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APPENDIX No. 39.

PAPER forwarded by Mr. G. Stuart Robertson, K.C.

FRIENDLY SOCIETIES REGISTRY.

(1) COMPARISON OF EXPENDITURE ON SALARIES IN 1925-26 (£45,089) WITH 1913-14 (£16,057)-SUB-HEAD A.

(Qs. 5243-5249.)

During this period there was an increase of £29,000 in the expenditure on salaries in spite of a reduction in staff from 180 to 148.

Before the passing of the National Insurance Act in 1911 the number of staff employed was under 40. The sudden expansion in the work of the Office, which was the subject of an exhaustive enquiry in 1913 by a committee appointed by the Treasury, resulted in large additions to the staff, and these consisted entirely of new recruits to the Civil Service, mainly Second Division Clerks, Assistant Clerks and boys, who were therefore paid at the minimum rates of their respective scales. The salaries of 169 of the total staff of 180 in 1913-14 averaged £60 a head. In these circumstances the increased expenditure due to normal increments of salary has obviously been exceptionally heavy. The average salary per head of the 126 members of the staff corresponding to the 169 referred to is now £242 including bonus, showing an increase of roughly £23,000. During the period under consideration there have been only four retirements. There has therefore been no set-off during the period by the retirement of men at or near their maximum and their replacement by men at the minimum, such as normally occurs in the operation of salary scales. This position is likely to continue for some time to come. Moreover, ex-service men are now employed (at higher rates of pay) in place of boys.

Another factor which accounts to some extent for the increase, is the establishment upon uniform scales of salary since 1913-14 of the legal staff who were previously unestablished officers paid at comparatively low rates, and the increase in numbers of the legal staff due to the increase of functions at the Office following the passing of the Industrial Assurance Act, 1923. The additional expenditure as between 1913-14 and 1925-26 due to these causes and to increments and bonus for this legal staff is £6,400.

(2) EXPENDITURE ON TELEGRAMS AND TELEPHONES (£479).

(Qs. 5256-5258.)

The work of the Office, especially since the passing of the Industrial Assurance Act, 1923, involves frequent references to Societies and Insurance Companies on matters which can often be disposed of expeditiously and with economy by telephone. The nature of the work also involves constant references between the various Branches of the Department, not only by the controlling but also by the subordinate staffs. It has therefore been found desirable to instal the telephone in practically every room. The installation reduces correspondence, obviates any system of House Telephones, and reduces the number of messengers employed.

The telephone system necessitates the employment of a whole-time operator and relief operators during leave periods and meal times,

accounting for 60 per cent. of the total charge for telephones. Of the balance about 10 per cent. represents the cost of the service in the Office in Edinburgh.

In comparing the cost of the telephone system with the cost in other small Departments it must be remembered that where the switchboard is operated by a messenger the cost does not appear under the head of telephones but in the Salary Sub-head under messengers. The cost is approximately the same whether a skilled operator or a messenger is employed.

There are in the building in which the Friendly Societies Registry is located six other sections of the Public Service. Some time ago discussion took place as to the possibility of arranging for the switchboard serving the Friendly Societies Registry to act for all the Government Departments in the building, but it appeared doubtful whether economy would result. The question is being re-investigated in conjunction with. the Treasury and Post Office.

APPENDIX No. 40.

PAPER forwarded by Mr. A. E. Watson, C.B.E.

H.M. TREASURY.

JOINT SUBSTITUTION BOARD.

(Q. 1899.)

The Joint Substitution Board is a joint sub-department of the Treasury and Ministry of Labour; its staff (provided on Subhead A ii of Ministry of Labour Vote) consists of 1 Higher Clerical, 4 Clerks and a part-time Chairman of Selection Committees. The supervision is provided by officers of the two Departments.

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(a) From Departments reducing staff, particulars of ex-service men (or ex-service women) temporarily employed who are about to be discharged (excluding industrial staff); and

(b) From Departments in need of temporary staff, particulars of the vacancies requiring to be filled; and to supply to the latter Departments for their consideration names received from the former. Regard has to be had to whether the discharged man is disabled, Overseas or home service; he is entitled to preference in that order; otherwise to suitability.

This system operates in London and the neighbouring counties for posts up to and including Grade I Clerks, and over the whole country for those above that rank or specialised (the vacancies being few); outside that area and the superior posts, the function is performed by the Divisional offices of the Ministry of Labour.

The Joint Substitution Board has nothing to do with creating, or authorising the filling of, vacancies. Unless or until a suitable vacancy occurs, a man's name simply remains on the list of candidates. He gets no pay of course.

APPENDIX No. 41.

COPY of Letter forwarded by Sir Oswyn Murray, K.C.B.

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In reply to Mr. Meiklejohn's letter of the 13th instant, No. S.31015, I am commanded by My Lords Commissioners of the Admiralty to state that they note that the Lords Commissioners of H.M. Treasury sanction payment for extra expenditure occasioned by suspension of work £15,000) and for additional cost of manufacture £10,700 approximately), but they regret that the Treasury take exception to the views expressed in my letter of the 21st May.

With regard to the question of additional expenditure incurred by Contractors during the period of suspension of work referred to in paragraphs 3 and 4 of the letter under reply, My Lords are unable to appreciate the distinction drawn by Their Lordships of the Treasury between claims relating to "acceleration" and those relating to retardation."

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In all questions affecting price one of the essential factors which has always to be considered is that relating to the time by which the Admiralty wish to receive from the Contractor the stores required, and if, after price is fixed, for any reason instructions are issued which have the effect of materially altering the normal time of delivery a new condition is introduced which must necessarily affect and modify the contract price for the goods ordered.

My Lords note that Their Lordships of the Treasury agree that their sanction is not required for the payment of an extra on account of "acceleration "' because "such payment is for work actually done." This, however, is not necessarily the case. It does not follow that additional work is done. Usually acceleration simply necessitates the same amount of work being done in a shorter period at greater expense to the contractor, e.g., if, because an order originally placed for completion in 12 months is subsequently required to be completed in nine months, it is necessary for a contractor to put his staff on overtime, the acceleration extra will consist of the excess cost of overtime rates of pay over ordinary time rates together with extra cost of lighting and any similar expenses. There is no extra work involved, but the Admiralty does, as stated by Their Lordships, receive "a definite consideration for the expenditure," viz., earlier delivery of the stores.

Similarly in the case of "retardation" arranged by a Contractor at the request of the Admiralty, it seems equally clear to My Lords that "definite consideration for the expenditure" is received by the Admiralty just as much as in the case of "acceleration by reason of the fact that, in consequence of the retardation, which almost certainly involves the Contractor in additional expenditure, although not perhaps to the same marked and readily identifiable degree as in an acceleration order, the Contractors are able to embody in the stores manufactured modifications which it is desirable should be so embodied. Seeing, therefore,

that consideration is received by the Admiralty for any additional expenditure incurred in respect of "retardation" or in respect of "acceleration," My Lords Commissioners of the Admiralty are unable to understand why it should be held that the sanction of the Lords Commissioners of H.M. Treasury is required in the former but is not required in the latter case.

With regard to the latter part of paragraph 4, My Lords note that whilst Their Lordships of the Treasury have no objection to the inclusion in the Conditions of Contract of a clause which, in specified circumstances, constitutes the Director of Contracts arbitrator in regard to the amount of the revised contractual payment to be made by the Admiralty, They consider that, in cases in which suspension of work is involved, they should be consulted before the Admiralty are committed to the payment of any particular amount.

The acceptance of this view by the Admiralty would necessarily involve the revision of the clause in question and probably of other clauses in Admiralty Contracts which confer similar powers on the Director of Contracts and Heads of other Admiralty Departments, and it is very probable that Contractors would hesitate to accept the Head of an Admiralty Department as the final assessor of disputed "extras" in such cases if the decision of such an assessor was not to be unfettered but was subject to the sanction of the Treasury.

As regards paragraph 6 of the letter under reply, My Lords would point out that it is essential, if advantage is to be taken from time to time of the discoveries of science and the improvements due to inventions and experiments, that, when considered desirable, the necessary modifications shall be made in the designs of ships and stores after orders have been placed and, as indicated in Admiralty letter of the 21st ultimo (No. C.F.2, C.I.1445), such modifications must inevitably, at times, render useless components which have been properly provided in accordance with the original designs.

The procedure hitherto followed by the Admiralty in such cases is stated in paragraphs 8 to 12 of the letter of this Department dated the 21st ultimo referred to above.

In order that a portion of the extra, which is payable as a definite contractual obligation, in respect of such modifications, under the clause referred to in paragraph 4 of the letter under reply, might be identified as being for components rendered useless a large amount of correspondence and enquiry would be necessary between Admiralty Departments between the Admiralty and Contractors, and finally, in cases in which the amounts involved were £50 or over, between the Admiralty and the Treasury.

The introduction, therefore, of the practice indicated by Their Lordships would probably lead to troublesome complications while the advantages to be gained are not apparent, and My Lords therefore deprecate any departure from the procedure which has hitherto been followed.

The Secretary,

H. M. Treasury.

I am, Sir,
Your obedient Servant,
(Sgd.) O. MURRAY.

APPENDIX No. 42.

COPY of Correspondence forwarded by Mr. H. E. Fass, O.B.E.

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(1) I am commanded by My Lerds Commissioners of the Admiralty to refer to your letter of 7th June, S.9993, and to state for the information of the Lords Commissioners of H.M. Treasury that as formal approval has now been given by the Cabinet to the building of four new capital ships, it is proposed to negotiate without delay the contracts for the construction of the ships in question. I am therefore to request that you will move the Lords Commissioners to sanction the proposals laid before them in letter of 20th May, C.P. Br.8/10839, as to the form of contract for the building of the Hulls and machinery which it is desired to adopt.

(2) As regards the armament I am to state that the question of placing orders for the gun mountings, guns and armour required for the new ships has been under careful consideration, and the form of contract to be adopted has been the subject of discussions with the firms concerned.

(3) The case of the gun mountings 16 inch and 6 inch is exceptional for the reason that they are of an entirely new design, the details of which are not yet settled nor is the specification completed. Messrs. Vickers and Messrs. Armstrong have each been entrusted with the development of the design of one type of mounting, but both firms will in all probability be required to manufacture both types as one could not undertake all the mountings in the time available. As neither of the designs is yet completed, neither firm has sufficient information on which to tender for the mountings the other firm is designing. If, therefore orders are not placed until it is is possible to obtain detailed tenders to approved drawings and specifications the commencement of work would be delayed for at least six months, with the result that expenditure in following years would be increased and completion of the ships would be delayed. Further it is of vital importance to get the first mountings of each type completed for its trials, as until these are carried out, the efficiency of the design cannot be assured, and the experience gained with the first trial mountings has to be embodied in all the remainder. My Lords desire therefore to emphasise the necessity of placing the orders for the whole of the gun mountings at once without waiting for formal tenders, as this course would enable both firms to start collecting material and making other preparations as soon as the drawings begin to be available.

(4) Similarly in regard to heavy guns it is most essential that orders for two should be placed at once. As regards armour My Lords propose that orders for all the armour required should be placed on the 1st October next, by which date it is expected that definite particulars will be available.

(5) With regard to the form of contract which should be adopted for the manufacture of the guns, gun mountings and armour, My Lords have come to the conclusion that for this type of manufacture it would be

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