§ The estimated expenditure for the year ending 31st March 1888 is £12,476,800, and for the year ending 31st March 1889 £13,082,800, showing an apparent increase of £606,000. Taking, however, into account the reciprocal transfer to Army Estimates of the Military Transport Vote and to Navy Estimates of the Vote for Naval Ordnance (a full explanation of which is given in the Estimates), the difference between the Estimates of the two years under comparison is a net Decrease to Naval Votes for the year 1888–89 of £905,581, sic.:— 886 887
| Transferred from Army Votes for Naval Armaments | £1,717,561 |
| Less:— | |
| Transferred to Army Votes for Army Transport Service | 205,980 |
| £1,511,581 | |
| Abate:— | |
| Apparent Increase above stated | 606,000 |
| Net Decrease in Navy Estimates, 1888–89 | £905,581 |
§ In describing last year the then position of Naval Finance, I pointed out that, owing to the exceptionally large outlay of the last three years, it would be possible for some years to come to associate a reduction of expenditure with an increase of naval efficiency and strength. By April 1888 the great bulk of the outlay necessary to bring the matériel and personnel of our Fleet up to the higher standard of efficiency will have been incurred, but the benefits of that increased expenditure are now only beginning to fully operate.
§ The financial policy of the present Board has been to wipe off, as rapidly as they could, the large liabilities for shipbuilding which had been incurred in 1885, and, until these had been reduced to a manageable shape, to postpone the commencement of an enlarged shipbuilding programme of their own. By adhering to this course they have now reduced to small dimensions their past liabilities, and completed with celerity the great bulk of the ships previously laid down, and known as Lord Northbrook's Special Programme.
§ Another cause has, however, largely contributed to the reduction of the expenditure for the forthcoming year. The reforms in Dockyard administration, begun in the year 1885, are now producing most satisfactory results. Supplementary Estimates for building have practically vanished; the cost of repairs has much diminished, and much of the work done in the past year has been well within the Estimate sanctioned. The savings in labour and material during 1887–88 have been great; and, as prices showed a tendency to rise, and as much of the material of the ships building, upon which these economies had been effected, was still unbought, we were able to utilize a certain portion of the savings in the advantageous purchase of stores. Curtailment of past liabilities, closer supervision of proposed expenditure, and purchases of stores in advance, have all contributed towards a diminution of the estimated outlay of 1888–89. A synopsis of the work proposed to be done, of the shipbuilding programme to be commenced, and of the establishments of men to be maintained, will show that the strength and efficiency of the Navy will be in all respects developed, and not contracted, during the next twelve months.