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5 May, 1927.]

[Continued.

Brig.-Gen. Sir SAMUEL H. WILSON, K.C.M.G., K.B.E., C.B., and Sir EDWARD STEPHENSON, K.O.M.G.

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3681. When you say they are worked the suggestion is one of two things either that when they are working these hours they do not get the work done, or that they are unable to do it efficiently; or else that they are at the present moment working overtime.

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take it that is what you mean?-When I said they are overworked I really had in mind the administrative staff, the people who ought to deal with big questions of high policy, such as constitutional questions in the overseas territories. I do not think those officers get sufficient time to think out properly the bigger questions. They are so over-burdened with the routine work that has to be dealt with during the office hours. That is really what I meant when I said they were overworked. I want to adopt a scheme of devolution in which some of the routine work will be given to lower grades to do, leaving these people time to think out the bigger questions.

3682. So far as the administrative staff is concerned, your object in increasing the staff, or whatever it is you are proposing to to do, is to obtain greater efficiency for the larger issues? That is what I want.

3683. If I may venture to correct you in one point, you did say that in the lower grades in the Registry Department you had found it necessary to make a claim for additional staff.-I had a complaint from one of the registries towards the end of last year that they could not do the work, and as I have explained the Treasury have agreed to an addition in both registries in order to cope with the increase of work. Knowing the

Treasury as I do, I am quite certain they would not have agreed unless they had been quite satisfied that there was not sufficient staff to cope with the work.

3684. That is to say, in your opinion and in the opinion of the Treasury, under the conditions under which the work was being done, there was an inability to carry it out with full efficiency, and therefore in the judgment of yourself and the Treasury it was necessary to increase the staff?-That is so.

Mr. Ellis.

3685. You have raised the question of devolution. I do not want you to tell me anything on the question of policy that you are not disposed to, but you yourself raised the question. Do we

take it that your view is the Office is overloaded with detail, and you consider some relief may be found in the direction of devolution because too much detail is passing between, say, Kenya and the Straits Settlements and Nigeria, and if you were relieved of that detail there would be a considerable amount more time left to your administrative staff to deal with the larger questions?—That is what I have broadly in the back of

my mind. First of all delegation of responsibility in the Office itself, allowing the lower grades to take more on themselves than has been the custom in the past, and also not going into so much detail in our despatches to the Government of Kenya, or the Government of the Straits Settlements, etc. I think there has been a tendency in the past to forget that these Colonies are growing up and that the local governments are becoming more efficient every day and more capable of managing their own affairs. 3686. Would it not be fair to say that in some of those Colonies there has been rather a disposition on one ground or another to shift the responsibility to London? I would not like to say that, because a good many of the Governors complain about Colonial Office interference. They think we interfere too much. That depends of course entirely on the individual officer who is administering the Government.

3687. Does it not depend a good deal on your Colonial Secretary?-You mean in London?

5 May, 1927.]

3688. No.

Brig.-Gen. Sir SAMUEL H. WILSON,

[Continued.

K.C.M.G., K.B.E., C.B., and Sir EDWARD STEPHENSON, K.C.M.G.

You mean the Colonial Secretary in a Colony?

3689. Yes? I think there is a certain type of man who is only too ready to put the responsibility on to somebody else if he can get anybody else to take it; but there are other men who are inclined to take too much responsibility and deal with things they ought not to deal with.

3690. It is really a question of policy which is entirely within the power of your own Office. If you lay down a rule that certain things that are detailed are unnecessary, the Colony concerned is bound to follow it? That is so.

3691. It is very much within the limit of your own Office to relieve a good deal

Chairman.

of the congestion that has been engendered? That is what I am trying to do. I have already presided over an Office Committee who reported to the Secretary of State, and there is another Committee sitting over which I am presiding which is going into these matters. Only recently we have examined as witnesses several Governors, and one of the questions asked has been in connection with matters they think we might leave to them to deal with.

3692. You do hope for a considerable possibility of relief in that process?—I hope for some.

3693. You can see some light at any rate? Yes, I hope so.

CLASS V.

On VOTE 2.
COLONIAL SERVICES.

3694. Sir Malcolm, paragraph 34 of your Report deals with this account?(Sir Malcolm Ramsay.) Yes.

3695. The paragraph refers to grantsin-aid of local revenues?-Yes.

3696. Mr. Phillips, can you remind the Committee briefly as to the Treasury terms of these grants? I think they are all subject to a variety of conditions? -(Mr. Phillips.) The grants are made where absolutely necessary for the purpose of advancing the expenditure, and against such revenue as can be collected in the Colonies and Protectorates. Nowa-days they are treated as loans repayable when the financial circumstances of the Colonies permit.

3697. Is it broadly true to say that the policy now followed is to treat them as gifts from this country?-Not quite. We have very good reason to treat them as loans.

3698. The Committee will later see in the account itself the actual grants-inaid. The paragraph is formal in character? (Sir Malcolm Ramsay.) Yes.

Sir Fredric Wise.

3699. In the fifth line of the paragraph you say, Sir Malcolm, that the Annual Estimates of the grants-in-aid "are still subject to Treasury control." Were they not always subject to Treasury control?

-Where the public Exchequer is interested the Estimates of these Colonies are subject to the control of the Treasury, but where the Colonies are self-supporting and we do not make any grants the Treasury control has been waived.

3700. What is the position of a Colony like British Guiana ?-That is a Colony where we do not see the Estimates. There is no grant-in-aid. One is speaking here of the African Protectorates mainly. When they were struggling and there were grants-in-aid the Estimates were all scrutinised by the Treasury. As these Colonies become self-supporting it has been the policy to continue Treasury scrutiny of the Estimates for a period of three years after the last grant-in-aid. When they go on without any assistance from the Imperial Exchequer for three years, it has been thought unnecessary that the Treasury should examine their Estimates in detail, and that work is dropped.

3701. After three years?-If there has been three years clear with no assistance from the British Exchequer. But that does not mean, of course, that the Estimates are not scrutinised by the Colonial Office.

3702. What would be the position if they had issued a trustee stock in the meantime, and the Treasury had not the control?—(Mr. Phillips.) That is

5 May, 1927.]

Brig.-Gen. Sir SAMUEL H. WILSON,

[Continued.

K.C.M.G., K.B.E., C.B., and Sir EDWARD STEPHENSON, K.C.M.G.

rather a different matter. The obligation when they issue a trustee stock is to satisfy the Treasury that they will satisfy any judgment of an English Court and for this purpose they will provide adequate funds in London, and that any law passed which interferes with the conditions of the original security setting up the trustee stock would be properly disallowed by the Secretary of State. I think those are the conditions, but they are quite separate from any question of the Colony's own finances.

3703. What about British Guiana, as I mentioned just now?-British Guiana does not owe the Exchequer any money, and she balances her budget.

was

3704. Excuse me. Perhaps I wrong in that. But she has not applied, so far as I know, for any assistance. (Sir Samuel Wilson.) That is so.

3705. But there are trustee stocks on the market.

Chairman.] Have you the recent report in mind of the two Members of this House?

Sir Fredric Wise.] Yes.

Chairman.] That might clarify matters for Mr. Phillips.

Sir Fredric Wise.

3706. It is the Treasury control I am on.-(Sir Samuel Wilson.) Any loan raised by British Guiana I suppose would come under the ordinary Colonial Trustee Act, but the other question which Mr. Phillips. is referring to is where the Treasury have the Estimates submitted to them where they give a grant-in-aid to the Colony. Of course British Guiana is not one of those Colonies.

3707. I do not think it does come under Treasury control?-No, it does not.

3708. Some of them are trustee stocks? -(Mr. Phillips.) Certainly. So far as I know it has never been proposed that on condition of the stocks of the Colony being trustee stocks the Treasury shall control the finances.

Mr. Ellis.

3709. Is not this the essence of it? Supposing the Treasury who had allowed trustee stocks in certain Colonies became aware of certain goings on in a Colony which tended to depress the whole condition of the Colony, would they not take steps to make the stock not a trustee one? That is what it comes to?-I do not think the case has arisen in British Guiana.

3710. On the Report of British Guiana it has.-Perhaps we might look the matter

up.

3711. I am not going to ask you to make a decision on the Report, but I am simply putting it in a broad way. Surely if circumstances arise which shake the credit of a Colony to whom a fiat has already been given, so to speak, would not the Treasury be empowered to review the right to describe it as a trustee stock?-Obviously the Home Government could disallow any legislation which interfered with the security of the stock.

Sir Fredric Wise.] Would it be right to ask for a paper to be put in on that?

Chairman.

3712. I have allowed all the questions on this because I gathered that Members were trying to find out what was meant by the phrase in this paragraph "which are still subject to Treasury control." I imagine the Treasury would have no difficulty in putting in a short statement as to what was actually done with reference to this clause in Sir Malcolm Ramsay's report.-(Sir Malcolm Ramsay.) I think I could make that point clear SO far as the Estimates are concerned. If any Colony comes to the Treasury for a grant-in-aid the Treasury at once says the Estimates must be subject to Treasury control. If that Colony later makes ends meet and therefore does not want a grantin-aid the Treasury control over its Estimates does

not cease for three years, but if there is a clear three years without any application for a grant-inaid then it is thought unnecessary from the point of view of the grant-in-aid and this Vote that the Treasury should continue to review its annual Estimates. The question of course of the conditions under which the stocks of Colonies should be admitted under the Colonial Stock Act to the privilege of being a trustee security is a separate one, and is not raised, I venture to suggest, in this paragraph. The powers of the Treasury in that matter depend entirely on the Colonial Stock Act, under which the Colonies have to satisfy the Treasury and the Secretary of State as to certain matters. I dare say the Treasury will put in a note on that point, which is a separate one.

* See Appendix 45.

5 May, 1927.]

Brig.-Gen. Sir SAMUEL H. WILSON,

[Continued.

K.C.M.G., K.B.E., C.B., and Sir EDWARD STEPHENSON, K.O.M.G.

Major Salmon.

3713. I should like to be clear on one point. Are the grants-in-aid for local revenue purposes in these respective Colonies treated now as part of a debt the Colony will owe when they are in a position to repay? (Mr. Phillips.) Almost invariably.

3714. Then what are the outside liabilities that exist with the various Colonies, and what figures can we see showing where those liabilities exist?-I think you will get that in the Finance Account. I believe the total is something like £14,500,000.

3715. The £14,500,000 was really given in small instalments to various of the Colonies as grants-in-aid, but instead of being grants-in-aid it is treated as a debt so that when they are in a financial position to pay they will be expected to pay the capital back?—Yes.

3716. In the meantime are they paying interest on the money?-About 50 per cent. of them are.

3717. About 50 per cent. are paying interest, and the other 50 per cent. are not? There is a large loan of £5,000,000 to Kenya and Uganda, concerning which it was agreed that the question of repayment and their commencing to pay interest would come up in 1934.

3718. Arising out of that, where they are not paying any interest at the moment is the interest that will become due to this country cumulative, or is it interest free? I think both things happen; in some cases it is cumulative, and in other cases, such as the 1934 case I mentioned just now, there are other arrangements. In that case the question will arise for decision in 1934. (Sir Malcolm Ramsay.) These grants-in-aid are being given on different terms. The terms on which it is proposed to give the grant in each case are stated in the Estimates presented to Parliament. The grants to Cyprus are free, and are in a curious position, being tied up with the tribute to Turkey. The grant to Nyasaland this year was a loan. As to the grant to Somaliland, a considerable amount of money has been given for military expenditure as a free grant, and the rest of the money is intended for development and will bear interest when the finances of the Colony allow it. The grant to St. Helena is a free

grant-in-aid for the expenses of administration.

3719. The point I rather want to be quite clear about is this. Why do we call them grants-in-aid if in fact they are only loans? If, on the other hand, they are grants-in-aid let us recognise them as grants-in-aid, and when they are repayable let us call them loans. Why do we call them all grants-in-aid?— "Grants-in-aid " is a technical term in Parliamentary accounting, and it means that if you label an item in the Estimates Grant-in-Aid" by the mere fact of calling it so you exempt the Accounting Officer from surrendering any money out of that grant which has not been finally paid away at the end of the year. It is a technical label or device for getting over the difficulty that all money not actually expended out of the Vote of Parliament must be surrendered.

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3720. If you earmark it as a loan, and it is a loan in fact, why call it a grantin-aid?-Because if Parliament were to vote the witness the sum of £10,000 without any other condition but call it a loan, I should have to require that unless the witness had spent the whole of that £10,000 in the year he should refund the unexpended balance. The term " Grant-in-Aid" is merely a technical label to indicate that the money will be issued out of the Vote, but if not spent at the end of the year it will not be surrendered. The grants-in-aid may be sub-divided into free grants and loans.

3721. What I would like to have a definite answer upon is this. Am I correct in assuming that we have never made a loan to any of our Colonies unless that money has been spent within the year in which that loan was given?—No, certainly not.

3722. If your answer is no, I cannot quite see the logic of it, if I may say so. It may be my misunderstanding of the position, but I cannot see the logic of your saying that the difference between a grant-in-aid and a loan is that if it is a loan merely you would have to get it back unless it is spent in the year, while a grant-in-aid can be run on?-I am afraid I must have explained myself badly. I was trying to explain the difference between a grant-in-aid subhead on the Vote and an ordinary subhead. In the case of an ordinary subhead, as for

5 May, 1927.]

[Continued.

Brig.-Gen. Sir SAMUEL H. WILSON, K.C.M.G., K.B.E., C.B., and Sir EDWARD STEPHENSON, K.C.M.G.

instance, salaries and travelling allowances, you can only charge against the Vote the money that has been finally paid away in the year; but where a subhead is voted as a grant-in-aid it is not necessary to insist that the money under that subhead shall have reached its final destination by the end of the year. The term "grant-in-aid " is the technical term used to distinguish these cases from ordinary subheads. Grantsin-aid are of all kinds. One may be a free gift, another may be a loan. In the early days I think I am right in saying that, going back to about 1910, loans to Colonies were generally made under the authority of a special Act. It is only gradually, and as a recent development that the practice has grown up of asking Parliament in the annual Estimate to vote sums to the Colonies by way of loans. I think that was first begun on a large scale by the Liberal Government in 1908. But it has been very considerably extended, and now I think for many years there has been no separate Bill authorising the Treasury to issue a loan to a Protectorate, and all these sums have been voted on the Estimates.

Mr. Ellis.

3723. Is it any more than a subsidy which may be repaid or may not be repaid? I think in many cases it is a definite loan.

Sir Robert Hamilton.] Would it be possible to have it shown in these accounts which of these grants-in-aid are repayable? If those which are repayable were put in italics we should be able to see in a moment the distinction.

Chairman.

3724. Mr. Phillips, that should not present any difficulty, should it? It is quite possible to add a word, or make some distinction of some sort?-(Mr. Phillips.) It is set out quite fully in the Estimates. For instance, this year there was in the Estimates a subhead A4 showing that there was granted Tanganyika Territory a loan in aid of expenses of administration of £350,000. When the Treasury does prescribe terms of repayment for a loan a minute is laid before the House of Commons.

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Sir Robert Hamilton.] For the purposes of this account I suggest we should have it before us.

Chairman.

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3725. May I reserve that point, Sir Robert, along with the other question which we propose to put to the Treasury as to the rather fuller statement, which we shall have to discuss a little later on. We will now take paragraph 35 of your Report, Sir Malcolm, which deals with subhead ᎠᏎ of this account?-(Sir Malcolm Ramsay.) That paragraph calls attention to the very heavy expenditure on the yacht Euphrosyne." Apart from ordinary repairs, as I show here there has been a very large sum of money spent on special repairs. I reckon that something like £11,000 has been spent on special repairs apart from the ordinary maintenance since this boat was bought. Therefore I asked the Colonial Office whether this was not a very expensive vessel to run, in the hope that some economy could be effected either in the working of this vessel, or by purchasing a new boat.

3726. Sir Samuel, have you anything to add on that point? (Sir Samuel Wilson.) We have gone into the question of purchasing a new boat, and we are advised that it would cost £15,000 to £20,000 to get a suitable vessel. It would cost £20,000 if made of steel. The High Commissioner has been asked to consider having an independent survey of the yacht made. I think we must wait until we have that to see what is the best thing to be done. The recent repairs which were very heavy were carried out without authority, ar instructions have been issued that in future nothing is to be done without authority.

Sir Fredric Wise.

3727. What does this yacht do?-She is available for taking the Resident about the different islands.

3728. Why does she come under the Anglo-French Protocol? The New Hebrides is a Condominion.

Mr. Ellis.

3729. Do the French pay anything towards it? It is an exclusively British

expense.

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