CLASS VI, VOTE 7-contd.

The purchasers also agreed to pay 3,650,000l. for the mechanical transport and spare parts then surplus and to be declared surplus within. a further period of two years, together with a percentage of any realizations by the purchasers in excess of 5,000,000l. The sum of 3,650,000l. for mechanical transport has been paid, as well as 145,7061. for realizations in excess of 5,000,000l.

When 1,470,000l. of the agreed price of 3,350,000l. for the Depot had been paid, the purchasing company took action against the Department, alleging breach of agreement as regards surrender of surplus, and claiming a rectification of the original agreement.

As the result of negotiation a new agreement was made in March 1923 under which the purchasing company were relieved of the payment of interest on instalments overdue under the original agreement; they undertook to pay to the Commission the excess of all receipts over expenditure up to 31 December 1924, during which time no dividends were to be paid; further, a valuation of the depot was to be made as at 31 December 1924, as between a willing seller and a willing purchaser, and the Department was to receive a proportion of any excess which the valuation showed over an agreed figure. Such valuation was accordingly made by an independent valuer agreed to between the parties, and amounted to 508,5851.

The effect of the arrangements made under this agreement is that the total sum to be realized by the Commission for the sale of the Depot will amount to 2,065,3381., of which 81,4391. remains to be collected by instalments spread over a period of years. Thus, the liability of the company has now been written down in the books of the Commission by 1,284,6621.

The Port of Richborough.

62. It was explained in the Report of the Disposal and Liquidation Commission for the year to 31 March 1921, presented to Parliament as Cmd. 1412, that the Port of Richborough and its equipment had been sold for the sum of 1,407,000l., plus the cost to the Department, up to 40,000l., of acquiring certain lands which had been occupied under the Defence of the Realm Act.

The acquisition of the lands proved to be a very difficult and expensive process, and it was found impossible to obtain title to all of them within the period specified in the agreement. The Commission could not in fact comply with all the contract provisions regarding the purchase of land owing to a change which had taken place in the course of the River Stour.

Owing to these and other difficulties which arose the Commission, who acted throughout on legal advice, was left with no option but to agree to the rescission of the Agreement in July 1923, and the property was ultimately sold to other purchasers in February 1925.

CLASS VI, VOTE 7-contd.

As the outcome of these transactions, the Department will receive a net sum very considerably below that contemplated in the Agreement of 1921.

CLASS VI, VOTE 13.-BRITISH EMPIRE EXHIBITION.

Subhead A.-British Government Exhibit.

63. This Subhead includes the cost of exhibits purchased by the Department of Overseas Trade and other Government Departments. The only store records of these exhibits available for my inspection were those of the Admiralty Theatre, show cases, and electrical equipment. In answer to my inquiries I was informed that inventories were in course of preparation but could not be completed until stock has been taken of the stores at the Wood Lane Depot.

Subhead B.-Displays (1924).

64. After a contract for the construction of scenery for the Pageant of Empire had been placed with a certain firm, circumstances arose necessitating a modification of the arrangements. The original proposals would have caused a large excess on the grant available, and accordingly new plans were drawn up requiring less costly scenery. A small committee was formed to deal with the scenic decorations, and another contractor, who had been taken into consultation, submitted an estimate for carrying out the revised scheme. As time was short it was decided to accept this estimate instead of following the normal procedure of calling for tenders.

The original contractor was paid 3,0941. in all. This sum represented the value of the work done and materials supplied by him, together with 450l. as compensation for loss of profit, an item for which the covering sanction of the Treasury was obtained at my request. It was intended to hand over to the second contractor, at an agreed price, stores to the value of 3981. included in the above settlement but not incorporated in works. Owing to a misunderstanding this was not done, and eventually the stores were taken over by the owner of the land at a valuation of 2401. in part-payment of rent, etc.

Outcome of the Massed Bands Concerts and the Pageant of Empire.

65. The gross expenditure incurred by the Department on the Massed Bands Concerts and Pageant of Empire amounted to 150,951l., and the cost of attendants, etc., employed by the Exhibition authorities was 8,2551. The net loss on the two displays was 102,0301., and this has been apportioned between the Department and the Exhibition authorities in the ratio of the expenditure incurred by each. The method of calculation adopted involved a credit to the British Empire Exhibition Association of approximately 5 per cent. of certain receipts, e.g., private contributions, proceeds of sale of costumes and properties, etc., for which no provision was made in the agreement, and I have asked that the covering sanction of the Treasury may be obtained to this modification of the original agreement.

CLASS VI, VOTE 14.-MISSION OF H.R.H. THE PRINCE OF WALES TO SOUTH AFRICA, OTHER PARTS OF AFRICA, AND SOUTH AMERICA. (GRANT IN AID.)

66. In a note to the Estimate it was stated that the expenditure out of this Grant in Aid would be audited by the Auditor of the Civil List, that any unexpended balance of the sums issued from the Grant would be surrendered to the Exchequer, and that certain expenses in connexion with the voyage would be defrayed from Navy Votes.

The certificate of the Auditor of the Civil List as to the expenditure out of the Grant in Aid was not available at the date of this Report.

As regards the expenditure defrayed from Navy Votes, I have been informed by the Admiralty that the total extra expenditure incurred in connexion with this mission amounts approximately to 9,6001.

CLASS VII, VOTE 1.-MINISTRY OF HEALTH.

Subhead F.1.-Grants towards Housing Expenses.

67. The provision under this subhead included grants payable to local authorities, under the Housing, etc., Act, 1923, in respect of expenditure incurred by them in promoting the construction by private enterprise of houses of specified types. The maximum contribution is an annual grant of 61. for each house, payable for a period of 20 years.

By the terms of the Act, the Exchequer contributions are payable only in respect of houses which had been included in proposals submitted by local authorities to the Minister of Health, and approved by him before construction commenced.

It was found that in many cases houses had been commenced before the necessary sanction had been obtained, under the assurance of the local authority that assistance would be forthcoming. The circumstances were reported to the Treasury, who agreed that in such cases the equivalent of the Exchequer contributions might be paid, provided the houses otherwise complied with the prescribed conditions.

An explanatory note to the Account (page 463) states that payments under this arrangement were made during the year in respect of 1,387 houses. The total number of houses affected will, it is anticipated, be about 3,000, involving a charge of approximately 18,000l. per annum for a period of 20 years.

Subhead G.2.-Treatment of Tuberculosis.

68. The grants to local authorities for this service comprise (1) grants of fixed sums in lieu of the amounts formerly available out of National Health Insurance Funds for provision of institutional treatment, and (2) grants not exceeding 50 per cent. of the approved net cost of local authorities' schemes for the treatment of tuberculosis, after deducting the fixed grant payable under (1).

My attention has been drawn to a case where, for several years past, a local authority in arriving at the net cost referred to above has, with

CLASS VII, VOTE 1-contd.

the acquiescence of the Ministry, deducted from the gross cost of treatment a part only of the contributions received from or in respect of patients, and has appropriated the remainder of such contributions to a separate fund for the after-care of child patients and other purposes. The sums thus diverted were the contributions of parents, etc., towards the cost of treatment of children in sanatoria, etc., and at 31 March 1925 amounted to 37,2351., against which expenditure totalling 18,8821. had been charged, leaving in the fund a balance of 18,3531.

As the omission to take these contributions into account in arriving at the net expenditure resulted in an increase in the amount of grant paid, I inquired whether Treasury approval had been obtained for the procedure.

I have now been furnished with a copy of a Treasury letter of 6 January last in which Their Lordships express regret that arrangements should have been approved by the Ministry under which contributions in respect of the treatment of tuberculous children were treated otherwise than in diminution of the expenditure on the treatment of tuberculosis ranking for grant, and state that, as the arrangements were so approved, They do not propose that contributions received by the local authority during past financial years should now be taken into account, and that They sanction the proposal of the Ministry that the deduction of such contributions from the expenditure ranking for grant should take effect from the commencement of the present financial year only.

UNCLASSIFIED SERVICES, VOTE 3.-EXPORT CREDITS.

Export Credits Fund Account.

69. This Account shows that during the year advances of 2,1601., and payments under guarantee of 4,8811., have been written off under Treasury authority as irrecoverable.

Included in the latter amount are certain losses resulting from the settlement of cases in connexion with exports to Roumania. In the largest of these the importers intimated that they would be compelled to take advantage of the Roumanian Moratorium Law of June 1923, but later expressed a desire to settle their indebtedness without recourse to this step. A settlement was finally reached, under which the Department agreed to accept approximately 40 per cent. of the amount for which the bills were drawn, leaving a loss of 4,3841. to be written off.

Another case has come to my notice in which a similar settlement was reached with the importers. I referred in paragraph 94 of my Report for 1922-23 to an advance of 39,0571. in connexion with bills drawn on an importer in Roumania, who had notified his intention of taking advantage of the Moratorium. Other transactions during 1920, 1921, and 1922 with this importer increased his indebtedness to the Department to 64,6371. for advances and 19,0641. for payments under guarantee. Terms of settlement were subsequently arranged which

UNCLASSIFIED SERVICES, VOTE 3-contd.

provided for a cash payment of 4,000l., and the payment by monthly instalments extending over three years of 50 per cent. of the amount, approximately 153,000l., of the unpaid bills held by the Department, together with interest at 4 per cent. These instalments were to be covered by a Bank guarantee, and the Department's rights under the original bills revived in case of default. Currency amounting to 18,000,000 lei, originally deposited as collateral security in the Department's name, has been realized for 19,755l., and the instalments have so far been paid at due date. It will not be possible to state the final loss incurred on these transactions until the completion of the debtor's payments, and the settlement of the general question, at present under consideration, regarding the recourse due from exporters.

In reply to my inquiries, I have recently been informed that the total outstanding commitments of the Department in respect of Roumanian business, excluding the debts referred to in the preceding paragraph, amount to approximately 192,4981. Of this figure 31,6401. represents business affected by the Roumanian Moratorium Law.

Losses on Guarantee Payments.

70. Included in the item "Guarantee Payments now outstanding (net). . . 199,573l. 13s. 10d." is an amount of 6,7071. 10s. of which it has since been possible to recover only 2501.

In the case concerned the Department was called upon to meet its guarantee of 9,1241. on a bill of exchange in connexion with the export of certain textile goods to Austria, delivery of which was not taken by the importers. The goods were invoiced at very high prices, and as it was found impossible to dispose of them locally, they were returned to England and realized only 2,4171. Endeavours were then made to collect from the exporters the recourse (2,1241.) due for their share of the loss, but their financial position was such that they could only make an offer of 2501. in full settlement. The Department was advised to accept this offer as being the most favourable course in the circumstances, and the sum of 250l. was duly received in July 1925, leaving a net amount of 6,4571. outstanding on the guarantee payments.

In order to obtain possession of the goods for re-shipment to England, the Department had been compelled to pay an amount of 2601. demanded by an Austrian bank as commission in respect of its guarantee furnished as security in connexion with the transaction. Both the bank and the importers were reported to be insolvent, and no claim was possible against them in respect of the balance of the loss. In addition, the bank's guarantee was found to be valueless, and the commission of 2601. paid on this worthless guarantee proved to be irrecoverable.

The losses incurred on this transaction include, in addition to 6,4571. on guarantee payments and 2601, bank commission, 2861. irrecoverable expenditure on insurance and shipping charges, and a claim for interest amounting to 6961. These amounts have now been written off