STATEMENT BY Mr. CHURCHILL.

HC Deb 25 April 1918 vol 105 cc1139-254

Motion made, and Question proposed, "That a sum, not exceeding £900, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on 31st day of March, 1919, for the Expenses of the Ministry of Munitions."—[NOTE: £100 has been voted on account.]

The MINISTER of MUNITIONS (Mr. Churchill)

I am glad that, on the whole, I have a fairly good report to give to the House. During the five weeks that have elapsed since the beginning of the great battle we have been passing through what is incomparably the period of greatest strain in regard to the supply of war materials which has ever occurred in the experience of the Ministry of Munitions. Not only has the consumption and destruction of munitions of all kinds been proceeding at the greatest rate, but we have also had very heavy losses in captures by the enemy. We have lost very nearly 1,000 guns by shell fire or by capture, and between 4,000 and 5,000 machine guns have been lost or destroyed; and a quantity of ammunition, apart from what has been fired, has been lost in dumps, which quantity I may perhaps best express in a manner which will give the information I desire to convey and at the same time baffle calculation by saying that it amounts to something between one week and three weeks' total manufacture. Other forms of war material have been used up or lost in a great variety of classes and on a smaller scale. To provide for these losses, while at the same time supplying the needs of the Army in action, and at the same time carrying out our expanding programme in so many directions without intermission, has required an enormous effort from the whole organisation of which we dispose, whether in regard to manufacture, inspection, transportation, and delivery. However, I am glad to be able to tell the Committee that by the end of last week all losses had been made good, and in many cases more than made good.

4.0 P.M.

To-day there are actually more serviceable guns as a whole, and more of practically every calibre, than there were when the battle began; and when I say guns I mean, of course, complete equipments, comprising all the necessities of Artillery in carriages, wagons, limbers, gun sights, platforms, and all the ancillary apparatus of that complicated arm. I observe that the German War Minister, in his speech a few days ago, claimed captures of guns nearly double the number of those which I have announced. These are grotesque exaggerations and untrue, but if that statement had been true it would, I believe, still have been possible for me to stand here to-day and say that all losses in guns had been made good. Not only have the losses of machine guns been replaced, but our establishment of light and heavy machine guns is being rapidly and largely increased. We have placed at the disposal of the military authorities and the air authorities during the battle for air and ground service more than twice as many guns as have been lost and destroyed in the battle. The supply of aeroplanes has for some time been in advance of the organisation of squadrons and of trained pilots, and this supply has enabled the Air Ministry to meet all the needs of the great battle, and the exceptional waste resulting there from, and in addition to carry forward the approved programme of expansion to which we are committed. By very praiseworthy exertions the output of Tanks has been so much accelerated that we are in the position at the present time to replace every Tank that has been lost by newer and better pat. terns of Tanks as fast as the Army can take delivery. In this moving and open warfare the expenditure of rifle ammunition has been on an entirely different scale from the ordinary conditions of trench or even of offensive warfare. Not only have vast quantities been used, but still vaster quantities have been lost or left behind, and a very heavy demand has been made upon us in this respect. Great as those demands are, the expenditure of small-arm ammunition in the month does not exceed the maximum potential capacity of our factories running at full blast without touching the enormous reserves which we had accumulated against such a contingency. It is also true that the wastage of rifles, necessarily very heavy, has been quite easily and promptly replaced, and no difficulty is experienced in regard to that supply. The loss of shells through dumps having been captured or blown up is, as I have said, between one week and three weeks' total production. But our preparations contemplated a period of supreme battle intensity on the Western Front this year from the third week in February, and not from the third week in March, and, as the German offensive opened a month later than the period on which our calculations were based, we are at the present time between one week and three weeks to the good, and not to the bad, on our original calculations. Those calculations allow the Army to fire during the whole fighting season a considerably heavier volume of shells than were expended on the weekly average in the great offensive battles of last year, and they allow the Army to fire more than double the volume of shells which were expended during the terrific bombardments which characterised the Somme offensive of 1916. They also provide for carrying forward into 1919 sufficient reserves to allow the aggregate British battery to mount still one step higher in 1919 in weight, intensity, and power.

It is upon these calculations that I am able to say that we are, on the whole, slightly to the good as the result, and in spite of all that has taken place this year. Speaking generally and safeguarding myself, as the experience of this War should teach us all to do, against what may reasonably or fairly be considered unforeseeable contingencies, there appears to be no doubt, if we continue to enjoy the loyal support of the workers, on which all depends, that the supply of munitions will enable us to carry on the battle at the supreme pitch of intensity and with a continually growing power, so far as munitions are concerned, throughout the whole possible fighting portions of the year right into the late months of the autumn and the early months of the winter without compromising our requirements for 1919. I think the House will consider that is a fairly remarkable state of things. How has it been achieved? It has been achieved in spite of two important adverse influences. First of all, we have been for nearly a year past continuously releasing large numbers of skilled men and semi-skilled men from the munition factories for service with the Colours. Of course, we have had at each stage in this process to replace these men by less physically efficient male substitutes and by women, both of whom, in most cases, have had to be trained. Since May last we have released more than 100,000 men for the Army, and I am now releasing—I have been for some time releasing, and I hope to continue for some time to release—men fit more than the rate of 1,000 a day. It is obvious that this double process of releasing skilled and organised labour on the one hand, and of satisfying the ever-increasing requirements of munition supplies on the other, imposes a problem of great difficulty upon the management of every firm in the country and upon the dilution officials of the-Ministry of Munitions. It is a problem that they have to judge in an innumerable number of cases separately, and it can only be judged from day to day as the experience warrants and as the circumstances require. Hitherto it may be maintained that this duplex problem has been successfully solved, but it is obvious that in so delicate a matter an error either in this direction or that may lead to denying the Army the men that they are entitled to have, or, on the other hand, compromiising or dislocating the-supply of munitions, without which those men would be simply thrown away.

We have now reached the point where I must make a further appeal for greater facilities in regard to the movement to points where they are most needed of the skilled workmen who are left at home. I propose, shortly, to issue an appeal to workmen generally pressing them to enrol as War Munition Volunteers, so that the available residuum of skilled and efficient labour which we have in this country can be moved from point to point as the needs of the time require, and so that all are employed to the highest possible advantage. It is clear that war munition volunteers who have undertaken to place themselves so fully at our disposal are of greater value from the point of view of indispensability to munitions output than those who have not volunteered for this special form of munitions service. Side by side with this, it will be necessary to regulate and restrict the action of employers so as to prevent the uneconomic use of labour and to enforce dilution by preventing new men being engaged and by requiring in some cases the dismissal of men who are already employed. Unless that process can be carried out we shall find increasing difficulties as we continue progressively to release our skilled men for military service. I have consulted and I am still in consultation with the Trade Union Advisory Committee, and I have received a great encouraging measure of support from them. With this greater power over the mobility of labour, on which a definite and formal statement will be issued in the course of a few days, I am hopeful, by pursuing our well-tried methods of substitution, that we shall continue to strike the happy mean between the needs of the Army in men and its no less vital needs in munitions. I should like to observe parenthetically that all the experience of the Ministry of Munitions is conclusive on the point that there should be no absolute protection for any class of supply, however important or urgent it may be. Every man should be judged on his merits as a contributor in one form or another to the one industry of the country, namely, the prosecution of the War. It is only under the pressure of releasement that the process of dilution and of substitution can be enforced and the proper training of new workers carried out. As long as any class of manufacture or any class of supply or any firm or group of firms enjoy an arbitrary and an absolute protection—what is called a complete umbrella—there is no incentive

either to the employer or the workman to adopt the necessary methods of expansion and of reform which the emergency demands from them. I hope that may be very carefully and widely considered, because it is obviously more difficult to enforce these drastic processes of dilution when there are invidious exceptions not to be justified on the strict merits existing side by side with the classes of industry which are affected.

Sir C. KINLOCH-COOKE

We have had it for a long time.

Mr. CHURCHILL

There is one point on man-power that I must now mention. The number of persons employed in the headquarters establishment of the Ministry of Munitions has now grown to 18,300, of which total nearly 11,000 are women. I have asked my hon. Friend the Member for the Wellington Division (Sir Charles Henry) and my hon. and gallant Friend the Member for Wolverhampton (Brigadier-General Hickman) to take charge of a Committee to make a further continuous effort not merely to curb the tendency to expansion which is being driven forward by so many powerful facts, but also to overhaul the existing staff and establishments with a view to a reduction. Out of this enormous total of persons employed on the headquarters staff of the Ministry of Munitions there are 1,637 men only who are fit for soma form of military service under the previous Acts. No examinations under the new Act have yet taken place. Of this total there are only 372 men who are classified as Grade 1, and of this total again there are only five men who are classified as Grade 1, who are under the age of twenty-six.

Mr. LEIF JONES

Only five?

Mr. CHURCHILL

Let us see what these five men are. Four are chemists engaged in vital work which might conceivably put our troops in the position to inflict casualties scores of times greater than any one man, or fifty men, could inflict by their ordinary physical strength. The other is a mechanical engineer of the highest possible competence. These numbers are very small, and, of course. I must state that none of these gentlemen are serving at the Ministry in preference to doing military duties. They have unreservedly placed themselves in the hands of the Government and of the Minister. I am responsible, and not they, if they are employed at home on munition work instead of having an opportunity of taking their places in the fighting line. That is the first adverse influence which we have had to overcome in making a larger output of munitions the continued releases of men for the Army.

The second adverse influence is the serious contraction of tonnage of imports which has been enforced upon us by the depredations of the submarine campaign. War is waged mainly by steel and explosives. The main bulk of the munition imports into this country consist of iron ore, steel and nitrates. Nitrates are a particularly costly class of imports in terms of tonnage, because of the great distance from Chile, and the fact that a ship can make scarcely more than two and a half voyages in the whole year. Owing to the importations of food which are required for this country, and which are also required for our Allies, owing to the great shipments of coal we have to make to France and Italy, owing to the assistance which we are giving in an increasing degree every week for the transportation of the American Army, I have had to accept a considerable reduction upon the tonnage Budget on which I had hoped to build my plans. It is no exaggeration to say that, owing to the ever growing efficiency of the shell plants we could have made this year 30 per cent. more shells with our plants for which we had the labour, and we could have provided the guns to fire off that shell in the currency of the year if only we could have had more tonnage to bring in these vital and bulky commodities. In consequence of the limitations of tonnage which have been imposed upon us, I have had to slow down to a steady pace shell production over considerable areas of our industry, and that inevitably manifests itself by an element of short time and by occasional, though gradual, discharges, and from time to time it must manifest itself by the complete closing down of the least economical and the most expensive factories. This process naturally looks incongruous when it is going on side by side with intense efforts to increase and accelerate the production of munitions in other directions. That incongruity has not escaped the attention of persons who are ignorant of the reasons why. But for this shortage of tonnage, it would have been possible still further to expand our shell outputs this year beyond the limits which I have already explained. However, enough is as good as a feast.

Having mentioned these two adverse causes which have worked against the output of munitions during the last eight months, I return to my question: How has it been done? How is it possible to combine a continually d[...]minisning fund of highly skilled and trained labour and a continually contracting volume of imports of raw materials with a production of larger and, in some cases, very much larger supplies of everything that is needed? It looks like a conjuring trick, and, like a conjuring trick, it is susceptible of very simple explanations. The first explanation is the loyal and faithful industry of the whole population engaged in munitions supplies. We had a splendid, autumn and winter of production. Strikes and disputes of all kinds, from whatever cause arising, were provoking individually but, compared with the volume of work which was. being done over the country as a whole, practically negligible. Less than one-fourth, and latterly less than one-sixth of 1 per cent. of the total time worked has been lost by disputes of all kinds. That is to say, much more than a year's work has been done for every day that has been lost by munition workers through disputes, interruptions and stoppages of work. I have not had this calculation made, but I am sure it will bear out my suggestion, that the extra time put in in the Easter holidays—when men and women, wherever needed for 1,500 or 1,600 firms, wherever asked, worked continuously on at the highest pressure—more than compensated for the loss which had been sustained in recent months, small as that loss was, through disputes of any kind. Therefore you may say that no time of any kind has been lost, if you balance the debit and the credit side, through trade disputes. If that is so, let us have an end of the carping and croaking which goes on about the attitude of Labour towards the War. We ought to be continually congratulating ourselves upon the inherent soundness of our political, social, and industrial institutions, and congratulate ourselves upon the loyal heart of the people, whose servants we have the honour to be.

The second explanation of the great outputs of which we have disposed is the gigantic transformation which has taken place in the industries of our country. They have been transformed from peace industries into war industries. Almost completely that great evolution has now taken place. All that manufacturing skill and energy, all these vast systems of industrial organisation which have been so patiently and so solidly established, and which in happier years gave us the mastery of so many markets and secured us a supremacy in spite of competition, fair and unfair, in so many important forms of production—all that mighty structure has now been adapted and is continuously applied almost exclusively to war purposes. The enormous national workshops, which were projected on the largest scale and equipped with the most perfect machinery by the foresight and vision of the first Minister of Munitions) have been roaring away at lull blast for many months past, and the increase every day in the efficiency of their output is one of the most striking features which I have to contemplate in the weekly returns which are presented. Immense economies and simplifications have taken place in our productive industry, and under the pressure of war and the changing conditions which war brings into being, British industry is every day achieving a higher organisation and a more modern outfit. We are not nearly at the limit of efficient war production. Great and difficult tasks lie before us, and inefficiency, inadequate combinations and wasteful processes have still to be combated in many directions. But the progress during the War has already been extraordinary, and when the military victory has been gained by our Fleets and Armies and the industries of Britain are liberated from their present trammels, when they return from war to peace, they will return vivified, renovated, purged, re-equipped, reorganised and modernised to an extent which would not be conceivable in peaceful times and which could not have been achieved by the patient and sagacious labours of an entire generation in tranquality.

The third explanation of the increase in outputs in the face of these adverse factors is the women. Nearly 750,000 women are actively employed at the present time under the Ministry of Munitions. Hardly any of them had industrial experience before the War, but they constitute to-day an additional resource in labour power without which we could not carry on. The diligence and the devotion of these women, their skill, their strength, above all their loyal and un wearying spirit, are beyond all praise. The main thing we have to be careful of at the present time, especially in these days when feelings run so high, is not to let the women overstrain themselves at their work. Their great desire to increase the outputs on which the lives of husbands, brothers, fathers, or sweethearts depend, synchronising as it does with a marked reduction in the nutritive qualities of the food which is available for their consumption, raises a series of problems to which the attention of all firms employing women in large numbers, as well as of the Welfare Department of the Ministry of Munitions must be insistently directed. We must look forward to a long strain, and we must nurse our strength, so far as that is possible, without damping the enthusiasm of the women. It is a striking fact that more than nine-tenths, in many branches far more than nine-tenths of the whole manufacture of the shells which constitute the foundation of the power and terror of the British Artillery, are due to the labours of women, and of women who before the War never saw a lathe. But throughout the whole area of munitions, not excluding the most arduous and dangerous form of service, women are largely, and will be increasingly, employed. It must not be supposed that this women's labour is a mere makeshift which we have been forced to put up with in the general stress of events. On the contrary, aided by the proper development of industrial organisation and by increasing standardisation of production, not only have these enormous outputs been produced by women's labour, but the cost has gone down and the quality has gone up to an almost incredible extent. The 18-pounder shell before the War, when everything was very much cheaper, cost 18s. The same shell to-day is contracted for, although I suppose the cost of everything has doubled, at 11s. 7d. In 1915 one high explosive shell in 18,000 was a premature. Before this battle began the last great batch of shells which were fired, of which careful records were kept, showed that in 980,000 only two prematures occurred. Not any of the countries at war can show anything approaching this in regard to the trustworthiness of the ammunition. No one can be blind to the profound significance of these facts or to the far-reaching consequences which they will carry to the industrial, political, and social life of this country long after the War is over. It is from this source that the wounded nation will draw new strength and energy, not merely enabling it to repair the ruin of the War, but flowing onward in a perennial stream which, if wisely and humanely guided, will enrich and expand the fortunes of the whole world.

I will now mention some of the special features of munitions development which have taken place in the last year, so far as I may do so without telling anything to the enemy which he ought not to know or which he does not know already. The principal great new task which was entrusted to the Ministry of Munitions in 1917 was the construction of aeroplanes and aeronautical appliances of all kinds Since that date we have delivered more than twice as many aeroplanes as have ever been made before. We are now making in a single week more than we made in the whole of 1914. We are now making in, a single month more than we made in 1915. We are making in a single quarter more than we made in 1916, and we are going to make this year several times what we made last year. (There I introduce an element of vagueness.) But the vast expansion, the geometric progression, of the supply is most impressive when viewed in figures. Here also the quality has greatly improved in every respect. Not only are the hopeful estimates which were put forward last August being fully maintained, and even in some cases sensibly surpassed, but the quality and power of the engines have made enormous advances, and the numbers of types in use have been reduced to, I think, something like a third of what they were a year ago. You can see the results in the increasing ascendancy, gradually moving forward to virtual supremacy, in the air which our Flying Service is establishing in France. But the flow of machines, the improved standardisation of engines, and the constant expansion of the British Air Force has only just begun. Never has there been an arm to which more encouraging prospects were open than the British Flying Service at present. I should be quite ready to elaborate this aeronautical supply question in the fullest possible detail if hon. Members desired it in the secrecy of a Committee room. Here I will content myself with saying that you may look forward at present with good and assured hope to the primacy of our Air Service among our Allies and its increasing and unmistakable superiority over the enemy, and we may look forward to both these objects as reasonable and legitimate objects to be achieved within the compass of this year's efforts. And there are hardly any limits to the results which may ultimately be derived from this.

So far as the Ministry of Munitions is concerned, we owe this achievement to the work of a very remarkable man. In Sir William Weir we have found not only a great producer, but a man with war intuitions of a very high order, a man fitted, above all others I have come across in this sphere of business, to express the swiftly changing war conceptions which a Service like this provides in terms of a great and expanding mechanical supply. The confidence which was reposed in Sir William Weir by the Air Board led to the whole business of design, as well as that of supply, being entrusted to us as soon as Lord Rother-mere had obtained the necessary power. The union under one authority of design and supply is the foundation of production on a great scale, and this is specially true when the character of the production is continually varying and developing. The interests of design and supply are naturally at variance, design seeking a swift and immediate road to perfection, and supply succeeding only through standardised output. We are very lucky indeed to have found at such a time a man capable of reconciling these conflicting interests in a manner which continues to command the increasing confidence of all concerned.

The second important new task which has been put upon us is the provision of steel in the proper forms for shipbuilding. The directions which I receive from the War Cabinet assigned to this task priority even over the production of shells, and, in consequence, very great efforts have been made to accumulate the greatest quantity of steel and to increase our rolling mill capacity to provide the plates which are the indispensable limiting factor governing all shipbuilding. I have explained already the stringency in regard to steel which arises out of our diminished importation of ore. Nevertheless, the exertions which have been made in this country since the beginning of the War have made our yearly production of steel nearly half as large again as it was in the piping times of peace. I am not by any means satisfied with this development. If we look back on the history of the past we see the great domestic resources in various classes of iron ore which we possess. la spite of the difficulties of labour we cannot be content with the present position, and every effort must be made to improve it; but still, without relaxing our efforts, we may note that our steel budget this year, in spite of the shortage of tonnage, eclipses all previous records. But the limiting factor in shipbuilding was not steel, but ship's plates, and to a lesser extent sections. If there is a stringency in steel, it is nothing like the stringency that existed in regard to steel plates. Six or eight months ago that was a definite barrier to a really great programme of ship construction. Everyone wants steel plates. Ships, locomotives, boilers, tanks, workshops of all kinds demand plates, and cannot carry on the industry of the country without an abundant issue of plates and sections in all sorts of directions. Our Allies in France and Italy make the most urgent demands upon us for plates. 'The programme of rolling mill expansion which was undertaken in the middle of last year, set on foot by my right hon. Friend (Dr. Addison), is in in increasing operation, and is already yielding a steady, substantial out-put. For the last six months the shipyards have been supplied with steel plates and other shipbuilding materials to the fullest possible extent. Every demand has been met, and a substantial surplus has been provided. Steel in all these directions is no longer a limiting factor in the construction of ships. On the contrary, we have at present to slow down our deliveries to the yards, and are at present devoting our production of plates to some extent to other, only less urgent, needs, which we hope to clear off, so as to clear the rolling mill capacity later in the year for the fullest possible development of our shipbuilding programme.

I now turn to the chemical sphere. The nitrate position requires vigilant attention, not only from our own point of view, but from that of our Allies, who so frequently turn to us in their need. To supplement the importation of nitrates from overseas and to make us more independent of Chili, we have embarked on the construction of nitrogen from the atmosphere on a very considerable scale. It is a very strange thing to reflect that but for the invention of Professor Haber the Germans could not have continued the War after their original stack of nitrates was exhausted. The invention of this single man has enabled them, utilising the interval in which their accumulations were used up, not only to maintain an almost unlimited supply of explosives for all purposes, but to provide amply for the needs of agriculture in chemical manures. It is a remarkable fact, and shows on what obscure and accidental incidents the fortunes possibly of the whole world may turn in these days of scientific discovery.

The French have gone a long way on this road, and it is high time we should follow. The services of Mr. Quinan, the American engineer, whose extraordinary gifts have been at our disposal since the beginning of the War and who, with Lord Moulton, has played so remarkable a part in the complete solving of every problem connected with explosive supplies, have been devoted to this task, and we have good hopes that the process which he has devised, and which is in principle the Haber process with some modifications, will not be inferior to any process in operation in any part of the world. The whole explosive position is quite sound whether we are concerned with propellants of all kinds or with the various kinas of high explosives which are used in such enormous quantities, many thousands of tons per week in shells, grenades, bombs, or mines. In all of these the future, as tar as we can see at the present time, is amply safeguarded. I have recently transferred the Chemical Warfare Department to the explosive group, for I feel that the development of chemical warfare in all its strange and formidable forms must be expanded on an ever-increasing scale. The complete success of the Explosives Department and its great resources, and the fact that it practically commands the whole chemical trade of the country affords the best prospect of ensuring that our troops shall suffer no disadvantage in this sinister form of warfare. It is a matter on which it is necessary to speak with caution because chemical warfare changes rapidly, and is a domain in which surprises on both sides are very effective. We have now entered on an exceptionally intricate phase of highly scientific warfare in which the relative progress of the two sides cannot be accurately measured from day to day. But, broadly speaking, we have been asked in former years by the Army, and our chemists have offered to the Army, lacrimatory and lethal gases. The Germans, in addition to lethal and lachrymatory gases, have developed irritant gases. I am informed by officers concerned with our chemical warfare in the field that there is no doubt that on the whole we have killed more Germans by our lethal gases than they have killed of our men by their chemical warfare, but, on the other hand, they have inflicted casualties of a transient nature, casualties which disable men for a few weeks in larger proportion by their irritant gases than we have been able to do by our existing types of gas. As for the masks which we have they, I think, hold the first place in Europe. We have supplied them by the millions, not only to our own troops, but also to the Italians, and we hold large stores available for American troops that may be serving in our ranks.

I have told the House already how quickly and easily our losses in guns which have occurred in the battle have been made good. But I have a word more to say about artillery. Last year, especially the latter period, imposed a very severe strain upon our guns. The destruction of carriages by shell fire in the close and deadly fighting in the Paschendaele offensive, combined with the wear of the guns through continuous firing caused, especially in the field guns, some anxiety at one time. We were not able to fire last year the whole quantity of ammunition available, because of the decline in gun life. The troops were in many cases so closely engaged with the enemy that they could not pull out the worn-out guns as early as they promised to do to enable us to get our repair plant working. They only gave us about half the number they promised. On the top of this came the Italian defeat, and we had to hand over hundreds of guns unexpectedly to Italy. That formed a serious combination of circumstances. However, by great exertion, the whole of the situation has been completely transformed, and very large systems of repair for guns and carriages have been established both here and in France. Although the offensive last year continued till a much later period in the winter than was expected, and the work of repairing our guns was delayed, the position was completely re-established before this battle began, and we are now getting a big flow of guns and the gun shops are in fullest operation. They continue to produce guns in succession with very great rapidity relatively to the ordinary destruction which is to be expected. Just as last year we had more ammunition than the guns could fire so this year, as far as we can foresee, again making every necessary reservation with regard to the unexpected, we shall, I believe, have sufficient guns to fire away all, and more than all, the ammunition which tonnage, and tonnage alone, allows us to manufacture. The great armies on both sides this year, in my opinion, will be in the latter part of the campaign fully supplied with guns, and I believe it to be true that in the case of all the belligerent powers, not guns nor shells, but gunners and organised batteries, will be the limiting factor of artillery development. If that opinion be well founded it certainly affords us some ground for feeling that the great captures of guns that the Germans have made in Russia and Italy, in addition to their own very large supply, will not be of so much service to them as some people expect and fear.

I should like, if the House will allow me—I will not detain it very long—to refer to the new organisation of the Ministry of Munitions which I brought into existence after taking office last year. The principle of that organisation consisted in dividing the seventy odd departments of the Ministry into eight or ten large groups, and placing at the head of each group a member of the Council the exercise general and direct supervision over the whole area. This organisation has in practise worked very well. It has not been changed in any way except by the ordinary accidents of daily life, it has not been altered in any important respect since it was brought into being. The Council meets about once a week. but the bulk of its work is done by Committees of three or four members of the Council specially concerned with any particular subject, and there is a standing Committee of the Council, a co-ordinating Committee, which considers and clamps together the proposals of the different departments. There are practically no important questions of business which do not pass through the machinery of these Committees before they come to me. It was provided in order to secure to the seventy heads of departments the integrity of their responsibility and initiative within their own sphere, that whenever one of these heads of departments had a difference with the superintending member of the Council or could not agree with him on any point, the difference should come to me for settlement. But all this time I have never had a case where any appeal has been made or where I have been called upon to intervene. Side by side with this system of Committees as an essential counterpart of a Department of State, I have largely extended the functions and increased the numbers of the secretariat, obtaining for that purpose the best permanent Civil servants that could be found. Without a branch official nucleus of Civil servants to deal with procedure, with the movements of papers, and with discipline, the business of no public Department could in my opinion be satisfactorily conducted. It is to the dearth of Civil servants, that much abused, that most unjustly and ignorantly abused class, that a great deal of our difficulties in coping with public business at the present time are directly attributable. No doubt there is room for very great improvement in many directions. No one can rest contented with the present state of things. The changes which have been made, I think I am entitled to say, have not impeded output, but so far as the Ministry is concerned have enormously lightened the burden of his daily work.

5.0 P.M.

I come last of all to finance. I left finance till the last, not because it is the least important nor because it is the most important of the topics with which I have to deal, but only because it is, so far as I can make out, the sole part of our immense organisation which at the present moment has been challenged. There have been two Reports laid before Parliament—one by the Comptroller and Auditor-, General, which has not yet been before the Committee on Public Accounts, and can only be regarded as a statement on the authority of that distinguished official; and the other by a Select Committee of this House. I conceive I am entitled to speak with a considerable measure of freedom in regard to these Reports, because they deal almost exclusively with matters which occurred for good or ill long before I had any responsibility for the Ministry of Munitions, and therefore I would take the liberty of saying that I regret the tone and character to some extent of these Reports and still more the class of comment which they have given rise to in the newspapers of the country. By selecting from the enormous field under survey—I know the difficulty of Committees in dealing with this work—I know how great their difficulties are, and no one would wish to depreciate the work of Members who serve upon them—but by selecting from the enormous field open to survey every discreditable incident which can be discovered, by assembling these together in one mass, by excluding rigorously any recognition of the achievements of the Department in other directions or of the conditions and difficulties of the emergencies under which their work was carried on, this Committee—I am quite certain unintentionally, I am sure my hon. Friend had no such intention—this Committee had provided a foundation upon which a vast amount of ungenerous, ungrateful, and I would take the liberty of adding grossly unfair comment has been erected. Let me say at the outset there can be no true efficiency of Government without a sound and careful system of finance. No Department is entitled to plume itself on its output or its action unless it can show a sincere attempt to conduct its finance in a competent and efficient manner; and, if that is true in time of peace, it is still more true in time of war, when people are everywhere asked to subscribe even the smallest sums towards the National Loans, and when the most undreamt of burdens of taxation are being patriotically borne. I recognise absolutely that these are times when our efforts should be redoubled, but still let us preserve a sense of proportion and a fair recognition of the actual conditions and circumstances which prevail. I have two general observations to make about this. The first is that the bulk of the material contained in these Reports, the examples cited and the scandals brought to light, were not discovered in the first instance either by the Comptroller and Auditor-General or by the Select Committee; they were discovered by the Ministry of Munitions. They were brought to the notice of the Select Committee by the officers of the Ministry of Munitions who were engaged at that time in correcting these evils, spontaneously. That is the fact which I am certain the Committee will weigh in forming its opinion. The second general observation which I would make is this—it must never be forgotten that the Ministry of Munitions was called into being by the convulsion of war—the one overpowering need of the moment was to supply the troops with weapons and with munitions which were required. What else mattered? What else compared for a second with that? An extraordinary improvisation beyond precedent without parallel in any country in the world took place in our industrial system. Thousands of persons who knew nothing at all about public business or public departments, thousands of firms which had never been used for warlike manufacture were amalgamated together, brought hastily together, and out of this ever-growing and enormous organisation that great flow of material of all kinds which raised our Army to the very forefront of all the combatant armies was almost immediately produced.

If at that time you had enforced strict and circumspect financial control and procedure with every kind of check and counter check operative both before and after the event, you might indeed have saved several millions—I dare say that is a modest figure—but you would have cramped and paralysed the whole of the organisation, and by so doing would have run grave risk of causing serious military injury which would manifest itself in the loss literally of scores of thousands of lives. Do not let us lose our sense of proportion. By all means let us have the strictest account, but no account, however strict, could prevent war from being waste and destruction from beginning to end. How many millions of stores are left on the ground in a single day, in a single night, when an Army retreats from its lines? No accounting, however strict, will be any substitute for victorious action in the field. Above all, do not ask that hampering impediments should be imposed on the exigencies of supply. The needs of the Army are continually changing. Speed is often the vital consideration: more important than anything else. In the early days the material was landed at the port, sent to the factory, and the shells were sent from the factory to the field, long before the process of accounting or making contracts was completed, and this process came along at intervals of a year after the shells had in some cases actually been fired against the enemy.

The Minister responsible must have a reasonably free hand and the power of making quick decisions to meet the emergency needs of the Army. You cannot stop to argue everything out every time with everybody. Right or wrong, those who are responsible must act, and Parliament, when it judges their action years afterwards, must make allowances as they will make allowances, for the conditions under which they acted. But, of course, I am speaking not of the present time mainly, I am speaking of the years 1915 and 1916, and I by no moans suggest that the wise indulgence which this House should extend to those early days of improvisation should be preserved in 1917 and 1918. You must expect a much higher standard now; a much more severe scrutiny should be enforced. We are no longer wholly or even mainly in the region of improvisation. Our shell foundries, for instance, ought to be run with the efficiency of the cotton industry in the time of peace. You get continually new demands which require swift improvisation, but the great bulk of our supplies should now be judged as a steady peacetime business, and I do not ask in any way for immunity for myself now, henceforth, and for ever more from fair or reasonable financial criticism. I observe that the Comptroller and Auditor-General, in a passage not so often quoted as some others, remarks that there has been a great and sensible improvement in the year 1917. My predecessor directed two very able and distinguished accountants, Messrs. Guy and Garnsey, to overhaul the munitions accounts with contractors in the early part of 1917. The exertions of these gentlemen, which have been continued from that date, have already recovered a very considerable number of millions, and have already provided my hon. Friend and his Committee with valuable material, which they have been able to lay before the House.

Colonel COLLINS

I must really interrupt the right hon. Gentleman- We had only two paragraphs, and we got no information from these officers. I may say that the cases we took are not selected cases. They are illustrations of the practice as we found it in the Ministry during the last six months; and may I say further that these cases were not brought before us by any Department in the Ministry, but having asked for papers for, say, twenty-five cases, we chose the illustrations from those papers and presented them to the judgment of the House of Commons.

Mr. CHURCHILL

I do not quarrel at all that they should be presented, but I hope that the House of Commons when forming its judgment will not exclude from its mind those other considerations to which I venture to refer. This process of inquiry, which in the initial stages was called the break-down gang, is still continuing, and it has been highly profitable from week to week. I now mean to elaborate and extend it, with the large increase of staff, which will be required for that purpose, and on a very much larger scale. My hon. Friend the Financial Secretary will deal with this in detail, and also with the points which have been raised by my hon. Friend, when he comes to his speech this evening. There was one recommendation of my hon. Friend which I gladly accepted, and that was the recommendation to make my hon. Friend the Parliamentary Under-Secretary of War Munitions, Financial Secretary, with a formal and definite responsibility to the House of Commons. I do not think it would be possible to find anyone so well suited to this difficult task in all the circumstances as my hon. Friend. He has a long and wide business experience. He has legal experience and he has Parliamentary experience. Those of us who were his opponents in the far-off days of the Insurance Act have a very lively recollection of the annoyance to which we were subjected by his cogent and searching analysis of that measure, and the criticism which he directed upon us.

Above all, he is a House of Commons man. The foundation of the House of Commons is its control over finance, and it is absolutely right that there should be in each important spending Department a person of Ministerial rank who is formally responsible, not only to the head of his Department, but to the House of Commons, for the proper conduct of finance—one of its own body who could be questioned at any moment, who is accessible to Members, who can be brought to book here and questioned, and who is willing at any time to meet any group of Members in a Committee Room and discuss with them in full Parliamentary confidence any matter which is causing difficulty or anxiety. If a man is to undertake a function of that character it is much better that he should have complete supervision of the sphere with which he is charged. I know my hon. Friend is very anxious to see several members of the Munitions Council responsible for finance, with the hopeful feeling, no doubt, that you would have greater economy in national finance if you had not one but several Chancellors of the Exchequer. But that is not a course which I have been able to adopt. I think it is far better that the House of Commons should hold my hon. Friend responsible, and I am very glad that they should do so. I gladly confide to him the supervision and control of munitions finance without in any way shirking my own inalienable and general responsibility for all that is done in the Department, and my hon. Friend will be able to tell the House this evening the measures which he is proposing, and to which I have gladly given my assent, to ensure that, as far as the life, energy and ability at our disposal can go, everything will be done that is humanly possible, and no effort will be spared to win for the Ministry of Munitions in its business and financial aspects that confidence and good name which it has undoubtedly won among all those who depend on it for vital supplies.

I have now completed my review of the main features of the munitions situation at the present time. I wonder what impression the House has derived from the numerous facts—pregnant, selected facts—which I have laid before it! I hope that it is the same impression which is continually borne in upon me as the War advances and difficulties and dangers gather, as the fury of the storm mounts higher and higher in seemingly inexhaustible violence—it is a profound conviction which grows in my heart from all the study of the phenomena presented by the War, from everything I learn the strength, the massive solidity, and inexhaustible resources of this great nation, this wonderful Island, battling for its life and for the life of the world. Ask what you please, look where you will, you cannot get to the bottom of the resources of Britain. No demand is too novel or too sudden to be met. No need is too unexpected to be supplied. No strain is too prolonged for the patience of our people. No suffering or peril daunt their hearts. Instead of quarrelling, giving way as we do from time to time to moods of pessimism and of irritation, we ought to be thankful that if such trials and dangers were destined for our country we are here to share them, and to see them slowly and surely overcome.

Mr. HERBERT SAMUEL

I feel sure that every Member of the Committee has been most deeply interested in the comprehensive, vivid, and highly encouraging account which the right hon. Gentleman has given of the work of his Department. On that work and our military effort everything depends. If we may say that the General Staff is the brain of our Armies, the Ministry of Munitions is the heart, propelling to every part the vivifying blood without which they would die. The period of my right hon. Friend's term of office has been one of great strain. He has to supply the colossal demands of modern warfare on the immense scale which we see at the present time. He has, in addition, to make good the heavy losses in battle both in France and in Italy. He has had to cope with the need, immensely expanded, of the air programme of the day. He has further to provide the materials for the expanded shipbuilding programme which the submarine campaign has involved, and over and above all these he has been called upon to release for the Armies many thousands, tens of thousands, of the most valuable workers, the able-bodied young men from the workshops and factories. It is a task formidable both in its dimensions and in the difficulties that surround it, and I am sure that the House of Commons would desire cordially to congratulate my right hon. Friend on the great measure of success which has attended his efforts. He must not think us ungrateful—indeed, we are not ungrateful—if at the same time we are disposed to criticise some of the financial considerations to which he referred in the finishing passages of his speech, for, after all, it is the duty of the House of Commons not merely to welcome and praise the great constructive effort of a Department such as the Ministry of Munitions, but at the same time to examine with a critical eye any defaults or shortcomings that there may be, particularly in the sphere of finance.

There are, as he has pointed out, two considerations to be borne in mind in a discussion such as this. There, is the necessity for adequacy of output, and there is need for economy in the methods of production. True, the former is far more important than the latter. He has said that victory is more than accounting. We need munitions even more than we need to be sparing and frugal in our spending. The true desideratum is to com- bine the two, and the really successful administrator is he who at one and the same time is able to give the great output which is demanded and also to see that it is produced under frugal and careful methods of administration. I think my right hon. Friend was a little unfair to the Select Committee on National Expenditure when he complained that it had not given adequate recognition to the difficulties of his Department. If I remember rightly—I have not the Report by me—in our first Report dealing with the Ministry of Munitions we dealt at length, clearly and emphatically, upon the great difficulties which had attended the Ministry in the period of urgency and stress of its foundation. He pointed out also that the information in our Report had been derived largely from the officers of the Ministry itself. My hon. and gallant Friend the Member for Greenock (Colonel Collins) has already given a preliminary reply to that statement. Even if it were so, we know full well that from the beginning there have been forces within the Ministry which have been doing their best strenuously to struggle for economy. Our complaint has been that those forces have been to a great extent unavailing, and that their efforts have been to a very large extent unsuccessful. Our chief criticism is not that during the first urgency of the Ministry's work in the year 1915 there was laxity of administration in matters of finance and that in the pressure of work and in the endeavour to get the speediest output on a large scale cheques were ignored and put aside, but our chief complaint has been that during the three years which have followed sufficient measures have not been taken to put a complete stop to these deficiencies and to place matters on a more satisfactory footing.

It is true that victory is of more importance than accounting, and that you had to handle rapidly large quantities of raw materials which had to be quickly sent out to the contractors to be worked up into the finished goods; but no matter how urgent it was, you might at least have kept a record on a piece of paper of the raw material you had distributed. What appears to have occurred in the Ministry was that certain materials sent to contractors were not debited against anyone; they were merely written off against the money that had been appropriated to be spent upon them, and recently the Ministry has been put in the somewhat ignominious position of having to reconstruct its own accounts by an examination of its contractors' books in order to find out what were, in fact, the materials they had received from the Ministry. It is not surprising that in the process, as the Comptroller and Auditor-General informs us, out of consignments of £47,000,000 of raw materials which came from the United States the track has been completely lost of a little item of £3,000,000 worth, and no one knows where these £3,000,000 worth of goods have been distributed. The hon. and gallant Member for Greenock is the Chairman of a Sub-Committee of the Select Committee on National Expenditure which for many months has been going to infinite pains to examine all these complicated and technical matters within the Department, and they have presented to the Select Committee a unanimous Report, which, except for some small, and on the whole unimportant, modifications, the Select Committee was glad to endorse and submit to Parliament. True, there are in that Report many items of criticism, but it contains also a long series of specific and detailed recommendations. It is not merely a negative Report, but it is a positive Report embodying a series of constructive proposals. I do not propose to repeat these criticisms, nor to review the recommendations. They are available for any hon. Member of this House who desires to see them. Indeed, I believe this Debate will be barren if it consists of nothing more than the mere repetition of what has already been presented in print to the House and the country.

What the members of the Committee particularly desire to know at this moment is what action the Ministry is taking to meet these criticisms and to carry out its recommendations. I rose primarily in order to invite the Financial Secretary to seize the earliest opportunity of informing the Committee what action is being taken on our Report. The present position is that the House of Commons appointed a Select Committee to review all these matters of expenditure. That Select Committee has presented a Report, and we have to-day an opportunity on which we can debate the administration of the Ministry of Munitions. I submit to my right hon. Friend and to his Financial Secretary that the proper course is for the Ministry now to give its reply to the Committee's Report and to state what their proposals are with respect to its recommendations, and only subsequently can this Committee of Supply properly engage in a discussion of the Ministry's activities, at all events on the side of finance. Otherwise hon. Members will merely be engaged in the barren task of repeating what has already been said in print, not knowing what action the Ministry propose to take to remedy the deficiencies which have been disclosed. There is, as ray right hon. Friend has said, uneasiness in this House and in the country with respect to the financial administration of the Ministry of Munitions from its inception even until this day, and that uneasiness has been increased by the Report of the Comptroller and Auditor-General which gives a long series of specific instances of extreme laxity of financial control. If the Committee has whipped the Department with whips, the Comptroller and Auditor-General has whipped it with scorpions.

Mr. CHURCHILL

That relates to a year ago.

Mr. SAMUEL

Possibly the next year's Report may also have some flagellatory passages. We may not be sure that already all is well. The Report of the Comptroller and Auditor-General goes for consideration in its details to the Committee on Public Accounts, and the right hon. Gentleman is fully entitled to say that until that Committee have considered the matter his Department are not called upon to reply in this House to any specific criticisms which it may contain. I, therefore, do not propose to repeat or emphasise them, but I will mention three points, one of a very favourable and remarkable character, and the other points of criticism. The first is the really amazing fact that in respect of the expenditure reviewed by the Comptroller and Auditor-General amounting in the year under consideration to not less than £500,000,000, the loss to the State through fraud or theft amounted to no more than £250. That, I think, is a remarkable testimony to the honesty of our public service. The second point, which is a very striking one, in the Report of the Comptroller and Auditor-General, refers to the Housing Department of the Ministry. It is remarkable to find—if the statements there made are not in some respects inaccurate—that of the housing accommodation provided by the Ministry for the workers throughout the country in a great many instances, more than half is left vacant and unused. I think that shows a great failure of administrative control and of wise direction. There may be some explanation which does not appear on the face of the Report, though I can quote from my own experience in my own Constituency of Cleveland what has happened in regard to housing accommodation. Huts built for the accommodation of several thousands of iron-stone miners have been left utterly unused during the period of nearly a year since they were erected so far as the miners have been concerned. An alternative use was happily found for some portion of the houses in accommodating workers of another kind but not workers who were contemplated when the huts were built. Thousands of pounds have been wasted so far as the original purpose for which the expenditure was intended is concerned.

The other matter in the Report of the Comptroller and Auditor-General to which I will refer is that he has to complain, not once but many times, that in the comments he has made and the inquiries he has sent to the Department for information necessary for the completion of his audit he has received no reply from the Ministry. I would urge my right hon. Friend and his Department to give special attention to that point. Here is the Comptroller and Auditor-General, who is an official of this House, responsible to this House and to no one else, and who exercises functions of supreme financial importance. Its work will be rendered inoperative, indeed impossible, if it does not receive from the Departments whose operations it is engaged in examining immediate replies to the inquries which it has addressed to them. But in no fewer than seven paragraphs of this Report the Comptroller and Auditor-General says that he has received no reply to his inquiries from the Ministry in reference to these matters. It is not for want of staff that the Ministry is unable to give a response to these inquiries. With a staff of 18,000 administrative and clerical officers—

The PARLIAMENTARY SECRETARY to the MINISTRY of MUNITIONS (Mr. Kellaway)

The number is not 18,000. The administrative and clerical staff number 15,000. The right hon. Gentleman is adding messengers and others.

Mr. SAMUEL

I was quoting the figures of the headquarters staff given by the Minister. I notice a discrepancy between that and the answer given to me only yesterday, in which the figure was 15,000, but I thought it quite possible that during the night the figure might have grown from one to the other, or, still more probable, that my right hon. Friend was referring to staffs throughout the country more or less connected with headquarters, while the answer given to me related only to the London staffs. But the explanation is that there are 3,000 messengers and charwomen, and that the figure 15,000 is the number of the administrative and clerical staff. But even with the small and modest total of 15,000 officers I should have hoped that my right hon. Friend would have been able to give rapid replies to the Comptroller and Auditor-General.

Mr. CHURCHILL

I will give the most strict instructions on that point. I accept absolutely the justice of what my right hon. Friend has said.

Mr. SAMUEL

I hope that the practice in this particular will at once be remedied. There has undoubtedly within the last year or so been some improvement of financial methods. The Comptroller and Auditor-General bears testimony to that, and it is only just that those who speak in this House should recognise that fact. But I do hope that we shall receive a somewhat full statement from the Ministry of the precise action that is being taken. We should all receive some assurance, for an assurance is needed, not only that the Ministry is devoting its attention to securing an adequate supply of munitions that shall be trustworthy in quality, but also that they are being produced in such condition that the taxpayer may feel that the public purse is being fully safeguarded. Let my right hon. Friend bear in mind this fact, which is indeed a truism, that in a long war, such as this war already is, and may probably still further prove to be, the safeguarding of the financial resources of the country is not a secondary but a primary matter, and it is to his Department in particular that we must look for the observance of that principle.

Sir W. RUTHERFORD

I beg to move that the Vote be reduced by the sum of £100.

I have not a set speech to make to the Committee, and I am not in opposition to the Ministry of Munitions, but during the last few weeks I have come across what I believe to be a typical illustration of the lack of business capacity, from the business man's point of view, of this Department. It seemed to me to be so much a matter of principle that I gave notice that I should bring it before the attention of the House of Commons at the earliest possible moment. I did not know then that this Vote was going to be set down for to-day. If the complaint which I had to make were merely a complaint of some trifling amount of a few million pounds I should leave it to be dealt with by some of the committees who sometimes unearth some of these small discrepancies a few years after it is too late to stop them. But this is a matter which goes to the root of the management of the Department from the business point of view, and illustrates what almost all the business men in the country have already, many of them to their disgust, realised, that it is impossible for a controller of any business, some official imported suddenly into a business of which he knows nothing, to manage that business with the same skill and the same success as that with which some few thousands of other people trained to that business from their earliest days have been carrying it on. My complaint is that in the matter to which I am about to refer the Ministry of Munitions ignores the A B C of economic production, and does not supply and is not supplying to our Air Forces the machines that it might supply at anything like the rate and with the efficiency with which it ought to supply them.

I have selected this particular item for this reason: The right hon. Gentleman told us just now, with regard to guns, that the number of guns you can use is limited by the gunners you can get, and the places from which you can fire those guns, and at the same time by the ammunition which you can get. Again, the ammunition is limited by the number of guns you have got to fire it off; but if there is one department of the Munitions Board which ought to be unlimited in point of supply, except by some very necessary condition, such as the number of pilots, it is the Air Service. If we had a few extra thousand efficient and well-armed aeroplanes to-day, an attack on London would be impossible. If we had a few thousand efficient aeroplanes at any given point on the front, look what a difference it would make with regard to the success of an offensive by the enemy. From inquiries which I have made—and I challenge a reply on this point—I find that aeroplanes efficiently armed can be made use of far more than any conceivable numbers that we have got to-day, or are making arrangements to supply, either in Mesopotamia or Palestine, to say nothing of France, and in the defence of London and other places. As I understood the right hon. Gentleman, he said that there was a deficiency of pilots, and that they were cutting down the supply of aeroplanes because they possibly had not got the pilots. I wish to avoid saying or suggesting anything that ought not to be said in public, and for which one might be called over the coals in the nature of discussing matters that possibly might give information to the enemy. But I do not think that this is one, and if there is the slightest suggestion of anything of the sort, of course I will immediately desist.

As to the supply of pilots, my information is that there are at present schools of pilots in England where those young fellows who are keen to learn can only get an hour's flying at intervals of a day because of the shortage of machines. Does that show that we have got an excess number of machines over the supply of pilots? I am one of those who admire above everything the magnificent pilots we produce. Their bravery and their success and their magnificent manœuvring are the envy of every Army, both of our Allies and of the enemy, and I think that the men would be forthcoming, and are forthcoming, and ready to do this dangerous but most successful and magnificent work if the machines were only at once provided to enable them to carry it out. I thought that I would go to the latest works which were making these things successfully for the Ministry. I do not want to give a gratuitous advertisement to any particular manufacturer, and I will not mention the name unless it is wished. I found those works, which have sprung up since the beginning of the War, paying £10,000 a week in wages, and turning out 100 aeroplanes a month. I found letters from the Ministry of Munitions expressed satisfaction that their requirements had been complied with, even before the date of contract. I asked, "Why do you not go in for making more?" and they said, "We cannot get orders from the Ministry of Munitions for them." I asked what they could make, and they said they could make so many thousands of those aeroplanes of an improved type, the largest and best that are now being made, and they could begin to deliver them within three months. But before they can begin to turn out a new type of machine they have got to get the jigs, as they call it, the tools and other preparations to turn out that new type in a wholesale manner, and it takes about three months. If you cut off works like that with a large number of fitters, skilled men, and say, "You shall make no more than what you are making, but we will give you an order at the end of two or three months," the effect is that those men have either got to starve or be dismissed by their firm, and the concern will be broken up. That is not the way to get aeroplanes; that is the way to discourage and prevent aeroplanes from being turned out.

What ought to be done in all these cases is to take from each of the works the utmost amount which they can turn out of the type on which they are engaged, down to the moment when the necessary preparations in the shape of tools and so on are ready to begin to turn out the new type. Otherwise there is a hiatus, a dismissal of the men, and there is a breaking up of the organisation, which is really fatal to turning out the new machines. I got this offer from the firm, that they would make so many thousands and would deliver them. I communicated with Lord Rothermere. He saw me about them. He said, "This is in the hands of another gentleman. I want you, first of all, to write me a letter giving me the particulars." That letter was written. I am not going to weary the Committee by reading it. It was a plain offer by these people to supply some thousands of those machines within this period to Lord Rothermere and this other gentleman, whose name was given by the right hon. Gentleman just now. He said more about Sir William Weir, but I should be the last person to say anything derogatory in reference to any gentleman who is not here present, and I am not going to do it. After all, we have got to remember that Sir William Weir was director of a foundry works in Glasgow. There are thousands of men in England directors and managers of foundry works just as able as Sir William Weir, and that is not saying anything against Sir William Weir,—not at all. But the position taken up by the Department is—and if this was the only answer, it would be fatal—that they can get as many aeroplanes built as they can get the engines for, and that they do not want to use manual labour in making aeroplanes for which they cannot get engines. That was a complete reply, and I therefore went back to the firm and put it before them. They said that they could supply the engines, if that was the point. I said to them, "Very well; make out an offer to supply the aeroplanes with engines." That they did, and they were told that the Department could not give them an order.

I put it to the Ministry of Munitions in this way: If you will give this firm—and in regard to all the other firms I asked the same thing of them—an order for all the complete machines they can turn out, you will get them; but if you deal out orders for twenty and fifty at a time to each of these firms, you will only get 25 per cent, of output. That is a business proposition. People who have only got an order for 25 per cent, to make different parts do not lay themselves out to make 500, but if they got an order for 500 they would work up to that. I have no hesitation in telling this Committee, as a business man of some years' experience, and without any hostility to the right hon. Gentleman or to anybody in the Ministry of Munitions, that the A B C principle of economic production, the way to get the largest number at the smallest cost, and as quickly as possible, is to give any firm making what you require an order for the largest number that they can turn out within a given time. That is the way to do it, and the only way to do it. Any other system, and, unfortunately, the system adopted and now carried out by the Ministry of Munitions, simply results in a quarter of the production that might otherwise be obtained. If there is a point which is of more vital interest than another to us to-day it is the output of efficient aircraft. I do not think there is any point more important. Of course, we know that machine guns are most important at the present moment; undoubtedly that is so; but efficient aircraft, above everything, are wanted in connection with this War. Why, in the name of Heaven, therefore, does not the Ministry avail itself of the opportunity to get as many of these efficient machines with engines as they possibly can? The right hon. Gentleman wrote me a letter in reply to a communication which I addressed to him.

Mr. CHURCHILL

I drafted it.

Sir W. RUTHERFORD

I am sorry to hear that, because the letter offered to make aeroplanes complete, and the answer was no answer at all. It stated that the Department could not give an order unless it was told how and where the firm could make every part of the engine, as the firm were not making the engines themselves. That was all right, but here is a way in which they could do the work. I have documents here to show how it could be done. I have a list of forty-five leading firms in the country, dealing with the work of making the different parts that would be wanted for the engines. These firms cannot make the aeroplanes, and the firm to which I have referred, and whose name I do not seek to advertise, do not make the engines. I have here statements by the forty-five firms, though I need not weary the Committee by reading them, but what, in effect, they all say is that they are now in a position to take contracts for the different parts they were asked about, and that these parts could be assembled and the engines put together by the firm in question. By going first to one place and then to another for these different parts, as is here proposed, thousands, not hundreds, but thousands of aeroplanes can be made by this firm and handed over to the Ministry of Munitions within twelve months. At the present moment the Department will not take them. I am here to ask why? To my mind, there is no intelligible ground. The whole of this documentary material is at the service of the Ministry, or of any business man in the House that would like to look at it. I believe that this is typical of the present management of the Department; they will not trust private enterprise to carry through its contracts; they want to do everything themselves; they want to get into direct touch with the people doing the work. That is all right, but could not the Ministry get their engines by getting into touch with forty different firms to make the different parts required? I apologise if I have occupied the time of the Committee unnecessarily. I am only urged by a desire to see the greatest possible output of this essential weapon, the aeroplane. I have no personal interest to serve; I have not a single sixpence in this firm to which I have referred; I have not given its name, and T do not wish to give it; I do not want to give it an advertisement; I am not here for that purpose. I ask the Com- mittee to believe that I am absolutely disinterested in this matter. As a businessman, the facts were brought to my notice; I have seen the works myself, I have examined into their capabilities and their general arrangements, and I am satisfied that they could carry out the order. I do not know why the Department should not give the order, and I submit that the state of affairs which I have brought before the Committee should be remedied.

Mr. CHURCHILL

I hope I may be allowed to intervene for one moment to answer the rather vital point raised by my hon. Friend. He has discussed this matter, and told the Committee that it was to Sir William Weir he made the offer to make this very large number of aeroplanes. My hon. Friend does not appreciate the fact that we are not trying to make the largest possible number of aeroplanes. We are trying to develop the greatest possible force of aeroplanes in the shortest possible time. It is no use developing aeroplanes of any particular type in advance of the squadron organisations which are to receive them, and of the pilots who are to use them. That is obvious. We have a great programme of aeroplane development which is being worked out in accordance with plans made many months ago. That, we thought, was the largest possible programme which could be efficiently managed when ready, and we are actually in advance, month by month, of the number guaranteed, both of aeroplanes and of engines that can be used. What is the good of parcelling out a number of orders when we have a well considered general programme, and when those orders would not add at all to our Flying Corps? The machines would have to be stacked and stored for a considerable period until pilots and squadrons were organised for them, and then very likely they would be superseded and out of date by a better aeroplane of a later pattern. To give such orders would deplete our limited stocks of materials for the construction of aeroplanes. I cannot go into this at great length, but I can assure my hon. Friend that we have no desire to go slow, and that red-tape does not prevent us from taking advantage of his public spirit.

Sir W. RUTHERFORD

Is the right hon. Gentleman intending to say that there is no shortage of aeroplanes, but that the shortage is a shortage of pilots? Because if that is so, I think the right hon. Gentleman should say it quite straight, so that there can be no mistake about the matter.

Mr. CHURCHILL

I do say that the supply of aeroplanes at the present time is, on the whole, not only above the estimate, but above the parallel development of squadrons and pilots that we require to organise. To give an order of this kind with the different parts of the engines to be obtained from different firms might draw on some of our existing sources of supply and limit development.

Mr. J. M. HENDERSON

Is it not a fact that five weeks ago you increased the aeroplane manufacturing business, and gave orders for 100 aeroplanes?

Mr. CHURCHILL

Oh, yes; we are continually putting out enormous orders for hundreds and thousands of aeroplanes—continually and in rapid succession—for aeroplanes made in accordance with our system and plans.

6.0 P.M.

Captain BLAIR

I venture to take part in this Debate for a few moments, because I have the honour to be a member of the Select Committee on National Expenditure, which has come in for a certain amount of criticism this afternoon. I should like to say what the right hon. Gentleman the Member for Cleveland (Mr. H. Samuel) has already said, but this time, speaking as a member of the Sub-committee that prepared that Report, that that Report was agreed to by all the members of the Sub-committee. I am not going to refer to the Report at any length, but I would like to say to the right hon. Gentleman that it was intended in no way to be hostile to the Ministry. We have borne steadily in mind the peculiar conditions under which the Ministry was founded and the wholly exceptional circumstances in which it now carries on its vast business. It was into the finances of this vast organisation, with its numerous ramifications, that the Committee was asked to inquire. In view of the fact that the Ministry involves the payment of very large sums of public money, I am sure no one would venture to deny that it should be established on a sound financial basis, and when you bear in mind the extraordinary circumstances in which it came into existence, its very rapid growth, and the peculiar nature of its work, the necessity for a sound financial system becomes all the more apparent. The Ministry is a child of the War. It was created to ensure victory—victory at all costs—and at a time, too, when many of us thought that the War was going to be short and sharp. This Ministry, which was to organise and to stimulate the provision of munitions required for the armies in the field, was given what was virtually a blank cheque upon the finances of the nation. Nothing in the way of expense was allowed to stand in the way, in those early days, of our Armies being supplied rapidly and well; and who shall say that the money so expended then was not very well invested by the nation?

It is only natural that such a body as the Ministry should have become subdivided into an enormous number of Departments. Each of these Departments I am sure has been animated by the desire to get the maximum output. Expense as of ten as not has been only a secondary consideration, but I am sure that the nation which has to provide the money is entitled to an assurance that that money which it so lavishly gives will be wisely spent. As we have heard this afternoon from the right hon. Gentleman, conditions are undergoing a very rapid change. I am sure that the right hon. Gentleman the Chancellor of the Exchequer would agree that money is not so easily found now as it was a short time ago. The cost of raw material, too, must have enormously increased, while labour has become very expensive. Some requirements in the matter of munitions, I believe, have been practically satisfied, but, owing to the rapid changes of which we have heard this afternoon, and which are daily taking place, new requirements-are constantly springing up, with the result that money formerly devoted to a certain purpose must now be diverted to other channels. All this argues the necessity of one thing, a proper system of financial control within the Ministry itself. As the Committee said in, I think, paragraph 10 of their Report: Supply should be able to leave to finance the troublesome question of accounts, and finance should miss no opportunity of relieving the Supply Department, which already carries such a heavy burden of responsibility. Speaking as one who is a chartered accountant by profession, I must say I was comforted, at least to some extent, that there was such a thing as Excess Profits Tax, which would tend to prevent those who are contracting with the Ministry from making abnormal profits in the long run. That is one good thing. I say I was comforted to some extent only because the members of this Committee must be fully aware that allowance is given in some oases for the writing down of capital expenditure incurred in the War out of these Excess Profits Taxes. I admit that it is desirable that the firms should be in a strong position after the War, and should not be burdened with a plant and building which they have possibly put up at the nation's urgent request, and for which after the War they may find no ready use; but surely the proper way to provide for this is not by the means of giving them excessive profits on their war products! By all means let them have every facility for starting fairly when peace arrives. If you like, give them subsidies, protection, and every facility, but do it with your eyes open. If the State is to subsidise industries in any form, then I say it should be openly done by Act of Parliament, and then the country will know where it is. There is no doubt that in same cases, of which we have given a few examples in our Report, abnormal profits have been made, and it must be remembered that a net profit of, say, 50 per cent, made by one contractor does not make it any easier for those who have to make contracts for the same material with other firms.

The right hon. Gentleman this afternoon said very little about finance. Possibly when some hon. Members of this House read the Report issued by that Sub-committee they asked themselves the question, "Is there a Finance Department at the Ministry at all?" There is undoubtedly a Finance Department at the Ministry, but in my opinion its services are not called into request as often as they should be. We give one small example in our Report, a case in which the prices were being negotiated by the Supply Department, although at that very same time the Finance Department had the firm's 'manufacturing cost in its possession. Again, surely the finance Member should be in a position to say, having regard to the total cost, whether it would not be more economical in the long run to incur capital expenditure. For instance, the total cost of the output of steel amounts to more than £100,000,000 sterling, yet no steel national factory has so far been erected. I ask the Committee to apply a very simple test in considering the recommendations of the Select Committee. I submit that the Committee has done nothing more nor less than to invite the Ministry to adopt principles which are applied to the management of every sound business concern in the country. No business could be satisfactorily conducted if orders were accepted and goods were bought without due regard being given to the financial position, and in my view the finance branch should, so to speak, be an ex officio member of every other branch in the Ministry, so that no steps could be taken without due regard to economy. The very first recommendation which we make in our Report is that the vacancy of the finance Member on the Council should be at once filled. If I remember rightly, it is three or four months ago that the gentleman occupying that position resigned his post, and, so far as I know, up to date no one has been put into that vacancy. As regards contracts, we have strongly recommended in our Report that a representative of the contracts branch be added to the Munitions, Council, and that the settlement of contract prices should in the future be done by the contracts branch. To leave the contract prices with the Supply Department is, in my opinion, not only undesirable but even dangerous, because the Supply Department is naturally anxious to procure the maximum supply without paying due regard to cost. We also recommended that the technical costing section should be immediately strengthened, and that all engineering costing in the Ministry should come under that one Department. We went very much on the lines on which the Committee on Public Accounts went last year when, dealing more especially with accountants' costs, they said in their Report: The system has become widely developed and its adoption made a condition of contract with the Department, the result being most striking in two directions: firstly, in reducing the scale of prices; and, secondly, in bringing home to the manufacturers the importance of minute investigation into their records to ascertain the true cost of production. They go on to say: This is likely to have a large and far-reaching effect in the future. Further, it is stated that the new system, which was in many cases at the start objected to, is now being warmly welcomed, as manufacturers find that it makes for economy by giving them a much closer grip over their transactions. I wish to press that the recommendations of that Committee be adopted, and I invite my hon. Friend on the Front Bench (Sir W. Evans) to tell this Committee as early as possible in the Debate what the Ministry intend doing on those recommendations. I repeat what I previously said, namely, that the Report was not intended to be hostile to the Ministry in any way, nor did we intend to minimise or disparage the magnificent work which they have done under exceptional circumstances in the interests of the Empire. But we felt it our bounden duty to point out, with a view to making certain Departments more efficient, that it is necessary—and vitally necessary—to assist and strengthen the status and the influence of the financial Department.

Mr. G. TERRELL

I think the Committee listened with genuine pleasure to the very interesting review which we have had to-day from the Minister of Munitions on the subject of the output of munitions during the past year; but I think he was a little ungenerous in his statement in not recognising that the work which has been accomplished was not really his work, but the work of a class whom he omitted to mention or to notice in any way whatever. The class to whom I refer are the manufacturers of the country, and I think the impression which one gains from reading the Report of the Auditor-General and of this Select Committee, both of which have been referred to, is that manufacturers have laid themselves out to make unconscionable profits. I wish, as representing here certain manufacturers' associations, on their behalf to give a denial to any suggestion of the sort in a most positive and definite manner. Of course, some may have made great profits, but, taking manufacturers as a class, they have been most patriotic, and have only attempted to obtain a fair and reasonable profit. They have submitted without a murmur to taxation. They have had their businesses interfered with. They have had interference with their men. They have been harassed with inspectors, and harassed by being required to fill up vast numbers of very unnecessary and difficult forms.

There is also another matter to which I might refer. There are very few firms engaged in the manufacture of munitions who have not, at one time or another, in their dealings with the Government Departments, been let in for serious losses. We have had an instance to-day.

I do not know what the firm is, but it is a firm which is short of money and unable to pay its wages, and I have little doubt when the facts are investigated it will be found that it has been struck by the Ministry with contracts which have proved far from profitable. I wish to deny most positively that manufacturers have been profiteers in any sense of the word. I know in some cases a charge of profiteering can be made. We were told that the workmen are doing so splendidly that they are turning out more and more every day. Some of them, at any rate, are not above the suspicion of having engaged in profiteering. They—I will not say all of them, or anything like all, but some of them—have taken advantage of the nation's necessities. I had some figures furnished to me by a shipowner this morning showing that in pre-war days a riveter could fix 360 rivets a day, and the output from his works in to-day's operations was only 240 rivets, and one knows the riveter to-day is receiving very much more in money than the riveter of pre-war days. That, to my mind, is profiteering.

As evidence that employers have not engaged in profiteering, I would refer to the Report of the Auditor-General, in which he states, in paragraph 31, that the evidences of large profits are not numerous. The Auditor-General, I venture to think, has a very intimate knowledge of this subject, and, if that is his opinion, it may be taken as fairly conclusive that manufacturers, at any rate, have not been guilty of this offence. Last year we were treated by the then Minister of Munitions to a speech which, in many respects, was somewhat similar to the speech to which we have listened to-day-According to him: All runs so smoothly now, supplies and processes of one Department operating with another, that the country is scarcely aware of what is going on. We have a very similar picture presented to us to-day, but we have also the picture which is presented of the methods of the Ministry in the two Reports which have been referred to, and if those Reports are a fair sample of the way in which the Ministry conducts its business, then the sooner the Ministry is wound up the better it will be for the country. I refer to one or two items mentioned in the Auditor-General's Report. In paragraph 8 it is mentioned that a contract ledger showed payments to a particular firm of £1,400,000. Some time subsequently the actual figure was found to be £4,700,000. Paragraph 9 refers to some account being paid twice. A contractor is paid £111,000. He calls the attention of the Ministry to it, and afterwards he is paid another account of £21,000 a second time. Then those Reports refer to the very great mistakes which are made in estimating for the construction of Government munition factories. Paragraph 26 shows that the estimated cost of certain factories was £3,000,000, and that the actual cost exceeded £7,000,000, and that since those figures were arrived at further expenditure had been incurred. Then the Report deals with the excessive payments made to the staff at the Ministry, and to expenditure which has been incurred for the accommodation of workers, and in every one of those instances you will find strong evidence of bad management and neglect.

I do not want to criticise the Ministry unduly. They have had a great deal of difficulty and trouble to overcome, but where they have gone wrong, and so often gone wrong, is that they have always, from the very time the Ministry was instituted, refused to consult employers. Their ears have always been open to Labour. "Oh, yes, we will consult your trade union," but when it comes to consulting employers, who, after all, know more about these matters, who have a greater and wider experience than the amateurs at the Ministry, they turn a deaf ear to them. I had the privilege of presenting a very large and representative deputation to the late Minister of Munitions a little over a year ago. We begged him then not to interfere with our businesses, but that in all the new arrangements he desired to make to consult us, and we would give him the best advice we could possibly furnish. He consulted us for a time. We advised him, but our reports were invariably turned down. The present Minister was appointed. We organised another deputation, and we asked him to consult us, but, instead of that, he has always preferred to go his own way. He has consulted certain organisations, but when it comes to consulting the great body of employers he has always refused, and still refuses, to be guided by any advice which they can offer. The upshot of it is that ever since he has been in office we have had a great deal of trouble and unsettlement in connection with the advances of wages to all classes of workers. When the demand was originally made which resulted in the 12½per cent, increase being granted, the Minister of Munitions consulted the engineering Employers' Federation, and they gave him very sound and definite advice, but that advice was turned down, and he preferred to be guided by the trades unions.

An HON. MEMBER

What advice?

Mr. TERRELL

The advice which was given was that the Federation objected to the proposal, and made strong representations as to the effect which the granting of an advance in. the case of any particular class or classes of time-workers would have on other classes of time-workers. Then the representatives of the Federation took the position that any proposal which involved extra payment to time workers without relation to increase of output, "is fundamentally opposed to the national interest, which, at this time, demands, and is entitled to receive, the maximum effort of everyone concerned." That was turned down, and the advance was granted which has been the cause of so much trouble to the country, and which in the end will affect the Excess Profits Tax, and will find its way on to the cost of materials. I should have thought that my right hon. Friend would have been guided by some of the many Reports of industrial unrest which have been published. In some of the Reports is the statement that the industrial unrest is to some extent occasioned by excessive Government interference between the employers and their men. I think that a very great mistake has been made. I further believe that at the present time, instead of the Ministry of Munitions helping our output they are doing the opposite, and if the Ministry could be entirely wiped out you would have no loss of output, but probably an increase of output, and an enormous saving of expense to the country.

One thing which apparently the Ministry, in dealing with labour, have never understood is the reasonable demand of skilled labour to be put on a higher footing as regards pay to unskilled labour, Unless I am mistaken, the all-round 12½per cent, which has been granted will before long find expression in a further demand for increased pay. The Ministry have never left it to the employers to deal with their workpeople themselves, but, as has been stated so often, they have interfered, and by their interference have made a great deal of unnecessary mischief and trouble. A step, I understand, is contemplated, which is the introduction of a Bill for the restoration of trade union rules. It is common knowledge that the Minister of Munitions has received the usual deputations, and pressure from the trade unions, and apparently he is going to act without any consultation with the employers. In my opinion it is unfair and unjust to the employers, who are, in every possible way, struggling and doing their best to help the country, that they should be treated in the manner in which they are being treated. My object in rising to-day is to make a vigorous protest against the policy which is being pursued, and to hope that, as my right hon. Friend seems to be quite blind, or determined to turn a deaf ear to private pressure, that he will, at any rate, listen to the pressure which I am now publicly endeavouring to put upon him, and on all occasions when employers' interests are concerned will himself consult them with regard to their business.

The FINANCIAL SECRETARY to the MINISTRY of MUNITIONS (Sir Worthington Evans)

The hon. Gentleman opposite will perhaps excuse me if I do not follow him into the matters of capital and labour contained in the latter part of his speech. I would like, however, to make a reference to the statement he made earlier, for it illustrates what my right hon. Friend opposite has said about the uneasiness which has been caused by the two Reports recently published. My right hon. Friend said that to-day is not the day to deal in any detail with the Report of the Comptroller and Auditor-General. But there is the Report which has been issued by a Committee appointed by this House, the Public Accounts Committee. The representatives' of the Departments are examined, subsequent to which the Public Accounts Committee, after having heard both sides of the case, makes a Report. Nevertheless, uneasiness has been created by the publication of that Report. The hon. Gentleman just now said, "Of course there is uneasiness if an Estimate of £3.000,000 is exceeded and ultimately £7.000,000 is spent." It is just that misconception of the facts which has given rise to uneasiness in this case. It is true there was an original Estimate of £3.000.000, but the whole scheme of construction was changed in order to more than double the output. The consequence was the larger sum was spent, and it is suggested that this was a piece of bad estimating, or of bad contracting, when an Estimate of £3,000,000 for one purpose was turned into £7,000,000 for a purpose which was two or three times as great as the original Estimate.

I do not propose to deal at all with the Report of the Comptroller and Auditor-General. I do desire, however, to say on behalf of the Ministry, in answer to an invitation of the right hon. Gentleman, what is the policy of the Ministry in regard to the Reports of the Select Committee. Before I do that I want, if I may, to lay before the Committee what might be called a business statement of the present organisation of the Ministry, because up to the present day there has never been a comprehensive statement relating to the finances, accounts, and contracts laid before the House of Commons, nor has the House of Commons ever been told the business of the Ministry from a business standpoint. It has been told from a production point of view, and from a fighting point of view—and a magnificent catalogue has been presented to the Committee from those points of view. In order, however, to remove, in some degree at any rate, the sense of uneasiness, I think it is only fair that I should put before the Committee a short statement of the business transactions carried through by the Ministry, so that the Committee can maintain a sense of proportion in judging the various incidents brought to light by the Report of the Select Committee.

Let me commence by saying that the Ministry of Munitions is the biggest buying, importing, selling, manufacturing, and distributing business in the world. That, of course, means nothing, because, by itself, it hardly describes even the quite simple operations which we have to carry through. We buy and import a very large quantity of raw materials—about £150,000,000 worth per year. There are, however, no world markets to-day in which you can buy those large quantities of raw material. So that, although purchasing seems to be quite a simple operation, it means, in our case, that we have had to establish and maintain offices in the United States, Canada, Paris, and now in Rome. We have had to make arrangements for the control in our Dependencies and self-governing Dominions of the prices of raw materials, the restriction of their user, and the importation into this country of those raw materials. There are very obvious results from endeavouring to obtain raw materials when there are no international markets. Some of the steps which we have had to take are the most unheard-of and most unlikely steps. For example, in order to secure and make sure of our lead supplies, in Spain we are actually financing the Carthagena and Herrerias tramway, and in order to get lead from Spain we have had to provide it with coal. Again, in order to secure pyrites, we are having to subsidise freights and supply coal. Then our aeroplane and machine tool requirements are very high. We have had to control high speed steel. That seems, again, quite a simple principle. What it has meant is this: We have had to arrange for an Empire price to be fixed for wolfram. We are importing on Ministry account, and we have to ration it out to the smelters. We have to take the product, and again ration that out to the various steel makers. All these operations are included in the business of buying and importing, and I ask the Committee to think for a moment what are the number of contracts and what are the number of financial controls required to carry out even a small programme of this sort. Yet this importation from abroad is only one small portion of our business.

At home we are controlling all the mines that the Coal Controller does not control. We have even to control bricks. Again, we have had to take quite unexpected measures to secure an increase of output of iron. In Lancashire and Cumberland we have had to take over some fifty-eight mines; and, in order to save tonnage as far as possible, we have been encouraging the reopening of lead mines in Wales. We have had to contribute to drainage schemes, and we have had even to include in our arrangements protection for the water of the Holy Well of Wales. In reply to questions at Question Time, I stated that we have opened up deposits of coprolites in Cambridgeshire—not for amusement, but in order to gave the tonnage which would otherwise be necessary for the importation of the equivalent phosphate rock.

Let me now ask the Committee for a moment to consider our manufacturing business. The raw materials that we import or produce here we either sell to contractors or we transfer them to our own factories for the purpose of working up into the partly manufactured or completely manufactured components of munitions of war. We own 180 factories, in which over £50,000,000 of public money is invested. The Royal arsenals are in addition to these, but altogether these factories employ 281,000 people, and the wage bill is- over £1,000,000 weekly. The output of these factories is £300,000,000 a year—that is, the output in our own factories and in the Royal Ordnance factories. In addition to that we have got to look after another output made by the contractors rather in excess of our own output. That is our manufacturing business. Of course, it is the largest manufacturing business in the world. Take our selling and distributing business. Just a few words about these. Besides our raw materials we are controlling pig-iron, steel and all steel products, and the product of the non-ferrous metals. We are actually rationing every industry in the country in connection with non-ferrous materials, and as regards some of them, tin plate, for example, we are rationing the world. We have had to make arrangements for rationing the whole of our Empire; our Allies also are dependent upon us. That is not nearly all in the distributing business, because in our factories we are making explosives and components. They are not completely worked up there, and they have to be distributed to other contractors or factories owned by ourselves. Not in a higgledy-piggledy fashion has this to be done, but in a way and at a time which synchronises with the needs of these factories. That is our sale and distributing business. In addition to that—I will not weary the Committee with details—

HON. MEMBERS

Go on!

Sir W. EVANS

We have all the transport business, both inland and overseas, which are connected with munitions. Without power there would be no production. We have had, therefore, to nurse the gas and electric power of the country, and, indeed, it is a curious fact that the electric power has been doubled, or nearly doubled, since the beginning of the War. That has not been done without financing. We have had to lend money to a private company here and a manufacturing company there, or in the case where the power is municipalised to the corporation for, it may be, the setting up of new power. There is not a single one of these transactions that did not require a large and complicated system of finance, contracts, and accounts, in any one of which a slip, of course, may occur. Therefore there is room for faults, and I do not deny that there are faults. In the early stages output was of the very first importance, and finance and accountancy were necessarily secondary. I do not know whether hon. Members realise how that quick movement did necessarily affect records, accounts, and finance. In those days manufacturers were almost stopping output for want of raw material, and they were down to the last few tons. They were so short that special trains were waiting at the ports to take the raw material immediately to the contractor to keep his works going. It is all very well to say you ought to have written down on a piece of paper what you sent him, and we did. That is exactly what happened. It was not business, and we are now suffering for it; and that is the scramble which has caused a great many of the deficiencies which have been referred to. So far as they refer to present and current practice, I will refer to them in a moment, but when hon. Members criticise the past, I say that there were conditions in the past which made that state of things almost inevitable. Gradually finance, contracts, and accountancy have been strengthened, but it will take time to overtake the arrears.

I do not pretend that we are going to be perfect, for it is going to take time and much labour. I have told the Committee something of the complications of this business. Has the Committee any idea of its magnitude? We are spending about £620,000,000 a year, and something over £2,000,000 each working day. Our finance and contracts departments have to look after that expenditure, and our turn-over is about £2,000,000,000 a year, and our accountancy and audit department have to look after all that expenditure. Let me explain what I mean by that. The expenditure is in raw material which is either used in the factory or sold, and it comes out again in the form of a mixture. Copper and spelter comes out as brass. It is sold or bought as brass, and from that day becomes cartridge strip or a cup on the cartridge, and for each of these transactions accounts have to come in, and they are taken charge of by the accountancy department right away there: and so it is calculated that the amount we have to look after is £2.000.000.000 a year. This is also true of the stores department. Unless they can become absolutely perfect there are bound to be some errors. One hon. Member said we were making duplicate payments. Does the hon. Member realise the extent of our payments? In the year ending 17th March, we paid 600,000 accounts, and so far as we know there were three hundred duplicate payments, and that is many more than the Select Committee or the Comptroller and Auditor-General said we made, and it amounts to one in two thousand. Last year we made 1,000,000 payments, and so far as we know the duplicate payments did not exceed twenty or one in 50,000.

Mr. TERRELL

I was referring to the Report, which alluded to the frequency and the amount of duplicate payments made to contractors in respect of some supplies.

Sir W. EVANS

I have stated with great frankness the full extent of our delinquencies. There were 300 such payments made. What I want the Committee to realise is that there is bound to be individual errors in a staff got together in the way our staff has been formed. I wish the Committee to realise that the system is such that it involves much labour, but yet it does pick up the errors and bring them to the surface and so ultimately public money is not lost. The improvement shown between the one year and the other seems to give us some degree of confidence that the staff itself is becoming better trained and individual errors are not likely to be so frequent. I do not want to claim too much. A business like this is carried on in public. There is no big business in the country subject to the criticism of acute Members of the House of Commons. If a private business makes mistakes, and if there is a duplicate payment there you do not hear of it, but if there is one in our Department the House of Commons and the world knows of it. I remember on one occasion my wife and I paid the same telephone bill. I thought she was not paying it and she thought I was not paying it, and there is an individual error. [An HON. MEMBER: "Did you get it back?"] Yes, and there was no public money lost. I want the Committee in criticising this Department to remember how big the business is. I said there was a turnover of £2,000,000,000 a year, and I also stated that there was nothing like it in the world. It is extremely difficult to get anything to compare with it, and the nearest comparison is that of the United States Steel Trust of America, which is the largest commercial corporation in the world. This company has taken more than fifty years to bring up to its present pitch of efficiency, and it is supposed to have one of the highest trained staffs in the world, and it rumour is true it is the highest paid staff.

To give the Committee some idea of the size of the business we are running, let me compare a few of the figures of the Ministry with those of the United States Steel Trust. The stocks in hand of the United States Steel Trust were, according to the last balance-sheet I have seen, £36,000,000, and ours are £277,000,000. Their year's sales to customers were £170,000,000, and our equivalent of that was £1,500,000,000. Their inter-company sales were £60,000,000, while our sales between one factory and another and between our factories and contractors was £500,000,000. The United States Steel Trust had 252,000 employés, as against our 385,000. Their pay roll was £52,000,000, as against ours of £71,000,000. Their net floating capital was £100,000,000 and ours was £350,000,000.

Those figures show that we have eight times the sales of the United States Steel Trust and three times the active capital of that trust, which is the biggest in the world, got together, not under war, but under peace conditions, and it is a business one-eighth of the size of ours; while our staff has been got together under war conditions, and a great bulk of them are men who are not fit for the Army. We have a mere backbone of Civil servants, a nucleus crew, so to speak, and they are the most loyal and hard-working men that ever a Ministry had. If you consider the dilution, we have less than one Civil servant per cent, of the people employed. We have in the Contracts and Finance Department about 2½ per cent, of the old staff and 97½ per cent, is dilution. With regard to these Civil servants, we have to remember that they are not dealing with ordinary Government finance and accounts. They are called upon to conduct transactions with which they have had practically no previous experience. Of course, we have, in addition, skilled accountants and business men giving us the greatest assistance. They are familiar with business methods, but not with Government methods; and what we find now is neither pre-war Government methods nor business methods alone will suffice, but what we want is a judicious blending of both.

7.0 P.M.

Let me tell the Committee some of the steps that we have recently taken to meet the deficiencies which at one time existed in the Ministry. First of all, we have to try and understand what the causes were, and the primary cause was, of course, the urgency of supply and the rapid growth of production. I do not think I need further dwell upon that, as my right hon. Friend has already referred to it. The next difficulty was that we inherited a single entry system of book-keeping, and we continued that system too long. I do not want to go into details, but any accountant or any business man knows perfectly well that a single entry system, however good it may be for Government accounts, is perfectly useless for the class of business we are now carrying on. In pre-war times you realise what the Government did. It bought from a contractor a number of shells and it paid the money. The money they paid was written off to a vote-head. The money was spent, the goods were received in exchange, and that was the end of it. To-day we carry on quite a different business. We buy and sell, and lend money and make Grants, some of which are repayable on all sorts of contingencies. There was nothing in the system of accounts which showed the balance due from a contractor in respect of those loans or of raw material. The single entry system did not permit of that. I am not saying that there were not subsidiary books kept; there were, but subsidiary books do not come in as part of the balancing system. It is very difficult to make them really valuable books of account. My hon. Friend (Mr. Henderson) says that they are not worth anything, but they arc better than nothing. The double entry system is infinitely better still, and within the last few months the double entry system has been adopted. It came into operation completely as from the 1st April this year. Last year it was recognised that other steps would have to be taken, and a break-down gang, to which my right hon. Friend alluded, under the experienced guiding of Messrs. Guy and Garn-say, was set to work. I was sorry that the right hon. Gentleman opposite smiled when my right hon. Friend related our efforts, but they were efforts to recover public funds. He laughed that it should have been necessary for the Ministry to have gone to contractors in order to reconcile the accounts, but in the circumstances in which we found ourselves it was the only course to take, and it was the right course.

Mr. H. SAMUEL

I do not dispute that.

Sir W. EVANS

The result was that there was an immediate recovery, spread over a very few months, of something like £10,000,000, partly in materials and partly in advances. In addition, the indirect effect was really very considerable, because it was found that materials were not billed out as quickly as they might be, and large recoveries and great savings in interest have taken place owing to the alteration of the system.

Mr. D. MASON

Did the right hon. Gentleman say a recovery of £10,000,000?

Sir W. EVANS

I did. I do not mean that that £10,000,000 would otherwise necessarily have been lost, but the examination that was conducted by the breakdown gang hurried things up, so that these things were brought to light at once, and the £10,000,000 was recovered. I do not mean to say that a slower process would not have got exactly the same result, but anyhow we did get it this way.

Captain BLAIR

Was it only £10,000,000?

Sir W. EVANS

It was £10,000,000 directly—I do not want to over-claim it—but, as I say, indirectly it had another effect. It had the effect of hurrying up the invoicing and of exposing some gaps which were promptly filled, and losses which might otherwise have occurred did not occur, so that undoubtedly it had a great effect. There have been other changes made. A central invoicing section has been set up, and, in addition, it is now possible to review contractors' accounts as a whole. A comment was made in one of the Reports that on one account a contractor had been overpaid. That is perfectly true, but if the writer of that report had looked at the other accounts of the contractor he would have found that the contractors' acounts did, in fact, balance. Steps have been taken to make that more apparent in future. Speaking of the break-down gang, I have my right hon. Friend's authority, provided I can get the staff, and that is the difficulty, because I must have peculiarly highly qualified accountants for this business, to now work backwards, and, having started the double entry system as from 1st April, to go over the books of the Ministry and put them on the double entry system from the commencement. That will entail the employment of a special staff of possibly several hundreds, and it will cost possibly several thousands of pounds, but I am advised and convinced that it will be a wise thing to do. There is only one other important thing that I want to mention to the Committee, and I think every business man will appreciate it. We are preparing a balance-sheet for the Ministry of Munitions. It will not be complete until the end of the financial year, but the opening entries are made.

Mr. J. M. HENDERSON

Will it be audited?

Sir W. EVANS

Certainly. I do not believe that it has ever been done in any Government Department before. We are employing in the Ministry as capital £435,000,000—that is one of the first things which is shown on the balance-sheet—or. say, two-thirds of the National Debt before the War. That is our working capital. It is represented by the following assets: About £85,000,000 capital employed in the factories or advances to contractors, £275,000,000 stock in hand and works in progress, and the balance, £75,000,000, is the difference between what we owe contractors and what contractors, foreign Governments, other Government Departments, and our Allies owe us. Of course, each separate factory has its own balance-sheet, but there never has been, I believe, any attempt to have a balance-sheet for a big trading Department such as we are. I am quite satisfied, although it will not be complete until next year, that it will be an administrative instrument which can be brought into use at once. We shall get a considerable advantage from the fact that we have got out our balance-sheet and that it is being constantly kept up to date. Of course, the improvements that may come will take some time to mature, and I have little doubt that it may be. possible from time to time to find deficiencies which will either be an inheritance from the past or even yet escape the attempts at reorganisation that have been made.

Sir F. BAN BURY

The right hon. Gentleman a short time ago said that the capital was £380,000,000. Now I understand him to say that it is £435,000.000.

Sir W. EVANS

Yes; the total capital is £435,000,000. The other figure was the working capital, because, of the £435,000,000, £85,000,000 is represented by factories and capital advances to contractors. If the right hon. Baronet deducts that £85,000,000 from £435,000,000—

Sir F. BANBURY

It will not be £380,000,000.

Sir W. EVANS

No; £350,000,000 is the figure. That is what I call the live assets. I now want to inform the Committee what is done in answer to the specific recommendations of the Select Committee. I have said that our organisation has been strengthened gradually, and it has been developed very considerably since the Committee's Report was made. The Select Committee have advised that there should be two additional members of the Council, one to represent finance and the other to represent contracts. My right hon. Friend in his speech earlier in the day dealt with that recommendation, and it is one which he is not prepared to accept. Ho has placed upon me the very arduous duty of representing both contracts and finance on the Council, and so far as the Council is concerned I represent the whole of that group. Wherever there is a special financial question or contract question or accounting question, then one of the controllers of those Departments are added to the Council Committee for the consideration of that particular matter. That is, for all practical purposes, an acceptance of the Committee's Report. Another recommendation of the Committee was that all the demands made upon the Ministry by the War Office, or the Admiralty, or the Air Ministry, should be examined by the Finance Department and that the allocation of orders between the factories and the contractors should be considered by that Department. For all practical and useful purposes that is going to be done. I will not trouble the Committee with the procedure which has been laid down in two office memoranda, which, if any hon. Member cares to see them, are at his service. The division of duties between finance and contracts is definitely laid down.

Mr. SAMUEL

Will an officer associated with finance be placed on the Programme Committee, so as to review those demands at the initial stages?

Sir W. EVANS

If the right hon. Gentleman likes, I will go into the details.

Mr. SAMUEL

It is a short point

Sir W. EVANS

The answer is "No," for this reason: Finance is not a limiting, factor. Long before finance becomes a limiting factor there are other limiting factors, such as transport, labour, and materials, and the statistical officer who examines those programmes can say "yea" or "nay" whether he can provide this particular demand limited only either by labour, raw material, or transport. It is not necessary at that stage to have a finance examination, but when that general requirement is broken up into the specific programmes of each supply Department, then the finance and contracts Departments are going to examine each one of those specific programmes, for then all the other limiting factors have been eliminated, and we have come down to the one thing: Can we fulfil that programme? If we can, can we do it economically? It is then examined to see that it is done in the most economical fashion, and the allocation between the factories belonging to the Ministry and outside contractors will be made at that stage. The other chief recommendations were with regard to contracts. There were three important recommendations. The first was that it should be laid down that the settlement of prices should be the duty of the Contracts Department. It is so laid down, I think, in sufficient detail in those two office memoranda. One of the memoranda was published before the Committee's Report, and the other has been published since.

Colonel COLLINS

Is there any dual responsibility between supply and contracts on the contract question? Is the contract officer solely responsible for price or has the supply officer any power over price?

Sir W. EVANS

The contract officer is solely responsible for price. The supply officer very frequently is a technical officer, and the contract officer is entitled to obtain from the technical supply officer all the advice and assistance that he can. get; but it is upon the contract officer that the duty is placed definitely of being responsible for price. The next recommendation was that the costing section of the Ministry should be strengthened. With that I entirely agree. Here, again., it is largely a question of staff. Technical accountants capable of costing work are not very easy to get, but the Controller of Contracts is doing his best to get a staff together. Meanwhile, he tells me that some 75 per cent, of the stores which we have purchased have been costed at one time or other, either by accountants or by technical experts. The last recommendation with regard to contracts was that as soon as possible a decision should be arrived at regarding the rate of profits which should be allowed to contractors. On this point, which is one of the most vexed points any Department has to come up against, I read the Report of the Committee with the greatest interest. Some twenty-one paragraphs of the Report are devoted to the discussion of the rates of profit that should be allowed on contracts, and how you can get at them. I must say that I was very disappointed with the conclusions to which the Committee came. The Committee came to several negative conclusions. It said that the flat rate and collective bargaining were to be objected to; that pre-war rates of profit were not to be taken into account; that time and line contracts were condemned, and that bargaining was never a satisfactory procedure. The only positive conclusion the Committee came to was that there should be an increase in. costing staff. With that I agree. But that will not give you either a rate of profit or a good bargain. The Select Committee apparently passed it on to the Inchcape Committee, and the Inchcape Committee, when they came to consider it, made no recommendations at all which infringed the action taken by the Ministry. It will be convenient if I state the policy of the Ministry on this question, because I have no doubt that my hon. and gallant Friend the Member for Greenock (Colonel Collins) will want to comment on it. I accept the positive recommendations of the Select Committee to extend costing as far as possible, and for regular stores actual accounting will be possible, but for new stores technical estimates only can be obtained.

Mr. ARNOLD

May I ask what steps are being taken by the Ministry to get back from the Army chartered accountants who are at present occupying relatively unimportant positions in the Army?

Sir W. EVANS

Perhaps my hon. Friend will permit me to complete my statement of principle, and if he will remind me of his point later I will deal with it. There are, of course, our factory costs. The contract officer, armed with the informa- tion he gets from these sources, has got to consider what risks the contractor will run, what amount of capital is employed, and what time will be taken to obtain the article. The rate of profit to be allowed must depend upon the answers to those questions. The skilled negotiator has really these instruments in his hands. So far as I can see, the Select Committee recommended that there should be a fixed rate of profit. If that is their recommendation, then I think they are wrong, because the only result of a fixed rate of profit would be to turn all contracting on to the time and line basis. That is to say, there would be no incentive to the contractor to save labour and no incentive to the contractor to save material. It would not matter to him in the least so long as he got a fixed rate of profit. If that is the case, then there would be much less economy and much greater waste of material and labour than there could possibly be saving of money.

Mr. SAMUEL

The Committee did not recommend that.

Sir W. EVANS

As I read their Report, I cannot get anything else out of it. I challenge my hon. and gallant Friend the Member for Greenock to say what he does mean, and what is the method of contracting that he recommends. He has given five or six things that he does not want. He has not given one, except costing, that he does want. If costing is not to be part of the bargain, what does he want? It can only be costing plus a percentage, to which, personally, I object. I do not believe there is a royal road to contracting. You cannot fix a rate; you have to take into account all those various considerations I have put before the Committee, and then you have to make a bargain. I believe that such a bargain, with knowledge of the costs and taking into account these considerations, is the only sound way of getting supplies with real economy. I have dealt with the various specific recommendations—I think all of them—contained in the Select Committee's Report, and I really thank the Committee for having allowed me to go on so long.

Mr. SAMUEL

There is the question of accountants in the Army.

Sir W. EVANS

With regard to that matter I welcome the support the Committee gives in its Report to the suggestion that we should claim the return of accountants from the Army. We have got some back, but the hon. Member (Mr. Arnold) knows that it is not a good time to press for the return of accountants from the Army if they are in any fighting regiment. We have selected a certain number known to us, who appear to be in occupations which would permit of their release, and there is an application before the War Office at this moment. We have got some, and we are asking for more.

Colonel Sir R. WILLIAMS

Have you tried the Navy as well?

Sir W. EVANS

Yes; I believe there has been a release from the Navy.

Colonel COLLINS

The Financial Secretary has gone in some detail through the recommendations which the Select Committee placed before the Government, and has told us that it is the intention of the Government to accept certain of those recommendations. I hope before I sit down to convince the Government that the whole of the recommendations made by the Committee should be accepted immediately, not only in the letter, but in the spirit as well. I naturally appreciate the extreme difficulty which every Parliamentary chief and every official at the Ministry has to-day. In the earlier part of his speech the Parliamentary Secretary sketched the great work which the Ministry has performed, and I would like to join with other Members in paying testimony to the great work the Ministry has done in supplying munitions so rapidly, at the same time adding my satisfaction that the working men of this country have kept to their work day by day in the manner outlined by the Minister of Munitions himself. We approach this subject with the sole desire to put forward constructive suggestions. In certain parts of the Minister of Munitions' speech it appeared to me he thought that we were destructive critics. Our recommendations may be right or they may be wrong, but, at any rate, they leave no room for doubt, and if in the course of our investigations we did meet with particulars of economy, we cannot help stating that there is avoidable waste, however unpalatable in certain quarters that truth may be. Let it be remembered that throughout our inquiry we have acted as representatives of the taxpayers. To harmonise the interests of the taxpayers with those of a great spending Department is neither an easy nor a simple matter. I can say on behalf of my colleagues and the whole of the Committee, that throughout these Reports we have dealt with even-handed justice, with questions relating to both capital and to labour. We have not shirked facing these delicate and thorny subjects, even though we are members of a democratic Assembly. Sound administration means successor failure. I call to mind, and I do not doubt other hon. Members call to mind, cases where instead of sound there has been showy administration during this War. Whether sound instead of showy administration is appreciated at its true worth is open to question. We have reported as to the practice we found at the Ministry during our investigation. Although changes have been made on or about the date of our Report. and though it may well be that a Royal Commission may investigate the work of the Ministry either during or after the War, no sentence in our Report, even if torn from its context, implies any reduction in the Ministry's programme. The Chancellor of the Exchequer, speaking in this House in January, after he had announced that the Parliamentary Secretary would be made the Financial Secretary said: I should like to see, if it were feasible, a Chancellor of the Exchequer in that Department, with the Chancellor of the Exchequer's authority to deal with everything within that Department. I find myself in complete agreement with the Chancellor of the Exchequer. I have little doubt that, if some such person had been appointed twelve or eighteen months ago, many of our recommendations would not have been needed. I hope the right hon. Gentleman will translate his views into action, and that the public may realise that they are represented at the Ministry by someone who represents them in its day-to-day work. The Report divides itself into two main branches, one dealing with finance and the other dealing with contracts. The purpose of the first part is to secure greater co-operation between finance and the other branches of the Ministry, especially at the top. I know that the Minister himself has made a certain effort in that direction. Co-operation is needed in regard to the size of the orders, subject, of course, to the limits of requirements, and in regard to the allocation of orders. I am glad to have the assurance of the Financial Secretary that that question will come in future before the finance side of the Ministry. We referred to this subject in our earlier Report in October last. At that time the Ministry did not take any action upon it. We are glad this afternoon to hear that they have accepted our recommendation made so many months ago. The Report also dealt with contracts. The purpose of that side of the Report was to strengthen the contract branch. I am afraid that the answer of the Financial Secretary on that point is not satisfactory, and I hope to place certain arguments before him in due course which may modify his views on that subject.

What has impressed the, mind of the Committee is the lack of co-operation between the finance and the contract branch and the supply branch. This continual struggle which is going on from day to day in the Ministry is to be regretted. Both are occupied in fighting the common enemy, and to uphold sectional interests and not to sink the Departmental in the national interest leads to weakness. We do not urge that finance should predominate, but we urge that there should be co-operation, hearty and sympathetic co-operation between supply and finance and contracts at every stage, especially at the top, as much in the interests of production as in those of economy. Wasteful management is not necessarily good management. The finance branch, in my opinion, is a branch which can check great supply officers with their too expensive plans. According to the constitution of the Ministry, finance at some stage or other must be consulted. Where friction exists difficulties arise, and unnecessary work results. The Minister may say, as he said to-day, that he gets the goods, and what does it matter if there are occasional cases of the supply branch outrunning financial sanction. That is entirely beside the point. The Report makes very little of the occasional failures of the supply branches to obtain financial consent. Such cases are easily covered up by financial sanction being received at a later stage, but they are only the symptoms which reach the surface which show the chaotic conditions which lie underneath. What the Committee is concerned with is that there is an undermining chaos, a piecemeal reference to finance. Finance is consulted at too late a stage, with the result that they have to make impossible inquiries. In other words, what we have found in many cases is the conversion of financial sanction into the mere fixing of a rubber stamp.

Through this failure to consult finance at every stage there is multiplicity of reference in the Ministry to-day. Where there is co-operation, as there often is, it is never clear who is responsible. Where there is no co-operation important points are overlooked. The appointment of the Parliamentary Secretary as Financial Secretary is a step in the right direction, but I appeal to the Minister of Munitions to endow the Finance and Contracts Branch with definite power and to place these officers in this great spending Department in a proper position adequate to the duties which they should perform Three months ago the Finance member of the Council resigned, and no appointment has been made. The Ministry, as the Financial Secretary told us, is the greatest spending Department the world has ever seen, controlling staple industries and vast supplies of raw material, the direct employer of hundreds of thousands, and the indirect employer of millions. It is governed by a Council of some fourteen members, apart from its political chief. On that Council there is no representative of the taxpayers apart from the political chief. The day to day work of the Ministry is performed by the supply officers, in contact with finance and contract officers. The senior finance and contract officers and their staffs are subordinate in their position to the senior supply officers and their staff. We do not urge that finance should predominate, but so long as finance is not placed in its proper position the interests of the taxpayer cannot be adequately safeguarded. The importance of money in the Report is not exaggerated. We maintain its importance. We maintain that economy of money is accompanied generally by economy of other resources, and so far from impeding production assists it. I appeal again to the right hon. Gentleman to review this matter, to place an officer of contracts and officers of the Finance Branch on the Council of the Ministry so as to improve their position. The Government during recent months has been pointing out the advantages and disadvantages of good and bad military organisation in France. Should we not at home place our own internal organisation in order so as to create an efficient machine and cope successfully with the problems which gather and thicken around us. The other side of finance refers to capital expenditure. I admit that that is a very difficult problem. To prevent unnecessary expenditure is a vital matter. The War Cabinet has in recent weeks appointed a Subcommittee to consider this subject. We have already been told of the vast sums of capital which the Ministry has spent and is spending to-day: Figures are but tokens of effort, and if the effort is not expended in one direction it is available for national purposes in another. Surely after four years of war the supply officers of the Ministry should be able to draw up their schemes of capital expenditure in detail and submit them in detail, rather than, as they so frequently do, get financial sanction for them in piece-meal fashion. I hope the Government may endow the Finance Branch of the Ministry with more definite powers so that they may judge and decide as to the necessity of capital expenditure.

The, second part of the Report dealt with the Contracts Branch of the Ministry, and the Financial Secretary asked me to state more definitely what we suggest. Let me refer to one or two cases in the Report. We give instances of the large sums which have been spent in the purchase of steel. We quote these cases to show the ill effect of collective bargaining and also of flat rates on this problem The amount of money which the State spends per year on steel is £100,000,000. A controlled price was made in the summer of 1915, but it was not until the autumn of 1917 that the Ministry thoroughly investigated the cost of steel. We considered that it should have reviewed the cost and not have allowed nearly two and a-half years to elapse before reviewing and revising the price of steel. For what happened? The price of shell steel was largely reduced. The price of plates, on the other hand, was increased. The price of cutting steel was reduced by 50 per cent. A reduction was made from 20s. to 10s. per ton. The Ministry may say, on the other hand, that it was necessary to pay these high prices to secure increased output, but that is no reason why it should have paid these same high prices for steel which was in existence at the beginning of the War. On that point my colleagues and I heard evidence from the Steel Makers' Association. We were impressed with the fact that they endeavoured to safeguard their weakest member, which was only natural. But if the State continues to pay a flat rate for any community such as steel they are paying a price based on the least efficient firm. I agree that efficient firms should make larger profits than those which are not so efficient. There must be a premium on efficiency, but we were advised that the margin of profits varied from £l to £3, and in some cases to £4, a ton. That appeared to us to be too great a variation, but so long as the practice of flat rates continues that variation will always continue. The cost of production varies. There are geographical advantages and disadvantages. Some firms have labour advantages or disadvantages. But where the product is so large, where the State is spending such large sums of money, and the number of producers is not large relatively, we recommend that the State should not pay a flat rate, but should pay a price based more on the cost of production. The Financial Secretary did not advise the Committee whether he was going to accept that recommendation or not. A large number of products are not affected by a flat rate. There is an individual price with an individual firm. That is a practice which we urge should be adopted in the case of steel.

Sir W. EVANS

Does the hon. Gentleman mean that the steel should be purchased at the cost of production plus a fixed rate of profit?

Colonel COLLINS

The Committee urges that the Ministry should offer a fixed price to these firms.

Sir W. EVANS

The same price or a different price dependent upon the cost of production?

Colonel COLLINS

The price should vary according to cost of production, giving a larger profit to the more efficient firms and, at the same time, when fixing that price, the Ministry should take into consideration the amount of capital involved in the firm and allow that to influence him in the matter of profits.

Mr. CURRIE

I do not find that in the Report.

Colonel COLLINS

May I read it— While, however, pre-war rates of profit on individual articles should not be allowed to continue, due attention must be paid, when fixing the rate of profit, to the amount of capital employed by the firm and the rate of profit normally earned on that capital before the War began. The Financial Secretary stated that we had offered several negatives on that point. But here in paragraph 66 are two definite suggestions as to the method by which prices should be fixed. Let me say on that broad question we are not an administrative Committee, and that such a Committee as ours, or even the House of Commons, cannot lay down these niceties of profit, or give a decision regarding this question. We can only judge the broad questions of administration—the broad principles which should govern any Ministry to-day—and I think it is rather for the Chancellor of the Exchequer himself to settle this particular question. As we point out in paragraph 67, there cannot be one principle permeating the contracts branch at the Ministry, another principle permeating the contracts branch at the War Office, and still another principle permeating the contracts branch at the Admiralty, and it was for that very reason that the Committee recommended that this question should be decided by the Chancellor of the Exchequer himself. Perhaps Lord Inchcape's Committee, to which the Financial Secretary referred, may afford some guidance on this subject. Its Report, however, has not yet been published, and we are not in possession of the views of that Committee.

Passing from that subject for a moment, I am anxious to draw the attention of the House to paragraph 40, which refers to the reply given by the Chancellor of the Exchequer to the recommendation made by this Committee some months ago. In that paragraph we state it would appear that the Chancellor of the Exchequer had been misinformed, "as this is not, and, generally speaking, never has been, the case," the case being that the supply officers at the Ministry are in possession of information regarding the cost of production. This is a very important point so far as the internal administration of the Ministry is concerned. The Committee have been impressed with the fact that the difficulties of the Finance and Contracts Branch, in their desire to reduce prices, are due to their inability to obtain information of cost from the supply officers. Except in a few cases, knowledge of cost has been obtained by the Contracts Branch. The accountants at the Ministry have performed a great national service. Their work has saved many millions of money. I do not think any blame is to be attached to the supply officers for their inability to get accurate information as to cost. The whole process of manufacture has changed. There has been dilution throughout the country, new methods of manufacture has been introduced, and the fault is in the system which places some form of responsibility on the shoulders of the supply officer.

Sir W. EVANS

Not now.

Colonel COLLINS

I should like to see the office memorandum on that point. The Financial Secretary stated that he intended to accept the recommendation of the Committee dealing with technical cost investigation. I am informed that there is a lack of technical cost investigation in connection with most munitions of war. Guns, gun ammunition, and explosives alone have been thoroughly investigated, but nothing of the kind has been done with machine guns or mechanical transport. These matters are not yet. in the accountants' hands. They are only just beginning with the aeroplanes, and there are innumerable other articles to which this investigation should apply. I hope that the Financial Secretary will rapidly develop that Department and give the officer in charge a good position and an ample staff, so that he may cover equally well the whole field of munitions of war and bring these munitions of war under review and technical cost investigation. Why I am so keen on this point is this: Fifteen years ago, when I was in business in Glasgow, we found it practically impossible to get at the cost of our goods, and we imported from America a man who was competent to deal with that subject. He came to us at very great expense. He spent two months or so with us, and he set up—or, rather, he instituted—a costs branch. Since then it has been much more easy to manage our business. It is from that personal point of view that I press this on the Financial Secretary.

The Report gives several instances of rates of profit. I have no desire to pillory any firm in dealing with this question. I may say in justification of the views of this Committee that these instances were taken from papers which happened to come before us, and they are fairly illustrative. We have no desire or intention to pillory any firm. There are hundreds of other cases which I could present to the Financial Secretary which would justify the criticisms we put forward in this Report. The Minister of Munitions in the earlier part of the afternoon rather implied that we had sought out these cases. My colleagues and I resent that. It is not true in fact, and it is not our intention to do so. We asked for certain papers. We asked for a certain number of contracts to be sent to the Committee. We went through them, and this is the result. We asked also for a statement from the heads of the controlled establishments, and I have here papers showing the profits of some twenty-six firms. They are merely illustrative, but they justify the views of the Committee, and they justify the case put forward by the Committee.

Sir ROWLAND BARRAN

May I ask whether in these cases which have been quoted any opportunity was given to the firms concerned to offer an explanation of their contract, and why it was at a lower rate or higher rate than any other?

Colonel COLLINS

I was about to deal with that very point. This Committee is not a committee of inquiry. It has no judicial functions. It is not our business to apportion blame or praise. We are in the same position as the Public Accounts Committee. We do not call outside firms before us. We called some of the officials from the Ministry. We have made minute investigation into the papers which were available at the Ministry at the time. All the Committee is concerned with is the facts which were present on the papers inside the Ministry when the bargain was made. It may be there were other facts which were not on the paper. Either they were not relevant to our case or they were not stated because it was thought they would not be relevant. We did not ask representatives of these firms to attend before us for this reason: that these cases are purely typical and representative cases. We do not give the names of anybody. Certainly if we had named any firm we would have asked the representatives of those firms to give evidence before us. As I have already stated, it is not our desire to pillory or hold up any firm. May I say further on that point that we asked the contracts branch what profits they generally allowed, and they stated, and we put it in our former Report, that it was their intention, or rather it was the aim of the Ministry—this is stated in paragraph 48—to allow a general maximum profit of 10 per cent. It was on that basis that these eases were quoted. They are quoted to show that whatever might be the aim or desire of the Ministry in a large number of cases it has not been translated into action. The Financial Secretary has asked me on what basis prices should be fixed? Frankly, I say that that is a matter which the Ministry and the Government must decide for themselves.

Sir W. EVANS

I asked what was your recommendation?

Colonel COLLINS

We had no intention of laying down or suggesting a certain rate of profits in one industry or in another. These matters must be considered by the Minister himself.

Mr. CURRIE

But that is what the hon. Gentleman's Report does.

8.0 P.M.

Colonel COLLINS

We say in Clause 50 that as soon as possible a decision should be arrived at as to the rate of profit, due regard being had to the turnover and the normal profits on the capital earned before the War. We laid down a general principle. We did not say whether it should be 5, 10, 15, 20, or 25 per cent. That is not the business of a Committee of this House. The object of a Committee of this House, as I understand it, is to lay down general principles, or rather to criticise the administration which is in being and to suggest alternative methods by which economies can be effected in the public service. Whether this Committee will be satisfied with the reply of the Financial Secretary, I do not know. When we come to consider the whole position of munition firms I think the Government might go further than has been suggested. These firms have their raw material secured. They have Government protection for their labour and Government assistance for capital expenditure. They have Government protection for their female labour and they are secured against loss through discontinuance of their contracts. The necessities of the State have led to largely increased production and the higher range of prices has led to further increased sale. Compare the position of these firms for a moment with the position of the one-man business men, many of whom have been ruined by this War. Contrast the position of these firms with some of the luxury trades already very heavily hit, and in some cases with a certain doom hanging over their heads if the proposed Luxuries Tax is imposed. My own view as to this delicate subject is that the Government should obtain a settlement of this subject by consent. They should seek to obtain the views of the manufacturers' associations and to obtain a settlement of this difficult subject which to-day leads to friction and endless difficulties. I have thrown out the suggestion several times that with regard to the rates of profit and raes of wages the Government should summon the manufacturers on the one hand and the trade unions on the other and endeavour to obtain a settlement of the question by consent. The main portion of the Minister of Munition's speech was that he has delivered the goods. We do not doubt that there has been an amply supply of munitions for our forces in different parts of the world, but that answer is not sufficient after three years of war. During these last three years the Ministry have exercised uncontrolled power over what? Over the vast manufacturing resources of Great Britain and America. They have been able to draw-on the world for their resources of raw material. They have had behind them an open treasury, with a generous public ever ready to lend or accept heavy taxation. They have had placed at their disposal the whole facilities of the commercial and manufacturing classes. In addition, they have had power to fix wages, and to grant a 12½per cent, increase to large numbers of men in this country. My colleagues and I, the hon. Member for Guildford (Mr. Horne), and the hon. and gallant Member for Bow and Bromley (Captain Blair), have worked on this Committee, and the number of meetings we have attended is very large. I do not know their views, but I hope that the Government may go some good way further in accepting the recommendations that finance should be endowed with adequate power, and that the detailed recommendations which we make will be carried into effect. Our sole desire in this matter is to serve our constituents and—I hope the Financial Secretary will believe me—the interest of the Ministry as well, and we submit with confidence our Report, and the recommendations which the Financial Secretary has not yet accepted, to the cordial consideration of the House of Commons.

Sir R. BARRAN

I desire to draw the attention of the Committee for a few moments to the point I raised in interrupting the speech of my hon. and gallant Friend (Colonel Collins). The Sub-committee over whoch he presided had power to send for persons, papers, and records. I venture to draw the Committee's attention to this, because he explained just now that in a very important part of their Report they have not used the powers given them in their Committee. I entirely support the recommendations in that Report, so far as they will tend to a better control of costings and a more complete control of the finance, but I think in many ways what we have heard from the Financial Secretary to the Ministry goes further and is more satisfactory than the recommendations contained in this Report. I rise, however, particularly to draw the attention of the Committee to this. I will not say that they attack the Ministry of Munitions, but the Committee very seriously criticise the action of the Ministry of Munitions. Yet they have not taken the course which puts them in a position of criticising with as much effect as they ought to have had. The number of cases quoted in this Report where the second contracts have been, placed at very much lower prices than the first, are intended to show that a costing Department is exceedingly valuable, and ought to have been established at a much earlier period in the Ministry of Munitions. That is obvious. I do not think there are any Members of this House who would dispute it. An effective Costing Department ought to have been established very much earlier, but I would remind the Committee of a statement made by the Minister of Munitions in the early part of his speech that in the early stages and in the rapid growth of this Ministry a great many things had to be left undone and a great many considerations other than the lowest cost had to be taken into consideration. The Committee's criticism of the Ministry of Munitions is probably sound, but in making that criticism they have given a large number of examples, it is true without names, of what they describe as unnecessary prices which have been paid. Those examples all refer to particular firms. Particular firms are not mentioned here, but they may be recognised in the trade, they may be known in the country, but, what is more important than that, is that what is intended as a genuine criticism of the Contracts Department of the Ministry of Munitions is turned, I believe, quite unintentionally, into a serious reflection upon a large number of business firms in this country who have been loyally supporting the Government, sup- porting the Ministry of Munitions, in giving the best output that they possibly can.

The only point that I want to bring out, and I think it ought to be stated before this Committee and it ought to be appreciated in the country, is that these examples of excess profits which are given in this Report are given without the firms to whom they refer ever having had any opportunity of answering before the Committee the statement that is made here. The Committee had power to send for persons and papers. The Committee sent for neither, but they allowed this reflection to be on the face of the Report, and to be used by newspapers. The Minister of Munitions stated in the beginning of his speech that very often in making contracts in the early part of the War those contracts were given to firms who had never made those articles before, often very large contracts, involving stupendous sums of money, a type of article, in some cases, that had never been made before, and in other cases a type of article which that particular firm had never made before. It is, therefore, exceedingly unfair to comment on them without their having been heard in explanation of their contracts. There is another point, not mentioned by the Minister of Munitions, but which is very important. In many cases the first contract that a large firm takes necessitates a very great outlay in capital. The firm never know whether they are going to have a second contract or riot, and are bound in their estimates and quotations to the Ministry of Munitions to cover, at any rate, to some extent, the cost of their initial outlay of capital on the only contract which they are absolutely certain of getting. I want to point out to the Committee that it was quite within the power of the Sub-Committee of this Select Committee to have asked every one of the firms whom they have quoted in this Report to give their explanation as to whether there were any special circumstances why their first contract should be so high or their second contract so low. I think it should be appreciated by this Committee and by those who read this Report in the country that such an opportunity was never given, and that therefore any reflection which apparently lies in this Report against the great manufacturers in this country is entirely unproved, and in all probability, in many of these cases is entirely unfounded. I think that statement is due to a large number of firms who are unknown, but who are apparently, though not actually, attacked here. I understand that the hon. Member who was Chairman of the Committee had no intention of attacking the firms, or even of criticising them. I am glad that he has made that admission, but I think it is as well to emphasise the point that these firms have had no opportunity of reply.

May I say further on the subject of costing that there is apparently some dispute in principle between the hon. Member who was Chairman of this Sub-Committee and the Financial Secretary to the Ministry of Munitions. I do not myself find in that Report a sufficiently definite method suggested of improving the financial control, and I find to-day that the Chairman of that Committee relinquishes, to a large extent, the suggestion he has made, and throws upon the Financial Secretary the responsibility of originating and carrying out a better system. I think there is a great deal of ground for that view. I think it is the business of the Financial Secretary to devise and carry out a better scheme. I am in entire agreement with the object that this Committee, had in view in forcing on the attention of the House the necessity for a very much closer financial control. The only other comment I want to make upon this is a comment on what the Financial Secretary's propositions are, and it arises from his statement of how small a proportion of Civil servants he has in the Ministry. One of the greatest sources of extravagance through the whole of this War has been the unwillingness in the early stages of all Departments of the Government to bring in professional and business men from outside to take charge of the main features of these Departments. It is not sufficient for the Ministry of Munitions to have a small percentage of men who were originally Civil servants It is a very much more important matter that they shall have a large percentage there of men who have actually been engaged in affairs before the War, either in accountancy or in the larger affairs of commerce, and it has been in far more cases the defect that they have had too many Civil servants than that they have had too few. I would suggest to the Financial Secretary that in reorganising his Department—and I believe all sections of the House have full con- fidence in him, and congratulate him and the Government on having taken up this position—he should follow the good example that has been set in some portions of his Department by bringing in at the present time more men of professional and commercial ability, and putting at the head of his various Departments men who have had previous experience, having as few as possible of those Civil servants who, with great ability, have very little knowledge of the world, very little knowledge of accountancy, and very little knowledge of the commercial life of the country.

Sir F. BANBURY

The Minister of Munitions made very little reference to the financial side of his Department. What reference he did make was to the effect that at the beginning of the War it was absolutely necessary to get the article which was required, and that the financial side was not so important. I do not think anyone will deny that it was absolutely important at the outbreak of the War to obtain all the articles which were necessary, and as quickly as possible. My contention is that you do not obtain the articles quickly or in greater amounts or in excellent qualities if you are extravagant with your money. It is the greatest mistake to suppose that by throwing down large sums of money on the table and leaving the contractors or the chief of the Department to do what they like with those sums of money that you get either good articles or that you get those articles quickly. I am very much afraid from the speech of the Financial Secretary (Sir W. Evans)—I hope I am not doing him an injustice; if so, he will correct me—that spirit still animates the Ministry, and that the idea is to produce the article, and that the cost is no consideration whatever. I do not mean to say that because a certain article is going to cost, say, £10, that you should not have it, but you should see that that £10 is spent in a proper and economical way. The Minister of Munitions, quite generously, did not attempt to deny that at the commencement of the work of this Department there were very serious leakages. He said that it had been very much improved, and I gathered that improvement is going on. That is to a certain extent borne out by the Report of the Comptroller and Auditor-General, but I am not at all sure that that improvement has been carried out to the extent it ought to be.

Some of the statements made in the Report of the Comptroller and Auditor-General were so bad that I am rather surprised that no notice has been taken of them. Very serious notice ought to be taken of them, and someone ought to be very severely punished. It is all very well to say that there was book-keeping by single entry and that we are now having book-keeping by double entry, but there must be something much more than bookkeeping by single entry which is at fault There must have been, to say the least of it, gross carelessness on the part of certain people, and when that occurs, in my opinion, it is the duty of this Committee to see that the people who have been guilty of that gross carelessness are punished. In any private establishment if the things that are mentioned in this Report had been done, the whole of the people responsible would have been dismissed. So far as I know nothing of that sort has taken place in the Ministry of Munitions. The Report of the Comptroller and Auditor-General, the Minister of Munitions pointed out, was to be submitted to the Public Accounts Committee, and he said it would be dealt with there, and eventually submitted to this House. At the same time it is a Report to this House. It is a Report ordered by this House to be printed on the 11th March of this year, and that being so it is quite legitimate for this Committee to deal with it. I do not want to deal at length with it, but it must be remembered that the Report of the Committee of Public Accounts will not come down to this House before May, June, or July, probably not before then, and it may be that we shall not have an opportunity of dealing with this very important subject. I notice in that Report the following statement: It was found that in one case, although the ledger showed that £230.000 had been for some months due to be refunded by the firm in respect of cash advances under a contract since-cancelled, no active steps had been taken to recover this sum or otherwise to adjust the firm's account. There had also been failure to keep up a complete and accurate record of repayable cash advances made to the firm. For example, an advance of £250 000 had not been charged in the contract ledger, while two other advances amounting to £750,000 had been posted twice in the same ledger. To post that sum twice in the same ledger is gross carelessness, and that will not be altered by any system of double entry. Here is another point which has nothing whatever to do with book-keeping— In March, 1916, the Ministry decided to-reduce the price payable for a certain type of shell from £1 to 12s. 6d.; the firm had offered in February, 1916, to accept 14s. 8d. A new tender form was sent out, but notwithstanding repeated reminders, had apparently not been returned. The reduction in price was not noted in the contract ledger, and large quantities of shell continued to be sent in until February, 1917, and paid for at the £1 rate. A year after the firm had offered to take 14s. 8d., and after the Ministry had decided that 12s. 6d, was to be the price, they continued to pay £l for these shells. That is a disgraceful thing which it is impossible to get over. Here is another entry in the Report: The contract ledger recorded payments of £1,400,000 only, although payments amounting to some £4,700,000 had been made. When one comes to deal with figures like that it must be remembered that in all probability these are only chance cases which the Comptroller and Auditor-General has found out. The mere fact that he has found out these cases leads to the assumption that there are many others which he has not found out. It is most important that this Committee should take notice of these things in view of the fact that the taxpayer of this country is being asked to contribute enormously to the cost of the output of munitions. He does not grudge that, but the great part of his hard-earned money which he is asked to pay has been absolutely wasted, and wasted when, with proper control and supervision, it might have been saved. The Report also says: Vast quantities of materials and components of immense value have been issued 'free' to various contractors for assembling or manufacturing operations only. In many cases the supplies in various stages of manufacture have been passed from contractor to contractor. No adequate record of issue from Ministry's stocks, or of the movements between contractors, was kept, nor had any effective steps been taken to the end of 1916–17 to secure that materials were not issued in excess of contract requirements. Here is another case where £6,900,000 was advanced to one firm: The earlier loans were subject to repayment by monthly instalments, but after £2,100,000 had been recovered the repayments ceased. In reply to my request for information on this subject, I have been furnished with a Report of an inquiry by the Advisory Committee of the Ministry into the financial relations of the firm with the Ministry. It appears, therefore, that the precise condition of affairs is not clearly defined either in the books of the company or in those of the Ministry, but action is being taken to obtain from the company a complete statement of their claims. What does that mean? Take the case of a banker who lends a customer £10,000, and when the director or one of the head partners says "What has happened to this £10,000?" the manager of the bank says "We lent it to So-and-So. We cannot give you any particulars, but will ask the people to whom we have lent it to give particulars." I do not think that anything could show more clearly the want of care in dealing with financial questions by the Ministry. I do not intend to deal with increases in the prices of contracts, because there is something to be said for my hon. Friend when ho said that a contract was changed, and therefore the price was altered. But there is one point on which I. should like to have an explanation. I heard, I will not say how, that it was understood in certain circles that contractors could get off payment of Excess Profits Duty if they had contracts with the Ministry of Munitions. I could not believe that such a thing was possible, and dismissed it from my mind as an idle tale. But on page 12 of the Comptroller and Auditor-General's Report the following appears: In January, 1917, the Ministry agreed to advance to a contractor sums estimated at £90,000. Fifty per cent, was to be repaid within three years, and the balance was to be repaid by the company out of excess profits earned during the period of control, otherwise payable to the Exchequer, but only so far as those profits permitted. When I read that I recalled the statement which had been made to me a few months previously that if you had a contract with the Ministry of Munitions you could get off payment of Excess Profit Duty. There may be some explanation of this. I do not know whether there is or not, but I should like to hear what the Ministry have to say on the subject. Then it appears that a very large quantity of defective shells—this, of course, is not a question of finance—was being supplied, and it appears that the method of checking these shells were very unsatisfactory. The Report says: From a decision reached quite lately by the Ministry it is observed that rectification of doubtful shells appears to have been allowed to fall seriously into arrear. I am not aware how such shell came to be accepted by the Ministry, but large stocks of shells appear to be lying at various factories, bonds, stores, etc., throughout the country, occupying valuable space and involving waste of ammunition which could be repaired or broken up for the material contained therein. Moreover, the conditions of storage are said in some cases to render further deterioration from rust, etc., inevitable. It is very serious that large quantities of doubtful shells have been delivered and still more serious that the rectification of doubtful shells has been allowed to fall into arrears. My hon. Friend (Sir W. Evans) has only lately been in the Ministry. I do not for a moment wish to hold him responsible for what took place in that year, or what has been taking place lately, but I do think that it is the duty of the Minister of Munitions in face of this Report, which has been issued by a capable officer, an official of the House of Commons, subject to the House of Commons alone, who was appointed in order to see that this sort of thing did not occur, to see whether or not there is legitimate excuse for what took place. In my opinion there cannot be, and the blame should be put upon the people who have committed these great errors involving the loss of many millions of money—and it must be remembered that the taxpayer suffers very heavily at the present moment, and his hard-earned money ought not to be squandered in this way—and an example should be made of the people who are responsible—I do not know who they are and I do not care, even if they are the highest people in the country—who have wasted the money of the taxpayer in this manner.

Sir J. HARMOOD-BANNER

It is not very encouraging to deal with a big question like this in so small a House. Undoubtedly we have had two very eloquent speeches—one from the Minister of Munitions, and one from the hon. and learned Gentleman who made such an expert speech to the Government on so many points. I wished that the rather rose-coloured speeches had been delivered at a time when we were in less anxiety than we arc in now. They would have been very much more pleasant to those who heard them if things had gone so well that we knew there was not quite the necessity for careful attention which is now required in this great question. There were two matters referred to by the Minister of Munitions on which I wish to say a few words. The right hon. Gentleman informed us that on a certain question connected with wages he had consulted the trade unions. I happen to be an employer connected with the Federation of Employers, and connected very largely with the employment of workmen in this country, and I must confess that the Minister of Munitions has by no means always consulted or taken the view of employers on many of the great questions of the day.

I do not intend to let the Minister of Munitions ride off without some reference to the great mistake which he made in the matter of the 12½per cent. This 12½ per cent, has disorganised the whole industry of the country, and almost worried out of existence the employers and directors of public companies who had to deal with the question, and which I am within the mark in saying has in the end imposed upon this country an extra wage sheet of something like £140,000,000 or £150,000,000. I think we ought to have some further explanation about this 12½per cent., and not let it slide and slip as it appears to be doing at the present moment It was the beginning of great trouble, which I have heard it described as the "letting out of the, waters," and there is no question about the fact that whilst the amount of 12½ per cent, at the outset was looked upon as a simple matter, it was only very simple-minded men who so regarded it. This increase started with the engineers, who, it is quite possible, thoroughly deserved the 12½ per cent. They are very intelligent men, who work very hard, and who are probably entitled to it. But what was the use of giving this one separate class this 12½ per cent.? At once the skilled labourers set up a demand for it, and said they would strike unless they got it. Their claim was satisfied, and then the semiskilled labourers made a similar demand. In every branch of works connected with engineers, bodies of men who had nothing whatever to do with engineers' work, one by one struck. I remember that we had a series of interviews with our men, who said, "We have no dispute with you whatever; we do not wish to down tools, but we are not going to let one class of men in the works have 12½per cent, if we do not get it." Then there followed one branch after another throughout the works, followed by the draughtsmen and the staff, who likewise demanded the 12½per cent. Next came responsible managers of works, who also had to have it, so that this 12½ per cent, was given all round.

This increase was to cost a small amount when it was given by the Minister of Munitions, but now we have had imposed upon the country the terrible drain of something like £140,000,000. More than that, during the period these settlements were being made, trade was disorganised, and everybody was led to ask for more wages, very naturally being discontented that one man should be asked to let another have the preference over him in respect of wages or of treatment by his employers. That is a most natural feeling, and in many matters the Ministry does not quite accept that fact, so as to make life run smoothly; for they are constantly making differences in wages and differences in advancement. One man may get a £10 note, and another man can get nothing. I submit that to make their world run easy you must be just in all your dealings. So much for this question of the 12½per cent. I did not like it to pass without expressing some judgment on the Minister of Munitions, whose action created such a disturbance in the country. While we are very much indebted to him for the energy he has put into the work of his Department, I think it well to remind him of his faults and to point out to him that he should not limit his attentions only to trade unions and the Labour party, but should also take employers into consultation and consider what is the proper method of dealing with these matters. I submit that if he had done that he would not have had the trouble which he has experienced.

I should like to thank the hon. Gentleman below the Gangway for the two Reports which have been issued. I must say the House is very much indebted to him for them. The first Report had a very immediate effect in dealing with the price of steel. I wish to ask for some explanation from the Minister of Munitions as to why and how they dealt with the price of steel. I happen to be interested in the making of pig-iron and steel. I was very much astonished to find I was asked to accept a bonus on all pig-iron produced, and that the price of steel was to be reduced by £1. That is a very colorable way of answering the criticisms of this Report about the high price of steel. You are going to reduce the price of steel by giving a bonus for pig-iron. I do not see where the advantage of the nation comes in, or where the profit comes in. Pig-iron comes in for the manufacture of steel at £l less, because you give a bonus of £l for pig-iron, and so you answer the criticism as to the price of steel by reducing the price in the way I have stated. but do not state that you have given a bonus of £l to those whose business it is to produce pig-iron. I am bound to say that in my own experience of business I have never seen such an extraordinary way of dealing with it. I would point out, further, that whilst you g[...]ve a bonus of £l to the firm which has old-fashioned works,, in the case of a firm who have established new works and plant at the cost of hundreds of thousands of pounds, you say, "We will not give so much in your case, because you can produce more cheaply," and only give in that case 8s. 12½d. This is the position, therefore, that the more the meritorious employer lays out his money to get efficient and well-equipped works the less money he will receive in the way of bonus, while the firm that has old fashioned works, and has disbursed nothing in their improvement, gets more money. That is the extraordinary method of dealing with this question of the price of steel. They give a bonus of £l to a man in order that he may say he has sold his goods £l cheaper, and then they say that they have reduced the price of steel.

The other question the Financial Secretary to the Ministry of Munitions referred to was that of audit and control, and he said that he considered that the Munitions Department was better audited and controlled. I have had some experience in these matters in a Committee which sat upstairs to deal with munition matters. That Committee had before them the Liverpool controller, and the Birmingham controller, in regard to the system they adopted for controlling expenditure. They gave us a very good example of their system, and stated that they controlled before payment and also audited after payment. If that system had been adopted in the Ministry of Munitions the mistakes which have been made could not possibly have occurred One of the principal officials at the Treasury, a man of great ability in all matters connected with finance, said they had the same system at the Treasury as that I have described as being in operation at Liverpool and Birmingham, and I think that if that had been practised at the Ministry of Munitions we would not have had all these statements in the papers about double payments, waste, and want of control. Why do not the Treasury ask to set up a Department in the Ministry of Munitions, and why were they not asked to do so? Why was it necessary to go to America to get someone to set up this Department? I am quite aware, as the hon. Member below the Gangway said, that they are extraordinarily able as regards costing in America. Although I am a chartered accountant and I see another near me, I must confess that they beat us in regard to matters of costing, but there are men of experience, like Mr. Hayward of the County Council, Mr. Ball of Liverpool, Mr, Farmer of Manchester, and a good many more, any one of whom would have been able to come in and put you right, so that you would never have made any mistake either on the double entry or any other system, as payment would not have been made until the matter was properly passed. I would just mention to the Financial Secretary the fact that there are such men in existence who know all about it, who know the business from start to finish, and even better than the chartered accountants, because although we have been doing it all our lives, we come in to criticise, control or audit, and not for the purpose of starting new systems.

There is one other matter. I should like to call the attention of the Minister to the forms which the Director-General of Munitions still requires from the people, and ask whether it is necessary now, in a time of few clerks and few officials and of shortness of paper and decreased printing power, to continue this system still apparently in use in the Ministry? Here I am not dealing with matters arising in 1916 or 1917, but to an entry of 18th March, 1918. It relates to annealed tinned wire, the weight of which is 10 lbs. I have got out a special set of papers used in connection with this 10 lbs. order, and the whole of these notices have to go out for every such consignment. Here are a yellow paper, a white paper, a buff paper, a red paper, a blue paper, and all sorts of coloured papers with all sorts of marks on them as to where they are to go, and in all there are no fewer than twenty-three forms with respect to 10 lbs. of annealed tinned wire. I should be glad to show them to members of the Ministry and would like them to study them. Is it right that we in times like these should be asked to undertake, all this? I would add that it is not only in this Department of the Ministry, but in every other Department. Some stop ought to be put to it and something done to ease our work at the present time.

There was one point I omitted to mention in speaking of the 12½per cent, bonus, and it is a curious comment on what the Ministry of Munitions have done upon this. I am connected with the coal trade, and we have engineers in the Coal Department as well as in the Iron Department. The Coal Controller said, "We will not allow you to give your engineers 12½ per cent.; it is the most mischievous thing I have ever heard of, and I cannot consent to it." Our engineers said that they would have it, and the only way in which it could be arranged was by their transference to the Iron Department; and then they got it. There are two Departments—the Coal Controller and the Board of Trade—saying it was mischievous, while the Ministry of Munitions was paying it. I venture to hope that we shall not have such a foolish thing repeated by anyone who happens to be in control of the administration of the country. But after cursing a little I should like to bless a little, and say that with considerable experience of the Ministry of Munitions they have latterly thrown great energy and great "go" into their work. In the industry with which I am particularly connected the output of steel has gone up nearly 50 per cent, compared with what it was before the War, and it is in a great measure due to their exertions, their push, and the way in which they have helped. I venture to hope that they will continue in that course in a fair-minded way.

What we have to complain of, so many of us, is that in dealing with the Ministry of Munitions you will see one man favoured in all matters and another man put on one side—one man can go and get his money at any moment, while another has to sit on the doorstep and wait. A question was put here to-day with regard to some poor unfortunate man whose wages were not paid and between whom and the Ministry there is a difference as to whether there is £12,000 owing by the Ministry or £12,000 owing to him. I venture to say that such a thing ought never to have happened, and that the matter ought to have been kept in order. This was a case where they had evidently favoured a man until some new chartered accountant came in, pounced upon him and tried to stop his very existence. I am sorry to say I have seen one or two cases of that kind, where there is an inclination to go on the pounce and say, "Now you must settle up, for if you do not we will trounce you." And "Dora" has extraordinary powers. They can say that the man must pay up at once. I venture to hope that the Ministry will consider all these things and consider how they can fairly deal between man and man, because if they do that they will get better work out of them, and better effort. If they can at the same time reduce our labour by reducing the number of forms, and ease our work by not putting difficulties in our way, we shall be very grateful. I was very pleased this week to hear that we had got a notice to produce 100 men out of our works. We have been through our works, and we saw no difficulty in letting these 100 men go. If the Ministry will help us, we can do more and more in that way, and is more and more to their advantage, because in so many of these problems it is all to the good of the country and it is all to the good of the War. Men work splendidly, without stint of their time and without asking extra reward. They are ready to do anything, but there must be justice; there must be equality. I hope, therefore, the Ministry will take what I have said in good part, and with a view, if possible, to assist them.

Mr. CURRIE

The House often listens to the invective, very often interesting, of the right hon. Baronet representing the City of London, and certainly to-night we had a double dose. If it were not for the last instance of reprehensible conduct on the part of the Ministry of Munitions, to which he drew the attention of the Committee, I do not think I should have wished to intervene at all; but I think he went altogether across the line that any Member of the House is entitled to traverse. I wish to say just a word in regard to two cases he instanced. In the first place, he drew our attention to the fact that a sum of £230,000 had been posted twice. That is a mistake which should not have happened, but which will on occasion take place. It is very easily made, and if you do not have a staff to follow up the work, especially when you are working single entry, the mistake will remain undiscovered. He talked about the mistake having been discovered by the Auditor-General, but I am inclined to think the mistake was discovered inside the Ministry of Munitions. I do not think the Auditor-General could have discovered the mistake. In any case, I do not understand that the money has been lost at all. The right hon. Baronet's second case in point involved a sum of £6,000,000—an enormous sum. Advances are made to contractors, of course, and £6,000,000 is a very large one I admit. His complaint is that at a certain stage of. the investigation the information at the disposal of the Ministry as to how the money was to be repaid was not completely chronicled. After all, audit is a process which has a beginning, a middle, and an end, and if at the end of the process any such accusation can be sustained against the Ministry of Munitions, of course the fault will be heavy; but that investigation is only half done, if so much as half-done at the present moment, and I see no reason to lay heavy blame at the door of the Ministry when, after all, the process of investigation has not been completed.

9.0 P.M.

It is the third instance, however, against which I really wish to protest. I listened very carefully to my right hon. Friend, and he really made a suggestion which was narrowly differentiated from a charge of corruption against the Ministry of Munitions. He suggested there was some arrangement, which was strongly to be deprecated, at all events, whereby, by-some process or other, a man who did business with the Ministry of Munitions could escape his fair share of Excess Profits Duty. The thing is absolutely untrue. Most people who know anything about these contracts know that very often the Ministry has to make a grant in aid or advances in capital, and very often there is a sort of partnership arrangement whereby terms and dates of repayment are to depend partly on the profits that accrue and the results of the business. Of course, if one had absolute omniscience and complete prescience in the Department, such form would be unnecessary, but in certain cases it is economical, convenient, and proper, and in no way open to attack, and I protest that any remarks should be made in this House which might be reported in the Press and be calculated to give a false impression.

My hon. Friend the Member for Liverpool (Sir J. Harmood-Banner) made a suggestion which, I confess, I was rather surprised to hear a man of his vast experience make. He suggested that the Ministry showed favouritism in the settlement of accounts between one contractor and another. Let me remind the Committee that there are various reasons, sometimes only too good, why the Ministry should not be very quick to settle with the contractor. If the contractor has completed many settlements with the Ministry, and has always been found to be absolutely correct, it is natural that the settling officers of the Ministry should be anxious to pay the man's account and get on with further business. On the other hand, there are contractors and contractors, and I am prepared to say I do not think anyone outside the House would be astonished to hear that there is such a thing as contractors in dealing with whom a little caution and a little delay in finally settling an account is not a thing to be deprecated. There are cases of that kind, and there may be cases where undue delay has taken place and the Ministry is to blame. I do not deny it. But I am surprised to hear a man of vast commercial experience make such a suggestion without being careful to add that there might be a very good reason indeed for a good deal of delay in such cases. My hon. Friend also spoke of the annoying number of forms and schedules which the require-merits of the Ministry placed upon the controlled firms. It is perfectly true that the forms which contractors are asked to fill are a source of great worry. At the same time, let me say this: The Ministry are short of the services of a considerable number of chartered accountants whom we wish to retrieve from the Army, and whom we wish to attract from civil life.

Mr. J. M. HENDERSON

What on earth has that to do with the number of forms?

Mr. CURRIE

I will tell the hon. Member. When the Ministry has at its disposal a larger number of experienced senior auditors, I hope they will be able to dispense with a good many of these forms. At present they are dependent on a less experienced staff in some ways than they would like, and when this staff is improved, as we hope it will be, we hope these forms will become less exacting. I only wish further to clear up the point raised by the hon. and gallant Member for Greenock as to the flat rate of profits. I make no complaint against the spirit of his speech, and still less against the spirit of his Report, which is a very valuable document. His own Committee says: Your Committee have not attempted to indicate in any way the rate or rates of profits which they consider would be fair. One cannot help observing that if they could have given us some indication of their opinion that would have greatly added to the value of their Report, because the Ministry would have listened to their Report with very great respect. May I further remind hon. Members that in paragraph 68 it says: That the rates of profit should be arrived at after consideration of the whole field. It is just because you cannot fix the rate of profit, even in a narrow part of the field, without considering all these different considerations, that the attempt to arrange the profit as suggested in any Department of work really breaks down. Collective bargaining is condemned. The Financial Secretary to the Ministry is absolutely right in what he says with regard to this. In some of the negotiations a man might be told, "Oh, yes, you are entitled to a certain rate of profit, whatever the other considerations may be." What sort of a bargain would that yield? That is the only point I have to make against an otherwise valuable Report.

Mr. ANDERSON

Of the speech to which we have just listened I shall only say that the Ministry of Munitions appears to have discovered a very valiant and a rather indiscriminating defender. His motto appears to be, "The Ministry—right or wrong!" As to the speech of a few minutes ago by the hon. Member who represents Liverpool, I think his point of view is that the Ministry of Munitions would be a splendid institution, and would be doing very admirable work, if it would not make the mistake of paying 12½per cent. advance of wages to the workers. His argument seems to be that once you begin to do that sort of tiling, you never know-where you are going to stop, and, having given advances to one group of workers, you were sometimes driven, quite unexpectedly, to give advances to other groups of workers. The logic of his argument would appear to me to suggest that the Ministry ought never in any circumstances to grant an increase of wages, for by doing that, they would have avoided the pitfalls into which they have fallen on recent occasions. He also said—and this was stated by a previous speaker—that if they had consulted the employers or consulted the various deputations of employers, very definite advice would have been given to them on this 12½per cent. question before the fatal step was taken. Those who spoke to-day left no doubt in our minds as to what the employers would have advised—if their advice had been asked. I do not know whether it was or not. It is quite clear, however, that the advice of the employers on this question would have been the advice given by "Punch" to those about to marry, "Don't." I only wish to add further on this point that the settlement of Labour questions is not quite such a simple and easy matter as some hon. Members appear to think.

We listened this afternoon to a very able and very eloquent speech from the Minister of Munitions. It showed a very firm grasp of the matter with which he has to deal. It is the business of Ministers—at any rate it seems to be the business of Ministers of the day, in point of fact—when they are going to give an account of their Department, to paint a sort of vision of a glowing sun, the sun of righteousness and of protection, representing the picture they wish to suggest. It is not entirely a very gracious task to paint in a few black spots in order to make the picture a little more real than it otherwise would be. I am very glad that the Minister of Munitions this afternoon did not, at any rate, fall into the error which is sometimes made by the heads of the various Government Departments when they are speaking from the Treasury Bench. He does not believe that munitions of war, and ships, and everything of that character are turned out from Government offices—are manufactured there. That mistake is sometimes made by Ministers. It appears to me that when things are going well, and munitions and shipbuilding are being turned out quickly and things are going with all dispatch that Ministers take to themselves a large part of the credit. They stand in a kind of reflected glory and say, "How splendidly we have done all this." It is only when things are not going so well that it is realised that these things are not made in Government offices, but by large masses of working men and women in various parts of the country, and if there has been some breakdown it is usually these wicked working people who are blamed for it; for having a strike, or doing this, or that, or something else.

It is not so very long since that another Minister, speaking from that place, said the shipyard workers were not doing their work as if they realised that the fate of the nation depended upon their exertions. These men say, whilst not admitting that impeachment at all, that the Government, find Government Departments, and sometimes employers of labour, do not act towards them as if they realised that the fate of the nation depended upon their labour and their exertions. Indeed, some of the employers—not all of them—still seem to be animated very largely by the pre-war spirit of provoking needless troubles with their employés. It is along those lines very often that troubles of various kinds begin. The Minister of Munitions this afternoon very plainly showed how very small was the amount of time lost through industrial strikes, and that sort of thing; that any loss or stoppage of that sort was negligible. Let me say frankly, as one who knows something about the psychology of working people, that they do not want strikes, and least of all do they want strikes at the present time. They have no great regard or love for the Government or for some of our rulers, but they do feel their responsibility towards their own sons and brothers in the trenches. I can assure the Government of this, that when mistakes have been made, in certain action in regard to the workpeople, that that action would have been combated much more strongly by the workpeople if it had not been for present circumstances and all involved therein, so as not to let the soldiers down. They do not want strikes or disputes. They want fair dealing and fair play. What has happened repeatedly is this, that under the pretext of the War the workpeople have been coerced and intimidated in various ways. When they complain of this or that grievance, the reply to them has been, "Do you not know there is a war on?" That is no answer at all if a grievance is being imposed quite needlessly upon them. That kind of spirit that would brush everything aside on the score that somebody else is suffering more has been responsible for a great deal of the industrial trouble we have had in the country during the last three or four years. They want a greater sense of freedom and responsibility, and with more freedom and responsibility you will get better workmen and better work and a larger output. I have very often said that labour is far more than a mere factor in production, and it is very often treated like bales of cotton or pig-iron. Labour is passion, emotion, hope, and fear. Labour is life, and you cannot have a more complex problem than the handling of large masses of people with all these various feelings and emotions. It is a matter which requires very delicate handling indeed. I know you get displays of temper, but those are not confined to working people, and we sometimes get them on the Front Government Bench, and even the Minister of Munitions is not entirely immune from occasional displays of temper.

In dealing with the labour problem during the last three or four years there has been far too much of the heavy-footed method. I am not raising all these points to revile the Ministry of Munitions, because I think they are getting rid of a good many of the panic methods into which the Ministry was driven, and they are finding their way along saner and sounder lines. There was too much panic legislation, and if one thing is more certain than another it is that industrial coercion, or attempts at it, bring their own Nemesis and punishment very speedily. I do not believe you can coerce 2,000,000 or 3,000,000 workpeople at all, and the laws you apply to them are such as must appeal to their understanding as being wise and necessary, and if they do not do that your laws will break down and your attempts at repression will break down.

In the early days of the War there were all sorts of experiments rushed into. You had the leaving certificate arrangement, by which the workman was bound down to one particular master, and that caused no end of trouble and difficulty and ill-feeling. Then you had Munition Courts set up, and a large number of people dressed in a little brief authority began to preside over them. Workmen were dragged before them for the most trivial offences, and all sorts of pin-pricking was indulged in, and so far from getting rid of the difficulties those methods led to a rising tide of discontent, so much so that at one time the industrial position was much more serious than hon. Members were aware of. At the time when there was a big engineers' strike and men were being arrested in various parts of the country, the industrial position was just as critical as it well could have been. I am glad that the present Minister of Munitions has profited by the mistakes of his predecessors and that, generally speaking, he is getting back to a better and a wiser labour policy. The Minister of Munitions has been criticised for his labour policy. I see he has been criticised in the columns of the "Morning Post." I hold no brief at all for the Minister of Munitions. I dare say mistakes are made, but I am sure that the spirit which animates some of the leading articles in the "Morning Post" will not solve the labour problem, and if some of the people who write those articles had the handling of labour problems for two months a very pretty mess they would make of them.

Two things have relieved the labour industrial situation in a very large degree. I remember the first speech of the present Minister of Munitions when he was appointed. He stated that whatever experiment you are going to make you had to take the mass of the workpeople along with you, otherwise the experiment would break down. He also said that you had to convince these masses of men and women that what you were trying to do was right and necessary. I believe those are very sound principles, and I am convinced that the sweeping away of leaving certificates has been a step entirely in the right direction. I do not know whether the Parliamentary Secretary to the Ministry, who I take it will reply presently, will have anything to say as to what has been the result of the leaving certificates being abolished. Has it led to some widespread upheaval of all sorts of men throwing up their jobs, as was predicted? In my own judgment, nothing of the kind has happened, and leaving certificates have been abolished not only without any ill results, but their abolition has certainly promoted a better feeling amongst working men and women.

I remember very often when I have taken part in Debates like the present I have had to complain about the number of men and women brought before the Munition Courts. They were dragged there for all sorts of trivial offences, and in my opinion sometimes very unfair sentences were imposed upon them. I do not know what has happened about the Munition Courts. I used to get complaints in newspapers sent to me, and I got a great number of cases in my newspaper cuttings. I want the Parliamentary Secretary to tell us whether these Munition Courts have been closed up altogether or whether they are still working, because I am bound to say that either they have closed down entirely or else they have been reduced to a minimum. Consequently, my complaints in that direction can no longer be made, and Othello's occupation in this respect is gone, and nobody is more pleased than I am. The Ministry have this in their own hands, and where offences are trivial and likely to harass and hamper and rouse ill-feeling the Ministry take good care that they are not dragged into Court. That is my interpretation; but, whatever has happened, there is far more wisdom and judgment displayed than there used to be in this matter. I claim that there is a much better feeling with this much greater freedom. I also claim that you are getting much better work, and I urge the Ministry to continue in this path and extend the bounds of freedom to make them wider yet.

I wish to come now to a principle of more definite importance, and I hope the Parliamentary Secretary will be able to give me his attention on some of these more concrete points. I have to complain that there is still a good deal of delay in getting things done. I wish first of all to raise the question of the consolidated Order dealing with women's wages and conditions. There has been issued from the Ministry a large number of Orders of one Kind and another—over lapping Orders, conflicting Orders, Orders that contradict one another. We have been anxious to get, and we have been promised for a very long time that we should get, one Order simplifying and codifying all the Orders, so that people may know exactly what is the position with regard to these Regulations. At the same time we were promised that there would be certain improvements embodied in the consolidated Order. That was promised last June. The pledge was given most solemnly by the present Parliamentary Secretary to the Ministry of Munitions. We have raised the question repeatedly since as to when we are going to get, if we ever are going to get, this consolidated Order. I repeat the question once more to-night: Are we going to have this Order, and, if so, when? Are we going to have it before the end of the War or after the War? Perhaps the Parliamentary Secretary will throw some light upon that particular point.

There is another matter in regard to which there has been considerable delay. The other day I raised a question in regard to giving legal effect to the various pledges and promises that have been made as to the restoration of trade union rules and conditions. I am not going into that matter to-night at any length—indeed, I should be out of order if I raised the legislative side of the question—but the fulfilment of that promise on the administrative side has been hung up for a very long time. The Parliamentary Secretary the other day said that if I raised the matter in a fortnight's time he hoped that he would be able to give something like a satisfactory reply. In the meantime I urge that proposals should be got into the form of a Bill and that something should be done. I know from resolutions that I have received from branches of the engineers and other workers that there is a good deal of doubt as to when the Ministry intend to carry out their promise regarding the restoration of trade union rules and customs. There is the question as to how far a record is being kept of any departures from industrial customs that are made. If there is going to be any give-and-take at all, and if there is going to be any understanding at all between labour and the nation, the first thing essential is that a complete record shall be kept of all departures that are made from trade union rules and customs. I find that some employers, carrying out these changes bit by bit, are not always willing to tell what they are doing or to divulge the character of the changes that they are making. I find also that representatives of the Ministry in one part of the country are sometimes less eager than representatives of the Ministry in other parts of the country to compel employers to sec that a record is kept of any change that is brought about. It is important also that the Ministry of Munitions should supply the head offices of the trade unions that arc affected with a statement of the changes that are being brought about in various parts of the country. That is essential in the interests of the union, and I should like to know whether it is being done by the Ministry at the present time.

About three weeks ago I raised the question of the inadequate travelling facilities for workers living in London and working at a place not twenty miles from London on very urgent war work. There are about 10,000 workpeople employed at this particular place, and I should say that the large majority of them reside in London. They have got to get there by 'bus and by tram. At the present time the service is altogether inadequate, and some of these workers in the morning have to wait over an hour in order to get a 'bus or a tram. There is a scramble, and some get in and some are left behind. I know for an actual fact that some of these workpeople are leaving their homes about four o'clock in the morning and are working an hour or two overtime, so that they do not get back to their homes until ten o'clock at night. Those are ridiculously long hours. It means that in the end you will wear down the efficiency of those people and create a good deal of discontent and upset, and it also means that they lose wages, because very often they are not able to get to their work.

Mr. J. M. HENDERSON

Is it not the fact that they sometimes meet other fellows coming the other way?

Mr. ANDERSON

They sometimes meet themselves coming the other way. [Laughter.] The point is that the workpeople lose wages and the nation loses work, because some of these men stay away. On the average, there is a loss of time of something like 10 per cent. due to this want of proper and adequate travelling facilities. When I raised this question five weeks ago I pressed for a railway siding in connection with one of the railways running out of London. It can easily be done; in fact, the work is going on now. I was told by the Parliamentary Secretary that the work was nearing completion. It is still nearing completion. It is not finished, and there is no immediate prospect of it being finished. I saw a deputation from these men, representing 5,000 people, on Tuesday, and they asked me to raise this matter in the House. They want to get to work more quickly; they want to be able to do their work more efficiently; they do not want to stay away from home so long, and they ask the Minister again to get into touch with this railway and to hurry up the work that might have been done in their view and in my view long ago. I certainly hope that the Ministry will take this matter in hand, because the congestion would be very much relieved if large numbers of men and women could travel by railway instead of by 'bus and tram.

I wish also to raise the question of how easy it is to provoke needless trouble among workpeople. Very often, when anything happens in the way of a stoppage of work, people do not reason about it or try to find out what are the facts; they simply blame the workpeople, and you get leading articles in various newspapers saying how bad and wicked they are. Before judgment is passed, the facts of each case ought to be investigated. You would then find that sometimes Government and employers' methods ought to be very strongly condemned. About a fortnight or three weeks ago a workman in a firm not a great distance from London, which makes parts of bombs, was called in either by the foreman or the employer and told that his services were no longer required. He asked why, and he was told that some Government Department had informed the employers that he was not a desirable man to have on the place. That was the only reason that he could obtain. The man is a very active trade unionist, and he was a shop steward. Apart from that, nobody knew anything at all against him. He was discharged. If there is one thing more than another that workpeople passionately resent, it is the victimisation of somebody who has been standing up for them and trying to defend their rights. The immediate result was a stoppage of work because this man who had stated their grievances had been victimised for doing so. Apparently there was no other reason. The moment the stoppage of work came the man's case was investigated. A special committee was asked to investigate it after the stoppage of work and not before. It was then found that they really had no case against the man at all. The man was unconditionally reinstated after the mischief was done, although a little inquiry beforehand would have avoided the whole of that trouble.

I wish to raise next a point which is quite familiar to the Parliamentary Secretary, namely, the question of the suspension of women workers. There is a considerable number of employers who, from time to time, suspend numbers of their women workers. The employer will tell one of these women that she is suspended for the time being, and that he will send for her if he requires her services. The employer may do this even if he has no intention at all of requiring her services in the future. If, after being suspended for a few days, that woman asks to be dismissed, she is held to have dismissed herself, and she has forfeited unemployment benefit by that act. In many districts, Bolton is one of them, women are suspended and told that they will be sent for if they are wanted. One thing that is got rid of by that method is that employers who discharge their employés in the ordinary way have to pay them a week's wages in lieu of notice. A good deal of dissatisfaction is caused by this practice. The workers therefore ask that if they are suspended for more than two days the suspension should be counted as dismissal, that they should be entitled to a week's wages in lieu of notice, and that when they are suspended for more than a week they should be paid during the time of their suspension if the em- ployer desires to retain their services. I believe the Parliamentary Secretary has been going into this matter, and I am not sure that he has not got certain proposals ready. At any rate, certain proposals have been suggested from time to time and I now ask whether he has any statement to make as to what the Ministry proposes to do on this question?

Another question that has been raised repeatedly in this House is the dismissal of a considerable number of women workers during the last few months. It was estimated that, if the present big offensive had not taken place, probably 40,000 of these women would have been discharged. In point of fact, a considerable number of them were discharged, 10,000 or 12,000 at least, and probably more, but, owing to the offensive, a large number of the dismissed women have been taken on again, showing that their dismissal was, to say the least of it, a little premature. Although that is true, there is still a number of the women who have been out of employment ever since. The position of these women is not less serious because there is not a great number of them. Not only is the position serious in regard to those who have not found employment, but there are considerable numbers of women who were out of work for long periods before they found work again. Some women in Leeds, for instance, were dismissed from Messrs. Greenwood and Batley's, and were out of employment from the 20th February until the first and second week in April. We know the testimony that is constantly being paid from the Treasury Bench to the services these women have been rendering, but I am not quite sure that the Ministry has yet been able to devise a very generous policy towards them when they get rid of their services from the various controlled establishments. We are told then, I believe it is quite true, that the dismissals were largely due to a shortage of materials. That will certainly happen again and again during the War. Therefore it is essential that the Ministry should have a definite policy as to what they intend to do in the event of the women being discharged. The unemployment benefit is very small. Sometimes the women do not get unemployment benefit because they refuse to go from one town to another. I know a case of a woman in Stafford who has two young children, and because she refused to take a job at Aston, which involved either leaving her children behind at Stafford altogether or making very difficult arrangements with regard to them, because she found herself unable—she is the wife of a soldier—to undertake this journey and to undertake the new work, she had her unemployment benefit entirely stopped. That is wrong. There is need for a far more definite policy than we have at present as to what ought to be done in such circumstances. I am quite sure that, in the main, the Parliamentary Secretary will agree that as long notice as possible ought to be given, and that Employment Exchanges ought to be informed in good time. Wages or or substantial unemployment insurance ought to be paid for a certain time during which the women are looking round for new work. I should like to ask whether the Ministry has a definite policy in regard to these matters, and, if so, what that policy is?

I have raised repeatedly in the House the question of railway vouchers for munition and other workers during holiday time. I have complaints from Birmingham, Lancaster, Woolwich, Cricklewood, and other places in regard to this matter. Up to last Easter women workers who had left their own homes and gone to another town to do munition work were able to obtain railway vouchers in order to get home at holiday times. Some of these women were married, but had left their children in the first town, and the railway voucher Was a very essential thing if they were going to see their children or their relatives and friends. An arrangement was made last Easter under which vouchers were issued only for married men, and no issue of vouchers was made for the women at all. We were told by the Parliamentary Secretary that if any vouchers were left over after the married men had been supplied with them the women would get them. That was not a very satisfactory arrangement. In point of fact, in future there are not likely to be any vouchers so far as these women are concerned. The difficulty was got over at Easter because both the men and the women gave up their holiday in view of the special circumstances in which the country was placed. I suppose they will receive a deferred holiday when matters ease down a little later on. If they do, as I am sure they will do, there ought to be some general provision made in regard to the issue of vouchers for the women workers. I should like the Ministry of Munitions to approach the Railway Executive Committee on this question, with a view to a proper understanding being reached and proper arrangements being made.

When women were brought into the industry in such large numbers various steps were taken in order to protect all round conditions, and a circular, L 2, was issued which laid down the very sound principle that where a woman is doing the same work as a man she ought to get the same payment as a man. My own view is that sex should not enter into workmanship at all. It does not matter in the least whether a piece of work is done by a man or a woman. You ought to pay for the work done, and whether it is a man or a woman who does it ought to be left out of account altogether. It is complained, less by the women than by the men, that the spirit of that circular is being violated by the fact that women are being excluded from all national advances. Advances which are being given to the men are not being given to the women, and it is claimed that this is a matter which violates the principles of circular L2.

I wish now to refer to certain allegations in respect of an Aberdeen firm in regard to the making of shells. Reports which have come to me make what are really very serious charges against this firm, and it is quite clear that investigations of these charges have been made by the Ministry of Munitions, and that they are very far from being satisfied that the right thing has been done. It is urged against this munition firm at Aberdeen that they have been making shells which were really faked shells, that they used a false mark in order to make it appear that they had been passed by the inspector, that the marking tool was really an imitation of the inspector's mark and not a, genuine mark at all. It is stated that they had a secret attic, unknown to the Government inspector, where this work was done, that they had special keys for the attic and a special alarm bell connected with it. It is stated that complaints of all this were duly sent to the Ministry of Munitions, which sent Colonel Stansfield, of Woolwich Arsenal, specially to Aberdeen in order to investigate these charges, which, if they are true, amount to a form of treason.

Mr. HENDERSON

Why not make the allegation outside, so that they can meet you?

Mr. ANDERSON

That is very well for my hon. Friend, who interrupted on a previous occasion, but I am going to show, from the question I have asked and from the answer I received, that the matter cannot possibly be left where it is. I am not suggesting that the charges are true, but in view of what has happened there will have to be a public inquiry into the facts of the case. A very full investigation was made into the charges by the Ministry of Munitions. There were various inquiries made, apparently by the Munitions Tribunal at Aberdeen, and in the end the firm was taken over by the Government.

Mr. HENDERSON

No!

Mr. ANDERSON

And became a national shell factory in place of being what it had hitherto been. [Interruption.] I am quite aware of the feeling I provoke in the breast of the hon. Member.

Mr. HENDERSON

It is so beastly unfair.

Mr. ANDERSON

We shall see to that. In view of the position the matter has now reached it has to be raised, first of all in this House, and I am perfectly prepared to take it elsewhere if the need for that arises. My question was: To ask the Minister of Munitions whether charges have been brought to his attention that an engineering firm in Aberdeen engaged in the manufacture of munitions were faking 6-inch shells and were in possesion of special marking tools for this purpose, a consignment of shells costing £4,000 being involved; whether Colonel Stansfield, of Woolwich Arsenal, was sent to Aberdeen by the Ministry, and whether it was discovered that discarded shells were being marked as if they had been passed and approved; whether these engineering works have since been taken over by the Government after a military investigation had taken place; whether he is aware of the name of the electrical engineers in Aberdeen who produced a tool for marking similar to the inspector's mark; and will he say whether there has been or will be a prosecution of any or all concerned? This is the reply of the Ministry of Munitions through the Parliamentary Secretary: The answer to the first part of the question is in the affirmative. No definite information has been obtained as to the manufacture of a tool for reproducing the inspector's mark"— [Interruption.] I am really very sorry I should be upsetting my hon. Friend. I suggest that he tries to keep quiet. This is a very serious matter, and I am fully alive to the responsibility of what I am doing. The question of a prosecution of the persons concerned has been under consideration, but the Ministry are advised by the legal authorities, whom they have consulted, that owing to the circumstances in which the works were taken over as a national factory they are unfortunately precluded from instituting a prosecution. The matter cannot possibly be allowed to remain there, because it suggests that some special bargain was made with this firm that, if it was taken over and became a, national factory, although these illegal practices had taken place no prosecution would follow. I would like to ask the Parliamentary Secretary who was responsible for such an arrangement. I am quite sure he was not. I cannot believe that the Ministry of Munitions was responsible for an arrangement which, according to the Parliamentary Secretary, allowed the firm to escape from the consequences of its own action as part of the taking over of the factory as a national factory. I ask the Parliamentary Secretary whether further action is going to be taken. I am not asking him for a prosecution, but I do want a public investigation. I say that such an investigation must take place. I have a large pile of correspondence from people who are prepared to give evidence—

Mr. HENDERSON

Principally discharged foremen, I suppose?

Mr. ANDERSON

Even discharged foremen may tell the truth; at any rate, they could be put into the box and subjected to cross-examination. I hope that this matter will be carried further to-night by a statement from the Parliamentary Secretary that the matter is going to be brought into the light of day. If this firm has been maligned it is wrong that these rumours should be allowed to run current. If certain directors are being wrongly charged with the manufacture of faked shells the stigma should no longer be allowed to rest upon them. I therefore ask for a full investigation into the matter.

10.0 P.M.

Captain DOUGLAS HALL

I have listened with some interest to the various attacks made on the administration of the Ministry, and I feel rather deeply that they should have gone into such pettifogging details as have been mentioned. I have been attached to the Ministry almost from its start, three and a half years ago. I know something of its working. I know what a tremendous shortage of munitions there was at the time it was brought into existence. I know what desperate straits the country was in. I was out in France in 1914–15, and I heard from wounded officers about those desperate straits. I remember one officer who was in the line of retreat from Mons when they were being subjected to such a bombardment as had never before been known in the history of the world, told me that he telephoned back for some retaliation from our guns, and the answer he received was, "My dear chap, we cannot do it, we have only four rounds per gun, and we are keeping them till the Boche comes over the top. You will have to stick it." Stick it they did, and they laid down their lives for their country. That was not the fault of this Ministry, it was the fault of lazy and supine previous Governments who had left us without an adequate reserve of ammunition—Governments who must have known that war was imminent, and yet had left us in these desperate straits. But under the circumstances the right thing was done. The Ministry was set up, the best business men were got together, men accustomed to making in peace times what they were asked to provide for the Government in these days. They were experts in their trade, but they were not necessarily experts in Government accountancy, or in Government routine. What would the country have said if this Ministry had started getting together a sufficient body of accountants, so that every penny spent might be duly accounted for on Government forms, instead of producing munitions forthwith? I know pretty well what would have been said. The Ministry would have got very short shrift. It has done its best under very difficult circumstances. These men could not fill up Government forms in the correct fashion in which ordinary Government officials do it, but they were experts in their trade, and when plausible contractors came to them in order to get a contract they found they could not get it by smiling or by being deferential and polite. They probably found sitting in their sleeves in the Government chair men who, in civil life, were perhaps the head of their trade or profession. They found it was of no use talking nonsense. They were forced to go down to the bedrock of things, and for the first time business and expert methods were brought into a Government Department. Comments have been made on the way in which forms have been filled in, but a number of firms in this country looked upon the Ministry of Munitions as a huge milch cow out of which they should get all they could. There were a number of firms who considered that if they did not spend their profits on improvements the money would have to be paid out in the form of Excess Profits Duty. No doubt these things have had to be looked into, but why arc these strong comments being directed against the management of the Munitions Department? The first thing that Department did was to set about getting the stuff, so as to be able to deliver the goods. They have delivered the goods, and now hon. Members are grumbling at having to pay the price. They would have grumbled much more had the goods not been delivered. They would have been the first to ask: "What are the Ministry doing?" We have a Budget this year involving over half a billion of money and yet the Accountant General brings in a Report in which he mentions such a pettifogging adverse criticism as a defalcation of £9, with which a wretched clerk had absconded, of which £5 would be deducted from his screw, while the remainder would represent a loss to the nation! Is this worthy of a great country? Napoleon said that we were a nation of shopkeepers. By God! I think we are.

We have got the stuff, we have the greatest amount of ammunition which has ever been turned out in the history of the world in the shortest time, yet, because there are some little mistakes in accounts all this fuss is being made! Is it better to make mistakes in accounts or mistakes costing human lives? What does it matter if you make a mistake in an account? It is perfectly sickening to hear these comments on the management of the Department. If hon. Members and the public only knew how these heads of Departments have given up their own businesses and, without any pay whatsoever, have for two years sat in Government offices from nine in the morning often till ten at night, giving their best expert knowledge without any hope of reward, I do not think these comments would be persisted in. It should astound this House to see men in their position undertaking even an ordinary clerk's job, although they are beyond military age and there is no reason why they should do it. Yet they are doing their best. They make mistakes because they are not accountants, and you cannot get accountants now; you might perhaps find some if you dug up the sods of Flanders. I do think it is a slur on the nation that these petty questions should be raised. This is not a Department which has been in existence, say, a hundred years, like the Home Office; it is a Department which was brought into existence in a national emergency, and it has produced stuff which the War Office could not produce, with all its organisation, and it has done that which no other Department could do. If there have been mistakes now and again, I do appeal to the Committee to remember that you cannot treat this Department like an ordinary business concern. Profits are not the only aim. It is the saving of the lives of our fellow countrymen which is the aim, the winning of our battles, and that must come first. If you find mistakes by men of action, men of brains in accountancy, after all they are very few and far between compared with the bulk of the money, and I think the country might exonerate the Ministry from the reflections which have been cast upon it, not only now, but by the gutter Press, who have been making such attacks that you would imagine that the whole organisation was in a state of what the French call pourrissage.

Mr. HENDERSON

I do not think that the Government have been very happy in the Gentlemen they have put up to make their apologia in connection with the charge made against them by the Auditor-General. We are told it is all right now, and that the whole Deus ex machina is this, that, whereas they tried to keep the books by single entry, they are now going to try to keep them by double entry. That is very comforting. The only trouble is that in my long experience I know, as a matter of fact, that some of the largest businesses in the world, and in this country, have gone on prosperously, and have never found out that single entry was not quite good enough for them. We have at last a Financial Secretary. Let me remind the House that when this Bill was brought in and the discussion took place upon it the Prime Minister, who brought in the Bill, demanded two secretaries, and one of them was to be a Financial Secretary. That is on the records, and one of them was intended to be a Financial Secretary. Where is he? He is only just now appointed, after nearly three years. If my hon. Friend is relying for salvation from these terrible troubles in finance upon double entry, then I say, Heaven help us! for we will be worse than we were before. Double entry has nothing to do with it. You sell a man goods and you charge him with the goods; you get goods from him, and credit him with the goods; and by making a double entry of each of these transactions you do not ensure accuracy. It is ridiculous. You cannot ensure it, and if my hon. Friend is relying on that he will find he is in just as big a mess when he is finished as he has been in lately, and as I believe he is in now. My hon. Friend the Member for Liverpool (Sir W. Rutherford)referred to the number of documents that each tranaction carries. If they had made mistakes in the Ministry of Munitions, Heaven knows it is not for the amount of papers and people to look after each item! Every article of goods they sold they accompanied with six dispatch notes. There was a blue, a white, a black, a pink, a green. What were they all for? The reply was, "Oh, this is necessary. One is for the War Office, another is for the Ministry, another is for the Statistical Department, another is for something, and another is for something else." They explained them all. There was a transaction that I could mention of 6 tons of copper which actually took up sixty-four documents. There is care for you! There is caution! They spend thousands of pounds on filing documents and jacketing all these letters and invoices, and yet they cannot keep their accounts right. They are over-checking. What do we find in other directions? As one of the Committee I went to one of the public offices and found a large room. There were seventy-three women employed in recording letters, and what they did was to put down the name, the date, the subject, and so forth; they ledgerised these, and they were passed on to another Department for card-indexing. Finally, after permeating the whole house from top to bottom, the letter was put away in its jacket on a shelf. We happened to strike one of these. It was an application from a poor man to get 2s. 10d.

Mr. KELLAWAY

Is this the Ministry of Munitions?

Mr. HENDERSON

It is the same thing. We could not find it notwithstanding all this elaborate system. When you come to the Ministry of Munitions what do you find? The filing room, hundreds of girls filing and filing, and that has been going on from the very first. They have been doing all this filing, and then the Auditor-General reports that there are millions of money that they cannot account for—

Notice taken that forty Members were not present; House counted, and forty Members being found present—

Mr. HENDERSON

The apologia that has been made by my hon. Friend for why things were so badly done really leaves me very, very cold. They have had years to do it. I know very well that no doubt there was a rush of work, and everyone understands that in the first two, three, four, or five months there might have been a great deal of want of organisation. We are not speaking of that, but of twelve months, eighteen months, and two years after; and it was only about twelve months after the Munitions Department was started that the real trouble began. It began when they commenced to sell raw material to the munitions people, and we know very well that they lost count. I asked the late Minister of Munitions, "How is it that you are sending out circulars to all the people that you buy from and sell to, to ask them to fill up all the particulars of the goods you have bought from them and that you have sold to them?" Why is that? The ordinary trader does not do it. That is only twelve months ago. I told him they were going to have confusion. His explanation was that a great many things were ordered through the telephone and the fellows forgot to take notice of them. That is the explanation I got. But it goes a great deal deeper than that. It has been carried on by men who really do not know the elements of ordinary business. My right hon. Friend seemed to think that there was something in the fact that the other Government Departments were all carried on by single entry. Of course they are. They are not manufacturing. They have nothing to do but to spend the money we vote to them, and they vouch for it. We may be very foolish in voting them a lot of the money, but, at any rate, they vouch for it. Do not think that you are going to start checking by double entry. You must look for the trouble elsewhere. You have I do not know how many thousands of inspectors. I do not know who appointed them. I have tried to find out, but I could not find out. I happen to be connected with some of these controlled establishments. They tell me that an inspector goes down, a gentleman in all the panoply of war, to inspect 10,000 electric lamps. He inspects them, and is perfectly satisfied, and drives off in his motor car. Presently he comes back and says, "You did not show me the aperture for the oil. "They said to him, "Electric lamps do not require oil." Then this inspector said, "Oh, I understand," and he goes away. That is one case. Here is another case I can vouch for. A professional man—we will call him Brown—went to one of these factories, and one of the managing directors happened to know him; he said, "Hello, Brown! What are you doing here?" Brown replied, "I am an inspector." "An inspector of what?" asked the managing director. "An inspector of so and so," was the reply. "But you do not know anything about it," said the director. "No, I do not," replied the inspector, "but I am going to learn." That is the sort of thing that goes on. Here is another case. I happen to know of a man who was appointed, with certain assistants. I went there, and I asked, "Where is the Government inspector?" The reply was, "He's off fishing. He fishes most of the day. He comes here for an hour in the morning, and then he goes off fishing."

Sir W. EVANS

Can you give the name?

Mr. HENDERSON

Yes, I can give the name. Here is another case of a number of articles that had to be checked by a gauge. This is in Birmingham, and I can give the name of the place. A gentleman came down and said he had come to inspect the things. "Very well," was the reply, "there they are." The gentleman then said, "All right, I will send down an inspector." A lady came down and said, "I have come to inspect these things." "Very well," was the reply, "there they are. We will give you a room for the purpose. Where are your gauges?" "Oh, I have not any gauges!" said the lady. "But you must have gauges. You cannot check them without." "Very well," she said, "I will go back and get some." She went back, and on her return she said, "This is the only thing we have got," and she produced a gauge of copper. She was told that that was not the slightest use, because when she had tried it on about a hundred the gauge would be altered. "Then lend me your gauges," she said. The result was the whole of the things were checked by their own gauges. Here is another case. At one oil these big factories where there is a tremendous lot of stuff made there was an inspector who only turned up now and then, and he had two assistants. This gentleman knew absolutely nothing about the thing. He is a notorious company promoter. He was pilloried in "Truth" years ago. He knew absolutely nothing about the subject. Who on earth appointed that man? When you appoint inspectors in that way by the thousand you go wrong in your accounts, and in the moneys you spend, and you do not know what you have ordered or what you have bought or what you have paid for.

There is another point. The Munitions Department started building for itself—that question will come on again, so that I will not go into it now—butinstead of going, as it ought to have gone, to the Board of Works, who look after the whole of the Government buildings throughout the country and know how to protect themselves, it did the work itself. The consequence is that we have had enormous waste which might have been saved if the Ministry had chosen to take the proper course. The head of that Department at that time was the present Prime Minister, who of course waved his hand and said that it did not matter about money. The hon. Member for the Isle of Wight seemed to think that it did not matter a rap whether we spent £200 or £2,000,000 so long as we got the things. That is a principle to which we cannot submit in this House when we are spending the money of the taxpayer. The real remedy for this is to overhaul the whole of the staff. You are paying far too much money for your staff. Perhaps you might have had no ground for saying to a man, "You must take less money than you are getting now." But now, with the Military Service Act passed, you have very good ground. You have no right to say to a man of Class A, "You are fit to serve. Go to the front or train for the front. Your pay is to be Is. 6d. a day, with allowance for your wife and family"—which pay and allowances might amount to £150 a year. When the man at munitions work is earning not £150 a year, but £400 or £500 a year. You have a right to say to that man, "We will make you work for the same as we make the other man work—Is. 6d. a day, with allowances for wife and family. You have men making up to £l,000 a year who ought not to have more than £300 or £400. You would get the right men if you simply overhauled the whole of your staff from top to bottom. You have some very excellent men, but you have a lot of men who are not excellent and are not worth the money you pay them, and it is time you dealt with them.

The question of a certain firm has been raised. I hold no brief for that firm or any other firm, but it is not a nice thing for any Member to vilify a firm in this House, when they have no opportunity of answering. If he feels so strongly upon the point, then he must unloose his soul and have them punished, and let him repeat the charge outside, where they can face it with their defence. They have never been asked to make a defence in any public investigation.

Mr. C. PRICE

The hon. Member knows that in Scotland the Public Prosecutor will pay the expenses.

Mr. HENDERSON

Then let the Public Prosecutor start a prosecution; that is nothing to me. But I do always protest—and this happens to be near my own Constituency—against charges being made in this House which vilify the character of a man. I do not care who he is; he may be guilty, but it does not matter; he ought not to be charged in this House, when he has no opportunity of defence.

Mr. ANDERSON

Does that apply to Government inspectors, who are charged with being scoundrels?

Mr. HENDERSON

I do not charge anyone with being a scoundrel.

Mr. ANDERSON

I have got the reply of the Minister of Munitions on the whole case which I made.

Mr. HENDERSON

I hold no brief for him or anybody else, but if these charges are brought something ought to be done. It is true that there are controlled establishments, but it is often only one portion of an establishment which is taken over, and the firm to which reference is made is now performing a contract for over £40,000 for the Ministry of Munitions. There I leave it. Let the thing be properly tried and met, without this constant niggling at them in this House. In conclusion, I would point out that the finance of the Ministry of Munitions is a very serious matter, because they draw from the Treasury £50,000,000 every four weeks—practically £600,000,000 a year. If that is to be properly looked after, it is no use talking about double or single entry. You have got to get a set of men who will go through every item, and see that every purchase and sale is properly recorded and properly checked. Only in that way can you save the nation's money.

Mr. KELLAWAY

Since I have been connected with the Ministry of Munitions I have been present on more than one occasion of this kind, but this, I think, is the first occasion upon which the particular section of work with which I have been associated has not called for any considerable comment or criticism from Members of the House. I derive personal satisfaction from the fact that, to-day, on the particular functions of the Ministry sought to be criticised, the criticism has centred almost entirely on the financial and accountant aspect of the Ministry's work. I think the intelligent foreigner, listening to the proceedings in the House this afternoon, would have thought, Here is a nation which is to be congratulated on having, in the midst of war conditions, in every circumstance of stress,' succeeded in establishing a Department of State at Westminster which administers an expenditure three times the total expenditure of this country previous to the War, and has been able to carry out this main function, namely, that of equipping our Armies in the field, without a Member rising in this House to say that it had failed in its main function. That is the big and substantial point which stands out in the proceedings here this afternoon and evening.

Before I go on to deal with particular points when have arisen in the course of the discussion I would like to say, with reference to the speech just made by my right hon. Friend below the Gangway (Mr. J. M. Henderson), that we have as much right to expect, that the inspectors and the servants of the Ministry, who are attacked here should have the same protection, and the hon. Member should be prepared to show the same courage as he expected the hon. Member for Attercliffe to show with regard to a particular firm in Glasgow. The right hon. Gentleman has ventured to criticise several officers of the Ministry, and has mentioned the name of a lady who went to inspect munitions without taking with her the necessary-gauges. Perhaps my right hon. Friend will give the name of the lady outside?

Mr. HENDERSON

I never suggested fraud or treason with regard to that lady. I have not suggested any such thing. I am prepared to give my hon. Friend the names of all these people, and, as a matter of fact, I have not particularised any of them except one.

Mr. KELLAWAY

We want something more than these general charges, and I think that the Committee and the House are entitled to something more than general statements of this kind. I should like to know the name of the inspector who spent one hour a day at his work and the rest of the day fishing. I think we are entitled to ask the hon. Gentleman to give the name.

Mr. HENDERSON

You will get it.

Mr. KELLAWAY

If Members of the House expect criticisms to be dealt with adequately from this place the Minister is entitled to ask for definite and specific charges. It is impossible to reply to charges of this kind made in the air. I rose particularly to reply to what has been said by the hon. Member for Attercliffe in regard to the Labour side of the Ministry. There has been no period since the Ministry of Munitions was established in which the general Labour situation was sounder than it is to-day—there was no period when there were fewer strikes and when the devotion of the great part of the munition workers of the country to the nation was more conspicuously shown. Following on the great German offensive it became necessary for my right hon. Friend to appeal to sections of the munitions workers to work over the Easter holiday. The response to that appeal was general—it was so striking as to be dramatic. We have not a complaint or any refusal to respond to that particular appeal. The difficulty we experienced was to prevent munition workers who were anxious to work over the Easter holiday when it was more in the interest of the State that they should not work.

I do not know of a single case in which it was necessary to make an appeal to munition workers to forego their Easter holiday where they did not willingly make that sacrifice, and in that typical hot-bed of industrial unrest, the Clyde—[HON. MEMBERS: "No, no!"]—if there is unrest in the country it will find expression in the Clyde among that quick and responsive people which you have there. In that district a body of electrical workers held a meeting and passed a resolution to the effect that not only would they be prepared to work over the holiday, but they would sacrifice their week's wages and contribute the amount to some charitable object because they were anxious to show to the country that they were not merely working for the money they received, and were not unmindful of the sacrifice and suffering of the men in France. That is the Clyde spirit, and it is the spirit which has animated the munition workers throughout the country. To be able to say that after three years of exceptional strain is to show that the spirit which animated them at the time this country embarked on this War has become intensified, as experience has shown the real character of the struggle. My hon. Friend wanted to know whether one of the causes of this improved spirit was the abolition of the leaving certificates? I think it was. I think that amongst the circumstances which have contributed to strengthen the devotion of the munition workers of this country to their country and its cause was a recognition by Parliament that the time had come when this restrictive condition might with safety be abolished.

But, arising out of the abolition of the leaving certificate, and one of its essential results, was the 12½per cent. bonus. Most of those who have criticised this decision of the Ministry in regard to the 12½per cent. bonus have entirely overlooked the fact that the abolition of the leaving certificate had created a different condition of things, had restored to labour its right to go into the market to secure the highest return for its employment. I am sure that, but for the payment of the 12½ per cent. bonus, you would have had a very considerable movement of labour in this country which it was essential to avoid. I am glad we hear very little indeed about the 12½ per cent. bonus now. We do not get those fantastic figures which were frequently seen in the Press of an expenditure of £40,000,000, £50,000,000, or even £100,000,000. One hon. Member did say this evening that this bonus was costing the State £140,000,000. I think the figure must have been borrowed from Baron Munchausen's Travels. It has no relation to what the State has had to pay, or possibly could pay, as a result of the 12½per cent. bonus. If the Committee has regard to the conditions under which advances of wages were regulated in this country previous to the payment of the 12½ per cent. bonus, they will see how fantastic these figures are. Advances of wages to munition workers were settled periodically by the Committee on Production. At periods of four months these advances were decided, and when the last application came before the Committee on Production for an advance of wages, the Committee on Production said that, having regard to the fact that munition workers had received this 12½ per cent., they did not consider it necessary that any periodic increase should be paid. So that, whatever the amount was—and it never had any relation to the sort of figure quoted here to-night—it was only for the period from the time the bonus was made and the time when the first periodic advance would automatically have been given, if the Committee on Production had decided that any advance was necessary. You have to take into consideration, then, in measuring the financial cost of this, whatever advance would have been decided upon by the Committee on Production when the time for the periodic increase became due.

My hon. Friend the Member for Attercliffe (Mr. Anderson) asked me what had become of the munition tribunals, as he heard very little about their operations now, and he took it either as a sign of grace or the result of speeches he had made in this House Perhaps it is to some extent due to both causes. I think there is another explanation. The improved tone of labour, the quickened sense of responsibility on the part of employers and employed, is to some extent explanatory of the reduced amount of work falling on munition tribunals; but another cause also is the fact that the Ministry of Munitions has decided, in regard to a very large number of cases which previously were sent to the tribunals by the employers, that before those cases go to the tribunals they must be approved by the Ministry itself. My hon. Friend asked for a definite statement in regard to the amending Bill. I hope to be able to make a statement in the House as to the date when we hope it will be possible to introduce legislation. I should not like it to be thought that because there has been delay in making that statement that there has been any weakening on the part of the Government as to the necessity, either by legislation or otherwise, of seeing that trade union conditions are restored after the War, in accordance with the pledges which have been given, and embodied in the Treasury Agreement. In reply to another question, I am glad to say that the records as to established trade union rules and customs have of late been coming in at a quicker rate. The influence of the Ministry has been exerted throughout the country with a view to getting the records up to date and complete. If my hon. Friend knows of eases where difficulties are being put in the way, and he will let me know, I shall do what I can to get these difficulties cleared out of the way. Our old friend the consolidated Orders is nearly out of its troubles. We have now only to complete the mechanical process of printing the documents, and I trust it will not be very long before the eyes of the hon. Member are gladdened by seeing the consolidated Orders actually in black and white.

Then as to the speech of the hon. Member concerning the Aberdeen contract. I have little to add to the answer I have given to the House. It is not a piece of business that I look upon as reflecting any great credit on either the firm or those in the Ministry responsible for dealing with it at the time. I myself think that a mistake was made. The offence was a serious one. At the time the offence was discovered there was a very pressing demand, which it was impossible to resist, for the continuous production of the type of shell being made by this firm. The officer deputed by the Ministry to go down to deal with the circumstances had his mind set chiefly on keeping up the production of that particular shell. When it is remembered that this took place in December, 1916, the significance of what I say will be realised. The officer felt that, although the offence was serious, the shell production should not stop, and that the firm ought not to be allowed to carry out the contract. As a result, he made an arrangement with the firm that the contract should be taken over by the Ministry.

Mr. ANDERSON

No prosecution?

Mr. KELLAWAY

No undertaking as to no prosecution was given. But undoubtedly the impression remained in the minds of the members of the firm that if they allowed the Ministry to take over this contract that would be an end of the case. I asked that the papers, when brought to my notice, should be sent to the Lord-Advocate, the proper legal authority for Scotland. The decision that he gave us was that in view of the circumstances under which the contract was taken over by the Ministry it would be impossible to press for prosecution. That was the impression left on the mind of the members of the firm, that if they agreed to parting with the contract no more would be heard about it.

Mr. ANDERSON

Was not that compounding a felony?

Mr. KELLAWAY

No, I think that phrase is much too strong to use. Having regard to the fact that this officer had his mind concentrated on the necessity of not allowing the output of this particular type of shell to be interfered with it is easy to understand him coming to the decision he did. My right hon. Friend himself took the view that he had been guilty of an error of duty, and that officer has been censured for the action he took. Although the circumstances are not such as would have been approved by the representatives of the Ministry had they been consulted throughout there is a good deal to be said from the point of view of the man who said "My chief interest is to see that this particular class of shell continues to be turned out without any interruption."

Mr. HENDERSON

Would it make any difference to the Lord Advocate's opinion if he had evidence before him that your own inspector authorised that change? Was that put before him?

Mr. T. WILSON

Is this man still an officer?

Mr. KELLAWAY

My right hon. Friend has already communicated his view that this officer has been guilty of an error of duty. [An HON. MEMBER: "Is he an officer still?"] I have already said so.

Mr. HENDERSON

I do not want to press my point too far, but the allegation is that this change of the base of the shell was sanctioned and approved by your inspector in the presence of three witnesses, and this change was repudiated after he had approved of the alteration. It may not be true, but that is the allegation.

Mr. ANDERSON

Does all this not make my point more essential that there should be a public investigation? My charge is that these shells were taken by the firm. I again ask the Parliamentary Secretary whether he is willing to say that a public investigation into this matter shall be made?

Mr. KELLAWAY

My right hon. Friend asked whether this particular method of treating shells has been approved by the Ministry. That statement was examined and proved to be quite baseless. There was no foundation for this statement that any officer of the Ministry ever approved of that change. The question was put to the Lord Advocate as to the necessity for an inquiry, and it was decided, for the reason I have given, that legal proceedings were not desirable in the circumstances. The only point which remains for me to deal with was in regard to the question of equal pay for women and men workers. There is this difficulty which is not boldly faced by those who take up the attitude on labour questions which is taken up by my hon. Friend below the Gangway. When you say equal pay for men and women do you mean for both quantity and quality of output. If that is the point of view, if you mean that a woman who produces the same amount of work as a man, and of equal quality, is to receive equal remuneration, then there is nothing between us. I have generally found, however, that when that question has been put they have not been willing to agree to it. The Ministry of Munitions has no reason to be ashamed of its labour record or its treatment of women. We have, as a result of departmental effort, secured the biggest uplift in the condition of women workers that has been achieved during any period in our history. The results of the efforts of trade unions and trade-union leaders do not compare with the results achieved by this Department of the Ministry of Munitions in this respect. We shall look back on that work with pride because we believe it is going to be a permanent improvement to the industrial organisation of this country. I am glad that it has been so. It is no more than ordinary gratitude to the women who have rendered to this country services which can never properly be recognised by anything the State can do. The adaptability of the women of this country has been amazing. I had an example of it brought to my notice only this morning in a particular sphere of activity where it might least be expected. There was a fire last night in a munition factory in London. It might have developed into a very serious fire indeed with serious con- sequences to an important part of London. There was in the factory a number of women, transport workers, who had been given a certain amount of training in fire drill. Within four minutes of of the call being given, there were twenty of these women at their posts, and they had their hose at work. It was a shed full of live cartridges and cartridge paper which had been stored up for the Russian Government. They stuck to their posts, although some of the men appealed to them to throw down the hose because the danger was too great. They kept the fire under until the London Fire Brigade was at the spot, and it was the testimony of the London Fire Brigade men that but for the efforts of these women the whole of that great munition factory would have been burnt to the ground. That spirit and adaptability of the munition workers of this country deserves the best recognition that the State can offer them. I am glad that the Labour Department of the Ministry, with which I have been and with which I am still particularly associated, can look back upon a record which I am convinced will leave a deep mark on the industrial history of this country.

Mr. LEIF JONES

It was not my intention to take part in this Debate, and I have only risen to complain of the opening remarks of the hon. Member who has just addressed the Committee. He brought a charge against my hon. Friend the Member for Aberdeen (Mr. J. M. Henderson), who made what I thought was a very interesting speech and a speech not without value. He brought to the notice of the Committee and of the Ministry of Munitions a number of instances which he had come across in his own experience, and more or less well-substantiated stories of people dealing with the Ministry up and down the country. My hon. Friend rose, and in a tone of indignation said, "Why have we not got the names? Let the hon. Member repeat his charges outside, so that these people may have the opportunity of protecting themselves. It is not fair to make these statements in which no names are mentioned unless you can bring forward absolute proof." If that is the attitude in which my hon. Friend receives complaints about the way in which the work of his Department is done, he will remain ignorant of many things that he might find out if he availed himself of the information which many hon. Members have. Our information is necessarily often imperfect; and all that can be asked of us is that when a story is brought to our notice we should pass it on to the Ministry. It is the Ministry who ought to make the investigations. They ought not to be dependent upon us. I certainly do not think that any Member ought to repeat these stories unless he investigates them but in bringing them to your notice he ought not to be received as if he were the enemy of the Department or the enemy of these people. He is really serving his country.

Mr. KELLAWAY

We cannot investigate them without particulars.

Mr. JONES

We have not the power to investigate them. You can do so. If there is a complaint about an inspector on your staff going fishing after an hour's work in the morning, you ought to have in your possession the means of identifying him. I think we have some reason to complain of the way in which the hon. Gentleman repudiated with indignation these stories, and begged us not to say anything about them unless we could prove up to the hilt everything to which reference was made. I was a member of the National Expenditure Committee, but I did not sit on the Munitions Sub-committee. We had the Report of the Munitions Sub-committee brought before us. It was a unanimous Report, and, with one small alteration, it received the unanimous endorsement of the whole of the National Expenditure Committee. I think we have every reason to congratulate ourselves—self-congratulation is the mood for the moment—upon the result. The Ministry has been sufficiently on its defence, and it has not really upset any of the facts of the Report, nor has it challenged in any great degree the Commissioners' Report.

In one respect already the Committee has seen the advantage of the work of the National Expenditure Committee in the fact that the hon. Baronet the Member for Colchester (Sir W. Evans) is now the Financial Secretary to the Ministry of Munitions. We may justly claim that to be an outcome of the recommendations of the Committee. If we did not get anything else, we should be entitled to a vote of thanks from the Ministry for having called attention to a defect in their organisation. There are still recommendations in the Report to which no attention has been given in the Debate. I do not know whether the Ministry is paying any attention to them now. I hope the Financial Secretary, at any rate, is attending to them and still considering them. On page 16, Recommendations 5 to 8, all relate to the position of the finance branch in transactions which are still incomplete.

Sir W. EVANS

I did deal with them.

Mr. JONES

I did not hear my hon. Friend's speech, but I was told he had not dealt with them. It is the most important part of our recommendations. It is all-important, if finance is to have its true position in the Ministry, that it should be called in in the cases of all large transactions at an early stage of the proceedings. I congratulate this Committee and the National Expenditure Committee on the fact that one outcome of its recommendations is that my hon. Friend occupies his present position. That does remove some defects in the Department in regard to the position it ought to occupy, and which I hope it will occupy in all future transactions.

Mr. PRICE

I am sorry the head of the Ministry has gone out, because I listened with considerable interest to that part of his speech which dealt with the output of aeroplanes. He referred to Sir William Weir and the enormous work that gentleman has done with regard to the supply of aeroplanes for the country, and to what he has done in connection with contracts in different parts of Scotland. The House may be interested to know that Edinburgh was the first place in Scotland to make an aeroplane before the War broke out. Glasgow had not made an aeroplane. I think aeroplanes had been offered to the War Office, which, of course, with characteristic indifference to what was needful to the Army, declined them. I have a photograph of these two aeroplanes. The firm that made them made no end of efforts to secure contracts, but not a single contract was given to it. I wish to speak of Sir William Weir with great respect. He is an extraordinarily able business man, and nothing I shall say will detract from the service he has rendered. Sir William Weir's firm were asked to make aeroplanes after the War broke out. They had never made aeroplanes before the War broke out, and the firm which had made aeroplanes before the War appealed to this firm to secure a sub-contract.

It being Eleven of the Clock, the CHAIRMAN left the Chair to make his Report to the House.

Committee report Progress; to sit again upon Monday next.

The remaining Orders were read, and postponed.

Whereupon Mr. DEPUTY-SPEAKER, pursuant to the Order of the House of the 13th February, proposed the Question, "That this House do now adjourn."

Question put, and agreed to.

Adjourned accordingly at Two minutes after Eleven o'clock till Monday next, pursuant to the Order of the House of the 13th February.