21 June, 1927.]

Major Salmon.

6316. What is the cost of the Auxiliary Air Force, Vote 7?-There are four Subheads. Do you wish to have the total?

6317. What is the total cost of the Auxiliary Air Force? I do not mean the total for headquarters, but what is the total cost to the State for maintaining an Auxiliary Air Force?-I am afraid I that. There are, of course, charges relating to the Auxiliary Air Force that fall on other Votes. I do not think there would be any charges that would be very heavy.

cannot answer

6318. When you give us the other particulars which you promised will you be able to give us that figure?-I will see if I can produce it. It cannot purport to be an exact costed figure, but an estimate.

6319. You will give an estimate of what the Auxiliary Air Force costs this country?—Yes. You want it for the

year of account, I presume?

6230. Yes.* With reference to the observation of Mr. Gillett as to the Cairo to Karachi service, there was a contract I believe for operating a service between Iraq and India which was to travel across Persian territory without the permission of the Persian Government?-I would rather not answer that question in great detail, because it is rather a Foreign Office matter. It is a matter of some delicacy, but in fact it may be stated that everybody understood the position to be that an agreement had been reached with Persia. It turned out in the event that there had been reservations in the mind of the Persian Government in regard to the obtaining of sanction from their Parliament for certain details.

6321. It cost us a fair sum of money to install this service, did it not?-Very little actual expenditure was incurred in Persia. Practically none was incurred by us; a little was incurred by Imperial Airways, I think. The matter is still not settled. The position was that the agree ment was for a fortnightly service over the whole route, and that has for the time being, owing to the Persian difficulty, been converted into a weekly service over half the route, as far as Basra. Substantially the material and personnel provided by Imperial Airways. and by the Air Ministry are being used, only they are being used on doubling half of the route.

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* See Appendix 54.

[Continued.

6323. As I understand you to say, the reason that the arrangement was entered into with the Imperial Airways was because there was a misunderstanding as to what the arrangement was with Persia ?--There was a misunderstanding as to what Persia had agreed to. 6324. Was not that agreement in writing, or was it merely a verbal agreement?-We are getting rather diplomatic details now. There is, I think, a document-I do not say it was actually signed by the Persian Government-placing on record what they agreed to.

into

men

6327. What are the number of trained by those clubs, or qualified to fly? Have you any idea?—I do not think I have any figures with me. They are comparatively small in number. I think there are half-a-dozen recognised clubs. If one of them turns out 20 or 30 qualified pupils in the course of a year I think that is somewhere about the figure. They are not large figures.

6328. Do the figures that they give you include members who are members of the Royal Air Force itself, or are the members of the flying club additional to the qualified flying men in the Royal Air Force? The qualified flying men in the flying clubs are additional but, it may be, I am rather exaggerating the figures. They are quite small in number. There is nothing on a really large scale.

S2

21 June, 1927.]

6329. Does the subsidy work out at a big figure per capita? On the one hand you say you subsidise flying clubs, and on the other hand I understand you to say that the number of members is very small. The figure of the subsidy as it works out per capita might be very high? -It is certainly not very high.-(Mr. Fass.) It is very much cheaper to provide a pilot through a subsidy to the flying clubs than it is to send them to the Air Force to train.-(Sir Walter Nicholson.) It is infinitely cheaper. But then you do not get the same article. Obviously, I do not think it is possible to give, so to say, a costed figure per head of pilots produced from these flying clubs; but even if you did work it out, it would come to a figure that was ridiculously low compared with the actual cost of producing a Service pilot, or anything of that sort. Of course, it is understood that these pilots are under no obligation to the Air Ministry. They do not enter into any undertaking to join the Air Force Reserve. In fact, we hope and believe that if these clubs go on growing they will in fact provide a number of trained personnel who will come forward in the event of emergency.

6330. Therefore it is economical to encourage flying clubs ?-Yes, we believe it to be a legitimate expenditure of money within reasonable limits. We are not prepared to put up very much money for it, and even if we were, the Treasury would discourage us from doing so.

6331. If, on the other hand, you could prove that it was so much cheaper and you could get efficient flying men, though not of as high efficiency as in the Air Force, it might be a means of helping the Air Ministry to get more money to spend? -I do not think we contemplate spending much money on this Vote. It is a little extra reserve-a potential or hypothetical reserve-in the background. But for the general encouragement of this flying sport in the country it is worth putting up a modest sum.

[Continued.

trained flying Air Force pilots whether in Active Service or in the Reserve.

Sir Fredric Wise.

6333. What is your number of reserve ex-Service pilots?-Those are figures I am going to put in for Major Salmon.

Major Salmon.] The figures you were going to put in for me were with regard to the short service officers.

Sir Fredric Wise.

6334. I should like to know the number of reserve ex-Service pilots and the number of direct entry pilots?—I have those figures. On the 1st May last the ex-Service reserve pilots, that is to say Class A, were 559, and the direct entry pilots were 71.

6335. Can you tell me the number of reserve skilled mechanics?-I have not any figures for the skilled mechanics.

6336. Could you put in that figure?— Yes.*

6337. The Didsbury Station was a civil station. Was it not taken over by the military? I do not think Didsbury is in use at all at the present time. That is my recollection. For some time we hoped that the Manchester Corporation would take over Didsbury as a civil aerodrome.

6338. You see it says on page 31 that £66,000 was paid in settlement of a reinstatement claim at Didsbury?—That is a War reinstatement claim.

6339. That is finished?—Yes.

6340. With regard to the subsidy question which was raised by Mr. Gillett, there was an alteration in the original subsidy, was there not? You remember we took that matter up in the Estimates Committee?-Yes, and you, Sir Fredric, referred to a 20 per cent. variation. I have searched all round the Air Ministry for someone who had heard of a 20 per cent. variation, and I could not find anyone. I am sorry, but I still do not know what you refer to.

6341. I wish you would look up the alteration? I am perfectly clear in my mind what the alteration was. The alteration was an alteration of a contract of 1,000,000 miles in a year into a minimum requirement of 425,000,000 horse-power miles. That is to say, you multiply the agreed horse-power of a machine into the mileage.

* See Appendix 50.

21 June, 1927.]

6342. That is right. I make it to be an alteration of 17 per cent. ?-It may be a variation of 80 per cent. What I mean is, you cannot tell what it is.

6343. Following on what Mr. Gillett said, it is an alteration to the detriment of the taxpayer?-The Secretary of State submitted to Parliament in a Paper that he presented that it was to the advantage of civil aviation and the advancement of air transport, and I do not see how you can say that it is to the disadvantage of the taxpayer.

6344. That is not my point. My point is that if you work it out it comes to a variation of 17 per cent. I agree that I said 20 per cent., but I was not far out. I make it an actual deficiency of 17 per cent. ?-But on what date? Does the Honourable Member realise that under our original agreement, if Imperial Airways had chosen to fly their 1,000,000 miles with aeroplanes of 100 horse-power there would be in the change an advantage to the taxpayer of 325 per cent.? Imperial Airways were at liberty to do so under their original agreement.

6345. But it was altered. The original agreement was altered to horse-power miles per annum?-The alteration was agreed by the two parties, and both parties considered it to their advantage to make the alteration.

6346. I am not saying that at all. My only point was that it was altered, and as I make it out it was altered to the extent of 17 per cent. to the detriment of the taxpayer?-I do not know how you arrive at the 17 per cent.

Do you

mean in the first year after the alteration that only 830,000 horse-power miles were flown? That may very well be so.

6347. It is an alteration from miles to horse-power miles. That is the difference?-But there cannot be any fixed arithmetical change in consequence of that alteration.

Chairman.

6438. Sir Walter, these things, if I remember rightly, were set forth in White Papers covering the agreements and were submitted to Parliament ?

Yes.

6349. Surely the point was that under the amended agreement and this is probably what Sir Fredric means when he refers to the detriment to the taxpayer-it was possible for Imperial Airways to earn more under the amended

61421

[Continued.

agreement than they could out of the agreement originally in force. Is that the state of the facts?-Oh, no, that is not so. The total figure of the subsidy was quite unaltered. It was simply tho conditions of the subsidy that were altered.

6350. Did they not complain of the terms of their earlier agreement ?-They said: "We are, in accordance with the encouragement that you are offering us, hoping to develop two- and three-engined machines as being valuable for the advancement of air transport, and we are contemplating buying such machines and developing in that way; but when we come to look at the money involved it cannot pay us to do so under the existing terms of the agreement. On the contrary, it pays us under the existing terms of the agreement to decrease the engine power, and speaking as commercial men simply responsible to our shareholders it would become our duty to decrease the horse-power rather than to increase it." But both parties agreed that that was not in accordance with the general object of the agreement, which was to develop a type of aircraft which seemed likely to prove, without subsidy, the most paying proposition eventually for air transport.

6351. I remember reading the White Papers at the time. It comes to this in practice, does it not, that they can earn the subsidy on a lower actual mileage under the amended agreement?—Yes, provided they fly with higher powered machines with an average of 425-horsepower.

Sir Fredric Wise.] In order to muddle a person like myself they have put it into horse-power miles instead of leaving it in miles.

Chairman.

6352. I think, Sir Fredric, you were pursuing a perfectly proper point, if I may say so. If I remember rightly, there was dissatisfaction with the original arrangement on the part of the Imperial Airways? Yes, and there was dissatisfaction on our part too when we realised -possibly we ought to have realised it earlier that the original agreement required no minimum in horsepower miles. We realised that by decreasing the power of their aircraftwhich is the last thing we wished them to do in the broad interests of civil S 3

21 June, 1927.]

air transport-they could actually save money for their shareholders and still comply with their agreement.

Sir Fredric Wise.] To the detriment of the taxpayer to the extent of 17 per cent.

Chairman.] That would hardly be so strong a point. I was only concerned in bringing out the nature of the variation. That is the essential point before the Committee.

Sir Fredric Wise.

6353. I notice there is a reduction in Vote 11. Is that a real reduction?-Do you mean a reduction in the grants?

6354. Yes. I think that is a real reduction. The expenditure is £139,000 as against a grant of £144,000.

Major Salmon.] When we hear about a reduction, I should like to understand what is the position with regard to Subhead A of Vote 10, page 34. The grant there was for £303,000, and the expenditure was £313,000. The expenditure was £10,000 more than the grant.

Chairman.] That is explained in the note opposite. The note says that there was a higher cost of living bonus for six months of the year, and there were unforeseen increases in staff.

Major Salmon.

6355. It says "unforseen increases of staff." That is how expenditure in administration goes up. It goes up by

increases of staff?-Vote 10 is a Vote which is presented in very great detail; practically every penny of it is accounted for in the Estimates by the salaries of individuals, and so on. Every salary, broadly speaking, in that Vote 18 approved by the Treasury; every variation of salary has to be authorised by the Treasury; and every addition has to be authorised by the Treasury. We find in practice that small variations down and up on that Vote tend to cancel out. You will find in fact that on that Vote as a whole the actual expenditure only differed by £821 from to total provided-which I submit is an almost insignificant variation. The fact that there are variations upward on one Subhead and downward on another is, I suggest, not of prime consequence.

Chairman.] We will now take the remainder of the account which consists of the various Papers.

Mr. Briggs.

[Continued.

Is

6356. On page 54 there is a reference to the accommodation at Hinaidi. that ever going to be finished with? On this occasion I see there is an expenditure higher than the grant?-It is very trifling.

6357. It is trifling in itself, but the total expenditure is not trifling. The total expenditure is over £500,000?-1 am not suggesting it is trifling in the total. I am suggesting that in the year of account the expenditure was trifling.

6358. What I should like to know is, shall we see it in next years' account?I think not.

6359. Is it going to be finished?-Certainly. There will be nothing but the merest trifle in next year's account.

18

6360. I do not know whether it is in order to ask you whether you are well pleased with the results of the expenditure?-Hinaidi as a cantonment reasonably satisfactory. It is admittedly rather a makeshift, and if we contemplated being in Iraq for the next three centuries we should certainly wish to have a finer cantonment.

6361. Item 12 on page 62 refers to deficiencies in stores at a home depot ?-(Sir Malcolm Ramsuy.) That was explained at great length to the Committee last year, and again last week I made a statement on the subject. It is simply a book entry writing off stores which were wrongly written on five years before.

6362. I see. There is one question, however, I should like to ask on it. Apparently this error was due to the markings on these cases in some way or other being confused with the quantities? -This was all explained at great length last year. Briefly the explanation is this. The tickets outside the bales, which professed to show the quantities, e.g., 1,000 yards, were incorrect. The bales were very large and they could not be opened to count them at the time. They added up the quantities given on the tickets and they found they were in excess of what they expected. Later, when they had time they opened the bales and found the tickets outside were all wrong and that the quantities really corresponded with what they had expected to find five years before.

21 June, 1927.]

6363. Then I will not pursue the matter in that direction, authough of course there are points one might raise. But I should like to ask this. On what markings were the goods paid for? Was that question asked on the last occasion ?-They were stores dumped on the Air Ministry on demobilisation from various units, and the people in the units had marked the contents wrongly. They were not paid for on the markings at all.

6364. They were not paid for on the markings. But the stocktaking was based on the markings. Therefore it would be reasonable for one to assume they were paid for on the markings?No, they had been paid for long before. These were bales made up in the various units.

6365. The subject has been dealt with before, I am told, but you did say just now that the confusion arose because the markings showed 1,000 yards?—That was only an illustration.

6366. Yes, I understood that. The markings you say misled them. When they came to pay for them they thought there were not 1,000 yards. The markings on the original bales you say were 1,000 yards?-(Mr. Watson.) They were not the original bales. (Sir Malcolm Ramsay.) They were bales brought into store from the units. They were not the original bales delivered by the manufac

turers.

6367. They were not the manufacturers' markings?-No, they were the markings of the units, and they were all

wrong.

Major Salmon.

6368. I notice under Vote 10 the Air Ministry show a decrease of £74,000 on last year's total. That is referred to in a memorandum which the Secretary of State for Air has given accompanying the Estimates. The memorandum says: "This result has been obtained by the closest scrutiny of the provision under each Subhead of the Vote." I should like to know what is the Subhead of the Vote to which this £74,000 refers. On the one hand you saved £74,000, but has it not been absorbed by transferring it to other Subheads?-(Sir Walter Nicholson.) I think £30,000 of it, speaking

61421

[Continued.

from memory, is a real decrease, and the remainder is transferred.

6369. So that the real saving is £30,000 instead of £74,000?-I am not sure that that is a complete statement of the facts, but it is something like that. For instance, the Middle East Vote is charged with the audit staff, and that is an item of £20,000 right away.

6370. Therefore the net result is not a saving of £74,000?-No, I do not think it is suggested it is.

66

6371. It says a decrease of £74,000?(Mr. Fass.) It says decrease "; it does not say saving."

66

6372. But a decrease means a saving? -(Sir Walter Nicholson.) But surely this is a perfectly straightforward statement. It is perfectly true when it says "This result has been obtained by the closest scrutiny of the provision under each Subhead of the Vote "-to bring it down by the £30,000, assuming I am right in that figure-"supplemented by a variation in the method of showing allowances (to conform with the practice of Army Estimates) and by increased appropriations in aid, mainly in respect of the repayment by the Middle East Department of the cost of the audit staff in Iraq and Palestine."

6373. It is true there is a decrease in the Estimate on this Vote only, but not on the total ?-On the total Air Estimates there was a decrease of £450,000.

6374. On this particular Vote there has been a decrease of £74,000 on the one hand, but as a matter of fact you have to take away from that £74,000 certain other items which reduced that decrease?-There is a certain amount that goes to Vote 2 and there is a certain amount that goes to the Middle East Vote.

6375. And the net result is a decrease of £30,000 instead of a decrease of £74,000 ?-I must repeat that it is something like £30,000 to the best of my recollection.

Sir Robert Hamilton.

6376. Can you tell me if any decision has been come to with regard to the Cranwell Railway ?-I think that was dealt with last time. It is being run only for freight now. The passenger service has been given up. We are relying on motor 'buses now for the passenger service.

S 4