Royal Ordnance Factories (Hansard, 26 January 1953)

§ Mr. Low
This Supplementary Estimate amounts to £2,600,000 for Royal Ordnance Factories and arises from a reduction in the total value of supplies which the factories expect to deliver to their customers during this financial year and therefore in their anticipated receipts.
As the Committee will see, there is on the other side of the account, as it were, an increase of £1½ million under Subhead A—"Current Expenditure"—which is more than offset by the substantial reduction under Subheads C and D for capital expenditure. If hon. Members will turn to the Appendix on page 15 which sets out the R.O.F. expenditure Estimates, and reconciles them with the revised cash Estimate, they will see that the increase in stocks and work in progress is now estimated at over £4½ million, compared with £2¼ in the Estimate.
This does not mean that there have been delays in programmed production or that there has been inefficiency. In general, the Royal Ordnance Factories will by the end of this year have met all the orders placed with them for Service customers. The work in progress is greater than anticipated, mainly because the nature of the work being done in the factories has been slightly different from that anticipated when the original estimate was made.
The value of the factory product, excluding capital expenditure, but including the increase in work in progress 715 and stocks, is approximately the same as that originally estimated. Hon. Members will find that that is so if they compare this with a similar Appendix on page 50, line 9, of the Civil Estimates. Why then has current expenditure increased?
The three reasons for the increase under Subhead A are referred to on page 14 of the Supplementary Estimate. The Estimate assumed an average strength of 7,275 non-industrial staff to which "salaries" referred. That will be found under Subhead A, paragraph 1. In fact, the average strength for the year will be 7,384, an average increase over the year of 109. I think that an average increase spread out over the year is the only way in which the Supplementary Estimate can be reasonably drawn.
I ought to explain the difference between 109 and 325. The figure of 325 is the maximum increase of staff during the whole year, but the average increase above the estimated average number of staff is 109.

§ Mr. R. R. Stokes (Ipswich)
May I understand what that means? I have never heard this put in that way before. It does not make any business sense of any kind, although it may have a Civil Service sense.

§ Mr. Low
I am sorry if this does not make any sense to the right hon. Gentleman, but it certainly makes sense to me, and I will attempt to explain the position to him.
The Estimate was drawn on the basis of what 7,275 persons would cost in salaries. It has been found in actual fact, taking it over the whole year, that the total numbers would be the equivalent of 109 more persons in posts during the whole year. It is the only way of doing the sum. There were on average 109 more persons in posts during the whole year, and that will cost part of the £125,000 additional for which we are asking.

§ Mr. Stokes
rose—

§ Mr. Low
If the right hon. Gentleman will wait a bit I will explain where the other part of that sum comes in. It was not found practicable to keep the level of 7,275 and to do the work required. The non-industrial staff in the Royal Ordnance Factories includes foremen, 716 engineers and chemists as well as clerks, accountants, managers and superintendents. In addition to the small increase in their numbers, experience has shown that there was a slight under estimate in their average rates of pay and £125,000 under this Subhead will cover both those points.

§ Mr. Stokes
May I now try to understand the position? Are there 325 bodies only or an average of 109, whatever that means?

§ Mr. Low
By referring back to the original Estimate I think we can understand the position. The greatest number of salaried staffs that there have been in the ordnance factories is 325 more than the figure at the beginning of the year. That is, the figure given in the original Estimate, but this maximum figure was not reached on the first day of the year, and, therefore, it is not in operation during the whole of the 12 months. Is the right hon. Gentleman now satisfied?

§ Mr. M. Stewart
What I do not understand is why the 109 is brought in. Was it to make it more difficult?

§ Mr. Low
Just to make it more truthful.

§ Mr. Stokes
It does not make sense.

§ Mr. Low
I am very sorry that the right hon. Gentleman is unable to follow it. At least his hon. Friend is able to follow that it makes sense though he does not agree that it was the right thing to do. After this slight interlude we might now pass on to the next Subhead, which is "wages" and for which there is also additional provision.
The additional provision for wages is due partly to an increase in average earnings over the year and partly to the engineering wage award of last November. That engineering wage award accounts for £274,000 out of the £760,000. The addition is not due to an increased number of men employed and, therefore, I have to explain the figures on the paper. They indicate that there are 4,500 additional staff. That means that at the peak period during the year there will have been 4,500 more industrial staff in the Royal Ordnance Factories than there were at the beginning of the year.
717 The original Estimate in providing for wages of nearly £18 million assumes an average strength over the year of 43,000 industrial staff in the Royal Ordnance Factories. Here again we meet with this average. The average is likely to be 41,060. In short it can be stated that the day's earnings per man are above the estimate and not the number of men.

§ Mr. Stokes
Would the Minister agree that if the average went the same way as it did in A. 1 then the average would be 1,500 and not 41,600? It does not make any sense any way.

§ Mr. Low
Without being discourteous to the right hon. Gentleman, I am bound to disagree with his last observation. The average did not go the same way as in subhead (1); it went in exactly the opposite way.
Under subhead (3) the current expenditure as originally estimated was just over £24 million, and we are asking for an additional £575,000 of which £245,000 is for materials and the rest for increases in running costs such as expenditure on utility services—heat, light, power and so on—and on internal transport. It will be appreciated that this increase amounts to about 2¼ per cent. of the original Estimate under this part of the subhead.
I might I think to draw the Committee's attention to the fact that the Supplementary Estimate would have been £900,000 higher but for the fact that there was an increase in miscellaneous receipts under Z. 3. This increase is largely due to a very successful scrap drive in the Royal Ordnance factories, particularly at Woolwich, and receipts for scrap will amount to £1,600,000 instead of the original estimate of £950,000.
I will gladly try to answer any questions that arise out of the Estimates.

§ Mr. Strachey
I do not think any of us envy the task which fell to the lot of the Parliamentary Secretary in explaining that part of the Estimates to us. I recollect that before the war there was a German philosopher who invented the philosophy: "as if," but I did not think that that philosophy would be introduced in the Supplementary Estimates from the Ministry of Supply. As I understood it, what the Parliamentary Secretary was attempting to say was that these Estimates were as if there had been, for example, an 718 average of 109 more salaried staff in the Ordnance Departments over the year. Quite why he had to present it to the Committee in that way I do not know, but he said that their wages were partly increased by more staff and partly increased through additional earnings.
The other thing that emerged from what he told us was the same as emerged from the last subject which we considered, that despite all we hear about our re-armament programme being stretched out at present, it is accelerating in what I venture to call a form of stocking up, and I do not mean the accumulation of physical stocks of finished goods. I agree with the Parliamentary Secretary that that is not what is happening, but we are stocking up in the sense of increasing the work in progress all along the line. Working capital has been increased, and that working capital represents costs and materials in various stages of progress.
It is a significant fact which the Committee ought to take note of, that this process is still going on. It goes on in any re-armament programme in the course of its development, but we find that it is going on faster than was estimated a year ago. It is still accelerating more rapidly than was expected a year ago, and that means that in physical terms of work in progress the re-armament programme, after all that has been said about it, has not yet reached its peak. That must mean that the strain of the programme has not reached its peak, and any deviation which we may get from the Prime Minister's announcement of stretching the programme out is for the future and cannot refer to what is happening here and now or in the coming year. These figures refer to the coming year, and that is a rather serious consideration which the nation has got to face.
The only other point I want to take up is that these figures seem to suggest a shift in the character of the programme from conventional weapons to some kind of futuristic weapon which has been given super-priority of one sort or another; that is to say, from such things as guns, tanks, vehicles and the like, to things like guided missiles, rockets and new types of aircraft. It is expected that the figures should show that shift, but it is something of which the Committee should take careful note.
719 I am disposed to question the wisdom of it. It seems arguable that the most important thing which this country should be doing at the moment is seeing that the maximum possible number of divisions with the very best equipment is available on the Continent of Europe, and that, important as guided missiles and such things are, the shift of emphasis that comes out—the Minister shakes his head. There must surely be some shift of emphasis in the figures. They all point in that direction. Indeed, it has been announced, and the Minister spoke of it himself by saying that concentration on the super-priority type of weapon was indispensable. To some extent it obviously is, but the Committee, and the House of Commons when it considers the matter, ought to take that point into account.

§ Sir Ian Orr-Ewing (Weston-super-Mare)
I have one or two questions to put on this aspect of the Supplementary Estimates. There is an increase of about £4½ million shown in regard to aircraft. Is that increase due to late stage alterations in design, alterations which might or might not have been devised at some earlier stage? If the Parliamentary Secretary would turn to the Report of the Select Committee on Estimates on that particular point he will see that we did attach considerable importance to the blending in of modern design with production.
The next point to which I would refer is the saving on plant and machinery of some £l¼ million. Could the Parliamentary Secretary tell us something about that? Those of us who have experience in looking at the plant in Royal Ordnance Factories are somewhat concerned whether that plant is being kept quite as up to date as it should be. The nature of the work done on the existing plant is brilliant, but it is not fair to expect to produce the best results unless the machinery is the best available in the country. I am glad to see any economies made, but the particular economy to which I am now referring may not in the long run be entirely sound.
Directly connected with that economy, it may well be, is the item set out on the paper—however it may be explained —of increases for the salaried staff, which the right hon. Gentleman opposite frankly 720 could not understand, and an increase of wages for an additional staff of 4,500 at increased rates. My hon. Friend the Parliamentary Secretary has attempted to tell us that that was not what was meant, but that in fact is what is being brought before the Committee. The words are: wages of additional 4,500 staff and for increased rates. There are two distinct points. If that does not mean wages for an additional 4,500 staff those words should very definitely be placed before us and we should be told that they should not be on this paper at all. If my hon. Friend the Parliamentary Secretary wants to interrupt me on that point I shall be very glad to give way while he does so.

§ Mr. Low
I am afraid that I was not quite as clear as I thought. If my hon. Friend is reading into the words on the paper that there has been an increase of 4,500 over the staff covered by the Estimates, he is not reading the words correctly.

§ Sir I. Orr-Ewing
I am sorry, but I simply cannot read any other meaning into the words as they appear on the paper. I do not doubt that my hon. Friend is weighing his words here, but we must accept it that the Committee are considering something rather different from what is set out on the paper. I hope we are. As the words are set out, they clearly mean that there has been a quite considerable reduction of expenditure on machinery and plant, related to additional labour involved. That is one of the points where we may get false economy. I hope that before we come to the end of our consideration of this Supplementary Estimate we may get some of the information which is behind these figures.
It seemed to us on the Select Committee that there was a very considerable waste of public money—those are the actual words which we used in our recommendation—in regard to inspectors. It appeared to us that something was creeping into the system leading to a considerable amount of confusion if not to a sense of frustration among a very important class of workers in the Royal Ordnance Factories, and, of course, to an increased loss of production arising from the frustration. Can my hon. Friend tell us whether the committee of inquiry have 721 reported on the question of inspectors? I should not like to think that any of the additional sum which we are asked to vote now will be used wastefully, while public money is not being expended as carefully as it might be as a result of this out-of-balance picture.

§ Mr. Christopher Mayhew (Woolwich, East)
Before we decide on this Supplementary Estimate in regard to the Royal Ordnance Factories I should like to put one or two questions to the Minister about the working of the Woolwich R.O.F.
It is obviously not the time now, for several reasons, to ask a Minister for a statement on the future of Woolwich Arsenal in particular because there are no fewer than three inquiries now going on into the question. There is the inquiry being made by the Board of Management of the Royal Ordnance factories. There is the inquiry which, I think, all concerned welcome which will be made by the Inter-Departmental Committee recently set up by the Minister of Supply, and there is the study that is being made by the combined shop stewards' committee and staff side at Woolwich Arsenal in conjunction with hon. Members of both parties who represent neighbouring constituencies.
6.0 p.m.
I am not asking the Parliamentary Secretary for a general statement on Woolwich Arsenal, but I want to put to him one or two points. Although nobody, least of all Woolwich people, pretend that all is well with the working of the Arsenal at present, some of the newspaper accounts of what is in the Report of the Select Committee have been regrettably inaccurate and unfair to the people working there. For example, the Select Committee did not describe Woolwich Arsenal as a white elephant. On page XIV of the Report they say: Your Committee conclude that the Arsenal was regarded by the Ministry as something of a white elephant. That is a very different thing, and I ask the Minister to deny that this is how he or his Ministry regard the Arsenal. It seems clear to me that even if the Ministry sometimes seem to treat the Arsenal as a poor relation, it in no sense regards it as a white elephant, so perhaps the Minister will take this opportunity of confirming my view?

§ Mr. Cyril Osborne (Louth)
Can the right hon. Gentleman say what is the difference between a "white elephant" and "something of a white elephant"? Surely it is only a matter of degree?

§ Mr. Mayhew
No, the point is this—

§ The Chairman
Order. We are discussing now the supplementary sum that is asked for. The original policy has been settled. Whether it is a white elephant or not does not arise.

§ Mr. Mayhew
I appreciate that, Sir Charles, but I think you will agree that the paper before us raises the question of the working of the Royal Ordnance Factories and in this connection it refers to the lack of supplies for customers, which is one of the main reasons for this Supplementary Estimate. In this connection I wish to refer to the under-employment at the Royal Arsenal at Woolwich, because none of us concerned with this problem denies that action is necessary. For years past the combined shop stewards committee has been pointing out to the Minister the under-employment of Woolwich Arsenal and the fact that it is operating at much below its potential capacity.
For instance, I have here a letter from the secretary of the Woolwich branch of the Associate Blacksmiths Forge and Smithy Workers Society which points out that three shops in the forges are to be closed this month, leaving only one open. Clearly this is bound to result in waste, in excessive overheads and in a number of the criticisms, some of them perfectly justified, made in the Report of the Select Committee. All I am asking the Minister is that when these inquiries are made by his inter-departmental committee, they will include the possibility of a revision of policy by the Ministry regarding orders given to Woolwich Arsenal, possibly involving a closer integration of Woolwich Arsenal with other Royal Ordnance Factories.

§ The Chairman
That is not what we are discussing. The policy is settled.

§ Mr. Mayhew
With respect, Sir Charles, I was relating this to the closely related subject of the present working and under-employment of the R.O.F., Woolwich, and it is as a result of the failure of deliveries of the R.O.F.s generally that we are being asked to approve this Supplementary Estimate.
723 There are one or two other points which in deference to you, Sir Charles, I shall leave to a future occasion. For example, there is the question of the possible concentration of work at the R.O.F.s. That should be studied in the course of the inquiries that are being made, because nobody who has studied this problem can deny that the R.O.F., Woolwich, will be needed by the nation for many years to come. Those who argue that it is vulnerably sited are living in an age when aircraft were guided to their targets by rivers, an age which now no longer exists. Those who argue that some of its machines are obsolete overlook that there are more than 1,000 first-class machine tools less than 10 years old at the Arsenal which could be of the greatest value to the nation at the moment.
I ask the Minister not to make any statement regarding the future of Woolwich Arsenal but to facilitate the enquiries being made by neighbouring Members of Parliament of both parties into this question, and to receive a deputation from us on this subject if that seems desirable. Also, I ask him to make it clear that he has never stated, and does not regard Woolwich Arsenal as a white elephant, and to show that he is aware of the need to make the fullest use in the national interest of the traditional skill, loyalty and public spirit of Woolwich people.

§ Sir Herbert Williams (Croydon, East)
I want to ask one or two questions about something which I do not understand. On page 14 there is Subhead Z—"Appropriations in Aid." These arise out of the Royal Ordnance Factories supplying things to the customers of the Ministry of Supply and also to other Supply Establishments. In other words that apparent increase in burden is due to a decrease in burden somewhere else because it means that less work is being done. I have been trying to relate these two items—the £3,600,000 deficiencies in appropriations arising out of supplies to Ministry of Supply customers (Class IX, 3) and the £300,000 supplies to Ministry of Supply Establishments (Class IX, 1). I have been looking at the earlier part of this document to try to find where they appear, but it is not clear. If these appropriations in aid are less merely because 724 we are spending less, I should be able to find the savings, because this is a book entry between one branch of the Ministry and another. It may be perfectly intelligible but I wish to have some explanation so that I can understand the accountancy method pursued.

§ Mr. Stokes
It all averages out.

§ Sir H. Williams
The right hon. Gentleman is getting muddled up with pink elephants. I have no doubt that there is a coherent explanation of this transfer, but I should be grateful to have it.

§ Mr. Low
Perhaps I might deal at once with the point of my hon. Friend the Member for Croydon, East (Sir H. Williams). It would be easier to understand what happens under Subhead Z (1) if, instead of it reading "Supplies to Ministry of Supply customers (Class IX, 3)" it read "Supplies to Ministry of Supply for its customers." The deficiency there of £3,600,000 is taken into account on page 12—

§ Sir H. Williams
Where?

§ Mr. Low
My hon. Friend will appreciate that I cannot break it all down, but he knows approximately what the Royal Ordnance Factories make and if he looks at the Subhead (1, a), he will see a number of items there in which it might be included. "Supplies to Ministry of Supply Establishments (Class IX, 1)" which appears under Subhead Z (2) are paid for under Vote 1, but they do not appear in this Supplementary Estimate. I do not think it would be right for me to go further on that.
The right hon. Gentleman the Member for Dundee, West (Mr. Strachey) argued that we are reducing the everyday equipment of the Forces and increasing their special equipment. There is no need for me to restate what has been said by my right hon. Friend or by the Prime Minister on this matter, but I ask the right hon. Gentleman not to read too much into the figures here and certainly not to read them wrongly. He will, I think, recollect that in 1951–52 the production of the Royal Ordnance Factories amounted to about £32 million. There has been a substantial increase during the last 12 months.
Then, the right hon. Gentleman went on to repeat his argument about work in 725 progress and stocking up, and I quite see the point that he is making to the Committee. But is it very unreasonable that work in progress in a group of factories like this should increase by approximately the same percentage or proportion as the total production increases? The total output of the Royal Ordnance Factories has increased by about one-third; work in progress has increased by less than one-third. Having given these figures, I think that the right hon. Gentleman might alter the deduction which he has drawn from the figures.

§ Mr. Strachey
The point I was making was that it has increased more than it was estimated to increase.

§ Mr. Low
The only point I can make is that experience has shown that the Estimate was wrong. The right hon. Gentleman and the Committee might like to remember that this is the first year that this Vote has been put in this form before the Committee.
My hon. Friend the Member for Weston-super-Mare (Sir I. Orr-Ewing) and the hon. Member for Woolwich, East (Mr. Mayhew) referred to the Report of the Select Committee on Estimates on the Royal Ordnance Factory. I think that I should be out of order if I tried to answer some of the points that were referred to. We have, of course, studied that valuable Report very carefully. I think that I have cleared up the doubts about the numbers of men. My hon. Friend in that connection had a point about the saving in plant and machinery.

§ Sir I. Orr-Ewing
Before my hon. Friend leaves the number of men, will he give an assurance that if ever he has to come to the Committee again and places the facts before the Committee, he will see that they are set out in a different form in order to make them absolutely clear to everybody?

§ Mr. Low
My hon. Friend must not press me too hard about the actual form of the Supplementary Estimates. He will appreciate my difficulty in trying to explain any mistakes.
There has been a saving in plant and machinery. As the question was asked, I hope that I may be in order in answering it. The saving is due to delays in arrivals of some important machine tools from overseas. My hon. Friend also referred to inspectors. I ask him to note, 726 however, that inspectors come, not under this Vote, but under Vote 1, and I think I should be wrong to try to pursue the subject of inspectors under the Royal Ordnance Factory Vote.
The hon. Member for Woolwich, East made an interesting statement on his views and certain facts in connection with certain enquiries which, he told the Committee, were being made. He asked whether we would receive a deputation. I have my right hon. Friend's permission to say that we will gladly receive a deputation, whether the hon. Member is in it or not, about this important matter. I think that I have dealt with all the points that have been raised, and I hope that the Committee will let us have the Supplementary Estimate.

§ Mr. Mayhew
Since this Supplementary Estimate deals directly with the work of the Royal Ordnance Factories and their production, will not the hon. Gentleman make a statement to correct false impressions about the Ministry's view of the working of Woolwich Arsenal?

§ Mr. Sandys
I should be very glad to give the hon. Member my assurance that neither I nor my hon. Friend have described, or ever will describe, Woolwich Arsenal as a "white elephant" or "something in the nature of a white elephant."