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SELECT COMMITTEE ON ESTIMATES.

FIRST REPORT.

iii

Appendix I.

Appendix I.

THE SELECT COMMITTEE ON ESTIMATES have made progress in the matters to them referred, and have agreed to the following First Report:

1. Your Committee have made a detailed investigation into the Estimates of the Board of Trade, and have examined Mr. H. A. Payne, C.B., Second Secretary, Mr. H. Mead Taylor, C.B., Assistant Secretary (Finance), Mr. S. H. Hughes, C.B.E., Shipping Liquidation Department, Mr. E. S. Grey, C.B., Controller, Enemy Debts Office, Mr. C. Hipwood, C.B., Principal Assistant Secretary, Mercantile Marine Department, and Sir William Clark, K.C.S.I., C.M.G., Controller, Department of Overseas Trade.

In addition, Sir Cecil Hurst, K.C.B., K.C., Legal Adviser to the Foreign Office, Mr. H. W. Malkin, C.B., C.M.G., Assistant to the Legal Adviser, and Mr. W. H. Robinson, C.B.E., were examined on the working of the Mixed Arbitral Tribunals.

BOARD OF TRADE.

2. The gross total of the ordinary services for the current year for the General Board of Trade Estimates amounts to £551,998 as compared with £409,910 for the ordinary service in 1914-15, the corresponding net Estimates being £491,654 and £382,550. Since 1914-15, however, a number of services have been transferred from the Board of Trade to other Departments. The services. which have now been transferred cost in the earlier years an aggregate of £54,034; they include payment of Railway Department Officials, £7,933; Employment Department Officials, £67,776; Trade Correspondence and Commissioners, £12,450; Trade Boards, £13,720; Light Railways Commission, £3,560, and other items. In relation to the increase of expenses for ordinary services the transfer of these services must not be ignored.

3. The War Services accounted for by the Board of Trade. involve the expenditure of £262,285 for the current year as compared with £330,040 for last year. This decrease is mainly accounted for by the Enemy Debts Clearing House, which shows a decrease of £44,000. The Timber Disposal Department has been. wound up, and the vote does not recur.

There is a considerable reduction of expenditure in the Food Department. The Reparations Claims Department shows a further reduction of £14,000 and the Power, Transport and Economic Department has disappeared altogether.

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4. Your Committee desire to call the attention of the House of Commons to the fact that the Board of Trade-alone among Government Offices-enjoys the services of an Economic Adviser, who receives a salary at the rate of £3,000 a year in addition to expenses incurred in connection with his duties as Chief Economic Adviser to the League of Nations. Your Committee understand, however, that the continuance of this office will be reconsidered on the occurrence of a vacancy.

5. Your Committee also desire to draw attention to the fact that in connection with the Australian Zinc Concentrates Contract there is still an outstanding liability which is, however, limited by the price of 300,000 tons in any one year until 1930.

6. In reference to Reparation Dyes (Sub-head P.7) the Board of Trade anticipate having 1,300 tons of dyes for sale in this country during 1924-5. The prices range very widely from 10d. to 64s. a pound. The selling prices are fixed by the Board of Trade with the help of an informal Committee. The latest average of the prices credited to Germany for Reparation Dyes is slightly under 2s. a pound.

Mercantile Marine Services.

7. For the Mercantile Marine Services the net total vote is £436,621 as compared with £124,424 for the year 1913-14. Since that date, however, the functions of the Department have been increased by the taking over of the Coast Guard Services which largely account for the increase of staff from 942 in August, 1914, to something over 2,000 at the present time. The cost of the Survey Staff has increased from £79,000 in 1913-14 to £186,000 for the current year.

Shipping Liquidation Department.

8. By far the most important addition to the work of the Board of Trade since the War is that of Shipping Liquidation. Your Committee have enquired into the present position of this service. The progress made in liquidation is, in their opinion, decidedly disappointing. They are of opinion that the smaller disputed accounts, mostly voyage accounts, ought to have been cleared up with greater celerity. A year ago the number of live cases amounted to about 8,000, and in addition to that there were some 3,000 to 4,000 accounts of various descriptions, mainly voyage accounts. The corresponding figures to-day are 6,700 and 1,561. Notwithstanding this reduction, the net amount of money still to be collected is £9,000,000 and £3,000,000 to be paid, as against £14,000,000 collected and £8,000,000 to be paid last year.

9. Your Committee particularly desire to call the attention of the House of Commons to the fact that some doubt exists as to the precise scope of the Indemnity Act which has led in certain

cases to litigation, and to the importance of resolving these doubts. Your Committee recommend that an amendment to effect this purpose should be introduced at an early date.

10. They further recommend that in order to accelerate the settlement of claims and counter-claims, the method adopted in the winding-up of the Ministry of Munitions should be applied to the Shipping Liquidation Commission and that a small committee of Treasury officials should for this purpose be appointed.

11. Your Committee report with satisfaction that out of a total turnover of £1,500,000,000, of which the debts of the Russian Government represent £5,000,000, the bad debts, excluding those due from Russia, amount only to about £40,000, or a mere fraction of 1 per cent.

12. The Shipping Liquidation Commission has now virtually ceased to operate vessels, and your Committee have reason to hope that the present estimate is the last estimate of any considerable amount which will be presented to Parliament, and that within two years at the outside the Shipping Liquidation Department will have ceased to exist.

Department of Overseas Trade.

13. Evidence was taken from Sir William Clark, K.C.S.I., C.M.G., the Comptroller-General of the Department of Overseas Trade. This Department now combines the Commercial Intelligence Department of the Board of Trade and the Commercial Department of the Foreign Office. Previous to the War these departments were on a very small scale and their expenditure was estimated by the Geddes Committee at a total of £34,000 a year. The estimate of the Department of Overseas Trade for the current year is £300,282, with a Headquarters Staff of 377. The Geddes Committee reported that such a staff appeared to them to be unjustified, and recommended a large reduction in the Headquarters Staff. The actual reduction has only been eight. The Petroleum Department has been wound up and is now reabsorbed into the Board of Trade. On the other hand the expenses of the staff attached to the Commercial Counsellor for Russia have been transferred from the Foreign Office to the Department of Overseas Trade.

14. The Department has now decided on the score of economy. to discontinue participation in various agricultural exhibitions in Canada, but has decided to spend a considerable sum on the International Exhibition of Decorative and Industrial Art at Paris.

15. Your Committee report with satisfaction that the guarantee scheme of the Export Credits Department is self-supporting on the administrative side and they are satisfied that without material cost to the Treasury it had been of considerable assistance to British export trade. The amount of Government credit now

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operating under the guarantee scheme is is £7,000,000 to £8,000,000. The Reserve Fund now amounts to about £150,000. 16. Your Committee consider that the form in which the estimate is presented is not appropriate to the purpose for which it is intended, though it conforms to the usual practice of the Treasury. Your Committee found that it failed to disclose information in a form intelligible to the Committee or presumably to the House of Commons, and they recommend that there should be attached to the existing estimate a statement to indicate unclosed risks, and further that the Accounts should be discriminated in such a manner as to show loss or gain on advances apart from loss or gain on the guarantee scheme for the whole period since the guarantee policy was inaugurated.

Enemy Debts Department.

17. Your Committee have given prolonged consideration to the position of the Clearing Office Enemy Debts Department and to the working of the Mixed Arbitral Tribunals, and in this connection have taken evidence from Mr. E. S. Grey, C.B., Controller of the Department, Sir Cecil Hurst, K.C.B., K.C., Legal Adviser to the Foreign Office, Mr. H. W. Malkin, C.B., C.M.G., Assistant to the Legal Adviser and Mr. W. H. Robinson, C.B.E., Assistant to the Chief Clerk of the Foreign Office.

18. The position is complicated by the fact that while the Clearing Office is under the Board of Trade and is maintained by fees collected from British Claimants, the Mixed Arbitral Tribunals are independent International bodies maintained partly by the British Taxpayer but partly by other countries. The total estimate for the current year is £639,300, made up as follows: Salaries, £239,300, and a sum of £400,000 (comparing with £1,000 last year) to cover the contingent liability of His Majesty's Government in respect of debts due from its nationals which must, when admitted, be credited to the German Government even though they cannot be collected from the British debtors. Against this the Clearing Office have in hand or in sight sums derived or derivable from fees, &c., estimated at about £1,000,000. This leaves only about £361,000 available from such sources for the future expenses of the Clearing Office before it becomes a charge upon the taxpayer.

19. The net cost of the Department up to 21st March, 1924, amounted to £942,000; the total number of the claims lodged both ways amounted to 417,944, involving a sum of approximately £233,000,000. One-third of the claims in money still remain to be disposed of, but the rate of progress is mainly dependent on the procedure of the Mixed Arbitral Tribunals-a matter to which further reference will be made. The Revenue of the Clearing Office is derived in the main from Commissions charged on British claims. The total sum paid to British nationals by ex-enemy powers up to date is approximately £70,000,000, of

which £24,000,000 have been paid in cash by Germany. The greater part of the balance, £46,000,000, has been paid out of the proceeds of the liquidation of German property in this country. The total cost of the Department represents under 1 per cent. of the amount distributed to British claimants. The total outstanding claims both ways in all categories and countries amount tɔ £71,225,736, of which £53,633,933 represents the aggregate of 36,652 claims made by British nationals.

20. Your Committee have ascertained that all claims established under Article 296 of the Treaty of Versailles have been paid in full or are in course of being so paid. They have further ascertained that on all claims established under Article 297e of the Treaty, 7s. 6d. in the £ has already been paid* and that the Clearing Office had in hand on March 18th, 1924, a sum of £19,056,000 which will suffice to pay

(a) all outstanding claims in full under Article 296;
(b) all outstanding claims in full under Article 297h;

and will leave an estimated balance of £8,531,010 available for claims under Article 297e.

Your Committee therefore recommend that in order to accellerate the winding up of this Department and so to reduce costs of administration an immediate further distribution of not less than 5s. in the £ should be made on all established claims for compensation under Article 297e.

Mixed Arbitral Tribunals.

21. Your Committee have given close attention to the working of the Mixed Arbitral Tribunals. In view of the serious delays involving great inconvenience to claimants and considerable expense to the Exchequer, an additional Second Division Mixed Arbitral Tribunal was set up in November, 1923. Nevertheless, the numbers of outstanding Anglo-German cases, which in October, 1923, amounted to 1,580, had been only reduced to 1,467 on 15th March, 1924. It appears, therefore, to your Committee to be a matter for serious consideration whether, in order to expedite proceedings, a third Tribunal or Division should be set up. The existing Tribunals are, of course, International bodies, over which the British Government has no control, and the setting up of a Third Division would obviously involve International agreement. Alike in the direct interests of the Taxpayer and the much larger financial interests involved to the citizens of this country, your Committee cannot refrain from drawing the attention of the House of Commons to the existing unsatisfactory position.

* The first £50 on all established claims has also been paid in full.

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