68

ESTIMATE OF CHARGE

FOR THE

YEAR 1927.

(Presented to Parliament by His Majesty's Command.)

Ordered, by The House of Commons, to be Printed,
17 May 1927

LONDON:

PUBLISHED BY HIS MAJESTY'S STATIONERY OFFICE.

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or through any Bookseller.

1927

Price 3d. Net.

ORDNANCE FACTORIES ESTIMATE, 1927.

I. Estimate of the Sum required in the Year ending 31st March, 1928, to defray the Expense of the ORDNANCE FACTORIES, the Cost of the Productions of which will be charged to the Army, Navy, Air Force, &c.

One Hundred Pounds.

II. Subheads under which this Vote will be accounted for.

Estimate of INCOMINGS and OUTGOINGS in respect of CAPITAL in the ORDNANCE FACTORIES during the Year 1927 :

ORDNANCE FACTORIES ESTIMATE, 1927.

At Woolwich.-Royal Ammunition Factory, Royal Filling Factory, and Royal Gun and Carriage Factory, with an Engineering and Building Works Department which serves the whole of the Arsenal and Dockyard area.

At Enfield Lock.-Royal Small Arms Factory.

At Waltham Abbey.-Royal Gun Powder Factory.

A reserve establishment at Hereford, and pivotal plant centres containing plant which would be brought into use on emergency, at Blackpole (Worcestershire), Birtley (Durham) and Irvine (Ayrshire).

The Factories are administered, under the Master-General of the Ordnance, by the Director of Ordnance Factories, whose pay is borne on Army Vote 12 (War Office). They supply the Service Departments, and also the Dominions, India and the Colonies, with guns, mountings, rifles, ammunition, tanks, vehicles, torpedoes, and many other warlike stores. They are also largely used for repair work. Goods similar to those made by the Factories are also supplied to the Services by trade firms.

The several customers of the Factories are charged each year for the work done for them at the cost prices shown in the Factory Manufacturing Accounts, and the Factories thus recover in the year all their working expenses, together with depreciation charges sufficient to enable them to finance for themselves all their normal requirements in the way of new capital services (see below under Supplies Suspense Account). Normally, therefore, no substantive Ordnance Factories Vote is required, but a token vote of 100l. is taken in order to bring the Estimate before Parliament.

The cost prices charged to customers are assessed on a system revised in 1921 so as to bring it into line, subject to necessary modifications, with modern commercial practice. The prices, however, do not include any charge in respect of rent of land, interest on capital or profit. On the other hand they include part of the cost of maintenance of the reserve capacity which would be required on emergency, the balance of that cost being recovered in the form of direct contributions in aid from the Navy, the Army and the Air Force; the payment by the Army (83,0001.) appears under Vote 9 D. on page 178 of the Army Estimates.

K8234 Wt 25324/PP1022 750 6/27 Gp 68

Supplies Suspense Account.

The estimate of Incomings and Outgoings in respect of Capital works up to a balancing item consisting of a transfer from (or in some years to) the so-called "Supplies Suspense Account." The nature of this account is as follows:

Under the ordinary Parliamentary procedure a surplus on a Vote Account is surrendered to the Exchequer, and a deficit requires a further Vote of Parliament. The normal surplus or deficit on the Ordnance Factories Vote Account is, however, of a special character, arising either out of the method of financing capital expenditure from the depreciation charges included in the payments made by customers for goods and services (see above), or out of temporary cash displacements of the year, e.g., wages earned in one year but paid in the next. The ordinary Parliamentary procedure is inapplicable to such surpluses and deficits, and the difference arising each year between the fluctuating outgoings (i.e., expenditure on new buildings and machinery) and the steadier incomings (i.e., depreciation charges) is accordingly carried to or from the Supplies Suspense Account, which thus operates as a reservoir of the funds required for financing capital services. No transfer from the Supplies Suspense Account for such capital purposes may be spent, however, without the previous authority of Parliament as signified upon the Ordnance Factories Estimate of the year. Any transfer from the Supplies Suspense Account is shown as an Appropriation in Aid on page 9, and the amount of that transfer is arrived at as shown in the estimate of Incomings and Outgoings in respect of Capital, &c., on page 2.

The maximum amount which may be held in the Supplies Suspense Account is authorised by the Treasury, and is at present 250,0001. any excess beyond that maximum is surrendered to the Exchequer.

Subhead A. (Establishments.) Subhead B. (Wages.)
The total numbers employed at the beginning of April 1927

Subhead H. (Appropriations in Aid.)

The amounts shown against "Production" for the several customers of the Factories include (a) prices paid for goods or services, and (b) in the case of the Navy, the Army, and the Air Force, the direct contributions made by them towards upkeep of reserve capacity. (See note above on assessment of cost prices.)