My Lords are glad to associate Themselves with the acknowledgment made by the Committee of Public Accounts of the good offices of the Government of the Dominion in regard to the payment of pensions in Canada and the United States, and in regard to the assistance which the Auditor General of Canada and his officers have given in the examination of accounts relating to these payments. They would be glad if the Committee's acknowledgment and Their own might be suitably conveyed to the Government of the Dominion. &c.

I am,

I am directed by the Lords Commissioners of His Majesty's Treasury to refer to paragraphs 33 to 35 of the Second Report of the Committee of Public Accounts, 1926, and to ask that you will be so good as to invite the attention of the Minister of Pensions to the enclosed copy of a letter which They have addressed to the Under Secretary of State for the Dominions.

My Lords have nothing to add to the comments of the Committee since They have already given Their authority for the establishment in Ottawa of a Branch of the Ministry of Pensions, which will in future administer War Pensions to Imperial Pensioners resident in Canada and the United States.

Write to:

Paragraphs 36 and 37.

The Commissioners of Inland Revenue.

Gentlemen,

I am directed by the Lords Commissioners of His Majesty's Treasury to refer to paragraphs 36 and 37 of the Second Report of the Committee of Public Accounts, 1926, and to invite the attention of the Board of Inland Revenue to the following comments.

Paragraph 36: Over-repayment of Excess Profits Duty.

As the Committee point out, it is the recognised rule that losses of revenue due to departmental error should be made good by a charge against voted monies. As soon as the loss of £8,000 now in question was brought to Their notice My Lords directed the charge of this sum to the losses sub-head of the vote for your Department and the insertion of a special note in the Appropriation Account.

I am to request that any future losses of revenue shall be reported to Their Lordships at the earliest possible opportunity.

Paragraph 37: Frauds by Collectors of Income Tax.

The Committee express their concern at the progressive increase in losses arising from the defalcations of Collectors, who are in most cases part-time officials and are appointed by the District Commissioners. The Committee note the view of the Board that supervision is now adequate and that changes introduced into the system of accounts will give less opportunity for error or fraud, but that the position cannot be completely

safeguarded unless the recommendations on this particular point made oy the Royal Commission on Income Tax in 1919 are adopted.

My Lords do not doubt that the observations of the Committee will receive the careful consideration of your Board. I am, &c.

Paragraph 38: Audit of Accounts; State Management Districts.

I am directed by the Lords Commissioners of His Majesty's Treasury to refer to paragraphs 38 and 39 of the Second Report of the Committee of Public Accounts, 1926, regarding the Audit of the Accounts of State Management Districts and I am to ask that you will be good enough to bring to the attention of the State Management Districts Council the comments which the Committee make in regard to the continuance of the audit work by Messrs. Mann, Judd, Gordon and Company. My Lords incline to the view that the time has come when the whole of the audit of these accounts should be performed by the Comptroller and Auditor General, and They would be glad to be informed whether the Council see any objection to this proposal.

My Lords are very sensible of the valuable assistance which Messrs. Mann, Judd, Gordon and Company have given in the past, but They have felt for some time that consideration must be given to the question whether the additional expense incurred in the dual system of audit is still justified.

Write to:

Sir,

I am, &c.

Paragraph 40: Stationery Office Sale Offices.

The Controller,

H.M. Stationery Office.

1 am directed by the Lords Commissioners of His Majesty's Treasury to refer to paragraph 40 of the Second Report of the Committee of Public Accounts 1926, regarding the Stationery Office Sales Offices, and I am to ask that you will be good enough to report as to the possibility of effecting economy in these offices more particularly as regards those at Manchester, Cardiff and Edinburgh where losses in working have regularly been sustained. I am, &c.

Paragraphs 41-44: Post Office Accounts.

The Postmaster General.

Write to:

Sir,

I am directed by the Lords Commissioners of His Majesty's Treasury to refer to paragraphs 41-44 of the Second Report of the Committee of Public Accounts, 1926, in regard to the accounts of the Post Office.

My Lords note the concurrence of the Committee in the arrangements made for the retrospective reduction as from 1st April, 1922, of the interest charges included in the Commercial Accounts of the Post Office in respect of advances from voted monies.

With regard to paragraph 44 in which the Committee deals with the general position of the Telegraph Service, My Lords feel confident that the matter is receiving your constant attention and that They may

expect to receive any proposals which can be made with the object of reducing the losses continually shown on the Telegraph Service, including Press Telegraphy.

I am, &c.

Paragraphs 45-48: Navy Accounts, Sale and Re-Purchase of Surplus Stocks of Explosives.

My Lords note the comments of the Committee in regard to certain transactions relating to T.N.T. and picric acid stocks held by the Disposal and Liquidation Commission. They share the regret of the Committee that losses were occasioned owing to a lack of co-ordination between the Commission and the Admiralty, and They hope that further incidents of the kind may be avoided.

I am directed by the Lords Commissioners of His Majesty's Treasury to refer to paragraphs 49-54 of the Second Report of the Committee of Public Accounts 1926, relating to Army Accounts and to ask that you will be good enough to lay before the Army Council the following comments:

Paragraphs 49-50: Annual Valuation of Stocks.

My Lords have appointed a Committee under the Chairmanship of Lt.-Colonel Sir Assheton Pownall, M.P., of representatives of the three Fighting Services and containing a member with outside experience of commercial methods of stocktaking together with officers of this Board to consider the question of the annual valuation of stocks held by the Navy, the Army and the Air Force. The Committee is actively pursuing its enquiry.

Paragraph 51: Recreation Facilities for Officers.

My Lords will no doubt receive in due course the Council's proposals for raising to fair rental values the rentals charged in respect of property leased to officers' clubs, &c.

Paragraphs 52 and 54: Write-off Losses.

Satisfactory arrangements have now been arrived at between the Treasury and the Service Departments which will ensure that the Treasury is fully informed of the disciplinary action taken.

I am, &c.

Paragraphs 55-64: Air Ministry Accounts.

Write to:-
The Secretary,

Sir,

Air Ministry.

I am directed by the Lords Commissioners of His Majesty's Treasury to refer to paragraphs 55-64 of the Second Report of the Committee of Public Accounts, 1926, relating to Air Accounts, and to ask that you will be so good as to lay before the Air Council the following comments on the Report.

Paragraph 55: Air Estimates.

Arrangements have now been made by which inter-leaved sheets giving statistical and other information similar to that shown in Navy and Army Estimates are inserted in Air Estimates, and it is hoped that additional information will be available in future Estimates.

Paragraphs 56 and 57: Special Advances to Contractors.

66

My Lords think that the rule is now fully understood that the express authority of this Board must be obtained, before a special" advance is made to a contractor at the end of the financial year, under the arrangements summarised in paragraph 54 of the Third Report of the Committee of Public Accounts, 1922, when such an advance is likely to cause an excess either on a Subhead or a Vote; but They desire to place the rule again on record in order that there may be no misapprehension in future, as to the necessity for such authority being sought.

Paragraphs 58-60: Irregular Procedure in Placing a Contract. My Lords regret that, after considering the full evidence given in regard to the placing of a contract for supply of Ferro-silicon in November, 1924, They are bound to concur in the views of the Committee that the administration in regard to this contract was not satisfactory. They readily assent to the view that the officers concerned were endeavouring to supply the public service in the most economical manner possible but They hope that in any similar circumstances in future, closer co-ordination with other departments may be effected.

Paragraph 61 Rents for Encroachment: Iraq.

The subject of the rentals chargeable to tradesmen allowed to establish themselves on encroachments within Royal Air Force cantonment areas has been discussed and settlement reached with your Department. A copy of the correspondence was forwarded to the Public Accounts Committee on the 27th ultimo (S. 30575).

l'aragraphs 62 and 63: Cost of Training Cadets and Apprentices for the

Air Force.

My Lords learn that the proposed transfer from Cranwell to Halton of the Apprentices Wing was carried out last autumn, and that the removal of this establishment from Cranwell is to be followed by the transfer to that station of another unit or units. In these circumstances My Lords suggest that further formal inquiry which has been proposed into the numbers of staff at Halton and Cranwell might usefully be deferred until more experience has been gained of the results of the concentration at Halton, and the policy with regard to Cranwell decided

upon.

They are glad meanwhile to note that the concentration at Halton has been accompanied by a reduction of 197 officers, airmen and civilians. They would invite the Air Council, even during the transitional period, to scrutinise the reductions already made and consider whether they can be carried any further.

Paragraph 64: Costs of Training Establishments.

My Lords have been in correspondence with the Air Ministry in regard to the information to be furnished in inter-leaved pages of estimates in regard to cost of training cadets and apprentices, and They look forward to the presentation in future years of the returns of costs of training in the principal educational establishments. In the meantime, They hope that steps will be taken to secure that adequate accounts of the cost of training are maintained.

I am, &c.

APPENDIX No. 3.

PAPER forwarded by Sir Lionel Earle, K.C.B., K.C.V.O., C.M.G.

OFFICE OF WORKS.

CHINA, JAPAN AND THE FAR EAST GENERALLY.

LIST OF PROPERTIES IN THE CHARGE OF THE BRANCH OF THE
OFFICE OF WORKS AT SHANGHAI.

(Qs. 685-690.)

CHINA.

Amoy.-Consul's House, Assistant's House, Offices, Constables' quarters and gaol (two sites). The British Concession generally.

Canton.-Consul-General's Residence, Vice-Consul's House, Three Assistants' and Constables' quarters and offices. The Yamen and ExRussian Consulate. The British Concession generally.

Changsha.-Consul's House and offices.

Chefoo.-Consul's and Assistants' Houses, Constables' quarters and

gaol.

Chinkiang. Consul's House and offices. The British Concession generally.

Chunking.-Consul's House, Constables' quarters, offices and goal. Foochow.-Consul's and Assistants' Houses, Court room and offices. Hankow.-Consul-General's and Vice-Consul's Houses, Assistants' quarters and offices. The British Concession generally.

Ichang.-Consul's residence and offices.

Kiukiang.-Consul's House, Constable's quarters, gaol and offices. The British Concession generally.

Kiungchow.-Consul's residence, offices, Constable's quarters and gaol. Mukden.-Consul's residence and offices.

Nanking.-Consul-General's and Vice-Consul's Houses and offices. Ningpo.-Consul's residence, offices, Constable's quarters and gaol. Pagoda Anchorage.-Vice-Consul's residence, offices, constable's quarters and gaol (to be sold).

Pekin. Minister's, Counsellor's, two Chinese Secretary's, Commercial Secretary's, Doctor's, Second and Third Secretary's, Consul's, ViceConsul's residences; 12 Students' quarters and mess, two Constables' quarters, offices, church, stables, dispensary, garages, fives court, bowling alley and theatre, &c.

Pei-Tai-Ho.-Minister's bungalow and four other residences.

Shanghai.-Supreme Court House and Consular offices; Residences of Consul-General, Consul, two Vice-Consuls, three Assistants, Chief Clerk and three Office of Works Architects. Quarters for Compradore and Constable. Offices of H.M.O.W. and Naval Intelligence.

Tengyueh.-Site and Consul's House, writers' quarters and offices under construction.