NAVY (SUPPLEMENTARY) ESTIMATES, 1903–4. (Hansard, 23 February 1904)

§ MR. EDMUND ROBERTSON (Dundee)
observed that this Vote involved, though he would not dwell on them, the questions of Supplementary Estimates and Appropriations-in-aid raised the previous day. The discussions which had already taken place had presented problems to the solution of which some half-dozen Ministers and ex-Ministers had contributed without, he was afraid, enlightening the House, but he hoped that the debate that day would result in their getting answers both intelligible and satisfactory. He wished the Committee to bear in mind that these Supplementary Estimates could not be considered apart from the original Estimates for the year to which they were to be attached. He was in the recollection of the House when he said that last session began with loud declarations from the Government and indeed from all parts of the House of economical intentions, which never came into effect. After all those violent declarations for economy it was his duty to point out that last year's original Estimate was the largest Estimate ever submitted for the Navy in time of peace, and now a Supplementary Estimate was presented. The original Estimate was dumped down on the Table of the House without any explanation from the Minister whose duty it was to state the international policy which made this expenditure necessary and, having failed last year to elicit the explanations, they required, they, the Committee, were bound to approach the consideration of the Supplementary Estimate with even greater gravity and attention than had been displayed the day before in regard to the Army.
He would like to point out the financial effect of the proposals before the Committee. This Estimate, if passed, would bring the total expenditure on the Navy in the year about to end to the highest point yet reached. In his opinion the Leader of the Opposition had under estimated the amount of the expenditure for the year. The gross naval expenditure submitted in the original and Supplementary Estimates amounted to £37,500,000, but to that must be added what his right hon. friend did not add, more than £4,000,000 under the Naval Works Act, making a total of 742 £41,500,000, or nearly £1 per head, man, woman, and child, of the population of the United Kingdom. A more serious point was the Vote to which this large addition was being made—because it was a Vote the enlargement of which involved an increase in all the other Navy Votes. The Shipbuilding Vote was raised by the Supplementary Estimate from £17,300,000 to £18,600,000, a sum in excess of the whole Navy Estimates of 1895. New construction was increasing at an alarming rate. Two years ago the Government asked for £9,500,000 for this purpose; last year they asked for £10,500,000, which the Supplementary Estimate now increased to £11,500,000. He thought such figures deserved the serious attention of the Committee. Notwithstanding the overwhelming importance of the Navy in the matter of national defence some regard must be had to the finances of the country; and these figures were so vast that hon. Members were bound to ask for explanation and justification, even as regarded comparatively small items. He asked for information regarding this new Vote. What was the million and quarter asked for, and why was it demanded at this time? He thought it was more or less an open secret that the bulk of the demand related to the acquisition of two warships which were built for the Chilian Government, but which had been purchased by our own Government. £700,000 of the Vote, he understood, was a payment on account of those battleships, the balance of the purchase money falling due in the coming financial year. Then, he took it, that part of the Supplementary Vote was required for repairs and reconstruction, and as to that he would like some information, as reconstruction would seem to point to defects in the original plans. But the second Question he desired to put was of a more delicate nature—Why did the Government buy these Chilian warships? In reply to the hon. Member for King's Lynn on 2nd March last, the Prime Minister stated that the question of the purchase of the battleships referred to had been carefully considered by the Admiralty, who had clearly come to the opinion that the ships were not suitable for their purposes and that it was not advisable to buy them. That statement seemed to 743 involve the Government in a certain amount of difficulty. Having declared the ships to be unsuitable, they had now bought them and were asking the Committee to ratify the contract. It was incumbent on the Admiralty to explain why a purchase which was inadvisable, imprudent, and improper a year ago was advisable, prudent, and proper now. It was not the duty of the British Admiralty, with the enormous resourses entrusted to them, to rush in and buy every warship they saw for sale in order to prevent its falling into the hands of a foreign Power. Such a course of action would simply offer a premium to, or encourage the creation of speculative builders of battleships. He presumed it was simply a question of confirming the contract, and that no money had passed.

§ THE SECRETARY TO THE ADMIRALTY (Mr. PRETYMAN,) Suffolk, Woodbridge
was understood to intimate that money had been paid.

§ MR. EDMUND ROBERTSON
said it was extraordinary that this should have been done without the assent of Parliament. Somewhat loose things were done three or four years ago when Mr. Goschen arranged a supplementary programme. No Vote was taken in Committee of Supply; but the House was informed of the matter and debated the subject before it was carried out. In this case, however, the battleship programme had been increased to the extent of two vessels, and not only had the contracts been made, but money had been paid, and all this had been done without the assent of Parliament. He did not blame the Admiralty. Another department was here involved, and when a transaction so peculiar was brought before Parliament there ought to be some representative of the Treasury present. The reason suggested last year for the purchase was that it would prevent the ships falling into the hands of a foreign Power, but the Prime Minister appeared inferentially to reject that reason. What other reasons were there? He hoped the Secretary to the Admiralty would throw as much light as possible on the matter, but as delicate considerations might be 744 involved he would not press this part of the case too strongly.
The next point would not admit of much development at this stage, but it was a very material consideration. The Committee wore asked to add to the already colossal Estimates of the year. If such a thing were done in private life the first question asked would be whether they could afford it. Surely the Committee ought to pause before consenting to this additional expenditure. He hoped that by passing these Estimates they would not be deliberately creating a deficit in the finances of the year. How much of the expenditure here proposed would fall upon the naval funds of next financial year? The Committee were entitled to that information, and also to an assurance that the Estimates and programme, shortly to be introduced, would be reduced by an amount corresponding to that represented by these supplementary proposals. (At this stage the Chancellor of the Exchequer entered the House and the hon. Member repeated his remarks concerning the Treasury.)

MR. GIBSON BOWLES (Lynn Regis)
held that the Supplementary Estimates did not so much concern the particular department in charge of special items as the Chancellor of the Exchequer himself. They represented a financial operation of the most objectionable character, and every good financier who had occupied the position of Prime Minister had done his best to prevent any Supplementary Estimates whatever. This year the gross Supplementary Estimates amounted to £7,800,000. That was a stupendous amount to add to the already enormous Budget. It represented a mistake in calculating the original Budget, and, so far as it was a mistake, the Government had, involuntarily no doubt, deceived the House in regard to the financial situation, and by that false view had extorted from Parliament consent to the reduction of some taxes and the imposition of others; in fact they had deprived the House of the opportunity of dealing with the finances of the country as a whole. In these Supplementary Estimates the gross sum authorised was £1,401,500. There was to come off that a surplus of 745 £93,500, and there were Appropriations-maid (extra receipts) £38,000. First of all, with regard to the surplus of £93,500, which represented a miscalculation, and the Appropriations - in - aid, which also represented a miscalculation and a deception. The Admiralty calculated the receipts they were likely to get in the course of the year and this calculation was exceeded by £38,000. If this Vote was not passed this sum would go to the extinction of the National Debt under the general financial rules of the House; that £38,000 was on its way to the National Debt Office, and it was only by these Supplementary Estimates that its course to the National Debt would be stayed and it would be applied in diminution of the gross Supplementary Estimates. All that was extremely objectionable and calculated to impair the control of this House over expenditure, and to deceive the public as to the total amount spent. All such financial proceedings were of the most objectionable and dangerous character, and it was because, of this that the country had failed to appreciate the extraordinary gravity of the situation. Perhaps his hon. friend the Secretary to the Admiralty would be able to give them some explanation and justification for the presentation of any Supplementary Estimates at all. There was no explanation in his opinion which could justify them except one, and that was the sudden arising of unforseen circumstances since the Estimates were presented. That was the only explanation which the Government would be justified in giving. The hon. Member had accurately quoted the Question he put last year to the First Lord of the Treasury, and the answer he received with regard to the "Triumph" and the "Swiftsure." He gave that answer not as the President of the Council of Defence, but as the head of the Government responsible for the finances and for the military and naval policy. The answer the right hon. Gentleman gave was that these vessels were unsuited to our purpose, but he was entirely of the contrary opinion, and he ventured to say that they were better than any we had. He challenged the hon. Member to state if that was the Admiralty opinion now, or whether it had always been their opinion. He still affirmed that 746 these battleships were far superior to anything we had in our Navy before they were purchased. He could not help thinking, when the First Lord of the Treasury replied on the 2nd of March last that these ships were unsuited to the requirements of the British Navy, either that he must have been misled by the Admiralty, or else the Chancellor of the Exchequer sat on the strong box like a bulldog showing his teeth, and refused to let them have the money. In regard to building there were no firms in this country who would venture to produce a battleship costing nearly £1,000,000 on the mere chance of finding a purchaser. He adhered to his statement that these vessels were better than any we then had, and better than we now have. In the first place, for size and displacement they were the most powerfully armed ships yet constructed. They had four 10-inch guns each, fourteen 7.5-inch guns, fourteen 14-pounders and ten smaller guns. As to their armaments he challenged contradiction that they were superior to anything in our Navy, or any other Navy at this moment. They were not the production of the inventive brain of any Admiralty official, but the production of a private shipbuilder. Their armour was equal to that of our very latest battleship, the "Russell," and as to speed they were even better, for they could do twenty-one knots, and the "Russell" could only do nineteen knots.

§ MR. PRETYMAN
No!

MR. GIBSON BOWLES
said that at any rate they were a bit better in speed. Their radius of action was 12,000 yards. In consequence of the great enterprise of the firm that built these vessels and; gunned them they were fitted for using a nitro-cellulose powder. The Admiralty being desirous of having everything of the Admiralty pattern had chosen to condemn this new powder. He maintained that this powder was better than our cordite powder, but the Admiralty did not approve of it, and the result was that they were going to make some sort of modification of their cordite powder for these guns, He understood that was so.

§ MR. PRETYMAN
No!

MR. GIBSON BOWLES
said he was mistaken then. He understood that those guns were not fitted for cordite powder and that they would have to make some modification of the cordite powder because it could not be used in those guns. When the Admiralty bought the ships and the guns they certainly ought to have bought the powder and the whole bag-o'-tricks. The maker believed that this powder was far superior to cordite and the guns were made for it, and when under those circumstances they bought new ships and new guns using a new powder it was much better that they should buy the whole thing throughout instead of trying to modify it. Some objection had been made to the ammunition supply, and he was informed that the Admiralty were wedded to a system of ammunition supply by hand. These new guns were fitted with mechanical ammunition suppliers and that was a very great improvement, and he hoped the Admiralty were not going to interfere with it. He had made these remarks because he was convinced that they were superior to anything we possessed in our Navy. He trusted they would use the powder invented for the guns. It seemed to him that a battleship represented so much of the naval defence of any country that the acquisition of these two vessels by any other country would have altered the balance of naval power. They were equal to two divisions of an army, and therefore in times of doubt and difficulty to allow any foreign country to acquire two battleships which this country needed, was to allow a change in the relative balance of naval power which might be a source of very great danger. In March, last year, he urged His Majesty's Government to buy these vessels, and the reply he received was that they were unsuited to our requirements. That reply must necessarily be abandoned in face of the facts he had adduced in respect of the ships, otherwise the Admiralty would not have purchased them at all. Why did not the Admiralty purchase them last year? He strongly suspected there was a reason for it.
He recalled with some apprehension the accumulation of these expenses, but the Committee should know what the Chancellor of the Exchequer was going 748 to do in the way of providing for the deficit he would have to face when he came to his Budget. His idea of the way in which these ships should have been purchased was that they should have taken the place of two in the existing programme. They would not then have saddled the country with extra expense, and they would have had the advantage of having two battleships ready two years earlier—two battleships of that superior quality which he had endeavoured to describe to the house. He regretted that they were not purchased last year, but he was glad that they were purchased this year. He was extremely sorry for the Chancellor of the Exchequer in regard to the financial consequences of the purchase. He had only one other thing to say with regard to the Supplementary Estimates. They did not clearly show—and he wished to ask his hon. friend the Secretary to the Admiralty to state—what part of the total Estimate was represented by the purchase money of these ships. Ho always regretted Supplementary Estimates, and he regretted those now before the Committee more than usual. It was not a fact that this was the first time he had complained of them. He had, year after year, protested against them. His voice had seemed like that of one crying in the wilderness. He hoped the House was becoming more or less alive to the great importance of this wicked system of Supplementary Estimates and he hoped this was one of the last which would be. presented to the House.

§ THE CHANCELLOR OF THE EXCHEQUER (Mr. AUSTEN CHAMBERLAIN,) Worcestershire, E.
said the hon. Member for Dundee and his hon. friend the Member for King's Lynn had pointedly addressed themselves to him for some explanation. Perhaps the Committee would allow him to give his reply at once. The Committee would not expect him to enter into the merits of naval guns or considerations of naval construction which the hon. Member for King's Lynn put forward, nor would they expect him to go into the details of the Estimates. He thought these would be fully explained by his hon. friend the Secretary to the Admiralty. What did concern him were the remarks of his hon. friend 749 as to Supplementary Estimates in general. The hon. Member was perfectly right in saying that this was not the first occasion on which he had drawn the attention of the House to the inconvenience of Supplementary Estimates, and no one who had been, as he had been, Financial Secretary to the Treasury, could be unaware of that inconvenience. He took his present office long after the current financial year began, but he and his hon. friend the Financial Secretary to the Treasury had done their best to limit the Supplementary Estimates. They perfectly agreed that Supplementary Estimates were in themselves an evil, and that they ought not to be used as a method of meeting the ordinary and foreseen expenditure of the year, but that they ought to be reserved for cases which could not be foreseen, or which had some special character attaching to them, It would not be in order for him, in connecton with this matter, to make any observations on the other Supplementary Estimates presented this year. He would confine himself to the Supplementary Estimate now before the Committee. It was due practically to three causes. In the first place it was due to the purchase of the Chilian battleships; in the second place to contractors for Government work having made greater progress than the Admiralty thought it possible to anticipate when the year's Estimates were framed: and in the third place to the fact that the original sums taken for repairs of ships then actually on active service in connection with coaling stations, had been proved to be insufficient for the necessary repairs when the ships came into the dockyards. He thought the Committee would see that the Estimate for the amount of work to be done on ships which were still actually serving on foreign stations must be a speculative Estimate, and even the most jealous guardian of national finance could not blame the Admiralty if they could not always estimate accurately the amount shown to be necessary when a ship was in dockyard and when the machinery was actually accessible to investigation. Then there was the question of progress on the part of the contractors. He had the honour to serve for five years on the Board of Admiralty. It was a constant 750 complaint from both sides of the House, during those five years, that the Board failed to obtain from the contractors the work which it was anticipated they would be able to perform within the year to which the Estimates were applicable. They were constantly urged that it was the bounden duty of the Board to take steps to accelerate the work of the contractors, and to see that they secured the output of work estimated. The present Board of Admiralty were in a more fortunate position. The contractors had more than fulfilled their expectations.
The Committee would remember how long in advance these Estimates had to be made. He found from experience that the chief anxiety was lest the Government should not have sufficient money to pay, and they over-estimated very much the amount of work within the year, and unless one cut down that estimate one was forced to ask the Committee for more money than was actually required. It was extraordinarily difficult to get an accurate estimate of the amount of work which would be done in a particular year on a contract extending over two or three years, and there seemed always to be an element of uncertainty in regard to it. In the present year, the contractors had earned more than was estimated, and. of course, the Government were bound to ask the House to make provision for that. It was not, however, new expenditure in the sense of being expenditure of which the House had no knowledge or control, but it was payment for a more rapid rate of progress which would result in our having the goods for which we paid more rapidly than we anticipated. As to the third cause for this Supplementary Estimate—the purchase of the Chilian ships—he said the Committee might take it that His Majesty's Government did not contemplate the purchase of the ships last year. That purchase was an unforeseen emergency of the kind to which the hon. Member for King's Lynn alluded. The hon. Member for Dundee did not question the discretion with which the Government acted in purchasing those ships at the time, and the price paid for them.

§ MR. EDMUND ROBERTSON
said he only asked for information.

§ MR. AUSTEN CHAMBERLAIN
said that was not incompatible with what he had stated. The hon. Gentleman did not question the purchase, but he did question the propriety of the action of the Treasury in sanctioning any payment on account of this purchase, until the Vote had been submitted to the House of Commons. It was in connection with that matter that the hon. Gentleman required his own presence in the House. He had been called away from a Committee meeting which he was attending. He accepted as Chancellor of the Exchequer full responsibility for having anticipated the sanction of Parliament for the purchase of these ships. In the opinion of His Majesty's Government, it was not desirable that they should purchase the ships at the price which was asked, and under the circumstances which prevailed at the time when they were questioned on the subject in last session of Parliament. When the matter arose again this winter at the reduced price then obtained, and under the circumstances of the time, the Government thought it was not only desirable, but they thought they should be greatly lacking in their duty to the House and the country if they did not secure these ships. Two battleships added to the strength of another Power might seriously disturb the balance of naval power, and might gravely affect the Naval Estimates which would have to be estimated to this House in the future. We got them on much more favourable terms than there was any prospect of obtaining them when the question was mooted last spring or summer, and in the circumstances of the time the Government felt that it was their bounden duty to obtain the vessels. It was an essential part of the contract that the payments falling due on these ships should be met before Christmas, and in the course of the present financial year they could not have carried the contract through unless they were willing to make these terms. Under these circumstances he, as Chancellor of the Exchequer, and the Government, of which he was a member, did not hesitate to take the responsibility of making the payment which this Committee were now asked to ratify. They took the responsibility of acting on behalf of the country, at a moment when it was essential that action should be taken if the result desired 752 was to be obtained at all, without waiting for Parliamentary sanction, which there was no doubt, under all the circumstances, Parliament would be willing to give. There was only one other point to which he would refer.

AN HON. MEMBER
What was the price?

§ MR. AUSTEN CHAMBERLAIN
said that the price was £1,875,000, of which there was included in the present Estimates £707,000; and the remainder would appear in the Estimates for next year. The hon. Members for King's Lynn and Dundee had asked what effect this purchase ought to have on our naval programme generally. He thought that the Committee would see that a purchase made at that period of the year could not materially affect the programme of the year in which we now were. Whether or not it would affect the calculations for next was obvious to everyone; but he conceived it would be out of order to discuss the programme for next year on the Supplementary Estimates. It would be more convenient to do so after the First Lord of the Admiralty had made his statement.

§ MR. EDMUND ROBERTSON
said that as he understood it, the real reason why these ships had been purchased now was that they were to be had cheaper than ever before.

§ MR. AUSTEN CHAMBERLAIN
said he did not know exactly what the hon. Gentleman's question really was.

§ MR. EDMUND ROBERTSON
said that when the purchase was first mooted they were told that the ships were absolutely unsuited for the British Navy.

§ MR. PRETYMAN
said that the term used was that they were "unsuitable."

§ MR. EDMUND ROBERTSON
said that that was a merely grammatical criticism. The Prime Minister's answer was that the Admiralty had clearly come to the opinion that the ships which were on sale were not suitable for their purpose, and that it would not be advisable to buy them. The explanation which he and his friends 753 had asked was why were they bought now or at all; and now the Chancellor of the Exchequer said that it was because they could be had at a more reasonable price. The right hon. Gentleman did not allude to the question why the Government purchased ships now which were unsuitable a year ago? The net result of the right hon. Gentleman's statement was that the Admiralty bought ships because they were cheap. When the right hon. Gentleman made that statement had he the Prime Minister's answer last year in his mind? The right hon. Gentleman spoke of an immediate urgency having arisen; but what was the urgency? He did not so much object to the contract having been entered into, but to the fact that the contract had not only been made but executed.

§ MR. AUSTEN CHAMBERLAIN
said that of course he had in his mind the statement of the First Lord of the Treasury last year, but the hon. Gentleman had not correctly followed the reasons he had given for the purchase of the ships now. Ships more than anything else might be unsuitable to purchase if the price were exorbitant, and suitable if the price were reasonable. But he did not confine himself entirely to the question of price, nor even did he lay great stress upon it. He did not want to go into much detail on this question, but in the circumstances of last year the Government did not consider the ships a desirable or suitable purchase: although the circumstances of last autumn, and the price at which they could obtain them, made their acquisition suitable. The hon. Gentleman said that he did not object to the Government making the contract, but to the Government paying money on the contract without the sanction of the House of Commons. Now, he had told the hon. Gentleman in the most explicit language that he took full responsibility for that action. If the Government had not agreed to make that payment as, and when, they did, they could not have purchased the ships at all. They considered it essential to purchase the ships, and that if they had not done so they would have been lacking in their duty to the country. Hence, they had not hesitated to tike the responsibility and find the money.

§ MR. KEARLEY (Devonport)
said that the Committee was reduced to this condition of affairs—that when the Government in March last declared that the Chilian ships were unsuitable, they really meant they were unsuitable as regarded price. The hon. Member for King's Lynn ventured to say last year in a supplementary Question that these ships were very much better than any of our ships, and the reply of the Prime Minister to that was that the Admiralty thought differently. Now the House was told that the reason was that the price was too high. He supposed the Government thought that at some future time they could make a better bargain. That seemed to him to be trifling with words. They were plain men in the House and they wanted to know the meaning of it in plain words. When told that the ships were unsuitable they could come to no other conclusion than that the Admiralty were advised by their professional advisers that the ships were unsuitable for the British Navy. Was the question of the purchase of these ships submitted to the consideration of the ex-Chancellor of the Exchequer Between the time when these ships were offered to the Government and when they were finally purchased a great deal had happened to the Government. Their Chancellor of the Exchequer and others had left them, and it was possible that something new might have arisen and actuated the Government to buy the ships, overriding what the right hon. Gentleman had said. It would be interesting to know whether the right hon. Gentleman had any voice in vetoing the purchase of these ships. The Government had not succeeded in convincing the House that there was any emergency for buying these ships at a later period. [MINISTERIAL cries of "Oh!"] What was the emergency? He was not aware of it. If it were a competition to prevent Russia or other nations getting the ships he did not consider that an emergency at all. What had been made clear was that at a later period the Government bought the ships because they could buy them cheaper although they had said at an earlier stage that they were not suitable. They were beginning to understand what the words "suitable" and "cheaper" really did mean. But there was another reason. He was not ready to accept 755 the opinion of the hon. Member for King's Lynn that these ships were superior to anything we had. It might be that they were, but he could not take it on the hon. Gentleman's pure word.

MR. GIBSON BOWLES
said that the hon. Gentleman might take it on the details of the figures he had laid before the Committee.

§ MR. KEARLEY
said that they did not always understand with great clearness what the hon. Gentleman said. The hon. Gentleman was so full of knowledge that ordinary persons with ordinary brains found some difficulty in filling in the details. But the hon. Member would agree with him that the Admiralty had striven to get homogeneous ships for our Navy. Now the two Chilian ships, they knew at the outset, were not of that kind. They would require a special kind of ammunition. That of itself would be a great difficulty. He knew sufficient of the working of the Naval Ordnance Department to know that there was sometimes great difficulty in serving out to our ships ordinary service ammunition. He had known ammunition found in ships of the Navy which was quite unsuitable for what was required. The Chancellor of the Exchequer in explaining some of the items in the Supplementary Estimates attributed it to inaccurate estimation of repairs, and rather suggested he thought, that the inaccuracy largely took place in the Government establishments. As a matter of fact, if anyone would refer to the Supplementary Estimates he would find that the item of £275,000 was all for repairs and alterations of ships built by contractors and repaired in contract yards. Last year he (Mr. Kearley) called attention to the very unsatisfactory basis upon which these repairs were carried out. In the Government yards an estimate was asked for and expected to be worked to. In the contractor's yard nothing of the kind took place. Ships went in there for repairs and a schedule of prices was worked on, but the contractor was allowed to put on a large percentage of profit, and consequently the Government never knew what the repairs were going to cost when a ship went into the contractor's yard. That was 756 really the cause of the expenditure of the £275,000. It was not what the Chancellor of the Exchequer said—namely, inaccuracy in estimating, but that no price was fixed at the outset. Contractors had a real good thing of it in these repairs. Last year he urged the Admiralty to treat the contractors, when carrying out repairs, in precisely the same way as they did the Government yards in this matter. He believed the Estimates given in His Majesty's dockyards were exceedingly correct. The Chilian battleships they were told cost £1,875,000. They were bought through a distinguished firm in the city, Messrs. Anthony Gibbs and Co. He would like to be informed what commission the Government paid for the purchase of these ships.

§ MR. PRETYMAN
I do not know that any commission was paid upon them.

§ MR. KEARLEY
Then why did Messrs. Gibbs have to vacate their seats in this House?

§ MR. PRETYMAN
Because they sold us the ships.

§ MR. KEARLEY
Did they get no profit?

§ MR. PRETYMAN
said the Admiralty contracted to purchase these ships from the firm in question, and that was the transaction which caused the vacation of the seats. What arrangement was made by Messrs. Gibbs with the Chilian Government he did not know.

§ MR. KEARLEY
They were acting as principals in the transaction and not as agents?

§ MR. PRETYMAN
Yes.

§ MR. KEARLEY
Then I am content.

§ MR. RITCHIE (Croydon)
said that he had been asked to state what his share in these negotiations had been. These ships were offered to the British Government when he was Chancellor of the Exchequer; but as to his having vetoed the purchase, "vetoed" was hardly the right word. 757 He and the First Lord of the Admiralty had a great deal of discussion as to the propriety of accepting the offer of the ships; and under the circumstances and at that time he certainly objected to sanctioning the purchase, the money for which would have been over and above the amount already agreed to for naval purposes. Of course he had much communication with the First Lord of the Admiralty while Naval Estimates were being prepared, and the amount which he sanctioned for naval purposes was the largest amount that had ever been presented to the House of Commons on that account. After the discussions which had taken place, he did not doubt that the Admiralty were justified in asking for the grant which was sanctioned; and he would have been taking a great responsibility on himself if he had tried to reduce the Estimates presented to him beyond the point which had been reached in negotiation between himself and the First Lord. Having sanctioned this very large but justifiable expenditure, he was unwilling to increase the amount by the purchase of two ships which had never been contemplated as necessary at the time the Estimates were prepared. He might also say that the First Lord of the Admiralty did not by any means press him in the matter, but quite saw the force of the objection to this very great increase in the naval expenditure of the year. While they were discussing the question the First Lord of the Admiralty made him aware that in some respects the ships were not exactly the kind of vessel which the Admiralty would have built if they had been building new ships; but the language used never amounted to anything like a statement that for all naval purposes the ships were unsuitable. The price at which the ships were then offered was a higher price than that at which they had since been bought.

§ MR. KEARLEY
What was the price?

§ MR. RITCHIE
said that it might not be advisable to mention it. Although he was far from saying that the price alone would make the vessels unsuitable, yet having regard to the fact that they were not exactly the type of vessel that the Admiralty would have built, it was 758 proper to take the price into consideration. He did not think that, even though ships were cheap, they should be purchased if we did not want them. Nothing was more to be avoided than purchasing a thing simply because it was cheap. At that time the ships were not absolutely essential, because the Estimates amply provided for all the wants of the Navy. But having said so much, he must add that, having accepted the statement of the Chancellor of the Exchequer that there were circumstances connected with the present situation which amply warranted the right hon. Gentleman in assenting now to what had been refused before, it would be very unwise of the Committee to press this matter further. The Chancellor of the Exchequer had said truly that it would have been very inadvisable to allow these ships, under all the circumstances of the case, to pass into other hands and so disturb that balance of naval power which we had endeavoured to keep. For these reasons, he considered that the Government were perfectly justified in entering into the bargain; and after the statement of the Chancellor of the Exchequer he did not believe that the country would suffer financially from the purchase, because the right hon. Gentleman had given a distinct engagement that these two ships should take the place of two other ships which would otherwise have been built. Having regard to all the circumstances, therefore, he thought not only that the Government were right in purchasing the ships, but that they would have been wrong if they had not purchased them.

§ MR. LOUGH (Islington, W.)
thought the Committee should consider this matter a little more carefully than it was being considered. The Prime Minister on this point had, in the previous year, said in answer to a Question put by the hon. Member for King's Lynn— The important point to which the hon. Member calls attention has been considered, and carefully considered, by the Admiralty and they have come to the conclusion that the ships offered for sale are not suitable for their purpose and it would not be wise to buy them. That was an emphatic and clear statement and he was greatly astonished when he read in the newspapers the account of 759 the purchase of these ships, and he felt greatly astonished still on two grounds. The first was that the Estimates submitted that year for the purposes of the Navy were the largest ever submitted, and the second was that the whole increase in those Estimates was taken for the building of ships on Vote 8, which was £2,000,000 or £3,000,000 higher than ever before. Whatever was the situation when these Estimates were taken, there was one of the most serious financial crises impending that this country had ever had to deal with. He wished the Chancellor of the Exchequer had been more clear on this point. We had not the money to buy the ships with, and with the prospect of a deficit it was a very grave responsibility for the Chancellor of the Exchequer to add these large Supplementary Estimates to the amount already voted. No real explanation had been given on any of these Estimates. The Chancellor of the Exchequer had stated that enough money had not been taken for the repairs of ships on foreign stations. If only necessary repairs had been included in a Supplementary Estimate he did not think the Committee would have raised any serious objection, but to swell the Estimates by so large an amount as was now proposed was perfectly unreasonable. The right hon. Gentleman the Member for Croydon had stated that the Estimates next year would be reduced by the amount paid for these two ships.

§ MR. RITCHIE
said that what he stated was that he understood a distinct pledge had been given that these two ships would take the place of two others which would otherwise have been built in the future. He did not say next year.

§ MR. LOUGH
pressed for as distinct a pledge as possible on the point. They did not want this expenditure of £2,000,000 to be added without it making any impression on the expenditure of next year. In addition to an assurance on that point, he hoped the Secretary to the Admiralty would state definitely on whose authority the Prime Minister declared that the ships were not suitable for the purposes of the Navy.

§ MR. PRETYMAN
said he had to reply somewhat under difficulty, but perhaps 760 the House would extend to him their indulgence, The opening remarks of the hon. Member for Dundee were entirely directed to the question of economy, and the impression left on his mind was that the hon. Member was unwilling to grant to the Navy sums of money which the Board of Admiralty considered absolutely necessary if the Fleet was to be kept in the state of efficiency demanded by Parliament. The cry for economy could be accepted only subject to the standard which Parliament itself had set. That standard was that the Navy should be kept up to a position of equality with that of any other two Powers. Nobody realised more than the Admiralty how heavy were the demands they made on the Chancellor of the Exchequer and the country, but he could assure the Committee that those demands were made with a full sense of responsibility, and that nothing was asked for which was not considered absolutely necessary. With regard to the purchase of the "Triumph" and the "Swiftsure" from the Chilian Government, he thought the Committee would agree that it was really an economical transaction, because, if they kept to the two-Power standard, it was evident that if those two ships had been purchased by any European Power whose fleet had to be taken into calculation in considering that standard, it would not only have entailed the construction of two similar ships by this country, but it would have counted four on a division. As to the payment of the money, the first instalment of £707,000 was due this year, and the balance of the £1,875,000 was due next year. These were the payments which fell due under the contract. What the Admiralty had actually purchased was not two completed ships, but the benefit of a contract to build two ships, and the terms of that contract entailed upon this country the payment of £707,000 during the present financial year, and the balance during the next financial year.

§ MR. LOUGH
asked whether the Admiralty were buying at the exact price for which the Chilian Government contracted?

§ MR. PRETYMAN
said they were not, as the ships were contracted for for 761 £2,200,000. With regard to the answer given by the Prime Minister, of which not unnaturally a great deal had been made, he would say at once that the Admiralty accepted full responsibility. He agreed with what had been said by the right hon. Gentleman the Member for Croydon as to what passed with regard to those ships. He was quite willing to allow that the expression used was perhaps a little too strong and a little too abbreviated. What was in the mind of the Admiralty was that the ships were not suited to our purposes in themselves, because they were not of the pattern of our Fleet, That was a point to which the Admiralty attached great importance. But it would be perfectly clear to the Committee that many considerations had to be weighed one against another. And at that time the balance was against purchasing these ships. But although the ships were not entirely suitable for the British Navy it was obvious that different circumstances might justify the Admiralty in deciding to purchase something as a special bargain which was not "entirely suitable," and under these changed conditions a decision was come to that the ships should be purchased. He thought a little more had been made of the matter than was really warranted by the circumstances of the case. The effect of the transaction upon this year's Estimates was perfectly clear. It meant an addition of £707,000. The effect upon next year's Estimates would be to add the balance of about £1,100,000.

§ MR. LOUGH
asked whether any further expenditure would be necessary to complete the ships.

§ MR. PRETYMAN
said that the entire cost of ships to the nation would be £1,875,000. That included the armament, and the last payment was actually due on the 1st August. Then as to the effect upon next year's programme. The Admiralty had intended to lay down three battleships at the beginning of April. Instead of laying down those three battleships at the commencement of the financial year they proposed to lay down two battleships, but not to commence them until the autumn. That would mean a saving of several months cost of 762 construction on the whole of three battleships and the entire saving of one ship. The Admiralty hoped that it might be possible to leave out two ships, but they did not desire to pledge themselves beyond the extent he had stated. It should be borne in mind that the whole saving would not come into one year only. One battleship was entirely omitted, and the Admiralty had bought two excellent battleships at a price which did not exceed the cost of building two armoured cruisers. They had therefore really obtained two battleships fit to place in the line of battle at the cost of two armoured cruisers, and that would save them building, at any rate, one battleship at a cost of £1,250,000.

MR. GIBSON BOWLES
asked, in order that the matter should be quite clear, whether, instead of laying down three new battleships on the 1st of April, none would then be laid down, but that two would be laid down in the autumn, and in certain contingencies only one.

§ MR. PRETYMAN
said that was not so. Three battleships were to have been laid down early in April; now there would be only two laid down, and they would not be laid down until the autumn.

§ MR. AUSTIN TAYLOR (Liverpool. E. Toxteth)
understood the hon. Member to say that another one might be dropped.

§ MR. PRETYMAN
said he meant not this year, but in the future. It was nut considered wise to drop more than the one in one year. The ships were of good quality and compared very favourably with other vessels in the Navy. The final completion of the ships and their availability for service was really governed by the time within which their ammunition could be raised, and that would not be until June. The ammunition had had to be prepared to the order of the Admiralty.

MR. GIBSON BOWLES
asked whether it had been necessary to make some alteration.

§ MR. PRETYMAN
said that there was no ammunition ready for these ships. Whatever ammunition the Admiralty had ordered would not be ready before June, and they had ordered, not nitro-cellulose powder, but cordite, as it would have been most objectionable, seeing that our ships had to be ready to serve in any quarter of the world, and for that it was necessary that there should be reserves of ammunition, if the Admiralty had introduced an entirely new kind of powder. The use of cordite entailed a loss of some eighty foot-seconds in initial velocity, but it was perfectly suitable for these guns. The 7.5 guns were the same essentially as the 7.5 guns would be in our new ships, and the ammunition would be interchangeable.

MR. GIBSON BOWLES
understood, then, that they had had to alter their cordite.

§ MR. PRETYMAN
said that was not so. If they used the very best sized cordite they would obtain the same velocity as by using nitro-cellulose, but by using a size of cordite which was not entirely suitable they only lost about ninety foot seconds of velocity, and they could use the pattern which they already had in stock.
With regard to contract work, on the point raised by the hon. Member for Devonport, he would remind the Committee that the estimates made in the dockyards were made after opening up the ship, whereas the estimates made by contractors were made before the ships could be opened up. Anybody who had had anything to do with the repair or construction of ships would agree that an estimate of the repairs necessary to a great battleship made before her machinery and boilers had been opened up could be only a matter of guesswork. The Admiralty, therefore, acknowledged that estimates made beforehand for work in contractors' yards could not be absolutely reliable. Consequently they had taken other measures to secure economy, and they were perfectly satisfied that extra cost was not involved to any appreciable amount, if at all, as compared with the 764 work done in the dockyards. The extra cost was due to the fact that when the ships were opened up, the amount of repairs estimated turned out in many cases to be considerably under the mark, and much more work had had to be done. Another reason was much more satisfactory. For several years the amount of work for which money had been provided had not been completed during the financial year, and the money thus saved was available under the present system of accounts for unforeseen expenditure in other directions. It was satisfactory to note that this year the work in the dockyards and by the contractors had been fully up to the requirements laid down for the twelve months, and their capacity of output appeared fully to meet the requirements of the Navy. That was a satisfactory state of affairs, but it had this result—that money with which in former years they had been able to meet unforeseen expenditure had not been forthcoming this year, and hence they were obliged to bring in a Supplementary Estimate.

§ * SIR EDWARD REED (Cardiff)
said as he had been responsible for these Chilian ships from their initiation he should like to say a few words about their purchase. When the Chilian Government made their treaty with Argentina they naturally proceeded at once to endeavour to sell the ships, and they applied in the first place to the British Admiralty. The ships had then been only recently commenced. He knew that it was the idlest possible thing to attempt to sell ships, just commenced, to the British Government because, were the Admiralty to fall in with such proposals, the House of Commons would naturally say, "If you wanted the ships why did you not put them into your own programme? Why do you wish to buy from other people ships which have been only just commenced?" In making that refusal the Admiralty had to give a reason, and they stated that the ships were not suitable for the British Navy. That remark caused him no anxiety, because he knew there were reasons which were perfectly valid why the ships should not be suitable for the British Navy at that time. They had a very special armament. They were equipped with 7½-inch guns, and they 765 were supplied with Yarrow boilers. The Admiralty had, however, since made use of such guns and boilers, so that the old objection no longer existed. With; regard to the point that had been raised as to the use of cordite in the guns of these ships, he could say that they were perfectly suited for the use of cordite powder; in fact, all the gun trials had been carried out with cordite. As to the quality of these ships, in the first place, they were the fastest battleships we had, and, in the second place, they had an armament of so much power that, if it J was valued in the correct manner, they had actually greater gun power than any other battleship in our Navy. The Admiralty had for many years past been in the habit, in calculating the broadside power of their ships, of putting the four guns in the two turrets on one broadside. Although it was perfectly true that a ship could in certain cases use both her turrets on the same side, it was obviously most misleading to calculate as part of the broadside the whole of the guns in the turrets. Surely the most proper and scientific way was to place one-half of the guns on one side of the ship and one-half on the other. Taking the muzzle energy of the guns of these ships, ascertained by multiplying the weight of the shot by the velocity with which it left the gun, he found that the figure which expressed the striking force of these ships on each broadside was 138,960, while the figure which expressed the striking force of the "King Edward VII."—a ship of 16,350 tons, while these ships were under 12,000 tons—came out at 138,700. The figure in the case of the "Duncan" was 104,000, and in the case of the "Canopus" 88,000. Therefore, the House might rest quite satisfied as to the fighting capabilities of these ships. As to the price of the ships, the price at which alone he could obtain them from the builders, under the keenest competition, was a very high price, for the reason that they were to be finished in eighteen months. It had been said that no reduction in price was obtainable when the proposal to sell was first made. That was so true that not four months ago the Chilian Minister assured him that he had not obtained permission from his Government to sell the ships for anything less than the 766 price at which they were being constructed, and the change in their position was brought about quite recently. Whatever might be said or thought of the price, there was the satisfaction of knowing that these ships would be economical in the working, because instead of having to drive ships of 16,000 or 15,000 tons through the sea at high speed, it would only be necessary to drive ships of less than 12,000 tons.

§ MR. REGINALD LUCAS (Portsmouth)
said the hon. Member for West Islington had stated that these ships were "black sheep," and therefore unfit to take their places in the British Navy.

§ MR. LOUGH
Black sheep are often very good.

§ MR. REGINALD LUCAS
said that was not the impression given by the hon. Member's remarks. The Committee should bear in mind the principle on which their ships of the Navy were built. So many of the different classes were laid down in order to make a homogeneous whole. Therefore if two extra ships of a particular class were introduced they were in that sense unsuitable, as they could not form part of the general scheme.

§ SIR EDWARD REED
If the ships steam alike, turn alike, and fight alike, what is the object of calling them "black sheep"?

§ MR. REGINALD LUCAS
contended that as these ships were not designed on the same lines they could not be regarded as belonging to the same class as other ships. In reply to the hon. Member for West Islington, who had suggested that the ships were unnecessary, and that their purchase was a waste of public money, he would put as an analogy the defects which existed in our military organisation in 1898, and which would never have been discovered but for the war. Surely in time of peace they should prepare for any emergency that might arise. The hon. Member for Devonport seemed to suggest that there was no emergency for the purchase. He envied the hon. Member the serene atmosphere in which he lived, or else he admired the confidence 767 shown by him that His Majesty's Government would avoid every conceivable contingency which might arise in the future. He was rather curious to know what the right hon. Gentleman the Member for the Forest of Dean would say when he knew that another ship had been dropped out of the naval programme. He confessed that he learned with some apprehension that this very valuable addition to our Navy was to receive a set off by the fact that other battleships were to be dropped. He wished to know on what principle His Majesty's ships were fitted with electricity.

* THE CHAIRMAN
said it was not in order to discuss that matter. There was no Vote for that in the Supplementary Estimates.

§ MR. REGINALD LUCAS
desired to know what were intended to be the duties of the Fleet Reserve as compared with the dockyard labourers.

* THE CHAIRMAN
said this was also a matter which it would not be in order to discuss at present.

§ * MR. RUNCIMAN (Dewsbury)
said he was sure the House must be satisfied with much of the information as to the battleships purchased last year. They were powerful vessels, well designed, and it was obvious that they were cheap. Up to the present they had not been told when they would be delivered.

§ MR. PRETYMAN
I said the vessels would be ready in a month but that their ammunition would not be ready until June.

§ * MR. RUNCIMAN
said that made the purchase all the more satisfactory. But the hon. Gentleman did not justify the purchase by stating that the Admiralty were still working up to the two-Power standard. Last year it was made evident on the Estimates that the Admiralty were working on the two-Power standard in battleships, and three-Power standard in cruisers. He trusted that the hon. Gentleman, when the Estimates were introduced, would not attempt to persuade the House that the Admiralty were working on a two-Power standard. Of course 768 they were anxious to know what the effect of this purchase would be on the new programme, and he thought they might take by the forecast which had been given that the Admiralty would save to the extent of a second instalment on these vessels by dropping one battleship out of the programme. He took it, therefore, that they counted on two battleships next year at a somewhat later date and that they would be able to diminish the Construction Vote by £1,200,000. If that were so, the Committee, he knew, would view the Vote with great satisfaction. On the Supplementary Votes now before the Committee the increase had been enormous. The precedent set that day by bringing in the Supplementary Estimates for the Navy was singularly bad. The wages for men had gone up by £29,000. That meant a large increase in this Vote for 1903–4 over 1902–3, while the total increase over last year on the next item was as much as £73,000. When they came to contract work they had a more serious item. Repairs and alterations on ships by contracts was for 1902–3 only £175,000, but they found the revised Estimate of the year came to nearly £1,000,000. That was an enormous increase which had only been partially explained by the Secretary. No doubt a very large amount of this was due to the fact that the repairs that used to be done in the dockyards were now let out to private contractors, and also because the Admiralty had had to replace many internal fittings and boilers, provide new engines, and to alter to some extent the armaments. There was scarcely a department in which they had not had to make renewals in the case of vessels which were new only a few years ago. He asked to what extent re-boilering had gone. They had heard that the Yarrow boilers formed one of the stumbling blocks of the Admiralty in connection particularly with the last two purchases. The Committee wished to know how far the Admiralty had changed their opinion about the Yarrow and the Belleville boilers, also how much of the sum expended on repairs went in re-tubing, how much in altering engines. It had been stated that one reason for the increase in the cost of repairs was that the vessels came back from long voyages and that, therefore, they unexpectedly required more repairs than could 769 have been anticipated. But vessels had been coming back from long voyages ever since the Admiralty were created. If the truth were known, it would be found that a very large amount of the increase was due to the fact that the Admiralty had been placing the repairs to be done in private dockyards on the "time and material" basis. Private dockyards had been given not an absolutely but a comparatively free hand, and they had been allowed to add a percentage on the turnover. If adopted indiscriminately that was a thoroughly unsound and unbusinesslike proceeding. It had been stated it was impossible to contract for repairs. Anyone who knew much about vessels knew that was only comparatively true. There was a large amount of renewals that could be contracted for, and there was no reason why a better system should be adopted than that of giving a percentage on the costs of all repairs. It was a system that must lead to increased charges. The Chancellor of the Exchequer said quicker work was done by private dockyards. Of course quicker work was done, because the owner of a private dockyard, who was paid a percentage on the turnover, would be a fool if he did not turn out the work quickly. He would urge upon the Secretary of the Admiralty that they should be cautious at the present time and that they should not hasten any of their new schemes or rush into the adoption of new methods, new materials, new guns, and new boilers, until they had considered the experience of the present war in the Far East. By doing so they might be able to reduce the Estimates without reducing the efficiency of the Fleet in succeeding years.

* SIR WALTER FOSTER (Derbyshire, Ilkeston)
said these Estimates were, with one exception, the largest produced during the last twenty years, and ought on that account to be fully considered by everyone who was anxious to promote economy. Supplementary Estimates in their essence were estimates that tended to encourage extravagant expenditure, and they did not give the House that accurate and strict control over expenditure which they had when criticising the ordinary Estimates of the year. During time of war it might be excusable, 770 but in time of peace it was inexcusable that there should be higher Supplementary Estimates than on previous records. When he sat on the Committee on National Expenditure, Supplementary Estimates received a great deal of attention, and it was felt by that Committee, and embodied in their Report, that it was necessary that these Supplementary Estimates should undergo a good deal of criticism before they were presented to the House. It would be a great advantage in discussing Votes like those before the Committee during the past two days, if they had some statement by a Committee of the House with reference to the cause of excessive extra expenditure. A precedent established the previous day by the right hon. Gentlemen the Secretary for War, in making a general statement when laying the Supplementary Estimates before the Committee, was one he should like to see extended in some form, e.g. by a Report from the Public Accounts Committee or some other similar Committee, which had considered and enquired into the Estimates before their presentation to the House. If that were done, and it ought to be done, it would make for efficiency and economy There were certain proceeds from sales of old stores on which the Estimates had been reduced. These sales had brought £38,000 more than estimated, and that sum had been brought in to reduce these Estimates. He was afraid that sometimes in the sale of these stores the Government did not get value for their money, although that did not happen probably so often in the Navy as in the Army. In the purchase of the Chilian battleships, he thought they had got value for their money. There was, however, a tendency to lose public money by over-haste or carelessness in looking after public property. A remarkable instance of that occurred last autumn under his own personal observation. When the Channel Fleet was at St. Andrews, in September last, an unfortunate accident happened which resulted in the loss of a steam launch. On 19th September it ran ashore on the rocks, in a position in which the crew had little or no difficulty in landing. That launch was an admirable little vessel, some thirty or forty feet long, and must have cost some thousands of pounds. The Fleet sailed the very 771 same day although the "Sutlej" was left in the bay to look after her launch. He was told that some engines were removed from the launch, but when he saw her the next day, almost high and dry, there was scarcely any damage done to the hull. The British Fleet sailed away and left the ship and her crew, who failed to move her off the rocks and so save her for the nation. He was told that the launch was sold for £110. The purchaser patched her up in a few days, and found no difficulty in getting her off the rocks on 3rd October, and taking her into St. Andrews harbour, where she was sold, according to his information, for £800, although she cost probably some thousands. He thought it was something approaching a scandal that a launch like that should have been lost on a friendly coast and no sustained attempt made to save her. A fisherman told him that if it had been one of their own fishing boats they would have had her off the rocks practically without any damage. It was not creditable to the Fleet, and indicated a slackness on the part of the naval officers and the handy-men of the Navy. The hon. Gentleman should, not only in the interests of the public purse, but of the reputation of the Navy, make a thorough inquiry into this discreditable incident so that such an occurrence should not happen again.

MR. GIBSON BOWLES
said he thought the right hon. Gentleman had been somewhat hard on the men connected with the steam launch. It was quite impossible to judge of a case like that unless they had the full facts before them as to weather, etc. He admitted that the naval sailor was not a very good beach-man, but he could not believe that some effort had not been made to save a steam launch of that sort. The hon. Member opposite had commented on the system by which the Admiralty got their repairs done by contract. The Admiralty had always been most unfortunate in regard to their contracts; and the reason was that the Admiralty never knew its own mind. When they made a contract for a ship or repairs, before these were completed the Admiralty made some alteration in the plans. That was the reason why they had never been able to obtain penalties 772 for non-fulfilment of contracts. As a matter of fact the Admiralty had given up any idea of recovering any penalties for anything except——

* THE CHAIRMAN
The hon. Gentleman is wandering outside the Vote.

MR. GIBSON BOWLES
said that his remarks might come under repairs but he would not pursue the subject. A great deal had been said about the purchase of the Chilian battleships. It was now put forward that there was some gain in the price for which they had been purchased, and not because they were not suitable. His own belief was that they were not purchased last year because the then Chancellor of the Exchequer would not agree to the deal; and that now the question of unsuitability had been given up. What was the price at which these ships were offered to the British Government by the Chilian Government in March last?

§ MR. PRETYMAN
said that the Government never had any offer at that time lower than the price at which the ships had been built. The hon. Member for Cardiff had stated of his own knowledge that the Chilian Government had not authorised the sale for anything less than the contract price.

MR. GIBSON BOWLES
said that, as he understood, the agents of the Chilian Government bought the ships themselves for Chili, and then re-sold them to our Government: with the result that we had got them for practically £400,000 less than we could have done last year.

§ MR. WHITLEY (Halifax)
said that his hon. friend had asked whether the large amount required in the Supplementary Estimates for repairs was due to the system under which the Admiralty was working. Any business man knew that the system which really existed was likely to lead to a great deal of expenditure in the nature of waste. He understood the hon. Gentleman to say that, at any rate, some of the repair work was being done on terms of 5 or 10 per cent. being paid to private dockyards on their time and materials. It was within his knowledge that a number of these yards 773 were working both night and day on this work. He imagined that all these highly-skilled work men had to be paid double time for night work, and that would be a very substantial increase on the cost of day work. Were these private firms sending in sheets of overtime, and, if so, were they being accepted by the Admiralty? He would also ask with reference to repairs to the boilers on these ships. The House and the Committee had experienced a great loss by the death of Sir William Allan, who was so great an expert on these matters, and it would be a great misfortune if they had no one in the House to take the place of that gentleman, and question the Government on this matter. The chief part of the discussion that afternoon had reference to the purchase of the two Chilian warships. Personally, he was pleased to hear that the purchase would go in the reduction of their future shipbuilding programme, and in that sense it would not be an additional expense on the national finances. They felt that the Government, as a whole, did not appear to realise that after all there was a greater thing to consider than the naval superiority and the military superiority, and that was the financial superiority of the country. If it ever came to a trial between this nation and other nations the crucial point would arise on the financial question. We could not go on with the national expenditure as it was now in times of peace and yet secure the reserve that we should require if a crisis arose. He was especially glad to have the assurance from the Secretary to the Admiralty that the Government had declared their intention that the purchase of these ships would not be considered an additional burden to the Exchequer and the taxpayers.

§ COLONEL DENNY (Kilmarnock Burghs)
said the question of ship repairs was a most difficult thing to deal with. When the Admiralty sent a ship to a private yard for repairs, if the shipbuilder knew what was best he took care to quote a price sufficient to cover any extra details that might arise. In dealing with a shipbuilder the Admiralty must put themselves entirely in his hands. contented themselves with checking the details of the work by means 774 of overseers, and let the shipbuilder render his bill for materials and wages and take a commission. From his own experience as a member of a shipbuilding firm they never executed repairs on any other system. The Admiralty officials could tell what the cost of repairs would be by comparing them to somewhat similar repairs executed at the Royal Dockyards. If they were dealing with men they could trust they might leave themselves in the hands of those men and they would never have any reason to complain. Personally he never did any work for the Admiralty for the reason that if he did he would render himself liable to a penalty of £500 for every division in which he took part. In conclusion he was convinced that assuming the work to be given out was handed to a man who could be trusted, it was the best thing for the Admiralty.

§ * SIR CHARLES DILKE (Gloucestershire, Forest of Dean)
said the net result of a long debate seemed to have been that the whole Committee had come either to regard with approval, or at all events with resignation, the purchase of these two Chilian warships. Even those who did not approve of the purchase were quite inclined to be friendly with it because it caused the recent Hertfordshire election. In taking Naval Estimates they were unable to discuss other expenditure. Last year in the course of their Naval, Military and Budget debates they found it impossible to separate the consideration of military and naval expenditure. They would not be in order that day if they referred to a pledge given by the Government to reduce their military expenditure because of the increased cost of the Navy, but he trusted that the pledge would not be departed from in the current year. He agreed with the hon. Member for Halifax (Mr. Whitley) that there was a large and a very rapidly increasing item in the original estimate for repairs, which he could not but help thinking was due to the extraordinarily large number of breakdowns in the cruisers. He had never been inclined to fall in with the attacks on the water-tube boilers, because all other Navies, and especially those advanced in scientific views, were more and more adopting that class of 775 boiler, and were using an older type even than that we had rejected. In his view the root of the whole question was to be found in the training of the stokers and engineers. He desired to know how far breakdowns were responsible for this very large increase in the cost of repairs.

§ MR. PRETYMAN
said in answer to the right hon. Baronet's Question he must freely admit that a large portion of the cost was due to repairs to the machinery and boilers of cruisers. Two of the largest items were in respect of the renewal of machinery and Belleville boilers and of the rather heavy expenditure incurred in fitting up certain old vessels for auxiliary purposes. The amount of work in those cases was much more than was anticipated. Experiments on Belleville boilers had been entered upon on too large a scale, and it was the fact that trouble was caused by the placing of the new machinery in the hands of men who had not been thoroughly instructed in the matter. It had to be remembered, however, that the very large increase in the cost of repairs in this particular year did not involve a permanent increase. This was a special occasion, and he hoped, when they came to the discussion of Vote 8, to be able to satisfy the Committee that the number of ships to be sent for repair next year would be very largely reduced. In fact, they were only going to send four ships to be repaired in the course of the next financial year. With regard to the point raised by the hon. Member for Dewsbury he thought the hon. Gentleman had a little misrepresented the object of sending Admiralty repair work to contractors. It was said the work would be more quickly done, but that simply meant that when there was a large amount of work to be done it could be effected more quickly if a part of it were sent to private yards than if the whole was kept for the dockyards. The advantages of the contract system were that the Admiralty only paid for the work actually done, and actually necessary, and they got it done in the most reasonable time. The disadvantage was that they were obliged by he nature of the work to give it out without having a specific lump sum 776 estimate at the time the contract was given out. In order to meet that disadvantage, a system of percentages was introduced. There was a charge for material and labour, all the work being under the close supervision of the Admiralty inspector; no work was undertaken unless with the authority of the Admiralty inspector, who also supervised the amount of labour and materials put into any contract. There was not any question of overtime. The Admiralty paid the usual rate of wages. The Admiralty paid for no extra time whatever. On the work done there was a ercentage of about 10 per cent. on materials, and about 35 per cent. on direct wages. Those percentages included profit, but they also covered indirect charges, such as the use of machinery, drawing of plans, etc. That was a business arrangement not peculiar to the Admiralty. It was entered into by the Oceanic Steam Navigation Company, the White Star Line, the Hamburg American Company, the Union Castle Line, and many others. They were not firms likely to throw their money away. The Admiralty, as the result of the experiment they had made, had succeeded in introducing the competitive element. Having arrived at a basis of percentage by experience, they had placed two large ships out to be repaired, after inviting different firms to tender on the basis of percentages upon actual labour and materials. They were taking a further precaution, and that was, after the work was completed, to have a careful estimate made by the officers of the dockyards as to what it would have cost had it been done in the dockyard instead of in a private yard. With reference to the remarks of the hon. Member for the Ilkeston division of Derbyshire his hon. friend had been kind enough to allow him to postpone his answer, as he had only recently had notice of the matter. He did not think the incident referred to showed the British Navy to be in a decadent state.

§ MR. RUNCIMAN
said there was not an exact parallel between private shipowners and the Admiralty, because there was often a close relation between the firms in question and the repairing firms, whereas no such relation existed between the Admiralty and their contractors. He 777 asked whether the Admiralty paid for night work in a private yard when work was going on night and day.

§ MR. PRETYMAN
Certainly, if the work is required to be done by night, but no night work has been required.

§ MR. RUNCIMAN
said night work had been carried on in private yards.

§ MR. PRETYMAN
said he was not aware of the fact.

§ MR. WOLFF (Belfast, E.)
said he could not see that there was any difference between the relations of private shipowners and the repairing firms and those of the Admiralty and their contractors, when all parties worked under a similar system. The arrangement made by the Admiralty for the repair of their ships in private yards was such as his firm had adopted for many years in the case of large shipowners, and he failed to see why the Admiralty should not be satisfied with the system. His firm had built and repaired ships on this principle for more than twenty years. The hon. Member had asked whether the Admiralty paid for night work. Of course the wages bill of the contractor would include extra pay for overtime. He believed the arrangement had worked very satisfactorily. It was clear that until a ship was opened out for repairs or alteration they could never tell exactly what was wanted, and any shipbuilder asked to send in a price under such circumstances would be likely to put his estimate in excess of the work which would have to be done. He hoped the Admiralty would continue this arrangement, not only in repairing but building ships.

§ * MR. CREAN (Cork, S. E.)
said that although Ireland was called upon to pay a share of the cost of our Navy he found that when work had to be executed Ireland was generally ignored. A short time ago he received a communication from a number of workmen who had been thrown out owing to work in one of the Irish dockyards having been stopped, and although he had written to the Admiralty 778 on the subject he had received no reply. He thought that when the amount spent on repairs had been increased it was not unfair that the taxpayers of Ireland should get some of it back in the shape of wages.

* THE CHAIRMAN
pointed out that the complaint that none of the money was spent in Ireland could not be made on this Supplementary Estimate, and that the hon. Member must wait until the Naval Estimates came on if he desired to enter into that.

§ * MR. CREAN
said in that case he would not pursue the matter further. He agreed that the contract work could not be better done than in the way the Admiralty did it. The system of having a tender on scheduled prices was the best way in which the work could be done. He could not now go into the details as to where the work was done, but at the same time he hoped on another occasion he would receive more courtesy and attention from the Admiralty than he received on the last on which he had to approach them.

§ MR. PRETYMAN
said he was extremely sorry that the hon. Gentleman had not received any reply to the letter he had sent, and if the hon. Member would send another letter to him personally it should have his attention. It was the desire of the Admiralty to give work to the Irish yards, and the hon. Member would see, when the Estimates came before the House, that that question had not been forgotten.

Section I. Personnel	£53,200
Section III. Contract Work	1,254,800
	£1,308,000
Section II. Materiel—Deduct Appropriations in Aid	38,000
	£1,270,000