Qs. 61096128.

57. Your Committee wish to remind Departments of the rule that express Treasury sanction must be invariably sought for making such advances, whenever an advance will cause excess either on a sub-head or on a vote (see Public Accounts Committee, 1889, Third Report, paras. 14 and 19, and Treasury Letter thereon of September 25, 1889). Your Committee regret that these rules should have been overlooked by the Air Ministry in connection with certain advances made towards the end of the year 1924-25.

58. Irregular Procedure in placing a Contract.-The attention of Your Committee has been called to the circumstances in which a contract for a supply of Ferro-silicon was placed in November, 1924. Considerable quantities of Ferro-silicon, which is used for the manufacture of hydrogen for Air-ships, were produced during the war and large stocks were thrown up at or shortly after the Armistice. The final sale of 2,500 tons was made by the Disposal and Liquidation Commission in July, 1922, and at that time the Air-ship service was completely shut down. When the demand for Ferro-silicon was revived in 1924 in connection with the resumption of the Air-ship service, the market, was, as Your Committee understand, somewhat abnormal. A firm, Messrs. X, then informed the Air Ministry that they had an option on 100 tons of Ferro-silicon at short notice, and offered it to the Ministry at a price of £A per ton. The Air Ministry ascertained by telephone that the largest known producers of this material, Messrs. Z, were asking a price of £18 per ton in excess of this quotation, and thereupon, although the arrangement was somewhat abnormal, decided to accept the offer of Messrs. X. It was part of the bargain that payment should be made before the goods were delivered, and payment was so made while the goods were lying in the Medway. When the Ferro-silicon was delivered by the contractor in the Thames under the terms of the contract, the containers were found to be faulty and leaking. By that time freight had been chartered and the ship was about to sail, so delivery of the faulty containers was accepted and the Ferro-silicon was shipped to Egypt. After the contract had been concluded with Messrs. X, the Air Ministry were approached with an offer of 50 tons by another firm. Messrs. Y (from whom it subsequently transpired Messrs. X had acquired the option on the Ferro-silicon which the latter had sold to the Air Ministry). The price quoted by Messrs. Y was 26s. a ton below the price agreed with Messrs. X for the other consignment. After obtaining less favourable quotations for this further supply from Messrs. X and from Messrs. Z, a producing firm, the Air Ministry accepted the offer of Messrs. Y.

59. In view of the procedure followed in dealing with the second supply, Your Committee find some difficulty in appreciating the reasons for placing the first order without exploring

more closely the possibilities of competition in the first case. The Accounting Officer endorsed completely the action of the Departmental officers responsible for these transactions, and assured Your Committee that, in his judgment, the contracts were the best that could be made in the public interest in the circumstances then prevailing. Your Committee entirely accepted his assurance that those concerned in the matter were endeavouring to supply the public service in the most economical manner possible, but they cannot avoid the conclusion that in this particular case they fell into an error of judgment, and that it would have been well had they made further inquiries before accepting the goods tendered by Messrs. X held under short option. There is reason to believe that the whole of the 150 tons of Ferro-silicon formed part of the surplus stocks sold, at a price of £4 per ton, by the Disposals and Liquidation Commission in 1922, of which the purchasers had taken delivery in the Medway shortly before these contracts were placed by the Air Ministry. While recognising that the Air Ministry could not have become aware of these circumstances without minute examination of the books of the Commission, Your Committee are of opinion that it would have been well had the Air Ministry, when considering Messrs. X's offer, consulted the Disposals and Liquidation Commission. Your Committee are glad to learn. that no loss will accrue to public funds owing to the fact that delivery was accepted in leaking containers, the contractors having made good the value.

60. The Ferro-silicon purchased by the Air Ministry was shipped to Egypt. Your Committee are informed that so far the consumption of it has been quite small and that the large unused balance is held in store for future Air-ship requirements.

61. Iraq Rents for Encroachments.-The Comptroller and Auditor General has called the attention of Your Committee to the fact, reported by his officers in Iraq, that the Air Ministry account has been credited with a small portion only of certain sums paid by tradesmen in Iraq for permission to establish themselves for trading purposes on encroachments within the Air Force's cantonment areas, the greater portion having been carried to the credit of non-public funds, i.e., Regimental Funds and other Funds of the Air Force Units in Iraq. It appears that the payments made by these native shopkeepers were divided. into two portions, a smaller portion definitely labelled as rent, which was paid over to the credit of the Air Force Vote, and a larger part called rebate. Your Committee were informed that Q. 6538. this arrangement had been made without the knowledge of the Air Ministry and is being revised, but they were somewhat surprised to hear from the Accounting Officer that, in his view, any amounts paid by the contractors in excess of a full economic

Qs. 6256 et seq.

Q. 6254.

Q. 6274.

Q. 6263.

rent for the accommodation should accrue to the benefit of the Unit funds on the analogy of the arrangement under which a rebate is allowed to members of the service trading with Navy, Army and Air Force Institutes. As the Accounting Officer has undertaken to bring the matter to the notice of the Treasury, Your Committee refrain from further comment at this stage beyond indicating that, in their view, profits derived from the use of public property should enure to public funds.

62. Cost of Training Cadets and Apprentices for the Air Force.-Your Committee have examined in some detail the cost of educating and training Air Force Cadets at Cranwell and Air Force apprentices at Halton. The expenditure incurred on these establishments is considerably heavier per head than, e.g., the cost of the Army Establishments at Woolwich and Sandhurst or at the Boys' Training School at Beachley. In any comparison between the Air Force and the Army Establishments, allowance must be made for the wide differences in condition and in the nature of the education given which were pointed out by the Accounting Officer of the Air Ministry, but Your Committee are not satisfied that the expense of these Establishments could not be reduced, and in particular they are struck by the large numbers of educational and teaching staff in relation to the number of cadets and apprentices.

63. Your Committee were informed that the Treasury has in view a special inquiry as to the number of staff at Halton. They suggest that an inquiry of this nature might be extended to the Cadet College at Cranwell and they will be anxious to learn the result.

64. Owing to the absence of detail in the Estimates and the Appropriation Accounts it is not easy to arrive at a considered view of the general cost of either Cranwell or Halton. It would be very helpful to this Committee if in future years they could be furnished with a return of the cost of training in the principal educational Establishments under the control of the Air Council, showing the cost per head of training (under suitable sub-divisions of expenditure) the length of courses and so forth. It appears to them that it should be possible for the Air Council to prepare a statement on these lines which would be approximately accurate without going to the expense of establishing a complete and continuous costing system, and they are glad to have received an assurance from the Accounting Officer that he would submit a proposal on these lines to the Air Council.

Statements of Excesses on the Votes for the Civil Services and the Navy were considered.

Sir MALCOLM RAMSAY, K.C.B., Mr. H. E. FASS, O.B.E., Mr. F. PHILLIPS, Mr. A. E. WATSON, C.B.E., Sir LIONEL EARLE, K.C.B., K.C.V.O., C.M.G., Sir GEORGE CHRYSTAL, K.C.B., and Sir CHARLES WALKER, K.C.B., were examined.

The Committee deliberated.

DRAFT FIRST REPORT, proposed by the CHAIRMAN, brought up, read the first and second times, and agreed to.

Ordered, to Report.

The Revenue Departments Appropriation Accounts, 1924-25, were considered.

Sir MALCOLM RAMSAY, K.C.B., Mr. F. PHILLIPS, Mr. A. E. WATSON, C.B.E., and Sir HENRY BUNBURY, K.C.B., were examined.

[Adjourned to Thursday next.

MR. WILLIAM GRAHAM IN THE CHAIR.

The Post Office Commercial Accounts, 1924-25, and the Post Office (London) Railway Act, 1913, Account, 1924-25, were considered.

Sir MALCOLM RAMSAY, K.C.B., Mr. F. PHILLIPS, Mr. A. E. WATSON, C.B.E., and Sir HENRY BUNBURY, K.C.B., were examined.

MR. WILLIAM GRAHAM IN THE CHAIR.

The Civil Services Appropriation Accounts, 1924-25, were considered. Sir MALCOLM RAMSAY, K.C.B., Mr. F. PHILLIPS, Mr. A. E. WATSON, C.B.E., Sir LIONEL EARLE, K.C.B., K.C.V.O., C.M.G., and Mr. J. A. BUCHANAN, C.B.E., were examined.

[Adjourned to Thursday next.

W.

MR. WILLIAM GRAHAM IN THE CHAIR.

The Civil Services Appropriation Accounts and the Revenue Departments Appropriation Accounts, 1924-25, were further considered.