§ Colonel Sir ROBERT WILLIAMS
I rise to draw attention to the two Reports of the Public Accounts Committee, and to move, "That the Reports of the Public Accounts Committee be now taken into consideration."
I have to thank the Prime Minister for giving me an early opportunity of saying something on behalf of the Committee, about which some very hard things have been said, both in the House and in the Press—excusable in the Press—but Members ought to know the functions of Committees. In one widely-read newspaper it was said that the Public Accounts Committee was appointed ad hoc to investigate matters connected with War Office contracts. The Committee has been widely blamed for what has been called unfair action in not calling the hon. Gentleman the senior Member for Devonport before them. I hope to show that this criticism is, in fact, unfounded. If the Members of the House had ever taken the trouble to read the Reports of the Comptroller and Auditor-General, or the Reports of this Committee, they would have seen that no names are ever mentioned. There are many individuals whose cases come under review all the way through, but they are all cases which have been dealt with beforehand. They are simply reported on by the Comptroller and Auditor-General as the result of his examination of the accounts of the various Departments, and the function of this Committee is simple: to hand on those cases anonymously to this House, because this House is the only authority which deals with these matters between individuals.
Let me give one somewhat similar instance, which arose after the South African War. There were a great many names of contractors mentioned, tout if the House refers back to the Comptroller and Auditor-General's Report they will find that the contractors are named A, B, C, and so forth. No names were given in the Report, and they 1006 were not given until they were brought out, and quite rightly brought out, in this House. One exception to this rule was that of a particular contractor who could not be described by a letter, because the subject matter of the inquiry was one as to a ration called the "Maconochie" ration, and the hon. Member took action. Under these circumstances the Public Accounts Committee thought they ought to hear him when he asked to give evidence before them. Even in this Report, if the Committee will look at it, there are many contractors referred to who have never been named, and there are many officers referred to, or rather there are many cases given where there have been embezzlements of money, or loss of money, through the action of some individual, both in the Navy, the Army, and the Post Office, but we never gave the names. Their cases have all been dealt with by the respective Departments concerned. It is not for us to gibbet any particular person, or to report upon particular names. So much is that the practice, that I only find two records of the Public Accounts Committee ever having thought of giving the names. I am thankful to say that the Committee stuck to precedent, and refused to put any name in the Report, but to keep to the words "principal contractor" all the way through.
I sympathise very much with the "principal contractor," because there was another question raised in the Committee as to whether the War Office should be asked to give all the commissions paid to different contractors, and we decided not to ask the War Office to give us those commissions, because it involved giving names, and we did not want to do so. An hon. Member in the House, however, asked for a Return of these contractors, and that Return was granted. As I said, I very much sympathise with the senior Member for Devonport, because that Return happened to come out on the same day as the Report of the Public Accounts Committee, and it appeared in the newspapers underneath the Report of the Committee, and everybody of course put two and two together, and action was taken outside. That concatenation of circumstances was very unfortunate for the hon. Member for Devonport, and I am quite sure very unfortunate for the Public Accounts Committee. I think I have shown the House that the Public Accounts Committee is not so 1007 much to blame as it is thought to be; on the contrary, we have striven to keep within the limits of our functions, and to make a Report to the House on those matters of which we are put in charge, leaving it to the House to deal with them. As the House knows very well, we do not mention the names of any firms who make Government supplies, but some of the firms took the matter up and have been answered by the Minister of Munitions, and that no doubt comes within the purview of this House. It is fifty-five years since Mr. Gladstone moved the appointment of a Select Committee on Public Accounts. He said that the object of the Committee would be "to revise the accounts of public expenditure after they had gone through the regular process of examination at the hands of the Executive Government; that was obviously the true conception of the duty of the House with regard to public money." He accordingly nominated the Select Committee on Public Accounts, adding that he had tried to appoint Members best qualified to fulfil those duties, which were of "a dry and repulsive kind." At that time the process of examination of the accounts varied greatly in the different Government Departments. It was not until the Exchequer and Audit Act of 1866, fifty years ago, was passed that that examination was systematized, and that there was a uniform system prescribed for all the Departments. After that Act, the Exchequer and Audit Department was set up, with the Comptroller and Auditor-General as head of that Department. The Comptroller and Auditor-General is an officer of the House itself, and is only removable by a joint petition of both Houses. The Public Accounts Committee has never been a party Committee. The chairman is always a member of the party in Opposition, and generally, I will not say invariably, has been the ex-Financial Secretary to the Treasury. When the late chairman became the Duke of Devonshire in 1908, there was no Unionist ex-Financial Secretary available, and as one of the oldest Unionist members, I was put in the chair. The Committee consists of fifteen members. I am quite certain that I speak for the Committee, as I do for myself, when I say that the proceedings of the Committee and the details which come before the Committee are neither "dry nor 1008 repulsive." On the contrary, the work of the Committee deals with principles and details which are extremely interesting. We are brought into touch not only with the officers of the Treasury, but with the Accounting and other Officers of the Departments picked specimens of that intelligence and devotion to the public interests which characterises the public Service as a whole. There is in this Report a very interesting Memorandum prepared by the present Comptroller and Auditor-General on the working of the Exchequer and Audit Act. During the fifty years since the Act was passed, there have been six Comptrollers and Auditors-General. Two of them I have had the pleasure of working with, and of the rest there is one outstanding name, Sir Charles Ryan, who has reached the age of eighty-five. When this Memorandum was sent to him, he wrote in answer and said, "If hereafter, under pressure of taxation, Parliament should wish to enforce economy instead of expenditure the means of doing so will be in their hands," in the Public Accounts Committee, the Comptroller and Auditor-General and the Exchequer and Audit Department. Lord Welby, who was perhaps the outstanding member of the representatives of the Treasury is quoted in the last paragraph of the Memorandum:The new system has taken away, and rightly, the unlimited discretion which the Treasury had formerly. It has done more, for while it has subjected the Treasury to a very needful control it has at the same time enabled the Treasury better to discharge its responsibility for the maintenance of financial order, because the Treasury learns much now from the Reports of the Auditor which it never would have learned under the old system.It was found practically impossible to give a list of the Members of the House who, during the fifty years, had served upon the Committee, but I think I ought to mention one in particular who was a member—I refer to Mr. Thomas Gibson Bowles. This House owes him a very great debt for his financial ability and activities. He did especially two things for this Committee. He secured that the receipt side of the account was brought within the purview of the Committee,' and it was also he who, in 1905, persuaded the House to give a day for the consideration of the Report. In that year the then Prime Minister, now First Lord of the Admiralty, said he would be very glad to give up one of the days allotted to Supply for the purpose, but that if the House did not want to do that, he would 1009 find some other day later in the Session. The next Debate was in 1907, and in closing the Debate, the present Prime Minister said he thought "the innovation of setting apart a day for the consideration of the Public Accounts Committee's Report a valuable precedent which he hoped would be followed in future," as it was in 1908, but not again until 1910. Since that there has not been a day until this day. If the House will permit me, I should like to give a short history of Parliamentary Grants and Accounts. Before 1688 the whole of the revenues of the Crown were at the personal disposal of the Sovereign. It was not until then that Parliament began to appropriate Grants for a specific object, and the Civil Services were not completely separated from Civil List Expenditure until the time of William IV. It was in 1802 that finance accounts were first established, and in 1834 a new office created independent of the executive Government in order to prevent the issue of public money not in accordance with Act of Parliament. In 1832 the Admiralty was required to prepare annually an account of expenditure under the several Votes defined in the Appropriation Act and requiring the Commissioners of Audit to compare the accounts with the vouchers. In 1846 the Army services were brought into line, and in 1851 Woods and Works, and in 1861 the Revenue Department Vote, culminating in the extension of appropriate audit to all supply services by the Exchequer and Audit Departments Act of 1866. But it was not until 1869 that the accounts or books were really in anything like the form in which they are in now, and it was not until 1873 that an Order in Council was passed formally prescribing the manner of keeping accounts. One result of the Act was to create the Accounting Officers. There were Accountants, but it was not for some time that it was realised that the real permanent heads of the Departments ought to be the accounting officers and responsible for the accounts, instead of merely accountants. This Committee has been very jealous of seeing that accounting officers are really accountable for the accounts and that the responsibility cannot be put on to anybody else. For excess Votes the sanction of the Committee must be obtained. The value of that is shown by the fact that whereas from 1868–9 to 1876–7 the average number of Civil Service and Revenue Department Votes which were 1010 exceeded were twenty-five, and in the nine years from 1886–7 to 1894–5 only eighteen, and from 1905–6 to 1913–14 only seven cases of excess Votes in those accounts. The basis of the Report of the Committee is the Report of the Comptroller and Auditor-General on the accounts which set out in detail the Estimates and the amount of actual expenditure, and the remarks of the Comptroller and Auditor-General on any irregularities are appended. It is on that that the Committee's work is founded, and the only persons who can answer the questions of the Committee upon those points are the Accounting Officers of the various Departments. They have to justify irregularities of whatever kind, and they do it with the full knowledge that their evidence will be published verbatim, and that anything they say, like the whole work of the Committee, is subject to the review of the House of Commons afterwards. It is not the purpose or function of this Committee to go beyond the statements made by the Accounting Officers. We do not want to disbelieve them; we have no reason to do so. They have to justify their statements to us, and anybody who looks at the evidence will see that very keen questions are put about the statements they make. If mistakes have been made by Accounting Officers in answers they give, it is for the House afterwards to decide whether they have been right or not in what they have said. The Public Accounts Committee does not deal with policy or expenditure, but with the results of expenditure. It simply reports to the House what has happened, and if there is any justification for what has been done.
With regard to the two Reports of this year, the House will remember that they deal with the financial year ending 31st March, 1915, and therefore only comprise the initial eight months of the War. It sometimes has been asked, What is the use of such a belated inquiry as that? You will remember that the Committee is not a committee of Expenditure, but a committee of Accounts. The accounts cannot be examined before they are furnished, and they cannot be furnished before they are finished, and they are not finished before the 31st of March of each year. It takes some time to make up such large, voluminous accounts. Consequently it is some months before the Comptroller and 1011 Auditor-General is able to get the accounts, and he must then take some little time to examine them and to write his Reports. The Reports on the Civil Service Votes need not be presented before the 31st of January, and the Navy and the Army are allowed till the 15th of February of each year. If the House will remember that we are a committee of Accounts and not of Expenditure, it will see that our power really arises in the knowledge by the Departments all through that any action taken will be submitted to an accurate, informed and searching scrutiny; and it is that knowledge which has contributed very materially to accuracy in the accounts and to the checking of irregularities. Where, as sometimes happens, disciplinary action has been taken, or in the opinion of the Committee ought to be taken, the Committee invariably inquire into the matter, and is not content unless a satisfactory answer is given as to any action to be taken or that ought to have been taken. There is one other function of the Committee, and that is the power of disallowance. As an instance, this year certain legal expenses in Ireland seemed to the Treasury to be very extravagant, and after due consideration the Public Accounts Committee fully upheld the view of the Treasury, and a portion of them has been disallowed. Before I come to the Reports themselves, I should like to give a few figures to show the increase of the amounts with which the Committee now has to deal. In 1898–99 the Navy expenditure was £ 24,000,000. In 1910–11 it was £ 40,000,000, an increase of 66 per cent. In 1914–15 it had risen to £ 52,000,000, an increase of 30 per cent. over 1910–11, and 116 per cent. over 1898–99. The corresponding figures for the Army are: 1898–99, £ 20,000,000; 1910–11, £ 28,000,000, an increase of 40 per cent.; and 1914–15, £ 29,000,000, an increase of 3 per cent. over 1910–11, and 45 per cent. over 1898–99. The Civil Service Estimates are very different. They were, in 1898–99, £ 37,000,000; in 1910–11, £ 67,000,000, an increase of 81 per cent.; and in 1914–15, £ 87,000,000, an increase of no less than 29 per cent. over 1910–11, and 135 per cent. over 1898–99. In addition to this normal expenditure, there were £ 337,000,000 of war expenditure met out of the Vote of Credit.
1012 In regard to the pre-war months of the period under review there is not much to say upon the great bulk of the Civil Service Votes, with the exception of the new Class VII., which deals with questions under the National Insurance Act and the case of over-expenditure in Ireland, which I have already mentioned. We have drawn the attention of the Government to the necessity of as speedy legislation as possible for diminishing the number of the Commissioners under the Mental Deficiency Act. A certain statutory number had to be provided for, but it is quite obvious that the number might now be greatly reduced. With regard to the War months, it was seen that the contractors would soon come for large increases under their contracts. Time was taken by the forelock and a Committee of the Treasury was appointed, who laid down the lines on which increases might be granted, the Treasury supervising all the large amounts. The Committee noted with satisfaction that the Office of Works, while it was forced to put a large contract for housing at Woolwich on a percentage basis, seems to have taken effectual steps both to supervise the rate of wages under the contract and also to provide that no commission should be paid on material which they themselves supplied.
With regard to the National Insurance Act, I should like to call attention to the amount of Supplementary Grants which have been required. The figures were given in the Report this year, and up to the present financial year they show that whereas the Grants under the Act of 1911 amounted to £ 20,250,000, additional Grants amounting to no less than £ 8,750,000 were needed—nearly 43 per cent. of the original amount—a fact that will have to be taken into account when the thorough review of the Act and its finance comes to be made, which so novel and complex a scheme must require. The earlier of these additional Grants at first received no Parliamentary sanction except that of the Appropriation Act, which, in the view of the Committee, is in itself a highly undesirable proceeding. The other Grants are covered by Section 1 of the amending Act of 1913. From the financial point of view, the Public Accounts Committee views with some apprehension the very large powers given under that Section for departing from the original contributory basis of the scheme. The 1013 National Insurance scheme is worked through approved societies, many of which are very small, and all of which have small branches, and they found great difficulty in accurately accounting for the sums spent. This difficulty arose not from deliberate inaccuracy, but rather from a natural non-appreciation of the necessity of keeping very strict accounts. In many cases the officials were working men, who, while fulfilling their functions with all honesty, were not conversant with the new system of keeping accounts which the Act rendered necessary. A considerable number of cases have come to light where overpayments have been made under the Act, chiefly in connection with the unemployment section, where the factors that govern the legal definition of unemployment are difficult of apprehension, and in these cases special provision has had to be made both for the recovery of overpayments in consequence of mere clerical errors and for the charging to the proper funds of amounts allowed erroneously.
In the case of the Labour Exchanges and Unemployment Insurance, the Board of Trade has taken in hand the question of proper forms of accounts being rendered and the prescribed conditions fulfilled. The whole question is a very difficult one, and the Treasury have appointed a Special Committee to go into the whole subject, and that Committee, of which a member of the Public Accounts Committee, the hon Member for Rushcliffe Division (Mr. Leif Jones) is a member, is, I believe, nearing the completion of its labours.
The Public Accounts Committee were rather impressed with the cost of the administration of the Act, while the somewhat large number of Commissioners seem now to be more than are needed. Whether they were originally needed I do not know.
Hitherto there has been an excellent practice that any proposed change in the form of the Estimate should be submitted to the Public Accounts Committee before it was carried into effect. In 1915 that practice was not observed. Provision was made for the payment of Exchequer benefits under the Act on an entirely new basis, and attention was drawn to it, not in the Estimate itself, but simply by a note on the Estimate. It was an alteration in practice which the Committee much regret, and if the point had been 1014 submitted to them first of all, I am inclined to think they would not have sanctioned it.
In connection with the Civil Service Accounts, I may refer to the Post Office Telephone Service, in connection with which there was a deficiency of £ 111,000, as compared with a profit in the year before of £ 239,000. Of course, the War had a great deal to do with 'it, but at the same time the increase in the charge for depreciation was £ 142,000 and the pensions liability £ 36,000. The former must inevitably increase, as a very large capital expenditure still remains to be made under the Telegraph Money Act, of 1913, so that, unless some special measures are devised, it seems to me that in normal times the telephone service will show not a profit, but a deficit.
With regard to the Departments more especially affected by the War—the Navy and the Army—in both Services it has been found impossible on the ground of national interest to publish the accounts in their full detail, while pressure of work and shortness of staff have rendered it necessary to omit a certain portion of the usual stocktaking, and also the rendering of certain manufacturing accounts. At the same time the Comptroller and Auditor-General has been afforded every facility for getting the information necessary for his usual examination and Report, and the Committee is informed that the accounts themselves have been kept as nearly full as possible, and have been entirely open to his confidential inspection. With regard to the Navy, at all events, a promise has been twice given in the House that as soon as possible after the War, when it can be done without detriment to the public interest, the accounts in full will be presented as usual. This has necessitated part of the examination by the Committee of both witnesses and documents being held in camera, and the evidence given by the Navy and the Army has had to be submitted to those Departments for the excision of such parts as they thought ought not to be published at present. If any hon. Members care to go through the whole of the evidence they will probably find certain gaps of which that is the explanation.
During the year under review there were Votes of Credit for no less than £ 362,000,000. Against these was charged, 1015 in the case of Civil Services, all excess expenditure wholly necessitated by the War, and such amount must be taken as the cost of the War for those months with regard to the Civil Service Votes. The Committee asked whether it would not be possible to distinguish moneys spent within the ambit of the various Votes, but which were real war expenditure, so that they might be taken into account in reckoning the total cost of the War. They were eventually obliged to acknowledge the validity of the contention of the Department that in most cases differentiation would be almost impossible, while to do it with anything like approximate accuracy would entail an amount of time and money wholly disproportionate to the advantage gained. I may be asked why Votes of Credit were asked for instead of Supplementary Estimates, which, of course, are regarded as the normal procedure. The Committee have been very jealous of this point, but it was pointed out to them that it would be extremely difficult to frame Supplementary Estimates with any accuracy, as it was impossible to say what services would be wanted, or what payments would fall to be made in the financial year. For instance, early in March, or late in February, it was thought that a very large payment would fall due before the 31st March, and a supplementary Vote of Credit for £ 37,000,000 was taken. That payment, however, did not fall due, and there was a surplus of £ 25,000,000 on that head. The expenditure under the Votes of Credit was kept entirely in the hands of the Treasury. The Departments had to satisfy them monthly as to what they had spent, and what would probably fall due in future months. With regard to matters not coming within the ordinary Votes, there was only one of any importance, namely, the Sugar Commission. The Sugar Commission spent £ 18,500,000 in that particular year, their trading accounts were fully examined by the Treasury, and the Comptroller and Auditor-General carried out a most satisfactory test audit.
With regard to the expenditure of the Navy and of the Army, in connection with the Navy a special Treasury Committee was set up, on which the Admiralty were represented, which was empowered on behalf of the Treasury to sanction all such urgent demands for money as were 1016 not of such overriding importance as to require formal reference to the Treasury itself. With regard to the Naval and Military expenditure generally, I think the House ought to bear in mind two things.—first, that in the carrying out of any service of great magnitude, time and money are necessary, and in this case there was no time to spare and money had therefore to be spent extravagantly. The other thing is the old warning regarding new wine in old bottles. The system both of the Navy and Army has grown up through many years, adapted to what the country regarded as the ordinary Naval and Military standard, and into these old systems, adapted for a comparatively small number of men and relatively small expenditure, there was suddenly poured unthought-of masses of men and the necessity for spending unthought-of millions of money. These two considerations account for a great deal of the enormous expenditure of the War. Let me give one instance—the provision that became necessary for large hutted camps. No man in his senses, if there had been time, would have begun to build those camps without first making the necessary roads. But the men had to be sheltered as soon as possible, and the roads perforce had to wait, although increased expenditure was thereby necessarily incurred.
That mistakes in judgment were committed under the enormous pressure, there is no denying; nor that in many cases antiquated procedure was adhered to when it was evident that it was not suitable to the emergency. But on the whole, adaptability was shown. Moreover, it must be recollected, especially in the case of the War Office, men were taken away from work to which they were getting accustomed and their places had to be filled by others who were ignorant of the necessities and routine of their positions, while the enormous expansion of the personnel of all the offices necessitated bringing men in who, however competent and zealous, knew little or anything of the system they were severally called upon to administer. To give one instance, the Army Pay Department. This Department before the War consisted of about 600 men; by 31st March the number had risen to 7,000, and" at the present time it totals 15,000. The exigencies of the War necessitated the resort to a form of contract to which there is great objection, i.e., the system of payment by percentage, i.e., on net cost. 1017 plus percentage. In 1902–3 the system was tried by the Navy, when the Royal Dockyards had fallen into arrears which were needed to be quickly overcome; and it was then found too extravagant. But under the extreme urgency of repairing and rebuilding during the War, the Admiralty were forced to return to the system, though not without many misgivings, and careful instructions that resort should be had to the system only in the last extremity. Your Committee have no doubt that this was inevitable, but grave mistakes were made in that no provision was made in the contracts whereby the Admiralty could check undue payment of wages or undue cost of material, but they were obliged to pay the percentage on whatever accounts were produced to them by the contractor. These were factors which made the system so unprofitable when last tried, and the experience then gained ought to have been noted for future use. No doubt there were some safeguards against the extravagance of the system in 1902, and cases of extravagance were watched and reported to the Admiralty; and it is no doubt also true that the extreme pressure under which the work had to be done by day and night prevented thoroughly efficient supervision and did not afford time for correcting wrongs which had been done. But the amount paid for wages did not vary very much from one job to another, and the schedule of rates ought to have been submitted to and checked by the Admiralty, who also ought at least to have been able to control rates of pay and the prices which were being paid for material.
With regard to the purchase of material the Admiralty, before the War, seemed to have no independent means of checking the prices of the armament firms. It seems to your Committee to have been slow in adopting the method of cost prices Situated as is this country in regard to its Navy, it is impossible to maintain sufficient national dockyards to cope with sudden emergencies, such as arise from time to time, and it is therefore necessary that there should be in existence a certain number of manufacturers of war material and builders of warships who should be able to undertake national orders quickly, without waiting, and to supply new machinery and make fresh arrangements. But this is no reason why the nation should pay extravagant prices for their requirements, 1018 nor why the Admiralty should not possess the requisite staff for controlling the cost of the supply and manufacture.
When I come to the staff, I want the House to realise the immense debt which the country owes for the unpaid work which is so largely done. There are many men whose natural business ability would command salaries of many thousands a year freely giving up the whole or the best part of their time to the national work; while the value of the unpaid work generally must run into many hundreds of thousands of pounds annually. This brings up the question of the employment of business men in the Civil Service, which in ordinary times does not seem possible, for the ordinary run of Civil Service salaries is far below the value of men of such experience, while, unless in exceptional times their whole-time services would not be needed; and it would be difficult, though not impossible, to fit part-time work into the scheme of the Departments. Although the work of the Ministry of Munitions does not come within the year under review, yet in the light of the evidence given by the Admiralty officers your Committee thought it not outside 'their province to ask that the Ministry of Munitions would give evidence as to the method on which they worked, and the results which they had effected and which are very considerable, as the figures will show. I am quite aware that those figures are not accepted by everybody either inside or outside this House. But the Committee have only reported to the House the figures given to them, and it will be for the House to form its own judgment as to their accuracy. Evidence was forthcoming to your Committee that a similar system was not being adopted by the Admiralty as fast as it seemed to your Committee to be possible.
A fruitful source of unnecessary expenditure which will have a lasting effect was the far too hasty medical examination of Reservists, so that men were passed into the Services who ought never to have been taken, and who were in many cases very soon invalided out with a pension or gratuity, however small, sometimes on account of the very diseases for which they had originally left the Services.
In the case of the Army, the Appropriation Account has no such fundamental change dictated by public interest as in the Navy, though naturally a good many of 1019 the details are omitted, and here, again, the Comptroller and Auditor-General has been in no way hindered in doing his full work of examining accounts as usual. Different provisions had to be made for the necessary relaxation of the Treasury Control. For instance, where expenditure was certified to be necessary and so urgently needed that there was no time to submit it to the Treasury, a certificate to that effect had to be given under the hand of the Financial Secretary to the War Office. The organisation of the War Office differs so fundamentally from that of the Admiralty that it was not possible to institute an Emergency Treasury Committee of Control similar to that of the Navy. The Accounting Officer of the Army is not situated in the same way as the Accountant-General of the Navy, since his opinion on matters which seem to him extravagant are submitted to review by the Secretary of State for War. The whole question of the organisation and administration of the War Office and Admiralty will have to be considered after the War, and they will have to be much more co-ordinated with regard to their supplies, so that similar economical prices may be paid for articles which are in common use by them both, and to prevent them competing against one another for material for use in the dockyards or arsenals.
The Army soon found that their system of contractors' lists was quite insufficient for the needs of the time, and they therefore resorted to the open market, with the result that they were gradually forced, step by step, until they have adopted the plan of commandeering whole processes of manufacture, and whole sources of supply, with exceedingly satisfactory results, and this was worked out and carried through excellently from a business point of view within the War Office itself. These methods would be impossible in peace time, and probably the system of lists of contractors will again come into force, and indeed in some respects is necessary, as the War Office must know where it can lay hands upon its requirements; and who has the necessary stock, and the machinery to produce it. These factors of necessity somewhat reduce the list and render combination more easy, but the costing system will obviate undue pressure upon the Government.
1020 I would notice in passing that the Public Accounts Committee of 1902, and again of 1906, recommended that in case of war there should be a Financial Adviser and Local Auditor in the field, a system which has produced excellent results at the present time.
Information was given to the Committee on the subject of billeting, and the first large allowance was reduced by the Army Council; while in some instances General Officers were able to effect a considerable reduction where large numbers of men were billeted in the same town. But it was unfortunate that, whereas the Army Council told the Treasury in January, 1915, that they intended to considerably reduce the payment, that intention was not carried into effect until the 1st September, so that for seven months at least wholly unnecessary expenditure was being incurred. Another question to which public attention has been called has been the waste of food, due to various causes apart from carelessness, and particularly to the overriding necessity of Officers devoting their whole time and thought to the training of their men. There are Commands and individual Officers to whom the complaint does not apply; but they are not as numerous as they might have been; and there does not seem to have been that definite attention to the question of the waste of food in Inspection Reports on units or individuals which I would have liked to have seen.
I now come to the hutting question, with which I only deal as regards the War Office justification for the action taken, which, after the public inquiry on one point, will no doubt form the subject of a debate in the House, for there is no doubt that neither material nor work was in many cases as good as it ought to have been, and many of the discomforts suffered by the troops could have been prevented, though here, again, the great difficulty of obtaining responsible overseers and inspectors over such a large area must be taken into account; while itmust be noted, to the credit of the War Office, that their first estimate for hutting was very accurate under the circumstances, with the addition which, of course, is necessary owing to the rise of prices during the period. In these cases, too, the system of net costs plus percentage was adopted, but with no proper provision for a sliding scale of commission in relation to the work, no understanding of items on which commission was to be 1021 paid, and no power to refuse exorbitant wages or prices. One question which arises is as to the failure of the War Department not to foresee the large amount required to be spent, and to fix the rate of commission with a maximum amount to which the commission should reach. I think I have put before the House the salient points of the Report. There is much food, not, perhaps, for action at present, but for reflection and thought as to what may be done after the extreme war pressure is removed. Above all, I hope I have succeeded in removing from the mind of the House an impression which seemed to us to have got abroad that the Committee had dealt exceptionally and unfairly not only with a fellow Member of the House, but with other members of the public.
§ Mr. S. ROBERTS
I very much regret that I find it necessary to intervene in this Debate. I do so with reluctance. But I feel a very great hardship has been suffered by the large armament firms in this country who, in a time of stress, are doing their very best in the interests of the country. At times like these the relations between the large firms and the Government ought to be most amicable, and that has been the case all through. The relations between the large armament firms and the Ministry have been cordial and amicable, and therefore it is with very great reluctance that I feel obliged this afternoon to draw attention to various items in this Report. It is not our fault, or my fault, that I have to do so. It is, first, the fault of the procedure taken by this Committee, and, secondly, the fault of some evidence which was given before the Committee and the Committee did not allow that evidence to be answered. The Chairman of the Committee in his speech, just delivered, stated that they mentioned no names. True, but when the names are well known, and there are very few, it makes the charge all the worse because of the implication.
§ Mr. ROBERTS
The Report mentions the armament firms and I shall draw the 1022 attention of the House presently to the manner in which they are mentioned. The large armament firms concerned were only five or six. The names were very well known, and when these statements are made in a public Report—false, as I know in my own case—it is our duty to take the first opportunity to contradict them. I should have liked, and my colleagues would have liked, to let this matter rest until the end of the War, but when a lie gets afloat it is very difficult to overtake it, and if we remained silent now we should be charged with our silence when we raised it after the War. It is best to be frank and open. Why did not the Committee give the gentlemen or the firms an opportunity of coming before them to state their case? They had power to send for them; they had power to send for persons and papers.
§ Mr. ROBERTS
I will refer to the passages if the hon. Member will have patience. They had power to send for persons and papers. Out of ordinary courtesy alone they ought to have done it. They knew who the parties were to whom allusion was made, and should have written to them and pointed out certain statements made in evidence which implicated them very much, asking them if they would like to state their case before the Committee. What happened? They allowed a gentleman to give evidence. They gave no notice to the parties concerned. We knew nothing about the evidence given until we saw this Report published. Is that a fair way of proceeding? This House relies upon this Committee, and properly so. We trust all our Committees upstairs, and we trust them because it has been the privilege of this House to appoint Committees who report truthfully. But if procedure like this is going to be adopted in future, this House will lose confidence in that Committee.
§ Mr. ROBERTS
I am very sorry, but it rather interrupts the argument. The hon. Member will have an opportunity later on. My hon. Friend (Sir H. Craik) wants to know to what I allude.
§ 5.0 P.M.
§ Mr. ROBERTS
If I am constantly interrupted it is impossible for me to proceed. On the 18th May Mr. Lever gave important evidence in regard to this matter. It is at the bottom of page 175. He is talking about the Ministry having reduced the price paid for shell. He says:We first tackled the big armament firms—Tackled" is not a very nice word; it is not a very good start.and we showed them our costs. They only said, That cannot be done,' and then we said, 'Produce your costs.' That did not bring the costs along as far as they were concerned, but we have the power under the Munitions Act to see the books if we want to, and so they immediately brought the prices down. As to the final result, as far as the armament firms are concerned, I have brought along a statement here in case you would want to see it. We have cut the price of shell from 25 to 30 per cent.That is a direct implication that before the action of this Department, and especially this gentleman, the armament firms had been charging too much and making money out of the War. It is a gross charge, and a libellous charge. I do not know whether gentlemen who give such evidence know that we have in this country a law of scandal and libel, and that a person is only protected when he gives evidence like this by the privilege of Parliament. The Committee appear to have acted on the evidence of this gentleman, for in their Report, on page 39, they say:By instituting a system of actual costing of the various shell and other supplies, coupled with the powers conferred by the Munitions Act and Regulations under the Defence of the Realm Act, the Ministry has been enabled to effect substantial reductions in prices as compared with those paid in the early stages of the War, notwithstanding the increased cost of labour and material.The Committee appear to have taken the evidence of this gentleman as true, and to have adopted his suggestion that pressure was brought to bear, and that in consequence of this pressure the price was reduced. The chairman of Messrs. Cammell, Laird and Company, on the board of which I have the honour to sit, as soon as he saw this evidence, thought it his duty, as I have stated, to draw the attention of the Committee to the matter. He did so because he was of opinion, as I am, that if he allowed the opportunity to pass away we should practically allow these false statements to go forth, and it would be very difficult then to contradict them. Three letters have been published in the "Times" newspaper. In the first letter Mr. Hichens drew attention to the 1024 fact that this gentleman made a false statement so far as our company was concerned. He was only speaking of our own company, although I believe the same is true of others, but we can only speak of ourselves. In the right hon. Gentleman's reply he practically endorses the statements of Mr. Lever. In fact, he adopts the whole evidence which Mr. Lever gave before the Committee. He admits, first, that he was not the Minister of Munitions then. I suppose the letter was drafted in this way. He must have sent for Mr. Lever and said, "Look here, you must draft me a letter—you know all about it—which I can sign." Mr. Hichens has replied in a letter which appears in the "Times" this morning. I do not, of course, ask anyone on the Front Bench to make any statement in reply to that letter now. It is rather too soon. I should like to give a full opportunity for a reply, and perhaps the Parliamentary Secretary will understand I am not asking him to make any reply to that letter now. I have no doubt that he will consider it very carefully, and that a proper reply will be forthcoming. I should like, however, to allude to one or two matters in the letter of Mr. Hichens this morning, because he presents the case so far as my company is concerned. The Minister of Munitions stated in his letter that there were numerous negotiations with the Ministry, and Mr. Hichens as chairman was present at those interviews. It turns out that Mr. Hichens was in Canada on the business of the Ministry itself—and he did excellent work for the Ministry—and therefore he had no interviews, and there is no record of any interviews. That shows the very loose way in which this reply has been concocted. The Minister went on to say that he could findno record of any specific refusal by our firm during the preliminary negotiations to reduce current prices; it is therefore, perhaps, unnecessary to pursue the point.That clears up the matter until February this year, and this brings the matter just where it is at the present time:You refer to a meeting with Dr. Addison. I was present at two meetings, the first on the 31st January, and the second on 3rd February, 1916. Neither before nor during these meetings did I demur to supplying any data in regard to the cost of manufacture. At the second of these meetings the prices suggested by the Ministry for discussion were modified in various directions, and an agreement was reached.That settles the price by agreement for the larger kind of shell, and now we come to the smaller kind of shell:In regard to the 18-pounder H.E. and the 4.5 in. H.E. shell, it was agreed according to the 1025 minutes, that there should be a 'friendly comparison of costs by the firms and the officers of the Department.' That is to say, that in the only cases where the Ministry were unable to accept the counter proposals made to them an examination into the costs was agreed to. Surely it is difficult to infer from these facts that we declined to reduce the price of shell until threatened with an examination into the costs, when we immediately brought the prices down. It would be truer to say that we declined to come down below what we thought reasonable until the costs had been examined into. Perhaps I may add that in reply to my letter accepting the above arrangement I was informed that ' The Ministry appreciate the readiness with which Messrs. Cammell Laird have expressed their willingness to accept the proposals set out in Dr. Addison's letter.'If that is not sufficient for the bond fides and good faith of my firm to reduce their price when they found that the cost allowed it, I am unable to say what is. That is a very different story to that which was told by Mr. Lever, and I ask the Minister representing the Munitions Department to clear the matter up by sending an apology, which I think is due to our firm. The right hon. Gentleman, in reply to Mr. Hichens, referred to the large national factory which we are managing now for the Ministry of Munitions. I am pleased to see at the end of the letter the right hon. Gentleman's admirable appreciation of the work now being done by the firm in managing most successfully one of their national factories without any fee or reward, when we could have had both fee and reward by asking for it. We are not, however, asking for it. On the other hand, we have carried out a work which to-day is turning out more shells of the larger type than we undertook to do, and we have submitted proposals to the right hon. Gentleman to produce still more shells. A firm that behaves in this way ought not to be treated by the Public Accounts Committee in the way it has been treated, and we feel that an apology is due to us. I should like the House and my right hon. Friend to bear the weighty words I have read in mind. If the large firms are mistrusted, unjustly suspected, and treated as evildoers, then the mainspring of action will be snapped. We do not want to do that. We shall go on doing our duty to the country and the Government, whatever the right hon. Gentleman says, and however we are treated; but I ask the right hon. Gentleman's consideration to this point. When he wants good work done by a firm or a private individual, the best way to get that good work is to encourage them and to praise them, and not always to be cavilling and finding fault. That is not the way to 1026 get the best work done, and I hope the right hon. Gentleman and the Government will understand that the position, at all events of my firm, and I believe I am speaking also for my competitors, is that they will continue to do national work.
I am not going to follow the hon. Gentleman who has just spoken in dealing with the matters which he has entered into except in one respect where I think they touch the members of the Public Accounts Committee, of which I happen to be a member. The hon. Member made certain references to the procedure of the Public Accounts Committee, and this question has been raised in a very important and direct manner by another instance which has come before the public in the last few weeks, and that is the decision of the Government to appoint a Special Committee of Inquiry into the Army Hutting Contract case, which has already been reported upon by tire Committee. I need not say as that committee of inquiry has yet to make its investigation, that the case may be regarded as sub judice, and it would not be proper for the merits of the case to be discussed at this stage in the House of Commons. I do not propose for a moment to do so, but apart altogether from the merits of the case, or from any conclusion that may be arrived at with regard to it, as a result of further investigation in the future, I do think that as the result of what has happened and the decision of the Government, that the practice and procedure of the Public Accounts Committee may have to be revised. I do not think there will be any dispute as to what are the functions of the Comptroller and Auditor-General, and the Public Accounts Committee. It is their duty to inquire into and report on all expenditure of public money where they consider it is either necessary or desirable to do so. It is the duty of the Auditor-General to draw the attention of the Public Accounts Committee, and through them the attention of the House of Commons, to any expenditure of public money when it appears that such expenditure is made otherwise than is authorised by Act of Parliament. In this respect I would remind the House of Commons that the Comptroller and Auditor-General is not a!i officer of the Government at all, but an. officer of this House in no way responsible to the Government, and he may even be said to be the master in some respects of the Prime Minister and of the Cabinet, because if any Minister or any officer of 1027 any Department under their control were to approve of the expenditure of public money otherwise than is directed and authorised by Act of Parliament it would be his duty to step in and prevent it if he could, and, if not, to report it to the House of Commons.
In addition, the Public Accounts Committee itself, as a Select Committee of this House, is not responsible to the Government, but to the House of Commons, and I think I am right and correct in saying that it is the only Committee appointed by the House where the settled practice is to have a Chairman who is not a supporter of the Government of the day. What happened in the case which has been referred to by the hon. Gentleman who has just sat down? The Committee had certain evidence before it, and the hon. Member appears to think that the Committee, in their Report, commented on and accepted that evidence. What happened in the case of the Army hutting contract, where the Government has promised this further inquiry? The Committee, having considered the matter, made a Report to this House, and a contractor, who happens to be a Member of this House, felt himself aggrieved, as the hon. Member (Mr. S. Roberts) feels his firm is aggrieved, and he asks for an inquiry, which the Government at once proceeds to grant. I have no quarrel with that action of the Government; in fact, I entirely agree with it, although at first sight it might appear to be a reflection or a vote of censure upon the Public Accounts Committee. I think I am quite safe in saying that it is not so regarded by any member of the Committee. Everyone is anxious that in this case, and in all cases of the kind, the fullest justice should be done, and we all welcome the proposal of the Government, because I believe, for my part, that it will lead to a reform, and a desirable reform, in the practice and procedure of the Public Accounts Committee.
In connection with that case there is only one point I would like to put to the Government. I would like to know if the Government have finally decided what form that inquiry is to take. In my opinion the proper course would be to refer this particular matter back to the Public Accounts Committee for further consideration and evidence. If the contractor in question for any reason has any objection to that course, I would not dream of pressing it upon the Government, although I 1028 hope they will well consider the question of adopting that course before deciding on any other. Whatever the decision of the Government in this matter is to be it is certain that, once you admit that the party concerned in this case has a right to be heard, you cannot deny that right to any person in the future whose action may be unfavourably reported upon by the Public Accounts Committee. I would like to point out to the House that every year you have cases of this kind, of one sort or another, and it seems to me that you will have to alter the functions of the Public Accounts Committee, and instead of having it purely as a Committee as it is at present for the examination of public accounts, you must make it, in addition, the tribunal for the trial of all persons reflected upon by the Comptroller and Auditor-General or the accounting officers of the various public Departments. Let me point out to the House what has been, so far as I know, throughout its recent history, over a period of many years, the procedure in these matters of the Public Accounts Committee. It examines the Appropriation Accounts, hears what the Auditor-General and the various accounting officers of the Department have got to say, considers any papers that may be put in dealing with a particular case, and then comes to a conclusion in its Report to the House of Commons. The Chairman of the Committee will correct me if I am wrong, but I think I am right when I say that in no case has the Committee heard evidence from third parties whose conduct may have been called into question.
That has been the practice. They are not called, and I am bound to say, as a member of this Committee for a number of years, that I think it would be advisable to change this old-established practice of the Committee, and I welcome the precedents of this Army hutting case and of the case brought forward by the hon. Gentleman above the Gangway, if they lead to that result, because every person, whether in a public or influential position or in a humble position, whose conduct is called into question, has an elementary right to be heard before being Condemned by anybody, and once you concede that principle in the case of a contractor, such as in this particular case, you cannot deny it in the 1029 case of more humble individuals. Either the Public Accounts Committee must themselves try all these cases or else perform the functions of a grand jury, and, if they consider that a case has been made out against any individual, report that case to the House of Commons, and let it be determined by some established and second tribunal. I remember very well a case which came before the Public Accounts Committee a few Sessions ago. Certain frauds were discovered in connection with the Customs Department, but there was no evidence to show that the heads of the firm in question knew what was going on. I took a great interest in that case, and there was a difference of opinion on the Committee as to whether the name of the firm should be reported to the House of Commons or not.
There was a difference of opinion as to whether the name of the firm should be reported to the House of Commons or not. There was actually a division on the point. In my opinion, it would have meant ruin to this particular firm to have taken that course, and I opposed it most strongly, as did the majority of the members of the Committee, on the very ground and for the very reason that they had not been heard in their own defence, and that, without their being heard, it would have been an unfair and an unjust course to have followed. I am not prepared to say whether that firm, as the hon. Gentleman who has just spoken, complained, but although the name of the firm was not mentioned, firms of the kind were very few, and they may have suffered in their reputation because the facts gained wide publicity, and of course the name of the firm was common knowledge in certain quarters. These cases, the Army hutting case, and the case of the hon. Gentleman, will have served a good purpose if they change the practice of the Public Accounts Committee in this respect, and lead to what I "believe is a most desirable and necessary reform.
§ Mr. SHERWELL
It has been my fortune during the last ten years to assist in a humble capacity at many depressing Debates in this House, but I think I have never assisted as a spectator or an auditor at a more depressing Debate than that which we have been favoured this 1030 afternoon. Like many other Members of this House, I believe, I came here to-night under the impression that we were at last, after many delays, to enjoy the privilege of a discussion concerning the control of finance which is supposed to be one of the highest and most responsible duties, as well as one of the most cherished traditions, of the House of Commons. We have had, instead, a very belated opportunity used for a discussion as to whether the Public Accounts Committee have the right to refer in their Reports to certain imperfections of contracts or other financial dealings without giving the names of outsiders who may be directly or indirectly concerned in those transactions. I have no hesitation in saying that I range myself entirely on the side of the Public Accounts Committee in holding that it is their duty, as it has always been understood to be their duty by the House of Commons from the year 1861, to investigate the audited accounts of the nation, to receive such reports from permanent officials as may be rendered to them, and to report upon any acts arising from those reports by permanent officials. I sincerely hope that the course of this Debate to-day may not give any support to the entirely novel idea and doctrine that the Public Accounts Committee had it as their duty to call outsiders as witnesses in connection with any reports that may be made to them by Civil servants. I the more regret the course which the Debate has taken today, because I have resented, as I think other hon. Members to whom financial control means something have resented, that although a Committee on public expenditure as far back as 1902 recommended that the annual Reports of the Public Accounts Committee should be annually discussed by this House, there have been only five occasions since 1902 when that recommendation was made that we have had the opportunity in the House of discussing this Report.
The Public Accounts Committee has always exercised a very high and a very important responsibility in relation to the taxpayers of this country. I only regret that they stand as an isolated instance of control and that they are precluded by the terms of their reference and by their limited responsibilities from exercising effective control. It is a misfortune that the only control which this nation as a nation of taxpayers has 1031 over the use of the public Revenue is the control by a Committee which can only pronounce upon the methods of expenditure after the money has been spent. There can be no pretention of anything like effective financial control over public Revenue until we have some standing Committee that can investigate the proposed sources of expenditure before the expenditure itself has been incurred. Many of us hoped great things from the appointment three years ago of the so-called Estimates Committee. I never had a very high expectation of the work of that Committee, because by its constitution it was physically unqualified to survey the whole of the Estimates that might be placed before it by the various Departments. But still that Estimates Committee, which was the first fruits of the fulfilment of a proper demand made by this House that we should have more efficient control over expenditure, did hold out a certain promise, and during the two years in which it was allowed to meet it certainly did very valuable work, although I agree with my hon. Friend the Member for the Rushcliffe Division (Mr. Leif Jones) that the work of the Committee came to be dovetailed very greatly into the work of the Public Accounts Committee. What are the facts? When, after a great struggle—and there are Members here who remember the Parliamentary struggle which we had to get even the appointment even of that limited Committee—we succeeded in getting the Government to consent to the appointment of an Estimates Committee, that Committee is only allowed to meet for two years. As a matter of fact, it has not met since 1914, although there has been a more urgent call for the more effective supervision of the nation's expenditure.
The recently published Report of the Public Accounts Committee plainly reveals that the machinery and organisation for the control of public expenditure in this country has gained very little from past experience and is still altogether inadequate. Again and again in the comments of that Committee there is plain evidence that since 1914 we have incurred heavy expenditure, in many cases largely unnecessary expenditure, because the lessons of the South African War, which had so much effect upon this House at the time, have been neglected by the different 1032 Departments of the State. I almost despair in the light of experience since 1902 that the flagrant cases of extravagant expenditure, which are indeed within the knowledge of Members of this House as having occurred since August, 1914, that even these culpable cases of gross extravagance and wasteful expenditure will leave a permanent mark upon the arrangements of this House in regard to. the control of expenditure. I do most emphatically desire to say that the Government ought to give the closest possible scrutiny to the comments and' opinions of the Public Accounts Committee. Much of the wasteful expenditure that is there noted and indicated is the result of a looseness of organisation and a looseness of administrative control which is almost incredible in the case of a highly-developed State such as our own country. I do hope, now we have secured a day for the discussion of this most important Report that the Debate may tend to emphasise certain great principles of financial control rather than dissipate itself over a wide area by the discussion of certain grievances of certain armament firms.
§ Mr. LEIF JONES
The hon. Member for Hudderpfield (Mr. Sherwell) has brought the House back to a consideration of the real subject-matter of to-day's Debate. It is a misfortune that in discussing the Report of the Public Accounts Committee the whole time should have been taken up with the grievances of one or two firms who happen to have come under the notice of the Committee through the evidence given to it by the Administrative Department which has had dealings with those firms. The work, of the Public Accounts Committee—I say this not from any prejudice in its favour because I have sat upon it for ten years—is of the utmost importance in the financial structure of this country. It is important in peace time, but I venture to say that it is tenfold as important now that a great War is being waged. The ordinary control of this House over finance has wholly disappeared during the War. We have no Estimates. We have the Estimates for the Civil Service, but there are no Estimates for War Office or Navy expenditure. The House of Commons has not the control which it exercises ordinarily through considering the Estimates. Treasury control has largely disappeared. Both the great spending Departments. 1033 which deal with the War urge that the ordinary control of the Treasury could not be exercised during the War because of the need for haste. The Chairman of the Public Accounts Committee pointed that out in his opening speech. He pointed out that the War has necessitated a great expenditure without any time to consider that expenditure. The result is that the Treasury is not able to consider the expenditure before the Departments, the War Office, and the Admiralty make it. The only control which is left is control after the event, and it is most important, late as it comes, that that control after the event should be as thorough as possible, and that there should be full investigation into those matters to which the Comptroller and Auditor-General draws attention in his Report upon the Appropriation Account. Although we are glad even to get the Appropriation Account in its present form, not in the form in which we shall have it after the War, nevertheless, we have sufficient detail in the Appropriation Account and in the account of the Comptroller and Auditor-General to enable the Public Accounts Committee, which deals with that Report, to know how the money of the nation has been spent, and whether the methods which have been pointed out to be bad are still bad; whether there has been improvement as the War goes on.
The hon. Member for Galway has reminded the House of the great functions of the Comptroller and Auditor-General, who, indeed, is the real guardian, on behalf of the House of Commons, of the purse of the nation. He is a great officer of State. He is not removable even by the Government of the day. He can only be removed on a petition from both Houses of Parliament. He is appointed expressly by this House to safeguard the expenditure of the country, and to see that the accounts are properly audited and properly appropriated for the purpose for which this House intended. There is no power in the House, nor in the Prime Minister nor in the Cabinet, to override the decisions of the Comptroller and Auditor-General. He is one of the greatest officials in this country. He presents his Report annually to the House. They are considered by the Public Accounts Committee, and it is not only our right, it is our bounden duty where the Comptroller and Auditor-General has pointed out matters in connection with expenditure which to him do not seem to be quite right, or 1034 which require further investigation—it is, I say, our bounden duty to call attention to these matters in our Report, so that the House may consider them. The functions of the Committee, of which so little has been said this afternoon, are statutory functions, laid upon the Committee by Act of Parliament. I think we are the only Committee of this House which has its duty so laid upon it. Our business is to examine official witnesses coming from the Departments who are responsible for the expenditure and who have to justify before the Committee the expenditure which their Departments have made.
The accounting officers from the different Departments come before us. We ask them questions upon the work which they have been doing We ask them why they have entered into contracts, and we have the contracts before us. We ask why certain expenditure has been made, why so much has been paid, and why contracts were not differently worded. We investigate in every possible way that occurs to us. No doubt we are doing our work very imperfectly, but it is our duty to investigate as thoroughly as we can the expenditure and the administration on the financial side of the different Departments of the State. In the case of Departments to which a great deal of attention is drawn, because the contracts are very large in the particular year which we have had under review, the Committee has, I think, pretty steadily set its face against contracts in which a percentage is paid upon the outlay of the contractor. We are not alone in thinking that those contracts lead to wasteful and extravagant expenditure. We have the support of the War Office. We have the support of the Admiralty. We have the support of the Office of Works. Every one of these Departments, in evidence before us, has stated at one time or another that they regard these percentage contracts as an extravagant form of contract; that they are only to be entered into under the pressure of necessity, and to be ended as soon as possible. I hope our critics recognise that the beginning of the War was the time we had under consideration this year. I think we all recognise the immense pressure there was upon the public Departments, and there is no desire on the part of any member of the Committee to criticise harshly what was done in the hurried days at the outbreak of the War. But the War has been going on a long time, and it is 1035 quite time that the vast expenditure of these Departments was put into thorough order and system. Percentage contracts are condemned by everyone. When we find fault with the officials with having entered into these percentage contracts we inevitably, in some way or other, reflect upon the contractor who has made such an arrangement with the official. That is inevitable, because we are criticising the arrangement entered into by these people, but we are criticising from the point of view of the public service. We are criticising from the point of view of the action of the official. We examine an official as to his reasons for having entered into an undesirable contract and for not making better terms with the contractor. He defends himself against our criticisms as well as he can, and we base our report upon the statements made to us by the official witnesses.
We go further. If we are not satisfied with the report which the official witnesses make to us, we refuse to sanction the payment. The Chairman has alluded to a case in this very year where, in regard to some witnesses in an Irish law case, it was considered by the Treasury and by others that extravagant payments had been made. The Treasury refused to sanction those payments. They referred the matter to the Public Accounts Committee to decide as to whether or not the payments should be allowed. We have refused to sanction those payments. We have gone the extreme length of our functions. We have reported to the House that the payment, in our judgment, ought not to have been made and that we refuse to endorse it. There the matter rests at present. When we are dealing with the administrators of our Departments and with public servants we are not dealing with the outside public, except in so far as the outside public come in relation to the contracts entered into on behalf of the Department. When it is suggested that we should call before us as witnesses every person on whom the official evidence reflects, I say you are laying upon a Committee of this House a duty which no Committee can perform. We have evidence brought before us of thousands of contracts. Some of them are reported upon most unfavourably, and it would be absolutely impossible for any Committee of this House to summon before it all the witnesses to whom reference may be made, and the people who may be referred to in the course of the evidence given before us. 1036 There is no need for us to do so. We are not a court of justice. We are not trying these people. All we are judging is whether or not the contract in question is a desirable contract for that Department to have entered into. If we Lay it is undesirable it may or may not have been undesirable for the contractor. That is a matter between him and the particular Department concerned. I venture, however, to say in all seriousness to the House that the criticisms which have been made upon the Committee in the public Press, and that have been repeated in the House to-day, have been made in ignorance of the true functions of the Committee and without consideration of what the effect would be if the functions were altered in the way suggested by those who have spoken. The hon. Member for Galway, for instance, thought we ought to call before us everyone who comes under condemnation in the course of our investigations. He will destroy the Public Accounts Committee if he attempts to make it a court of justice of that kind.
Special reference has been made to the evidence given before us by Mr. Lever, who came from the Ministry of Munitions. I am glad that reference has been made to Mr. Lever's evidence. I would urge every Member of the House to read the evidence which Mr. Lever gave before the Public Accounts Committee. No more instructive half-hour could be spent than in reading that evidence and considering every word of it. What did we find in our examination this year? On inquiry we found at the Admiralty and the War Office that the method of supplying prices adopted by the Admiralty and the War Office—prices for ships, armaments, cordite, and for all the different materials bought by these Departments, was a comparison with what they had paid in previous years. There was no knowledge, so far as we could ascertain, in those Departments, of what was the actual cost or the actual amount of material or of labour represented in the different articles which were bought. We had from Mr. Lever most valuable evidence of the cost system, of the series of experiments that they had made in different factories under their control, whereby they had got out the actual cost in labour and material, of things like cordite, the different kinds of shells, and of most of the large material which the nation is buying in such vast quantities from the armament firms in this country. The hon. 1037 Member for Sheffield speaks on behalf of one of these armament firms. No names are mentioned in our Report. I do not dwell upon that, because it is quite true that the number of armament firms in this country is strictly limited, and therefore it is probable that the firm which he represents was included amongst those to which we referred. I would like the hon. Member to hear what our Report says, because be attributed a little of our Report to some of the evidence which Mr. Lever gave. Mr. Lever was an official witness, and he gave his evidence, as I have no doubt he can justify it, when called upon to do so, and it is for him to justify it. But I would like to read what the Committee says in regard to this question of prices of material sold by the great armament firm:In regard to the supply of munitions your Committee have had the advantage of hearing evidence from representatives of the Ministry of Munitions as to their method of supplying prices to contractors by instituting a system of the actual cost of the various shells and other supplies. Coupled with the powers conferred by the Munitions Act and Regulations under the Defence of the Realm Act, the Ministry has been enabled to effect substantial reductions in prices as compared with those paid in the early days of the War, notwithstanding the increased cost of labour and material.That statement is either true or it is not true. Is it true or not? If it is true, what complaint have the armament manufacturers to make? What complaint have they if we say that it is as a result of the cost system at the Ministry of Munitions, as they have told us, that they have been able to reduce the cost of these munitions, and to reduce them—let the House mark!—when the price of labour has gone up day by day and week by week, and when the price of materials has mounted in the same way! Notwithstanding all this, there has been a reduction of 10, 20, 25, and even 30 per cent. in the price of some sorts of shells which have been supplied in large quantities. Take the question of cordite. Does the hon. Member for Sheffield deny that the Ministry of Munitions have succeeded in reducing the price of cordite?
§ Mr. JONES
Quite so, but I am speaking of the actual work done by the Ministry 1038 of Munitions and by the Public Accounts Committee in investigating these matters. It is all very well for hon. Members to fix upon one particular grievance which they allege, and to urge this against a Committee which has been working throughout to save the nation. There are many manufacturers of cordite in this country, and the result of this cost-price system adopted by the Ministry of Munitions has been a reduction in the price of cordite by many pence per pound, and every penny per pound saved means hundreds of thousands of pounds saved to the people of the country! The hon. Member says that he only mentioned shells. Let me tell him—he knows it—that the price of shells has come down 10, 20, and even 30 per cent. in some cases. The prices came down after this work was done in the matter of cost prices. He says there was no connection between the two events. People must judge for themselves. I suggest and believe that there was a connection between the two. I had the honour of serving on the Estimates Committee to which the hon. Member for Huddersfield (Mr. Sherwell) alluded. We had evidence before that Committee that there was an armament ring in this country. Why did not the armament firms in 1913 resent the description of them by the official witnesses of the Admiralty as "an armament ring"?
§ Mr. JONES
Yes, it is in again this year. The existence of the ring was admitted before the Estimates Committee in 1913. We were told that the members of those firms were such enlightened patriots that although they were put in a position of advantage, and although they were fixing prices among themselves, they were fixing them so fairly that the country was not paying an undue amount for its armaments, shells, and so forth. That might, pass until we had an investigation made into the actual cost system with regard to shells and armaments. Immediately after that the prices of shells and armaments came down, although materials and labour had gone up in price. Is not that proof enough to a plain man that the armament, firms were charging too much for their wares, and that the prices have been brought down now under pressure of public opinion and largely as a result of the cost system put into operation by 1039 the Ministry of Munitions? The nation owes a great debt of gratitude to Mr. Lever for the evidence he gave before the Public Accounts Committee, and I hope the House will show that gratitude by not associating itself with the criticism passed upon his evidence by the hon. Member for the Ecclesall Division of Sheffield (Mr. S. Roberts) in his defence of his own firm, and that the House will look beyond that question to the result in the prices paid. The result has been a saving of millions of pounds to the people of this country in the waging of this War. Of course the men who are not involved, and who have lowered their prices, not because of but subsequent to these investigations, are not satisfied with the evidence. They ask for an inquiry and ask to be allowed to come before the Public Accounts Committee because they are not satisfied.
§ Mr. JONES
Did he write to the Chairman asking for a meeting of the Committee to be held? The evidence has been made public. The official witnesses are there. I cannot imagine, if any member of the public wishes to give evidence before that Committee in regard to a matter upon which he can throw light, that the Committee will not hold a meeting to enable him to clear it up. I cannot say positively, but as a member of the Committee I should urge that we should receive him. The existence of this ring was undoubtedly admitted before the Estimates Committee. No one really denies it; it has been generally admitted. One of the most interesting things resulting from our Report is that at last the nation has made a hole in this ring, and that prices have consequently come down. I hope that the House of Commons is going to protect its Committee and protect the witnesses who give evidence before it. It is not an easy thing to stand up to the great armament firms in this country. They have many millions at their back and great power and influence. It takes a great deal of courage in any man, be he official or other, to give evidence against them. They have great powers in their hands, and I think we ought to be grateful to witnesses who dare to tell the truth to the country and have the courage to stand the racket of such speeches as that which the hon. Member for the Ecclesall Division of Sheffield has been making here to-day.
1040 If this Committee has not done its work properly, then change your Committee, but do not interfere with the functions laid upon them, which are most important—important in peace, but far more important in war. Support the Comptroller and Auditor-General, and support your Committee, as the House is in the habit of doing, by accepting their Report, by endorsing the action they have taken, and by making it clear that you value the work which has been done, after all, for no reward at all. What advantage is it to any member of that Committee to say there are contracts into which it may have been undesirable to enter? This is all voluntary work. There are no salaries, no great commissions, no 5 per cents., no establishment charges paid to the members of this Committee. It has been a labour of love. The work is not repulsive, as was once said by Mr. Gladstone, because the matters considered are very interesting. It is ungrateful work, because we have occasionally to come across people we have no wish to offend. I claim that the work of the Committee has been done without a shadow of party spirit. I have sat upon the Committee for ten years, and have never known anything in the nature of party spirit shown in it. The work has been done with a single eye to the public interest. I claim that in our procedure we have carried out the methods which have come down to us. We have never called an outside witness before that Committee since I have been a member of it. I believe there is only one case on record of an outside witness being called, and he asked to be called. Therefore I claim, I hope not boastfully, that the Committee has deserved well of the House in the Reports which it has presented, and I ask the House to support its Committee.
§ Sir H. CRAIK
If anything were required to redeem this discussion from the criticism of the hon. Member for Hudders field (Mr. Sherwell), who described it as dull and unimportant, his own speech and that of the hon. Member for the Rushcliffe Division (Mr. Leif Jones) will amply set aside that criticism, because they have touched upon points of the greatest importance and interest to the House. I should not be sorry if some of the personal criticism directed against the Public Accounts Committee increased the interest of the House in it and showed the House how important the proceedings of the Committee are and how worthy they are of its attention. I speak with some know- 1041 ledge and. appreciation of the position of the Public Accounts Committee. For about a quarter of a century I annually appeared as an accounting official for some £ 2,000,000 a year before that Committee. I know what the official felt about it. I know how much he dreaded it, and how it was necessary for him to have a clean sheet if he was to be safe in submitting himself to the inquiries of that Committee. I have subsequently acted for several years as a member of the Committee. I know how free it is from any party taint and from any personal bias. I know, also, how enormously important the questions are and how close is the touch made, closer than any other machinery of which we are possessed in this House, between the permanent officials and the House of Commons by means of that Committee. Do not let the House get into the habit, which it has got into for some years, of passing over the Report and proceedings of that Committee as if they were of no account. I would ask the House to consider the position of this Committee. It is not a judicial body. I am entirely opposed to the suggestion put forward by the hon. Member for North Galway (Mr. Hazleton) that we should call before us as witnesses all who may be involved, even directly or indirectly, in the statements made regarding them. Moreover, I do not think we ought to be a Committee of Control. It is not for us to stigmatise or to pass sentence of condemnation upon anybody. We report the facts as they are laid before us in responsible evidence. Our duty is that of investigating and reporting. It is not our duty to control or to act as a judicial body.
Two questions, more or less personal, have arisen with which I desire to deal briefly, but upon which I desire to give no personal opinion or judgment one way or the other. First, there is the question with reagrd to hutting, and, secondly, the question referred to in a certain portion of the evidence with regard to the arrangements with certain munition firms. With regard to hutting, which has offered an easy topic for the newspapers and upon which they have offered abundant criticism, that is alluded to in only a single paragraph in the Report. If anyone will take the pains to read that paragraph and compare it with the evidence, they will see that the paragraph simply reproduces, with as small an amount of personal 1042 opinion as possible, the facts brought out in evidence. I refer to paragraph 51, which merely recounts, almost totidem verbae, the evidence laid before it. We were told that a difference arose between a certain contractor and the officials of the War Office with regard to the terms upon which he was to conduct his work. As all the world knows, from statements that have been made, the change was made when the contractor repudiated the offer he had made to do a certain part gratis and asked for a percentage. We say that the awkwardness of the position was pointed out. Even if the matter is to be investigated by a judicial tribunal, and we should not have done our duty or acted upon our responsibility if we had not fearlessly stated the aspect of the case that was put before us by the responsible officials of the War Office, contained in the evidence given by Major-General Sir G. Scott Moncrieff, and afterwards by the late Financial Secretary to the War Office. Both witnesses gave us identically all that we say in our Report. We point out the awkwardness of the position as shown by that evidence. If the result of an inquiry by a judicial tribunal reviewing the subject should be that they think that the evidence went too far or left an undeserved stigma upon any one concerned, no one, I am sure, will be more rejoiced to hear it than the members of the Public Accounts Committee; but we had a clear fact and aspect of the case put before us, not by one witness, but by three or four witnesses, all agreeing with one another. It would have been very easy to gloss this over, but how do you hope you will ever get anything better in the administration of public accounts or be able to detect defects, if they exist, unless you have in your Public Accounts Committee a body that is prepared, without any fear or bias one way or the other of a personal kind, to state plainly the effect of the evidence laid before them, and to leave it to the House of Commons or the Ministry of the day to proceed as they think proper. If they think it proper—I think it is a very good solution—that there should be a judicial inquiry, certainly none of us would object to it. I am sure we shall be very glad if the result should in any way lessen the implied charge in the evidence, which evidence we reproduce in our Report.
The other question is one with which I will deal even more briefly, that is, the question regarding the munition firms. 1043 The hon. Member for the Ecclesall Division of Sheffield resented a very innocent interruption of mine. I asked a very simple question, namely, to which part of our Report he referred. He resented that interruption and gave us the evidence of Mr. Lever. He gave us not a bit of the Report but merely the small print which is contained after the Report with regard to the proceedings of the Committee. He pointed out the paragraph which states a plain fact, that somehow or other, by one means or the other, the cost of these articles was lessened. That is a fact which there is no gainsaying. It cannot be challenged. We said it. We did not bring any charge in that paragraph either against anyone or against all munition firms. We simply stated the fact. If my hon. Friend had read the evidence very carefully he would have seen that we investigated that. I myself cross-examined that witness. I suspected that he was perhaps assuming a little too much that he was the cause of all the reduction in price. I may have been right or wrong. I was probably in a minority in the Committee, but I felt the suspicion that that witness was rather taking to himself the whole influence of what had been brought about by various competing causes. I pointed out to him that one reason which would lead to an enormous reduction in the charges would be the vastly increased amount of production. Of course, if you are producing by millions where you produced only a few thousands the cost of production is enormously reduced, and if my hon. Friend would only look at my cross-examination he would see that I called very careful attention to that, and he will see further that we left the thing as it stood in his evidence. We stated merely the facts of the reduction. We did not say what caused the reduction, and we never meant for one moment that there was anything of the kind on the part of these munition firms. I hope the House, having had its attention aroused by the personal element that has come into this case, will not neglect in future, even if there is no personal element, its duty and responsibility of examining these Reports by the Public Accounts Committee. You. have your engine in the Public Accounts Committee. If it is insufficient, add to its powers; if it is wrong, challenge it, but take care that you take up the plain evidence that the Public Accounts Committee lays before you, and do not neglect 1044 the invaluable opportunity which it gives of finding out what is really wrong in the public accounts.
§ Mr. BRADY
I do not rise for the purpose of defending the Public Accounts Committee. In view of the speech to which we have just listened I think that would be unnecessary, and certainly in my case, having regard to my brief experience on that Committee, it would be an impertinence But I cannot help thinking that the House has heard a great deal about this Committee to-day which may result, perhaps in the early part of next year, in a very keen rivalry amongst Members of this House to obtain seats on the Public Accounts Committee. If that be the case, speaking for myself, in consequence of the great profit and pleasure I have derived from being a junior member of that Committee, I am certainly not prepared to give way if the Selection Committee honours me by naming me again next year. The hon. and gallant Gentleman who so ably presides over the deliberations of the Committee has given us a very interesting account of its genesis and of its operations, extending now since 1860, and I think most people who have heard that statement will agree that the Public Accounts Committee discharges duties of a very important character to the nation. I have only risen for the purpose of echoing the remarks made by the hon. Member (Mr. Sherwell) and the hon. Member (Mr. Leif Jones) as to the impotence of this Committee in point of its control over financial affairs. I adopt the phrase so aptly used by the hon. Member (Mr. Sherwell) when he spoke of the futility of control after the event. That is a matter which I find has been dealt with in successive Debates in this House when the Public Accounts Committee's Report was presented to it. Year after year, extending back now for the last ten or fifteen years, emphasis has been laid on the point of the futility, to use no stronger word, of the Public Accounts Committee examining accounts which have been settled and paid, sometimes two and three years before they come under the Committee for review.
If that be true regarding financial affairs so far as Great Britain is concerned, it is a fortiori true so far as regards the financial aspect of the case from the Irish standpoint. The hon. Gentleman (Sir H. Craik) had an experience this year which very aptly illustrates my meaning. On one of the Irish accounts, I forget 1045 which of them, the hon. Gentleman naturally required some information and I was very anxious to have it myself, hut what happened? The accounting officer—of course I make no reflection on him—who was in the chair at the moment, was unable to give any information about this transaction. I think the incident to which I am referring was a question raised as to the transfer by the Crown to the Corporation of Dublin of a certain small portion of land in Clontarf, which is a portion of the City of Dublin. The transaction was one calling for examination and investigation, but the officer was unable, naturally, to give any information upon it. He was a gentleman of very great experience as far as affairs in Whitehall were concerned, but he did not know anything about financial or any other affairs as far as the City of Dublin was concerned. The thing was investigated by correspondence, and it turned out that it called for no adverse comment whatever. It was found that this piece of ground was useless as an adjunct to the police barracks at Clontarf, and could be very advantageously used to enlarge the highway at this spot, and it was transferred to the Dublin Corporation for no pecuniary consideration, and we were satisfied that it was a perfectly proper transaction.
Again, I had an experience of the kind myself when another matter turned up very intimately concerning the City of Dublin. I forget for the moment what it was. I am not reflecting on these witnesses, who were doing their best to deal with circumstances with which they were not familiar. I asked this witness what explanation he could give of this item, and he said he could not give any, but if I wished he would communicate with the officials in Dublin. I do not think I am exaggerating in suggesting that as far as Irish financial affairs are concerned, proceedings of that kind are an absolute futility. I should like to use a stronger word, but it might not be a Parliamentary expression. The Chairman of the Committee pointed out to me that had I told him beforehand that I required this information, he would have summoned a proper witness from Dublin. But the question might be one of very trifling importance, and I would not take the responsibility, merely for the sake of getting an answer to a single question, to ask the Chairman to summon a witness from an Irish Department—to take him away from his official duties, not to speak of the not incon- 1046 siderable expense involved by a journey to London. Perhaps I carry with me the opinion of my hon. Friend (Mr. Hazleton) when I say that, as far as Irish experience is concerned, the Committee does not serve a very practical purpose. I gladly endorse the suggestions which have been thrown out by the hon. Member (Mr. Sherwell) and the hon. Member (Mr. Leif Jones), who is an experienced member of the Committee, that the jurisdiction and powers of the Committee might now well be amplified, and that some arrangement might be come to by which we could inspect these accounts at the beginning, rather than at the close of the financial year, or sometimes two or three years afterwards.
§ The PARLIAMENTARY SECRETARY to the MINISTRY of MUNITIONS (Dr. Addison)
My hon. Friend's behind me, and the hon. and learned Gentleman (Sir H. Craik) have called the attention of the House to the greater issues which are involved in this discussion, and in respect of which Mr. Lever and myself were asked to give evidence before the Public Accounts Committee. I take it that the question which is really involved, certainly as to which we were asked to give evidence, was the methods which could or should be adopted in Government Departments to ensure, as far as possible, efficient control over expenditure. It is only too often that the critic comes in when it is too late, when the expenditure would have been incurred and waste committed, and the Public Accounts Committee is considering what practicable steps can be taken with a view to preventing excessive expenditure before the Departments are committed to contracts. In calling the attention of the House and the country to that very important question the Public Accounts Committee has rendered, and is rendering, a very conspicuous service to the nation. I am quite sure it is there where the leakage is, but what is really necessary is that we should have in the different State Departments an efficient critical machinery and efficient control over commitments before a Department is actually committed to any particular expenditure, and only by the institution of some machinery or other which experience may prove to be practicable to achieve that end, shall we ever really prevent gross waste. By no amount, it seems to me, of attention drawn to mistakes after they have occurred shall we prevent their recurrence, unless a consequence of the 1047 criticism is that efficient machinery is introduced into the fabric of a Government Department to prevent waste at the earliest possible moment. In respect of the evidence which has come under criticism by the hon. Member (Mr. S. Roberts) and others, such as was tendered by the Minister of Munitions, the first thing that struck us—and, of course, being a new Department I recognise that it might perhaps have a special weight—was that we had not a basis of ascertained facts at our disposal upon which we could proceed. We were suddenly called upon to buy vast quantities of shells, fuses, copper, brass, aluminium, and a thousand other things and it was quite evident it appeared to us, that if we were to make contracts which were justifiable as contracts we must have accurate information as to what the costs of production were. The system which Mr. Lever explained in his evidence to the Committee, and which has been adopted throughout, is to gradually build up machinery which will inform the Departments as to the costs of production. When you have obtained that information, you are in a position to make a businesslike bargain with the contractor. Until you have that information at your disposal you are groping about in the dark. it was in order to obtain that information, and to make the fullest possible allowances for all relevant contingencies, that this machinery was set up. I contend that no sound contractual system could be based on any other principle than a fair and sufficient knowledge of the costs of production. I take it that there is no complaint on that score.
The method which was adopted, and which has since that date been considerably extended, was that a system of checking costs on an elaborate scale was introduced in all our own factories, and, I am glad to say, by the assistance of many employers in their own works, on a standard system. I have here a photographic representation of the system as applied to an 18-pounder shell, and I will tell the House one or two of the results of this system. If any hon. Member cares to inspect this card, he will see that the card and the information which it sets out allows for all proper contingencies, depreciation, overhead charges, labour, materials, scrap, and so on. There was no purpose, so far as we were concerned, to arrive at any other than a 1048 fair and true ascertainment of costs. It was quite evident that we must recognise that in the exceptional circumstances of the War there were special circumstances which should enter into this calculation. This system was not adopted simply to provide us with a basis upon which we could conduct a businesslike bargain, though that is, in itself, sufficient to justify it. I suggest that when the time arrives for the Public Accounts Committee or some other body to investigate these matters in detail, it will be shown that the adoption of this system has been of incalculable benefit, to industry itself, because there is nothing that I have seen in the course of my experience at the Ministry of Munitions which enables us to put our finger upon inefficiency with such unerring accuracy as a system of that kind. We applied it in the first place in our own factories, and we found one factory producing an 18-pounder shell at a cost of 12s. 6d., and another factory producing an identical shell, with identical raw materials at the same price, and labour at the same price, at a cost of 17s. 6d. Obviously there was something wrong. The result of pursuing this analysis in our own factories has enabled us, I am quite sure, to improve their efficiency. Indeed, many employers, with whom I am glad to say we are on the friendliest terms, have paid their tribute to these efforts on many occasions. I am quite sure that this system has enabled us to show up inefficiency in management or in method on innumerable occasions.
It is quite open—and I should like to take the opportunity of correcting an impression on this point as far as the Ministry of Munitions is concerned—for people to say: "You have reduced the 18-pounder shell bodies from 18s. 6d. to 12s. 6d., and, therefore, you assume too lightly that the price which was paid before was unnecessarily high." There are certain qualifying observations which I think ought to be made here. At the beginning of the War many firms, without regard to what might happen in the future, spent their money freely in laying down new plant, which afterwards, possibly, would be little more than scrap iron. Therefore they were fully entitled to have a large writing-off in the early contracts. Then again, a good deal of expenditure was necessarily incurred in the early contracts before they had overcome the initial difficulties. You had to allow for that. I am quite sure that the 1049 Department has endeavoured with the utmost fairness at all times to take all these facts into consideration. Although we have had a complaint to-day in the name of one particular firm, seeing that we are doing our best to make proper bargains for the State on an unprecedented scale every day, I think that the firms themselves, great and small—and there are thousands of them of one sort or another—may say that we have tried our best to be fair and reasonable. I am quite sure that it is correct to say that our relations hitherto have been of the friendliest possible kind with the large firms to which the hon. Member has referred, and I sincerely hope that the rash interposition of Mr. Hichens will not in any way interfere with those good relations. The hon. Member for Ecclesall (Mr. S. Roberts) and Mr. Hichens, in his letter, made reference to Mr. Lever's evidence, and, in justice to our own officers, I must take the opportunity of stating a few facts. I want to call the attention of the House to the fact that this occasion has not been sought by us. Mr. Lever is an officer who, like many others, is a volunteer. Many of the heads of the staff—and it is a very large staff—are volunteers also, and are giving their time, early and late, to the service of the State. Therefore, the least we can do is to defend them whilst they retain our confidence, as they do.
The hon. Member for Ecclesall, for some reason or other, used certain expressions to which I will refer. He speaks of Mr. Lever's statement as a scandalous charge. Then he invokes the law of libel. I am not a lawyer, so I do not know what he is referring to there. Then he speaks of a false statement and various other expressions of a similar kind. When you come to accuse a man in a very difficult public position of making a false statement and making a scandalous charge against people, it is just as well to investigate the facts before you give undue publicity to them. It may perhaps be desirable to inspect your own evidence, and if you do so you might express yourself differently. I am not going to say anything except about this particular case on which we have been challenged. I do it with the utmost reluctance, but I must defend a gentleman who has been most unjustly attacked. We had a series of meetings with the different firms, after the cost of shell bodies had been ascer- 1050 tained, and those meetings were of the friendliest kind. The result was that notices were given, in accordance with the terms of the contract, that we proposed to revise the prices after a certain date. Subsequent to this, meetings were held with individual firms, and, finally, in order to bring the matter to a head, certain leading firms met together in my room on two occasions, and the matter was gone into. On the first occasion, when we discussed matters, the Ministry of Munitions suggested what they thought the costs ought to be, and the result was that the firms agreed to come back a few days later and say what they could do to meet the Ministry. I said at the time that these prices were what we believed in substance to be fair prices to pay after allowing for a decent profit, and that we made these suggestions on the basis of ascertained facts. I further said to them, "If you object, we suggest that you shall discuss your price with us, and show us from your own costs that we are unreasonable, and we are prepared to listen." In the case of all the shells, except the 18-lb. high explosive and the 4.5-in. shell, we arrived at an agreement. This particular firm were not making the large shell; they were making the smaller shell. The two sizes upon which we did not come to an agreement were the 18-lb. high explosive and the 4.5-in. shell. Therefore, there was only a small difference between us, and the matter was left on the basis of an understanding, which was quoted in the Minister's letter to Mr. Hichens—that is to say, that our prices should be taken as the ruling prices, but that if they could show later on that our prices were not reasonable, we would pay more, up to, but not exceeding, the price which the firms had suggested. The fact, however, is that we have not had to pay more than our own price 12s. 6d. We are in our own national factories getting some of them made for 9s. 4d., and we are getting many of them made for 10s. Mr. Lever is accused in reference to this particular firm of making a scandalous charge, and various things of that kind. Mr. Lever stated a fact. We had ascertained the cost. We carried on quite friendly negotiations and in the end we have come to an agreement.
Let us make the fullest possible allowance for the early excessive charges which have been made. I do not want hon. Members to lose sight of that. It does not follow 1051 because in the second year of the War we ask a man to make an 18-lb. shell for 12s. 6d. that he should have been asked to make it for anything like that in the first year. That should be emphasised. It applies to shells, cordite and other things. In this particular case we have as a fact had the contract for the 18-lb. shell at 20s. Notice was given to revise the prices. I have here a letter from the firm dated the 19th September, 1915. We had not stated what our proposed price would be, but the price then was 20s. per 18-lb. shell. This firm declined to accede to our suggestion. They claimed that they should go on making the 18-lb. shell on the basis of the existing contract for the whole duration of the War. It is quite true to say that we had these two meetings, and it does not follow that you should not pay less now simply because you have paid £ 1 a shell in the early days, which might have been fair. I do not venture any opinion on that; quite likely it was fair. We gave notice, "Now the time has come to reduce it, and we suggest that 12s. 6d. would be a fair price." Two months later, at this meeting in my room, the firms suggested that 14s. 6d. for the 18-lb. shell would be a fair price, which was a very reasonable way of meeting the Ministry, but we did not agree with that, and the result was the price that was paid eventually was 12s. 6d. When dealing with shells, of which you are making hundreds of thousands every week, a very little calculation will soon show that if you reduce your shell price from 20s. to 12s. 6d. or from 18s. 6d. to 12s. 6d., a saving of 5s. or 6s. a shell, or whatever it is, soon mounts up.
I do not know what the scandalous charge is. I still want to know what it is. Mr. Lever said that certain investigations were made into the cost, and the end of it was that reduction was made. The firms recognised that reductions should take place, and they met us very well, but we should not have been in a position to say what the price should be unless we had made those investigations. That is the point of Mr. Lever's evidence, which hon. Members miss altogether, that we were in a position to suggest that this is a fair price, and to say, "If it is not, then show us your cost, and suggest what it is." Certain alternative suggestions were put before us, quite of a reasonable kind, as a result of which we agreed, except in these two cases. That is what Mr. Lever 1052 said we did. He has not made a scandalous charge against anybody. It is not insulting a man, when you buy anything from him, to say, "I do not think that I ought to pay so-and-so for it." If a man wants to sell me a horse, and asks me fifty guineas, and I only think that it is worth forty-five guineas, I am not insulting the man by telling him so. The point is that there is nothing scandalous in suggesting that we have been paying hitherto more for a particular article than we should be called on to pay and we think that we should pay less. We had this meeting. There was the utmost courtesy all through, and we maintain, and I hope shall continue to maintain, the most friendly relation with these great firms, who have responded to our demands without exception in a most patriotic and ready way. I myself deplore the interposition of Mr. Hichens. I do not think myself that the sequel is going to be at all fortunate for Mr. Hichens. The facts are as stated. Previously we paid a pound. We suggested 12s. 6d., and we are paying 12s. 6d. Give what explanation you like, those are the facts. I see no reason whatever why Mr. Lever should apologise to Mr. Hichens, or why the Ministry of Munitions should do so. If he attacks our officers in this way, it is very unfortunate, and it is right that it should be gone into; but I cannot see what Mr. Lever's offence is, and I do not believe that the House of Commons can see it either.
§ Dr. ADDISON
Innumerable meetings have been held with these great firms. I had a meeting with them myself, only last week, when we discussed in the most friendly manner possible the price for certain munitions. We made certain suggestions, and they made certain suggestions. These things were going to and fro for months before ever the meetings were held to which reference has been made. We really have tried, and I am quite sure that we succeeded throughout, in carrying these firms with us. We have said, "These are our figures. If you object to them and say that they are wrong, show us where they are wrong." That is a perfectly reasonable attitude to take up, and on many occasions—I remember one that was referred to indirectly in one of the Debates—we spent a long time with some great firms in going over every 1053 detail of fractions of pence of the cost, and finally between us we agreed on a price, but it was not—
§ Sir E. CARSON
I think the hon. Member misunderstood me. The complaint was that they were not heard before the Accounts Committee. That is my point.
§ Dr. ADDISON
I think that I have placed the House in possession of the facts of the case, and I should like to take this opportunity—
§ Dr. ADDISON
No; I do not think that that enters into the discussion. I have confined myself solely to the one case which was challenged. It is very undesirable that we should wander outside that. I should not have stated any of these facts, but I was bound to state them in justice to the gentlemen whose conduct was called to question.
§ Dr. ADDISON
If the hon. Member will put down a question I will consider it. I think that we ought to recognise that these gentlemen who have carried out these most important and difficult inquiries have deserved well of us. I think that the fact that they have conducted this difficult business so long up till now without challenge is a great tribute to the discretion and efficiency with which they have done the work. This I can say, that the work which they have done is of first-rate importance in assisting this country to continue the War. The economies which have been exercised, and the savings which have been made, as the result of information which has been gathered together and collected and applied in a scientific way, amount to many millions of pounds. They sometimes have amounted to millions in individual great contracts, and if we were paying to-day the prices which we were paying eighteen months ago for shells, shell components, and all the other 1054 necessary munitions of War, they would cripple and handicap this country in an incalculable manner in the continuation of the War, and we owe it mainly to these men that enormous reductions have been brought about. They have shown the way and created the machinery and assisted the State to achieve these results, and I am satisfied that in cailing public attention to this system of controlling expenditure inside the Department before the commitment is made the Public Accounts Committee has rendered a great service to the cause of public economy.
§ Mr. STUART-WORTLEY
I think we might almost leave the subject, after the speech of the Secretary of the Ministry of Munitions, who has shown a very imperfect appreciation of what it was that caused the undue indignation with which my hon. Friend behind me addressed the House. It may have been that he showed too much indignation and used language which went beyond what was necessary, but he was not the only one to show indignation in this Debate. The hon. Member for the Rushcliffe Division (Mr. Leif Jones), in referring to these armament firms, spoke with not less indignation than my hon. Friend behind me. What does all this point to? I submit respectfully that it points to the procedure of the Public Accounts Committee. There is no more venerable institution than the Public Accounts Committee, nor is there any Parliamentary institution which is more deserving of veneration than that Committee. They are entitled to our special consideration, sympathy, and added respect on the very ground that when they are making investigation it is inevitable that such investigation should lead them to inquire into particular cases as to personal conduct, a matter clearly beyond their powers or resources of time to go into them. That necessarily places them in a very great difficulty. You cannot complain or be surprised when a public officer comes forward and says that they had certain powers which they threatened to exercise, and that certain other people had lowered their prices, that these people considered it was a case of post hoc, propter hoc. The whole thing was not a question of fact at all, but a question of opinion, and I must say that this House should see that somehow or other means be found by which evidence of that kind should not be given without the circumstances being tested in some way, and opportunity afforded for the necessary replies to be 1055 given by the only parties in a position to give them. That is a matter of elementary justice.
The Parliamentary Secretary to the Ministry of Munitions practically admitted the whole case of the armament firms, that as soon as the question of cost was mentioned an agreement was arrived at. But I would point out that the firms did not do so by giving way to pressure or to unused powers, and I think, on the whole, that the armament firms have some right to complain. There have been references to my own personal position. I wish to say two things about my personal position. Very injurious things have been said about these great firms, which, as the Parliamentary Secretary to the Ministry of Munitions said, and properly said, have from first to last behaved in a most patriotic manner. I happen to be trustee of the debenture holders of two great firms. That position gives me no right whatever in the smallest degree to interfere, and I have never interfered. It does not make it necessary that I should hold a single share, nor do I hold a single share. I have had no correspondence with either of the two firms since this dispute in any way, and there is nothing in the surrounding circumstances of this matter which could possibly justify the inference which has been drawn. We know that prices have been reduced, but at the beginning of the business it was stated that they could make nothing out of the shells. They had to train lads, who were immediately taken for recruits; then they had to start training girls for the work, until in time it began to be apparent from orders for shells on an enormous scale, on which alone in this war they can be given, that the cost must go down, and the prices be reduced; and prices have been reduced because of those reasons, and not in the least because of the exercise of unused powers or pressure. That is the first observation I wish to make on the personal point. My second observation on this personal matter is this: If the position of the hon. Member for the Rushcliffe Division was right, then a disgraceful ring has been operating against the public.
§ Mr. STUART-WORTLEY
What is the use of referring to an investigation that has been held and the verdict arrived at? I have been thirty-six years in this House, and if what has been said of these firms were true, what would be the sort of thing they would have asked of me if they were the kind of people they have been represented to be, namely, as anxious to promote war and to promote expenditure on arms and munitions? Never once in all those years have I been asked by them to intervene, nor have they ever made a single suggestion that expenditure should be increased on naval or any other armaments, never once. Whatever may be the attitude of the firms in foreign countries in matters of this kind, of what, I ask, would have been the attitude of the firms to which I refer, had they been of the kind described? Surely they would have pressed me to take up what is called a jingo attitude, and to call for naval expenditure in this country. I have never once been asked to do so, never once, and that fact bears most materially on the patriotic action of these firms. One more word about the Public Accounts Committee. No man in this House feels greater respect for that Committee than I do, but I think my hon. Friend the Member for the Scottish University and the Member for the Rushcliffe Division must feel, in effect, that the Report of the Committee has adopted the language of these people, and that it conducted, not a post hoc, but a propter hoc inquiry. I think we have some right to complain of our good friends, the Public Accounts Committee. The Department disclaimed that the firms had reduced the cost, and the Department having made that claim in that way, we have some right, I say, to complain that the Public Accounts Committee adopted that suggestion by a particular witness without calling the only witnesses by whom such a suggestion could have been refuted.
§ Mr. J. M. HENDERSON
I am very glad of this discussion of the Public Accounts Committee. I have been eleven years in this House, and I have never yet heard a discussion which could be called worthy of the name of a discussion on the Report of the Public Accounts Committee. I think that Members of this House are very greatly to blame that they do not give attention to the Report of the Committee on the expenditure of Government Departments, and do not have a 1057 discussion of the Public Accounts Committee. If there had not been a certain air of private inquiry in this matter, I do not suppose there would have been as many Members present as there are tonight. I speak as one on whose Motion the Estimates Committee was created. I am very glad this discussion has been raised, because I think, before I have done, I will be able to point to the real culprits, who are not these two firms. I am quite conscious that the Ministry of Munitions has done very great service in keeping down the cost of material, although at the same time, they are running up the cost of their own Department. I think there is something in this discussion which is rather unfair to these armament firms. It was not, I submit, the report which was the essence of the thing discussed, but it was really the innuendoes in the Press which followed upon the inquiry. My hon. Friend below me spoke of shells made by firms who were charging 20s. last year, and that these shells are now being produced at from 12s. 6d. to 14s. But nobody has taken the true element into account, and that is the fact that the relaxation of the rules of trade unions has enabled the cost to be reduced. I was in a factory where they were turning out these shells at the rate of 30,000 a week. The engineer, a friend of mine, showed me the whole process. The 18-pounder shells, in cast steel, were there, and they had to be bored. He stated that before the rules were relaxed, what had cost 20s. at one time, now, since the relaxation of the rules, only cost from 12s. 6d. to 14s. That is an element—I am not saying whether the price is too high or too low—that anybody should have frankly stated, because anyone can see that the relaxation of the trade union rules had a most critical effect upon the cost of the shells. Will my right hon. Friend listen to this? At the inquiry the Admiralty representative was asked about the price of armour plating:In regard to this armour plating, and the price given to you, have you formed a judgment as to whether it is a right price or a wrong price; do you, as a representative of the Board, say that this is a fair price for the article for which we have asked?The answer is:The whole question of the price of armour is a matter which the Board regards at the present time, and has for many years regarded, as strictly confidential, and they hold that it is against the public service that prices should be disclosed.I hope we have got away from those days.
§ The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara)
made an observation which was inaudible in the Reporters' Gallery.
§ 7.0 P.M.
§ Mr. HENDERSON
They never put in an estimate of the cost per ton; never one. That is what we found then, and what you will find afterwards, unless, after the War, something is done by the Government towards making these armaments themselves. Years and years ago the Government of the day made this their policy: "We have certain docks where we build warships. We have Woolwich, where we meet the requirements of the Army, but we think that it would be good policy to encourage private firms to lay down the necessary plants, so that in the case of emergency we would be able to produce armaments of war in greater quantity than we could by leaving the matter to our own control and our own practices." They created the armament firms; they are five in number only, for the reason that it requires enormous capital to lay down the necessary plant. There they are, creatures of the Government's own creation. Whether they have done right or done wrong, I think you must recognise that; but the result was bound to be when you had only five firms which could make armour plate and three able to make gun mountings that you were thrown into their hands, and it would be more than human nature if they did not take advantage of it. My right hon. Friend has stated quite frankly that they have acted patriotically in this matter and throughout the whole of the present War.
The point I wish to emphasise is this: It is not fair to suggest that because we have paid 20s. in a year before the War that therefore they have charged more than they ought to have charged, seeing that subsequently it could be done for 12s. 6d. or 12s. I have explained, I think, to the House that there is no necessity for any reflection upon the armament firms in that respect, and there would have been none if the wording of the Report had been different and if the Press had refrained from making the innuendoes which they did make. With regard to the contract in which a very large sum was paid, and I will not mention the name because the Report does not, who' is to blame for it? When you appoint a Secretary, say, for the War Office, who knows nothing about business, but, be- 1059 cause, possibly, he is a Fellow of Balliol, how can you expect him to make a proper bargain? The thing is ridiculous, and that is what is happening all through with our contracts. For the first time in the history of the Government, we have some men who know how to make contracts under a proper system of taking out the costs. I hope that the Government will extend the system which my right hon. Friend has explained into all the Departments. I can only hope that the Estimates Committee will be re-established, and that it will have the power of overlooking proposed expenditure before it is actually spent, and that the Public Accounts Committee will have the opportunity of overhauling the actual expenditure afterwards. Above all, I wish the constituencies would insist on their Members coming here and looking after Finance, because that is at the bottom of the whole thing. If you had not the question of personality introduced into this Debate, you would not have the interest you have in it. Unless the constituencies will insist on the Members taking a practical interest, and criticising all the expenditure reported by the Public Accounts Committee, and bringing the Departments who are responsible for any excess to book, you will never get sufficient control. I hope we shall use this as a lever in the future to see that we have more complete and thorough control than we have had in the past.
§ Mr. JOWETT
The hon. Member who has just spoken made some reference to changed systems of working in munition shops. He referred to the fact of the system of dilution as being a factor in cheapening production. I should like my hon. Friend to be good enough on some convenient occasion to give particulars regarding the case to which he referred. If he will give the name of the firm where a reduction in one working operation has been made from twenty minutes to six minutes, I think trade unionists in his constituency will be extremely obliged to him.
§ Mr. JOWETT
I should like proof and the name of the particular instance. As a member of the Accounts Committee for some years, it seems to me that we are very much behind the fair. Our inquiries are held at such a time that they cannot 1060 do the utmost amount of good. I do not mean to say they do no good. A Debate like this must necessarily do an immense amount of good. The very fact that the circumstances are related and disclosures are made is good, but something more is necessary, and that something I wish to suggest is continuous inquiry and continuous association with the spending Departments of the State. It is not sufficient that every Session a Committee is set up to make inquiries into the Auditor's reports. What is needed, I contend—and I am sure many hon. Members agree with me, and I have heard them say so—is a Committee associated with the actual spending Departments, and, like the Public Accounts Committee, a non-party Committee, because such a Committee works extremely well. We ought to have such a Committee, in order to find a remedy before so much mischief is done; or, in other words, to lock the stable before the horse escapes. The Public Accounts Committee at present meet usually at two o'clock in the afternoon, and therefore the proceedings overlap the ordinary business of the House, so that sometimes it is extremely difficult to know where one's duty lies—whether it is upstairs or in the House itself. I suggest that either the meetings should be held in the mornings, like those of the Local Legislation Committee, or on days when the House does not meet, so that undivided attention could be given to the business in hand. It has been stated—and one must recognise the strength which lies behind, such a statement—that the permanent officials would find it difficult to appear in the morning. I suggest, then, that the only alternative is to meet on days when the House is not sitting.
Referring to the value of these discussions, I regard it as a lamentable circumstance that a Session should be allowed to pass without a full discussion on' the Report of the Public Accounts Committee. As an illustration of how important it is that these opportunities should be found for discussion of the Public Accounts Committee's work, let me mention the Report of 1913. That Report was never discussed in this House, and yet there was contained in it something that ought to have obtained the publicity that has been given to some of the contents of this present Report.
One of the things contained in that Report was an account of a firm of tobacco manufacturers which for a series of years 1061 extending from 1904 to 1910 had escaped payment of a large sum of Excise Duty by means of a trick, the trick being the placing of a four-pound weight of lead in the tare, so that after the lead was taken out each subsequent weighing left four pounds of tobacco unaccounted for so far as Excise Duty was concerned. The firm was allowed by the Department concerned to repay the estimated sum of which the Exchequer had been deprived by this mean process, and, will the House believe it, that sum was £ 26,000 odd! There was no disclosure of the name The firm were not called before the Committee. If a humble shopkeeper had been detected with his scales half an ounce out of balance his name would have been disclosed and he would not have been allowed to pay up the amount involved. But in this case that was allowed. It is reported that of the Customs officials, some of them highly paid, employed in the warehouse in question over the period during which these frauds occurred, five were deprived of their jobs by being removed to some other employment, but did not lose any remuneration whatever. I give that as an illustration of the value of discussion in this House. If there had been a discussion on the Report of the Public Accounts Committee in that year this House would have had something to say about the Department which allowed a firm to repay £26,000 defrauded in this mean manner, and visited with no sort of punishment whatever, other than that which I have mentioned, the officials involved. The name has never been publicly divulged to this day. I therefore submit that a discussion on the Public Accounts Committee's Report should take place every year, and oftener if possible; certainly no Session should be allowed to pass without such a discussion.
§ Mr. PRINGLE
The hon. Member for West Bradford (Mr. Jowett) has recalled to the House the more general considerations which should have been in our minds in the course of this Debate. Unfortunately, the fact that in respect of two parts of the Report personal questions have arisen has diverted the attention of the few Members present from the real value of the function performed by this highly important Committee. I agree with my hon. Friend's suggestion that the work of the Public Accounts Committee is not in itself sufficient to achieve the object which this House should have in view—in other 1062 words, that not only should we have a Public Accounts Committee as a means of ascertaining how money has been spent, but that there should be a similar Committee in touch with the Departments in settling the estimates, who would see beforehand that the appropriation was made on proper lines. An attempt was made in this direction by the Estimates Committee instituted at the suggestion of my hon. Friend the Member for West Aberdeenshire (Mr. J. Henderson). It is regrettable that at the present time that Committee is not in existence. I believe that much good would have been done had there been such a Committee, and that some of the irregularities which have arisen as the result of deficiency of Treasury control would have been averted had the House of Commons been able to act through an Estimates Committee.
The Public Accounts Committee and the Ministry of Munitions are to be congratulated on the result of the discussion this afternoon. The Ministry of Munitions is to be congratulated on the record which it has been able to set up in respect of its vigilance regarding the expenditure of public money. For the first time one of the great spending Departments has shown itself capable of devising machinery for checking contractors' costs The alarm and indignation displayed by the hon. Member for Sheffield (Mr. S. Roberts) wore to me a very sinister aspect. He talked about disgraceful slanders and false statements which would lay the Ministry of Munitions open to actions for libel. But it struck me that his real indignation was directed to this new and highly valuable departure on the part of the Ministry of Munitions. He was indignant not only at the statements of the officials of the Ministry of Munitions, but also at the statement in the Committee's Report which he endeavoured to challenge with singularly little success. There is one statement in this Report which, the House should observe, he never endeavoured to challenege. It is in paragraph 14:It is greatly to be regretted that no such system seems to have been adopted before the War in order to break down rings which were known to exist among contractors.Here is a perfectly clear and definite statement that rings were known to exist among contractors and that no effort was made to break them down. But this hon. Member, who appears professedly as the champion of a particular firm in this House, and his right hon. colleague in the 1063 representation of the same city, did not challenge this statement made by the Committee. That is the most significant thing that has occurred in this Debate. We may take it that it is admitted without question by the representatives of the armament firms that there were armament rings in this country before the War, that those armament rings continued to exist after the War, and that no Department—neither the War Office nor the Admiralty—made any attempt to break down those rings.
§ Mr. PRINGLE
I will come to that point. I was merely dealing with the tacit admission on the part of hon. Members opposite. When you have a tacit admission of that kind I think it justifies all the vigilance that can be displayed by a new Department, and that this House should lend not the slightest countenance to any attempt to discourage such vigilance. If the speech means anything, it is meant to check the action and discourage the vigilance of those men who in our public Departments are endeavouring to safeguard the interests of the public purse. I am glad that from no quarter of the House, apart from the isolated individuals who represent the armament firms, has the slightest encouragement been given to any such attempt. I was going to refer to the reason why this evidence was given before the Committee and why this passage was introduced into the report. As I understand, at this period the Public Accounts Committee were considering the expenditure on Admiralty contracts, and the question had arisen why the Admiralty had not entered into this question of costs. It was admitted that the Admiralty lad not attempted to do it, and in consequence, in order to ascertain what could be done, the Committee very wisely asked for evidence regarding the experience of the Ministry of Munitions. I think it was the obvious thing to do, and that the Committee have discharged a great public service in calling attention to what the Ministry of Munitions has done, and in making an effort to see that other great spending Departments follow the same course. My right hon. Friend the Parliamentary Secretary says that the Admiralty had not the power. They had the power at the time this step was taken by the Ministry of Munitions.
§ Mr. PRINGLE
I admit that. But I take it the Admiralty never asked for these powers, and I have some ground for believing that they looked with some disfavour upon these powers being conferred by Parliament. They did not think the powers were desirable, and we have no evidence as to whether after the powers were conferred they actually began to exercise them.
§ Mr. PRINGLE
Yes—"quite recently." But the question arises whether they began to exercise them as soon as the Ministry of Munitions did. I think it was established by the Report that they did not. As to "quite recently," it is a very vague and ambiguous expression. I did not intend to make any detailed reference to the other contract which also has been referred to in the course of the discussion. I understand that a judicial inquiry is to take place into certain matters relating to that contract. Personally, I regret that any judicial inquiry is to be held. I think that, after all, this matter could have been threshed out on the floor of the House. I do not understand why a judicial inquiry should be given to one powerful gentleman who has influential friends in this House, when similar treatment will not be given to humbler individuals. I understand that in regard to the case which my hon. Friend the Member for Bradford (Mr. Jowett) mentioned, which took place some years ago, of the frauds upon the Excise, that the Excise officers who were dismissed had no judicial inquiry into their case, and I do not understand that there was any judicial inquiry in regard to that particular firm.
§ Mr. PRINGLE
Oh, they were removed! But when the contractor happens to be a powerful Member of this House, or at least to have influential connections, a judicial inquiry is granted by the Government—a rather easy-going Government. This raises a very wide question, and that is as to the whole relation between Members of this House and Government Departments. We all know that this is a one-man company; that it is only through 1065 the technicalities of our company law that this gentleman is able to have a contract with the Government at all. Had he been, like the hon. Member for Whitechapel (Sir S. Samuel), a member of a private firm, this contract could not have taken place, or if it had, for every day he sat and voted in this House he would have been subject to certain penalties which could be claimed by a common informer, as the hon. Member for Whitechapel discovered. Surely it is a most anomalous thing that simply by setting up a company which has no real existence—because everybody knows that the man who carried out this transaction was the hon. Member for Devonport (Sir J. Jackson), and that no one else had a voice in the matter—he should be able to evade the operation of the Statute passed by this House with regard to contractors and Government Departments. I think the matter requires further consideration, and that the House in its own interests should put an end to such an anomalous and objectionable position.
§ Mr. HOGGE
I have not heard as much of the discussion to-day as I should have liked to hear. An important question of this kind which we are able to review on so few opportunities in the House is one, I think, on which one is entitled to make some general observation. If there is one thing that must have struck many new Members who have been coming into this House in the past few weeks it is the fact that the House of Commons has not that financial control over its own finances that it ought to have. One frequently finds that on those which are considered by the House, and in which large sums of money are involved, other questions than financial questions are raised, and that as a result the House is unable to concentrate its attention upon the mere financial side of the question and allows its interest to be dispersed. I think the plea that has already been made to-day for the creation of a General Estimates Committee is one that ought to be pressed. I think that if the House were divided into sections of Members who are keenly interested in those various affairs, the knowledge and business experience which they could bring to a discussion of them would be extremely useful to the whole House, and I very much hope that that 1066 opinion which has been expressed to-day will receive due consideration from those whom it concerns mainly.
I am glad also that so much has been made of the competing interests of our great Departments. That has been emphasised so much that I need not elaborate it, but everyone of us knows that not only in financial matters but in other political matters the large Departments somehow or other prefer to get up against each other rather than to co-operate with each other. If the criticism urged to-day leads to closer co-operation between the great Departments in economising for the sake of the country, this Debate will not have been held in vain. I remember putting a question to the Prime Minister in the very early days of the War referring to the experience which we have had as a country in the South African campaign. I had in my mind the scandals which were afterwards reviewed by Committees, and which shocked the conscience of the community. I remember distinctly the Prime Minister saying—I have not the reference in the OFFICIAL REPORT in my hand—that the Government were taking precautions to avoid the kind of thing that had occurred in the South African War. Certain things have emerged now which lead us to think that there may be worse to follow, and that when this War is finished we may find ourselves in no better position than we were at the close of the South African War, having committed again a great many of the mistakes that, with great care, we got Committees set up to warn us against in any subsequent war. The final point I want to put is, that I am glad the House of Commons has to-day defended generally in debate the only Committee it has to protect it against extravagance by the great spending Departments. It is not an ideal Committee, but it works faithfully and well, and I think the House is indebted to it for the care with which it has examined the accounts. I only wish its Reports were not so belated, and that the House could get at them and discuss them before the subject-matter of the discussion has receded so far into the past. If these things have been achieved by the Debates we have had, I think everyone will agree that we have spent the afternoon profitably.
§ Resolved, That the Reports of the Public Accounts Committee be now taken into consideration.