NATIONAL EXPENDITURE (COMMITTEE'S RECOMMENDATIONS).

HC Deb 14 January 1918 vol 101 cc26-41W

ACTION OF GOVERNMENT.

Mr. HERBERT SAMUEL

asked the Chancellor of the Exchequer what action, has been taken by the Government with respect to each of the recommendations in the First Report of the Select Committee on National Expenditure which were under consideration at the time of his statement on 11th December, 1917, and with respect to each of the recommendations in the Committee's Second. Report?

Mr. BONAR LAW

issued the following statement:—

PARLIAMENTARY ESTIMATES.
Recommendations.	Action taken.
Second Report—Paragraphs 5 and 68.—Suggesting the desirability of presenting Estimates to Parliament in all cases where secrecy is not essential.	The question of the presentation of Estimates for various Services now provided for out of Votes of Credit was raised by the Public Accounts Committee of 1917, and is fully discussed in the Treasury Minute on their Report. The Treasury note with satisfaction that the conclusions arrived at in that Minute are generally in accord with the recommendations of the National Expenditure Committee.
	Every endeavour will be made, in cases in which the expenditure in respect of any Service can be estimated with sufficient approximation and the details of it can be made public without detriment to the public interest, to make the statement presented with the Vote of Credit as complete as possible, and also to secure that all excesses upon such Estimates are brought to the immediate attention of the House of Commons.
	Whether it is desirable to go beyond this and make the provision for certain War Services the subject of separate Resolutions (apart from the general Vote of Credit Resolutions) in Committee of Supply appears to the Treasury to depend upon whether the Services which are capable of such treatment are sufficient in volume and importance to justify the technical, the statistical, inconveniences which, as pointed out in the Minute, would be involved in attempting to separate them from the general War Services still to be included in the Votes of Credit.
	As the Estimates for 1918–19 are already in a forward state of preparation on the basis laid down in the Minute, it is proposed to present them in the first instance, at any rate, on that basis, leaving open for further consideration the question whether any particular Services of which details are shown in the Statement accompanying the Vote of Credit can, with advantage, be made the subject of separate Resolutions.
TREASURY CONTROL.
First Report.—Paragraph 38.	In addition to obtaining further assistance for the Department generally from men with outside business experience, the Treasury have appointed two Special Committees to advise them on contract arrangements and to inquire into the temporary staffs of Departments respectively. They have also arranged that the Ministry of Munitions shall submit for Treasury authority all proposals for capital expenditure exceeding £50,000 on a new factory or an extension of a factory, and that all concessions to firms in respect of capital expenditure shall take the form of cash grants, to be subject to Treasury approval when in excess of £10,000 or £50,000, according to circumstances.
Second Report—Paragraphs 15, 5], and 64.
Extension of Treasury control over the Ministry of Munitions and other Departments as regards capital expenditure, financial concessions to firms in respect of capital expenditure, the principles on which contracts are settled, the amount of profit left to contractors, and the securing or co-ordination of purchases. Support by the Treasury to financial

branches generally. Strengthening of the Treasury staff with a view to action on the above lines and as regards securing co-ordination of Departments in obtaining labour and inquiring as to the numbers and organisation of temporary staffs already existing.	Steps are being taken for securing, as far as possible, the co-ordination of Departments in making purchases and obtaining labour.
The Treasury have always given, and will continue to give, their full support to the finance branches of Departments generally.

WAR OFFICE
1. First Report.
	Reply already given.	Further reply.
Paragraph 13.—Re-issue of leaflet in regard to safe-guarding arms, ammunition and equipment.	Steps are being taken to draw attention again to the Circular relating to the care of arms, ammunition and equipment.	An Army Council Instruction No. 1872 was issued on the 26th December last enjoining the greatest care in the conservation of arms, ammunition and equipment. This Instruction was distributed to all formations, units and depots at home and abroad.
Paragraph 14.—The more general use of comparative returns enjoined.	It is agreed that statistical returns have been of very great value, and their use is being largely extended.	Action is still proceeding.
Paragraph 15.—The system of cost accounts should be considerably extended.	An accountant has been engaged to examine the possibilities of such extension and has already entered on his duties.
Paragraphs 16 and 17.—The heavy expenditure incurred in the maintenance of very large forces in the United Kingdom, including the Volunteers, should be reviewed by the War Cabinet.	The strength of the forces at home is constantly under the review of the General Staff and the Adjutant-General and the numbers allocated for Home Defence are reviewed from time to time by the War Cabinet.	These questions are dealt with in the Memorandum on the Committee's second Report.
A comprehensive review of Army establishments should be set on foot in the United Kingdom with a view to reduction when man-power could be economised without. loss of efficiency.	This question is under consideration.	These questions are dealt with in the Memorandum on Committee's second Report.
Paragraph 19.—A review of the organisation of the Armies at home with a view to lessened expenditure of staff should be made.	The organisation of the Armies at home is under review with a view to economy of personnel.
Paragraph 18.—The cost of guarding posts by the Royal Defence Corps, the number of such posts and the method of staffing them should be reconsidered.	The question of the cost and establishment of the Royal Defence Corps is being further reviewed.	Action is being taken with a view to the replacement of the Royal Defence Corps as far as possible.
Paragraph 20. — Whilst there is an accumulation of brass shell cases and wooden shell boxes in France and at	On a review twelve months ago when the actual cost of repairs and transport was compared with the cost of	The functions of the Salvage Board and the duties of the Salvage Directorate in the Department of

a British port the manufacture of new supplies proceeds.	new boxes and cases, it was decided to continue the practice which had been in force since the beginning of the War of returning the boxes and cases to this country. Difficulties arose in the summer of this year owing to the congestion at points where the empties were received, but these have now been largely over-come. Of necessity a number of new boxes and cases must be made by way of replacing unserviceable ones.	the Surveyor - General of Supply have been defined. A branch has been organised in England to deal with the inflow of waste materials. The field organisation in France has been revised, and a Salvage Commission appointed to deal with unserviceable materials in the East African theatre of war. Steps are being taken to co-operate in the collection and disposal of civil waste. The Board and the Directorate are working in co-operation with the Ministry of Reconstruction.
	A Salvage Board has been constituted under the chairmanship of the Quartermaster-General on which the Ministry of Munitions is represented, to deal with the utilisation and disposal of all waste stores, including those referred to by the Committee. This Board will review the existing salvage arrangements with a view to their revision if found necessary.	The Italian Government has been approached with a view to its utilising Army waste materials so as to relieve the demand for tonnage for new materials, and steps are being taken to develop arrangements in Italy on similar lines to those in France.
	The following are amongst the results achieved:—
	As an illustration of the extent to which salvage has already been carried out, it may be mentioned that 285,000 tons of salvage were shipped from France to England between 1st January and 31st October in the present year.	(1) From waste fats collected from Army camps alone have been produced:—
	(i.) Tallow sufficient to provide soap for the entire needs of the Army, Navy and Government Departments with a surplus for public use, producing an actual revenue of about £960,000 per annum in addition to saving valuable tonnage.
		(ii.) 1,800 tons of glycerine for ammunition—sufficient to provide the propellant for 18,000,004 —18-pr. shells. The glycerine costs the Government £59 10s. per ton as compared with £300 per ton, the price of imported. glycerine.
		(2) Well over £1,000,000 worth of military rags have been recovered and used in the manufacture of new cloth and blankets for the Army.
		(3) Many thousands of pounds worth of cuttings

		from cotton textiles have also been recovered and utilised in connection with munition and aeroplane requirements.
		(4) Some hundreds of thousands of pounds worth of condemned boots have, after the expenditure of some labour in sorting and minor repairs at very small cost, been sold for distribution amongst the labouring classes, agricultural and industrial.
Paragraph 21.—Allegations as to wastage of ammunition.	Inquiries have been made as to these allegations.	Replies to the inquiries which have been addressed to France, Mesopotamia, Egypt and Salonika have not yet been received, but all the information in the possession of the War Office leads to the supposition that every effort is being made in all the theatres of war to conserve material and prevent wastage. (See also reply on paragraph 13.)

II. Second Report.
Paragraph 34.—Inquiry into and review of the expenditure on the forces at home.	Such economies as are practicable are being introduced, but it is, of course, essential to maintain an adequate force for Home Defence.
Paragraph 35.—The Committee cannot find that any definite conclusion has been reached by the War Office as to the use to be made of the large force of Volunteers.	Arrangements are being made to replace certain Regular medical units by Volunteers, and to form special sections in Volunteer units for periodic whole-time service, with a view to extending the employment of Volunteers, as far as may be possible, in other ways.
Paragraph 36.—It should be considered whether a large proportion of the Home Service employment companies could not now be disbanded.	These have now been reduced considerably; but it must be remembered that if the time-table of troops under training is interfered with by diverting recruits to fatigue duties, the period of training would have to be extended.
Paragraphs 37 and 38.—Inquiries should be made from time to time as to a possible reduction of the Military Staff at the War Office.	A Committee has been appointed to consider possible reductions.
Paragraph 39.—Although mistakes have been, and are still being, made, the Army Pay Department is, on the whole, to be commended for the way in which it has met and overcome its difficulties.	The Council agree, and are glad to see this recognition of the unceasing and successful efforts of the Army Pay Department.
It is desirable that an investigation should be made with a view to simplification of system, but this should not be carried out during the War.

Paragraph 42.—Requisition of buildings for military purposes should be avoided unless there is real urgency on military grounds.	The urgency is sometimes extreme, and delay would involve extra cost, but every effort is being made to give effect to the recommendation.
Paragraph 43. — Commercial value of frontages on sites acquired for military purposes should be taken into account in the lay-out of land.	This recommendation is being acted upon.
Paragraph 44.—A small Committee should be appointed, including persons accustomed to the organisation of large bodies of civilian labour, to inquire into existing methods of remuneration of, and of ensuring reasonably good work from, German prisoners of war employed in the United Kingdom and in France.	The recommendation is being considered.
Paragraph 45 and Appendix III.— Arrangements for manufacture of briquettes.	The French scheme was adopted in preference to the Dumfries scheme on assurances that steel would be available and in order to relieve the serious tonnage situation. It was abandoned as soon as it became necessary to divert the steel to other more urgent Services.

MINISTRY OF MUNITIONS.
First Report.
	Reply already given.	Further reply.
Paragraph 31 (1).—Parliamentary Secretary should he charged with the Finance of the Ministry as in case of Financial Secretaries to Admiralty and War Office.	No statement can be made for the moment, but the proposal is receiving most careful consideration and it is hoped that it will be possible to arrive at a decision shortly.	This matter is still under consideration in connection with a rearrangement of the duties of the personnel of the Ministry. (See also paragraph at end of reply.)

EXPENDITURE AND PRICES.
Second Report.
Paragraph 33 (1).—Desirability of avoiding the creation of new credits in financing the War.	The Treasury are very fully alive to the importance of the matters dealt with in this and the succeeding portions of paragraph 33. With the general conclusions of the Committee they entirely concur, and as regards the recommendations numbered 2 to 5 in the paragraph action is being taken, in consultation with the Departments primarily concerned, upon the lines indicated (see separate notes below against each item).
	As regards the first recommendation, it has been the constant pre-occupation of the Treasury to secure that the War expenditure should be financed to the maximum extent. possible by taxation and that the necessary Loans should be raised in such a manner as to secure the transfer to Government of existing purchasing power rather than the creation of new purchasing power. These efforts have necessarily attained only partial success. The financing of war operations on the

	present scale has proved by experience to be impossible without a considerable measure of credit inflation, and the position of the United Kingdom compares not unfavourably in this respect with that of any of the belligerents.
Paragraph 33 (2).—Suggested inquiry into the actual increase in the cost of living and counterbalancing advantages due to War conditions.	A Committee is being appointed to consider the matter.
Paragraph 33 (3).—Continuance of measures for limitation of profits and publication of the fact.	The measures are being continued and the attention of the War Aims Committee has been drawn to the question of publication.
Paragraph 33 (4) and (5).—Suggesting general considerations to be borne in mind before conceding advances of wages, and proposing unification of machinery for deciding wage questions.	The War Cabinet have decided that all applications for an increase in War advances, and wages disputes arising in connection therewith, shall be referred for decision to the Minister of Labour.

ADMI RALTY.
Paragraph 47.—Certain improve-meats proposed in contract arrangements so as to encourage the contractor to economise, to limit the contractor's profit on sub-contracts, and to maintain an efficient Costings Department.	The plan now being adopted for dealing with profits under Net Cost Shipbuilding Contracts is to fix the total. amount of profit and establishment charges in advance. The further scheme for giving the contractors a bonus on cheaper production has not proved capable of application in practice.
	With regard to profits under sub-contracts, an arrangement is made with the contractors for repair contracts to accept half the profits ordinarily payable, and for shipbuilding contracts a reduced profit on sub-contracts is allowed for in fixing the whole lump sum profit on the whole contract.
	The Admiralty are in thorough accord with the desirability of maintaining an efficient Costing Department.
	See also reply above to paragraph 38 of First Report and paragraph 15 of Second Report.
Paragraph 48.—Absence of any estimate of the cost of National Shipyards before the scheme was started.	The estimates for the cost of the National Shipyards have mow been laid before the Treasury.
Paragraph 51.—Recommending that, as regards orders for shell, the utmost care should be taken to avoid competition in buying, either direct or indirect, between the Admiralty and the Ministry of Munitions.	The Admiralty note that the Committee appears to support their view that it is undesirable to transfer the work of contracting for Naval shell to the Ministry of Munitions. The Committee's desire that thee utmost care should be taken to avoid competitive buying is being complied with. Frequent meetings are held between the Directors of Contracts of the several Departments, and constant communication as to prices and orders is kept up. A Joint Committee sits frequently, on which the Admiralty, War Office, and Ministry of Munitions are represented, for the consideration of all common questions of policy, as well as for the prevention of competitive buying and other forms of overlapping.

FOOD PRODUCTION DEPARTMENT.
Paragraph 54.—Statement to be made to Parliament as to grants and expenditure in connection with work on the land.	A statement will be made to Parliament at an early date as to the probable expenditure on these and other Services from the Vote of Credit in 1918–19.
Paragraph 55.—Desirability of introducing uniform rates for homogeneous classes such such as shorthand-writers, etc., and of reducing the amount of overtime.	Uniform rates have normally been laid down in the past for lower grade homogeneous classes, including shorthand-writers, at Headquarters establishments; but higher pay has been allowed to some grades in certain Departments to cover all overtime, and this system is now being ex-tended as far as possible. The new Treasury Committee on Staffs will have an opportunity of considering, inter alia, the amount of overtime worked in Departments.
OFFICE ACCOMMODATION.
Paragraphs 56 and 72.—Unsatisfactory nature of the accommodation provided for the Food Production Department and the Employment Department.	In each case the premises were the only adequate premises obtainable near Whitehall at the time when the demand arose. At the Employment Department a number of partitions have in the past been removed, so as to provide larger rooms, and steps are now being taken to secure a more economical use of the premises. It is not true that the Employment staff generally are "accommodated in a number of small rooms holding from three to four persons": only one-fifth of the staff are so accommodated, and nearly half the staff are in rooms with twenty or more persons each.
BOARD 0F TRADE.
Paragraph 57.—Powers of the Board of Trade should be systematically used to secure the supply of petrol for the public at a price based on the ascertained costs.	The question of the limitation of the price of petrol to the consumer is under consideration.
Paragraphs 60–62. — Petroleum Administration should be concentrated in one organisation.	The question of the best means of securing the objects for which the Petroleum Executive was recently set up is being discussed between that body and the Board of Trade.
Paragraphs 63–64.—Operations of Timber Control Board. Arrangements for consolidated purchase should be framed in consultation with the Admiralty and Air Ministry.	The Department is actively engaged in considering arrangements which will, in effect, carry out the suggestions of the Committee.
Paragraph 65.—Closer co-operation appears desirable in the matter of afforestations between the Board of Agriculture and the Office of Woods.	The question is being discussed between the Ministry of Reconstruction and the other Departments concerned.
Paragraph 66.—Written accounts in respect of Office accommodation for the three years that have passed should now be formally presented through the proper channels to the various Governments represented on the Commission Internationale de Ravi-	The necessary steps are now being taken in order that the claims referred to by the Committee may be presented to the respective Governments.

taillement. A similar course should be followed in respect of the cost of telegrams from delegates in London to their own Governments.
Paragraph 68.—Estimates.	See under paragraph 5 above.
EMPLOYMENT DEPARTMENT.
Paragraph 71.—Questioning the need for continuing the salary of a certain official after the War.	The official referred to is concerned not only with the duties mentioned by the Committee, but also with the general supervision, under the Director, of the whole of the work of the Exchanges with regard to women. 1,000,000 women are now insured against unemployment, and 2,500 Vacancies for women are filled daily by the Exchanges; and the work is expected to increase after the War.
Paragraph 72.—Office accommodation.	See under paragraphs 56 and 72 above.
Paragraph 74.—Deprecating the practice of giving only the number of vacancies filled.	This is not the practice. The Department habitually quote also the number of individuals concerned.
Paragraph 77.—Questioning proposal to constitute a Central Exchange in London for the Building Trade, with rooms which can be used for meetings by persons engaged in the trade with to charge beyond a small sum to cover the cost of heating and lighting.	This proposal was adopted by the Department at the urgent request of the trade unions in the London building trades, who took the matter up on their own initiative.
Paragraph 80.—Principal Financial Officer to report to the Permanent Secretary, etc.	This proposal is being considered.

The Chancellor of the Exchequer is of opinion that the most effective way of securing economies in the large spending Departments is to appoint in each an efficient head of Supply services with large powers. This policy has been carried out in the War Office by the appointment of Mr. Andrew Weir as Surveyor-General of Supply and in the Admiralty by the appointment of Sir H. Livesey, K.B.E., as Director of Contracts. The Ministry of Munitions stands in a different position, because it is almost exclusively a Supply Department on a very large scale, but arrangements for improving the machinery of financial control and the making of contracts are now under consideration.