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3 March, 1927.]

Sir F. G. A. BUTLER, K.O.M.G., C.B.

this extent: that this is additional to anything on the League of Nations Vote.

Sir Fredric Wise.

14. How many extra journeys were there? I could not tell you without ascertaining the number of days that the Secretary of State was at Geneva. There would be one return journey each day.

15. I mean from London, not from Paris. We station two messengers in Paris. We have a daily bag between London and Paris, and we send over everything in that to Paris. Two of our messengers were stationed at Paris to do the work between Paris and Geneva.

16. What have you to say about this extra cost of journeys to Constantinople and Bucharest? That is part of the usual unsatisfactory task of trying to estimate the cost of our regular weekly journeys-which we discussed last year. 17. How much does the extra cost amount to?-The extra cost was £760 over our estimate.

18. That is on the whole amount ?Over the amount that we had estimated as the cost of those particular journeys.

19. That is including Geneva as well? -No. You will see in the footnote to Subhead "C" that the increase in the cost of journeys to Constantinople and Bucharest was £760.

Major Salmon.

20. Would it be correct to say that if you had not received £19,000 more than you anticipated in passports your excess Vote to-day would have been higher?—


No, except to the extent disclosed, i.e., that we have appropriated £741 from that £19,000. But none of the balance of the £19,000 has come in to diminish our excess at all. Our actual excess is £751.

Colonel Vivian Henderson.

21. On the League of Nations Vote you have an item for travelling and incidental expenses on which you also have an excess. Why is the travelling of messengers to Geneva in connection with the work of the League of Nations under the Foreign Office Vote and not under the League of Nations Vote?-Because the travelling expenses under the League of Nations Vote mean the travelling expenses of our delegation to the League of Nations, that is, the people who go 'to represent us on the League of Nations, and their staff.

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(Sir Frederick Butler withdrew.)




Mr. E. C. CUNNINGHAM, C.B., called in; and examined.


25. We now take page 420 of the large book, and paragraphs 2 and 41 of the Report of the Comptroller and Auditor General, but particularly for the moment paragraph 41, page xx. This is a summary of the position. Would you like to add anything to it, Sir Malcolm ?—


(Sir Malcolm Ramsay.) No 1 think that tells the whole story shortly. There is a note on page 420 which deals with it in a little greater detail.

26. Mr. Cunningham, perhaps you would like to say something to the Committee on the paragraph and on the note? (Mr. Cunningham.) I think the C 2

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only thing to say on the paragraph is, first, that the Old Age Pension Vote is one for which we have no firm basis of estimating, and an estimate which gets within £16,000 of the right amount 13 an extraordinarily close one; and secondly, that we have no means whatever of controlling the amount that is being paid out. As the Committee know, the pensions are paid out day by day at the Post Office by the Postmaster, and it was not until a fortnight or three weeks after the end of the financial year that we knew whether we had overspent or not.


27. You must know closely, or fairly closely, as you go along. For example, the note makes it perfectly plain that in the last quarter you had an estimated increase of 6,500 apparently increased to 12,645. Had you not some previous indication of that?-No. When frame the estimate to begin with we have to work on a period of twelve months which is still three months ahead. We have to estimate for the period from March to March on the basis of the preceding December. We have nothing to guide us except experience. Towards the end of the financial year which we are discussing to-day we foresaw there would be a deficiency unless we got a supplementary estimate. That supplementary estimate we calculated on the basis that during the March quarter the net increase in the number of pensioners would be 6,500. That is a small increase compared with most quarters. Our experience as a rule is that the March quarter, owing to the large number of deaths through the winter among old pensioners, has the smallest increase of all. As it turned out, for some reason we cannot fathom, there were a great many more claims put through in that quarter than we had any reason to expect on the basis of our experience.

28. That was, of course, apart from what you had already tried to do in your supplementary estimate ?-Exactly.

Sir Fredric Wise.

29. Would you suggest any alteration in the payment? No, I do not see how we can suggest any alteration.

30. I mean, so that you had some sort of control?-No, I do not think it is feasible. The Postmaster must pay on


the production of a duly authorised pension order. I do not see how you can get round that in any way.

Major Salmon.

31. Do you not know how many new pension orders are issued per year?We do at the end of the year.

32. Do you not know how they are being issued? Do you not get a return every quarter? We know how they are being issued, but we do not know how they are being cashed until after the Post Office have made up their accounts.

33. In ariving at your estimate you base your estimate presumably on the number of orders that are issued, not on how they are cashed?-We base it on the number of pensioners we expect to find in the year in front of us.

34. There is some authority given before an individual becomes eligible for a pension ?-Yes.

35. When that authority is issued by any local authority you have notification of it, presumably?—Yes.

36. And when you have notification of it surely that is the means by which you build up your approximate estimate for the year?-That is how we build up our estimate, but we cannot look into the future and foretell how many more new claims there will be in the year in front of us. We had to base this estimate on the year 1924. We had to estimate to the best of our ability the expenditure for twelve months beginning 1st April, 1925, and going on to 31st March, 1926.

37. Of course, you have past experience to go upon?-Exactly. We have only past experience to go upon, and we cannot prophesy with any certainty as to the number of new pensioners who will come in during the year of account, or contrariwise, the number of deaths.

38. Then it is quite a new experience to you to have had so many in a particular quarter ?-It is an abnormally big increase in the March quarter.

Mr. Pethick-Lawrence.

39. What exactly are the appropriations-in-aid which as a matter of fact have, I understand, fallen short of what you anticipated?-Those appropriationsin-aid are recoveries from pensioners of money which they ought not to have received, which they drew wrongly.

40. Is the fact that they do not amount to as much as you expected just a sort

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Sir HENRY BUNBURY, K.O.B., called in; and examined.


42. This is shown on page 25 of the Revenue Accounts, and also in paragraph 7, page 7. Sir Malcolm, I think that paragraph sets forth the facts with regard to the excess expenditure?-(Sir Malcolm Ramsay.) Yes. The Post Office took a supplementary estimate towards the end of the year, and as members will see from pages 25 and 26 the subheads which the supplementary estimate cover worked out pretty accurately as expected, but on two subheads which were not covered by the supplementary estimate, namely, engineering establishment, subhead I, and superannuations, subhead N, there was a large excess. Those two subheads account for the excess of the total Vote. In the case of the engineering establishment the accounting officer's note shows that there was an abnormal amount of storm repair work towards the end of the year after the supplementary estimate had been prepared, and in the case of superannuations the retirements were abnormally heavy.

43. Would you like to add to that, Sir Henry? (Sir Henry Bunbury.) I think


44. There is no note on the account itself, is there, Sir Malcolm?-(Sir Malcolm Ramsay.) Yes. The note on storm repairs is page 32. The general summary is at pages 25 and 26, and the subheads are given with detailed explanation after that. The engineering establishment subhead is at page 32.

Mr. Gillett.

45. Might we have some more particulars about the storm repairs, and whether an excess of this amount is or is not an unusually heavy figure ?-(Sir Henry Bunbury.) It is a very fluctuating and uncertain item, because it depends entirely on the weather. I might give the honourable member the figures for the last four years, first saying that about five years ago the provision customarily taken was fairly high, and it was then considered too high; and consequently about five years ago the provision made for storm repairs was substantially reduced. In other words, the contingent margin was cut out of the estimate. The figures of actual expenditure are these: in the year 1922-23, £150,000; 1923-24, £117,000; 1924-25, £224,000; 1925-26, £265,000. What happens when there is a serious storm is that engineering gangs are taken off construction work, chiefly local line work which is chargeable to telephone capital, and are put on to repairing the damage; and the effect of that is to reduce the expenditure on telephone capital and increase the expenditure under the Vote. That is a matter which has always givou trouble to the Post Office, because it is impossible to forecast with close accuracy.

Mr. Pethick-Lawrence.

46. At one time I believe there was a proposal to put a good many of these C 3

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wires underground.


Has that been pur

sued at all?-Oh, yes. The great bulk of the additions to telegraph and telephone plant are underground. But

there is no decrease in the amount of overhead plant. In fact the amount of overhead plant is also slowly increasing. Whether a line is put overhead or underground depends actually on a number of circumstances. We do whichever is the

more economical.


47. The deduction from that is that the extension of your underground work does not in fact diminish the storm problem? -No, not at all.

Mr. Pethick-Lawrence.

48. When you say it is a question of estimating the comparative cost, I presume you take into account the cost of repairing in the two cases?-That is so. We take into account first cost and maintenance.

Mr. Briggs.

49. As to the question of gangs, is every care exercised when you are sending a gang to do repair work as to whether the job is a small one or a large one, and the gang is proportionate to the job?-I imagine that is so. I cannot conceive that they do not take a great deal of trouble about that. Of course maintenance gangs work in units. They work as a gang, and cover a fairly wide area.

50. But it has come under one's own experience where a gang has been put on to a job where two men could have done it, and there are about 10 men standing by. I have heard statements to that effect from time to time. The last time they were formally made and

answered was before the Select Committee on the Telephone Service in 1922. At that time a number of such cases was investigated, and the Engineer-in-Chief of the Post Office gave his answer. I do not remember the details, but my inpression is that in so far as there was anything in it, and there was very little in it indeed, it was due to trade demarcations or to the fact that the matter was observed at a moment when under any system you would have a certain number of men standing idle for a short time. My impression is there is extremely little in that point.


Sir Fredric Wise.

51. Have you had excesses in previous years? I think the last one was about 1908 or thereabouts.

Major Salmon.

52. With reference to the answer I understood you to make with regard to placing wires underground instead of overhead, am I correct in understanding that you do not think there is any economy from placing wires underground?-Oh, no. I hope I did not give that impression. It depends on a number of things, of which I think the most important is the number of circuits to be provided say for the next 15 or 20 years. It would not pay you to lay a costly underground duct and cable say for three or four circuits to connect up subscribers to a rural exchange. On the other hand, if you are laying a heavy cable with perhaps 150 or 200 circuits in a fairly densely populated area, it does pay.

53. There is a limit to when it becomes an economic unit?-That is so.

Colonel Vivian Henderson.

54. Have you had any excess in connection with superannuation charges recently apart from the Sutton judgment?--Yes For the last three or four years we find we have overspent the provision for superannuation. In fact we have had rather reluctantly to take special steps to get returns of the number of people who are going to retire in any particular year.

55. Is it not possible, apart from judgments in the Court, to estimate pretty accurately what your charges are going to be? After all, you can always find out people's ages, and who are likely to bo retired?-Pretty accurately, I agree; and even here the difference is less than 2 per cent.

56. Yes, I realise that; but I should have thought this was one of the particular items in which you could probably avoid any error at all, particularly if you have had an error three or four years running, which shows there was probably something wrong with the estimate?-I agree. I think there was something wrong with the estimate.

57. You mean you do not think the excess will continue in the future?-We

3 March, 1927.]


are taking special steps to find out exactly what people are going to retire. Hitherto we have calculated on previous experience, and it has not been entirely reliable, for this reason. In the period from 35 to 45 years ago the Post Office was going through a stage of rapid development, and large numbers of personnel were taken on especially as a result of what are known as the Jubilee concessions of 1887. Those people are now retiring, and it is evident we have not hitherto successfully measured the effect of that. The honourable Member will know too that a civil servant does not retire on his 60th birthday. There is a certain latitude between the ages of 60 and 65.


58. In this year were the retirements abnormally heavy?—I do not quite know

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what is meant by abnormally "; that is the difficulty. It is increasing all the time.

59. You had not some sudden jump in the year under review ?-No, I do not think so. What we failed to measure was the rapidity of the rate of increase.

Major Salmon.

60. Of course it would be to the interests of the individual to retire practically at this period if there is a likelihood of the cost of living going down, because his retiring allowance would be based on a lesser basic figure if that were to occur?-His overriding maximum is higher when the cost of living is higher. I have no doubt that does affect it to an extent.

(Sir Henry Bunbury withdrew.)






61. We have also to consider two quasiexcess Votes, one of which is with regard to the National Library, Scotland, which is dealt with on page 377 of the large book, and paragraph 27 of Sir Malcolm Ramsay's Report, page xiv. The facts are set forth in that paragraph, Sir Malcolm, but probably you will also put them before the Committee in your own words? (Sir Malcolm Ramsay.) I should explain that the endowment income of the National Library, of which the Chairman is now one of the trustees, was sufficient in the full year to meet the current expenses. But it comes in, of course, at intervals, and two of the biggest dividends fall due on the 1st October and 1st April. The Library was transferred to the State on the 26th October, 1925. Four days before the transfer took effect the endowment trustees, a separate body under the Alexander Grant Trust,


handed over £500 out of their accumulated income to the Librarian to meet, as the practice had been, the expenses which would come in the course of payment in the next few months; but owing to a provision in the Act this £500, being accumulated income, had to be handed over as part of the capital endowment, and the trustees were not at liberty to take it in reduction of the current expenses. I challenged the propriety of bringing in as appropriations in aid any part of this £500. The Law Officers of Scotland agreed that the endowment trustees had no power to do what they had done. Therefore the position is that this Vote which Members have before them on page 377 only balances because all or part of this £500 has been appropriated in aid. Strictly speaking that ought not to be used, and in that event there will be an excess on the Vote of some £420. I think that, according to the strict letter of the law, the Committee could insist on C 4

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