Army (Ordnance Factories) (Excess), 1920–21.

Orders of the Day — REPORT [20th March.] – in the House of Commons on 23rd March 1922.

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Motion made, and Question proposed, That a sum, not exceeding £1,040,172 6s. 4d., be granted to His Majesty, to make good Excesses on the Grant for the Expense of the Ordnance Factories for the year ended on the 31st day of March, 1921.

Photo of Lieut-Colonel George Stanley Lieut-Colonel George Stanley , Preston

This Vote also has been before the Public Accounts Committee and has been approved by them, and is, therefore, presented to this Committee. It is presented as a result of losses on the ordnance factories at Woolwich and Waltham Abbey. The normal rule at the ordnance factories is that we do not put any manufacturing work in hand without a definite order, and, therefore, in most years the expenditure is counterbalanced by the receipts, except that we have a token Vote of £100 in order to bring the account before this House. This rule was not applied in the year 1920–21. I must go back to the time of the Armistice to explain the reason for that. There were then a large number of employés at Woolwich, far in excess of the normal peace establishment. There were two alternatives before the Government at that time, either that they should discharge all the employés or else that they should endeavour to obtain alternative work. It was not at that moment possible to obtain alternative work to any large extent for definite orders, and, therefore, it was decided that, in order to retain as many employés a possible, and to prevent us putting more than was necessary on to the unemployment grant, they should adopt some form of work which they thought would result in being able to balance their expenditure by the sale of the goods manufactured. It was decided that they should embark on building locomotives, and a hundred were ordered. The work was undertaken, and is still not quite completed, but I am afraid that up to now there are no purchasers for these locomotives. I am assured that they are extremely well manufactured, and we did our best to sell what were ready during last year, but without success. That results in an Excess Vote for the year 1920–21.

There have been some other factors which have added to this Vote. A certain work which was undertaken for a definite order, but at competitive prices, was not able to be manufactured without a loss, and in addition to that there was at Waltham Abbey a complete cessation of orders. That factory was devoted entirely to the manufacture of propellers, and as soon as the Armistice came all manufacture was ceased. In order to keep on as large a staff as possible, labour was largely diverted to internal factory services, which could not, of course, be placed against any manufacturing order. There is one other point that arises on this Vote. There is, and has been for the last 30 years, what is called a Suspense Account. That arises in this way. Our financial year ending, as it does, on the 31st March, it is quite possible that in one week you may have a certain amount of wages which have been earned but not paid. If the 1st April, for instance, happens to be on a Thursday, there *are wages that have been earned during the first three days of the week, which, of course, are not paid till the Friday or Saturday, and strictly speaking the money that ought to be devoted to that purpose should be surrendered to the Treasury on the 31st March. The obvious inconvenience of that course was recognised 30 years ago, and it was decided to have what is called a Suspense Account, so that this money should not be surrendered, but could be devoted to the purpose for which it was originally intended without a further Vote of this House. That is, of course, not the same amount at the end of each year, and the result in 1920–21 gave a net debit balance on the adjustment of the account of £130,000 odd. There were further losses incurred during that year. There was a loss on the sale of materials, entirely due to the sale of acetone. That is one of the ingredients in the manufacture of propellers. There was naturally a large supply of it at the time of the Armistice, and that had to be sold, and it was sold at a loss. Then there was a loss on the canteen trading. There had been that loss during the time before the factories returned under the War Office, and as soon as it was discovered steps were taken to counteract that, and there has been no loss since.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

Will the hon. and gallant Member add to his statement an explanation of what the "other work" includes, in addition to locomotive engines?

Photo of Lieut-Colonel George Stanley Lieut-Colonel George Stanley , Preston

There was a certain amount of general work for the Ministry of Food, some for the Post Office, some for the Mint, and some for the railways, including the repair of wagons, and on certain of the railway work we had a profit.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I beg to move to reduce the Vote by £100.

This Vote, I think, will require a little more examination than the Vote which the Committee has just passed. It is the result of an interesting experiment by the State in undertaking private work, and therefore I issue a warning note to any of my Labour friends who followed me into the Lobby on the last occasion that they had better carefully note my remarks this time to see whether they feel justified or not in according me their support on this occasion when we go into the? Lobby. What this Department did was that they undertook to manufacture 100 locomotive engines. I congratulate my hon. and gallant Friend on his admirable incursion into the realms of commercial advertising, because he pictured to us in most attractive terms what splendid engines they were, and how admirably they could be adapted for industrial operations if he could only find a purchaser. In so far as I know anything about these particular engines, I will gladly add my testimony to them, and let us hope that by the joint efforts of the hon. and gallant Gentleman and myself these engines will speedily go off the stocks for commercial use at a proper commercial price. The complaint we are entitled to make against the Government in regard to this Vote is that, having decided from very good motives, namely, to prevent a sudden throwing of a large body of men on to the labour market—although, if my recollection be correct, there was very little lack of demand for labour at the time; however, the motive was quite a good one—they went into the work of making engines, and doing general engineering and repairing and other work for all Departments of His Majesty's Service. They did it for the railways, which were then under the control of the Government, and for the Post Office, and if anybody would give them an order they were prepared to take on the job.

The net result of that was a loss to the State of £1,500,000, made up by some interesting items which will be found in the White Paper. The realised loss on orders at firm prices—that is, competitive prices—was, in round figures, £130,000. But at Waltham Abbey they also went in for a capital expenditure, presumably, as it was not chargeable to manufacture, of £154,000. They also went into the market and sold material. There they succeeded in making a loss of no less than £108,000. I should have thought they might have got much nearer squaring their canteen accounts than they did, but they lost £50,000 on their canteen fund. That is a very serious loss to make merely upon canteen trading, because if there be one thing that has shown a profit during the last four or five years, it has been the canteen departments. I think there has been a surplus of about 7 to 10 millions shown in the canteen accounts, but when we come to this special form of industrial activity by the Government, they lost on their canteens no less than £49,820, and, to wind up, there is a net debit balance of £130,319. I think I am justified, on the facts disclosed in this White Paper, in asking the Committee once again to mark its disapproval of the way the Government manage their business, by voting with me for the reduction I move of £100.

There is one point I omitted in my general lecture on the last Vote, which I think I might add now. It shows that the War Office has been exceptionally blameworthy for this reason. The Army and the Navy—I do not know whether the Air Force comes into it, but certainly the Army and the Navy are entitled, under special regulations, where they have saved money on one account, to put it to another account where they have lost money—that is, where they have overspent—and they are entitled to square their accounts in that way without coming to the House. But they have to come to the House—and this is my charge against them on the year 1920–21—whenever the total expenditure for the year has exceeded that provided in the Estimate. The other Departments have got to come here anyhow, but the War Office and the Admiralty are only brought to account when their total expenditure has exceeded the total amount granted to them by this House in the Estimates which are given for authorising their expenses. Therefore, there is that little addition to their sinfulness, to which I draw the attention of the Committee in moving a reduction.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

We ought really to go a little bit further into these dealings with locomotives. We have here an Army Vote in which £1,000,000 is going to be devoted, not to Army purposes, but to Poor Law outdoor relief-and nothing else, at a time when the Secretary of State has told us that the British Army is being reduced to one division, and one cavalry division.

Photo of Mr John Whitley Mr John Whitley , Halifax

I must remind the hon. Gentleman that these transactions have been completed before the 31st March, and brought into the account by the 31st March, 1921.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

I submit that we are entitled to discuss the figures of this Vote, and the figures include £1,000,000 devoted to the manufacture of locomotives, which have nothing whatever to do with Army administration. They were manufactured purely to give outdoor relief to men who would otherwise come either on Votes of the Government or of local authorities; and this has been camouflaged in the form of an Army Vote at a time when the Army is already being starved for money. And mark this well! The Financial Secretary, and the right hon. Gentleman who spoke last, have advertised these locomotives, as locomotives which are undoubtedly very fine and beautiful. But I would ask them to bear in mind that there have been large armament firms in this country making locomotives since the Armistice. The experience of these armament firms has been a very disappointing experience indeed. The manufacture of a locomotive is not a thing that any man can undertake in a hurry. You cannot easily turn over works that have been making guns and munitions, tanks, and things of that sort, to the making of locomotives. Therefore, do not let hon. Members think that because these locomotives are completed and painted in the shops we have finished with the expense of them. Inexperienced builders do not in the very least know how locomotives have got to be made and before they can make them work satisfactorily in actual service they may have to be entirely reconstructed.

The second point is this, that in this country already there are scores of army locomotives, locomotives made for use in France, by what we called the R.O.D., main line locomotives of powerful design, and, I believe, first-rate locomotives in every way. And I say there are scores of these in the Government's possession, which cannot be sold and which are lying rusting in the sidings up and down this country at the present day. Under these conditions does the Government think it right in order to provide work for workmen at Woolwich Arsenal, in order to, keep these men off Poor Law relief or being on unemployment insurance, to start this building of locomotives? I should like to ask the hon. and gallant Gentleman one other point about these locomotives. I see a hundred of them are put down on the Vote with the sum of £582,000 standing opposite to them. Do we understand that these locomotives have cost to manufacture at Woolwich Arsenal something in the neighbourhood of £5,000 apiece? It seems to me that there is a good deal more behind this than what the House has been informed of. It looks as if these locomotives have been built for £5,800 odd, while, as a matter of fact, we know perfectly well that locomotives built under conditions such as this must cost greatly in excess of that figure and in excess of what locomotives would cost built in a proper engineering establishment. I do hope, therefore, that we shall have some real explanation as to whether this £5,000 odd is just the loss as compared with the valuation, or whether it really does represent any considerable part of the real cost. But what I really wish to say is this: That I do protest, and I trust the Committee will protest also, against charging outdoor relief on an Army Vote at a time when the Army is being starved.

10.0.P.M.

Photo of Mr Arthur Hayday Mr Arthur Hayday , Nottingham West

I rise to speak upon this matter from quite a different point of view to that which has been submitted by the right hon. Member for Peebles (Sir D. Maclean) and the hon. Member for Mossley (Mr. Hopkinson). We must first of all remember that at the apex of the activities at Woolwich Arsenal there were employed there something like 60,000 workpeople. That was during the period covered by this Vote. Towards the end of 1920 there was a request made that some alternative work might be provided for the purpose of stopping the sudden discharge of something approaching 30,000 of the men. If that alternative work was provided, as it was in part, by the erection of these locomotives, then I say it was a valuable and useful work to undertake. It may appear that there has been some loss, but the alternative was the dismissal of a large number of workpeople in one area, and that area not a very large one either. It is absurd to say that out of that very large number of men that the Arsenal had not at its disposal plant and efficient mechanics who wore equally able with anybody else to erect efficient locomotives. I can imagine that if the cost in that direction was a little higher than anywhere else it would be because of the establishment charges, and that, to my mind, would prevent Woolwich Arsenal entering into the competitive market on equal terms with a private undertaking. I view with alarm the continuous discharges that have taken place at Woolwich. You may call it some form of casing burdens that would have fallen upon the boards of guardians in the Woolwich area if you like, but what is the present position?

It is that over 60,000 men were employed, and that that number has been reduced to 10,000, which means again that over 50,000 men are already drawing some form of unemployment pay or relief from Woolwich and in its immediate neighbouring authorities, and we are told that these discharges must continue. Rather than make more dismissals, as my hon. Friend suggested, what has been done was to spread the dismissals over a longer period so as to lighten the burden, and the putting of workpeople into a state almost of panic. If you had not entered upon this work, although you may have a loss on the manufacture of the locomotives, and in their ultimate sale, it is possible that you might have broken down the Poor Law machinery and so added to the burden of unemployment payments. We would have been faced with a much graver situation had not this provision been made.

Photo of Mr Arthur Hayday Mr Arthur Hayday , Nottingham West

I well remember the matter being discussed at the time and the Government and the War Office being urged to carry out some form of alternative work. I am sure that under the same circumstances in competition work they have been able, with fair success, to undertake competitive work—

Photo of Mr Arthur Hayday Mr Arthur Hayday , Nottingham West

The hon. and gallant Gentleman in charge of this Vote will, no doubt, be able to explain, because I happened to be connected with the Whitley Council dealing with the Ordnance Depots under the War Office. I know that month by month these matters are mentioned to us by way of information, because we have been most anxious on the Whitley Council to see to what extent alternative work could be undertaken by the great Ordnance Departments under the War Office. We have been informed that certain work has been competed for in the open market, but by reason of a huge establishment such as Woolwich the necessary overhead charges have to be considered, and that burden has placed upon the Department in competition with outside firms a heavy handicap.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

It does not com pete with private firms.

Photo of Mr Arthur Hayday Mr Arthur Hayday , Nottingham West

It does compete, and it has been successful in competition with outside people. These two items, locomotives and other work, amount to a total cost of £850,000, and that expenditure has been the means of preventing mass dismissals from the Woolwich Arsenal, and therefore we have not sufficient grounds to impeach the Department to the extent which some hon. Members wish.

Colonel LAMBERT WARD:

The War Office cannot be congratulated on the re-transference of these ordnance factories from the Ministry of Munitions, and I do not think they can be congratulated on the result of this particular year's trading. I wish to call attention to a significant paragraph which appears further down on the first page, which is to the effect that work taken at competitive prices resulted in a loss. Does the Committee fully understand what that means? It means that in the case of work taken on by these Government factories it is costing the taxpayers more than it would do if the same work was done by private enterprise. We have just heard that the reason for that was the gigantic establishment and overhead expenses which Woolwich had to pay. Private firms have overhead and establishment expenses, and in addition to that they are compelled to find interest on capital, an obligation from which Government factories are absolved. There is also a sentence referring to the staff at Waltham Abbey which reads: Labour was largely diverted to internal factory services. That might mean anything. Docs it mean that some men were set to work shovelling sand into a cart, and other men came to shovel it out? I see that the loss amounts to £154,000, so I suppose they may be congratulated that the result of their year's trading is better than it was at Woolwich where they lost £582,000. There is also a loss on canteen trade. That means that not only were the Arsenal competing unfairly with the local tradespeople, but that the latter, as taxpayers, were compelled to make good the loss on trading incurred by their competitors. That is the most unfair item in the whole of this Excess Vote. For these reasons I shall have much pleasure in supporting the reduction of this Vote.

Photo of Mr Joseph Johnstone Mr Joseph Johnstone , Renfrewshire Eastern

It has been made quite clear that the ordnance factory at Woolwich cannot produce the goods they manufacture at anything approaching a competitive price. We have not yet arrived at the full loss upon the manufacture of these locomotives, because they are not all finished, and the work will have to go on. I sympathise with the view which has been expressed in regard to the hardship of discharging a great body of men from Woolwich at the conclusion of the War, and I think the Government were quite justified in trying to seek work whereby those men could be employed. I should like to inquire if there was anything to indicate that a ready sale would be found for locomotives of this kind. Were any inquiries made as to whether there was any demand for those locomotives, or did the Government rush into the manufacture of 100 locomotives blindly and baldheadedly, without any consideration as to whether there was a market for them. This is a most disquieting circumstance, and I hope that as a result of this uneconomic experiment at Woolwich that an end will be put to this kind of trading, and that these factories will confine themselves to the purpose for which they were established, namely, the manufacture of guns and ordnance. No doubt they will cost the taxpayer far more than if they were manufactured by private enterprise, but we have to reconcile ourselves to that. These factories, with their extravagant administration and overhead charges, cannot possibly manufacture goods at competitive prices. The ordnance department took on other work besides locomotives, and in the explanation they say: Other work was taken at firm (competitive) prices which were payable on completion, and did not cover the full cost shown by the manufacturing accounts. I hope the Government will take these disastrous experiments to heart, and no longer engage in undertakings of this sort in any of their factories, but confine themselves to the work which the factories were designed to perform, and not enter into the manufacture of articles of this sort. It is clear that there is something wrong with the whole of the administration. The cost of building a ship in a private yard is £1 per unit but in a Government factory it is 30s. per unit. There is no longer any justification for the Government entering into these manufacturing processes at all, and I trust they will never renew that operation.

Photo of Mr James Wignall Mr James Wignall , Forest of Dean

I do not wish to join in the general condemnation of the Government for undertaking work of this kind. One has to realise that, after the Armistice, there was a big slump in trade and there was a general demand in the House for putting into effect the Report of a Committee recommending that certain commercial work should be undertaken by the dockyards and by the ordnance factories if possible. At the time when it was reported that the locomotives were to be constructed, I do not remember that, with the exception of a Member here and there, anyone condemned the Government for going in for private work. There certainly was no general condemnation expressed at that time. We have to realise the pressure that was brought to bear on the Government. There was a big demand, not only from the Labour benches, but from Members on the other side of the House, who were touched by the fact that they represented constituencies like Woolwich and Waltham Abbey. They brought as much pressure to bear on the Government as anyone could do, because they were so closely in touch with the people affected, and I have a clear recollection that many Members of the House actually cheered when it was announced that the Government were undertaking to construct these locomotives. The experiment has not been a financial success, but it is not all loss. There is a good deal to be cut out of the total loss represented on the Paper, because employment was given to many hundreds or thousands of people during a very critical period, and the material is still there. The locomotives, I assume, are good enough to sell, and will sell, I believe, before very long. Presumably they are constructed in such a way that it is quite possible, if the boycott of private firms is removed, that they will find a market, if not in this country, in some other country before very long, when the present depressed condition of affairs has passed away.

There is another item as to which we are entitled to further explanation, that is the loss on the canteens. I feel we have not had sufficient information concerning this matter. A sum of nearly £50,000 is a very big amount to lose in one year in any concern, and looking at the item it would seem to me that the canteens must have been run free to all comers, that no charge was made for the goods supplied, and that there was a liberal salary list for those who were looking after the concern. The Committee is entitled to know how the loss is made up and if it has been due to a failure to get proper prices for the goods consumed. This item does not really explain whether this is a loss on all the canteens, or whether it is simply a loss on one canteen. It says, "Loss on canteen trading, £49,820 0s. 11d." There is nothing, so far as I can see, to explain whether the loss is spread over a wide area, including all the Government factories and the dockyards, or whether it is simply confined to Woolwich and Waltham Abbey, or to either. Canteens are necessary in dockyards and in large factories such its Woolwich and Waltham Abbey, and I do not say, as one hon. Member has said, that these canteens enter into competition with local traders. The canteen, properly conducted, is a necessity and a convenience in the place where the operatives are engaged. But canteens ought not to be run at such an enormous loss as this, and I do think we have a right to demand a fuller explanation of how the loss came about. Whether it was through misappropriation, or through selling cheap beer or cheap food, or giving it away, it takes a lot of explanation to explain away a loss of nearly £50,000 in 12 months. Although I am not blaming the Government for the loss incurred on the construction of the locomotives, because that, I believe, was unavoidable, I do blame them for the want of explanation of losses incurred where no very serious loss, if any at all, ought to exist. Therefore, I should be glad if the right hon. Gentleman could give us some explanation as to how this loss has been created, and the reason for it.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

I want, first of all, to take exception to a statement made by the hon. Member for Mossley (Mr. A. Hopkinson). I feel certain that he did not mean it in the way in which he said it, and in which it might appear when read in the Press, namely, that this Vote means voting for the Army money which ought to have been paid in outdoor relief. I feel certain that the hon. Member does not mean it in that way.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

Oh, yes, I do, entirely.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

Then I take it that, as an employer of labour himself, he thinks, when he employs men to work for him, that he is giving them outdoor relief. These men were employed in manufacturing locomotives and doing other work—

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

The fact that it did not pay does not mean that they were receiving outdoor relief. It means that their employers, like some others who were private employers, did not estimate the costs sufficiently well to enable the price to meet the cost. But the value of the labour has been put into the material, and if the hon. Member means it in that sense he is grossly insulting men who showed their capacity, during the War, to produce the things that were necessary to keep the troops and the Navy going with the things they required to fight the enemy.

Photo of Mr Walter Smith Mr Walter Smith , Wellingborough

And cheaper than private enterprise.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

And cheaper than private enterprise, as they brought down the price of shells and other things. The words that fell from the hon. Member are a gross insult to the working men of this country, and particularly of Woolwich and Waltham Abbey. One of the points in this connection is that at Waltham Abbey there was not sufficient work to keep the men employed, and they were put on internal work. I should imagine that that was maintenance work, such as necessary repairs and the changing of certain machinery in order that it might be used for some different purpose from that for which it had previously been used. I should imagine that that was adding to the capital value of the factory. It is not a loss; it is preparing the establishment for further production of a necessary character, and it ought to have been charged to some of the capital accounts of Waltham Abbey.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

It is not down here as a loss.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

It is down here as a loss, and it has been quoted by practically everyone who has spoken as a loss sustained at Waltham Abbey by the Government. That is why I am making the point that it ought to have been charged to some capital account, because it adds to the value of Waltham Abbey if they have been doing repair or maintenance work with the machinery and plant there. Another item that requires some explanation is the 100 locomotives which have not been sold. An hon. Member said some were not completed yet. I take it we have not 100 locomotives lying there in an incomplete condition. I should imagine quite a number of them are complete and ready to be placed on the rails. We gave away £60,000,000 to the railway companies, money they claimed they were entitled to for the use made of their railways during the War by the Government. Why were not some of these 100 locomotives offered to the railway companies as part payment? Business men laugh at a business transaction. Possibly hon. Members might be afraid to travel to the House of Commons on one of these locomotives. But they have not been tried. Evidently hon. Members think these locomotives have been built purely for amusement. They may have been' built for the amusement that it gives to the hon. Member for Mossley to make speeches about them. But I am putting forward a feasible proposition. The locomotives are well made and substantial, as has been said on both sides, by the hon. Gentleman who represents the Government and by the right hon. Gentleman my clansman, the hon. Gentleman who wants the money and the hon. Gentleman who has moved the reduction so that he will not get all he wants. Surely that would have been a sound business deal. They might have said to the railway companies, "If you are having £60,000 from this country, then try some of these locomotives as well, and see how they run on your rails." [Interruption]. They would do all right for your country. They would carry the Vicars of Bray all round.

There is another point that must be considered with regard to these locomotives. It is like the discussion that takes place periodically about the famine in Russia and the causes of it—the breakdown of transport. I do not know the gauge of the railways in Russia or of these locomotives, but why not enter into some deal in that way? They would be better employed in drawing food about in Russia than standing as monuments to the incapacity of the British Government. Something of that kind can be, and should be, done. While I join with my right hon. Friend in opposing the method in which this money is being asked for, I do not think all the items in it call for the hostile criticism which has been devoted to them. Certain work had to be done. You had large numbers of men there who had done valuable work for you during the War. Were you going to throw them on the streets because the War had finished? Something had to be done to keep them employed, and the fact that they did not produce work on a paying basis is not their fault. There are hon. Members in this House who can carry in their minds the circumstances of certain firms where the members of those firms underestimated the cost of certain jobs. The hon. Member for Mossley laughs. I suppose he thinks that is an impossibility for him.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

I was thinking of a case in my own experience.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

It must have been a very humorous one for the hon. Member to laugh at it like that. The Government requires no more criticism for un-estimating the cost of manufacturing locomotives than does any other employer of labour for under-estimating. It is to be hoped that in the further work which will be undertaken at Woolwich and Waltham Abbey, they will be able to make good any losses that have been incurred, and that in the next Estimate they will show a surplus which will cover these losses.

Photo of Mr John Randles Mr John Randles , Manchester Exchange

Hon. Members opposite seem to think that the beginning of unemployment was at Woolwich or Waltham Abbey, and that any enterprise undertaken to reduce that unemployment, however uneconomical or wasteful it may be, is comparatively unimportant so far as the rest of the community is concerned. When you put inefficient and incompetent appliances to work to produce, you are taking away employment and work from the private manufacturer who employs large numbers of other people, and in that way you are seriously reducing the volume of employment throughout the country. You are also doing it by an uneconomic process, and you enter into competition, with the result that you reduce the prices that are obtainable for these commodities by the private manufacturer. In that way you bring about and accentuate the difficulties connected with the question of wages. When that competition is brought to bear, you immediately make it more difficult for the competitors who are in the business, and who have been legitimately in the business for a number of years, to secure orders at remunerative prices. So you not only produce unemployment, but you produce reductions in wages and then you produce that uneconomic condition in the country with which, unfortunately, we are very much engaged at the present time.

I hope that the experiment conducted in connection with this concern will be abandoned, and that when there is a case of this kind again, and a case of hardship, we shall frankly, without any pretence, do what we can to relieve the distress in that particular place, and not throw the whole machinery of our industrial community out of gear because we are trying by artificial methods to maintain manufacture which is uneconomic, both in respect of the persons employed in it and also those who have to do with the sale of the commodity when it is finished. I am not stressing the fact that the locomotives that were manufactured are probably unsaleable. I am assuming that they were fairly good locomotives and that they might compete with other manufacturers, but it is very doubtful whether they will find a market. It is a bad experiment, and I hope the lesson will be learned, and that hon. Members opposite will not think that they are helping the unemployed when they do it by making unemployment in other directions, to a large extent reducing the prices of possible competitors, and making it difficult for the industry of the country to be carried on. I hope that they will study the whole question, and not think only of the immediate difficulty.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

This is an occasion of some importance. This is the funeral of the Socialist Labour party, and I am astonished that so few mourners are here to attend the corpse. When they are all gone they will get plenty of people to weep for them, because we shall never again get an Opposition so easy to destroy as the Socialist Labour party.

Photo of Mr Neil Maclean Mr Neil Maclean , Glasgow Govan

Another aspirant for a Parliamentary Under-Secretaryship.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

That is possible, but, at any rate, it will be a long time before any Member on that Bench is asked to occupy a position in any Government.

Photo of Sir Edwin Cornwall Sir Edwin Cornwall , Bethnal Green North East

We are going a long way from Woolwich now.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

This is more germane to the subject of debate than any remarks that have yet been made in this Debate. Here is an experiment in State Socialism. It is clamoured for by Members on those Benches. This experiment was tried. It was challenged in Committee. A very weak defence was put up. The challenge comes up again on Report and there are none of the Labour party here to answer it. Where is that row of eloquent orators who get up and demand the nationalisation of our staple industries? They are not there. When we have the trial of this experiment whom do we find? Two Members who have spoken to-night. One, of them spent most of his time asking why this factory had lost £1,000 a week on canteen charges. No defence has been offered of the gigantic failure of this gigantic experiment except that one hon. Member said that these locomotives might be given to Russia, though he said he had no idea of what the gauge of the Russian railways was, and whether it differed from the gauge of English railways, or what were the conditions in Russia. But these things were not matters of great importance. They would be better in Russia than 'here because then we should not see them here. It was actually offered as an argument for giving them to Russia that the transport was bad there, though the locomotives built there by State Socialism had succeeded in breaking down the bridges across which it was tried to drive them, 60 that the last state was worse than the first. Why not have a serious argument put forward? I shall listen with interest to any serious defence of this experiment put forward by hon. Members on those Benches because this is an explanation of their theories and their experiments.

Photo of Mr John Swan Mr John Swan , Barnard Castle

Which were successful according to Sir Eric Geddes.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

Sir Eric Geddes put forward great Estimates of what could be done.

Photo of Mr John Swan Mr John Swan , Barnard Castle

And you kicked him out before he had time to do it.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

Where are the men who would defend this?

Mr. RICHARDSON:

Where are yours?

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

Responsible Ministers are on these benches. The people who claim that the industries of the country should be put on the basis which has resulted in these gigantic losses being paid for by this much-despised private enterprise should have the decency to come down and attempt some defence of the policy which has produced this gigantic economic disaster in this limited time. As other hon. Members desire to speak I will not stand in their way—

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

I am glad you enjoy it, but nothing is more terrible, or more appalling, to contemplate than the glee with which the Labour party observe the lavishing of enormous sums on State socialistic experiments, and the levity and flippancy with which they treat the inevitable and gigantic losses which occur. When you have an example of their experiments here, with the loss of a huge sum of money, it is treated with roars of laughter by the Labour party. Giggles from hon. Members opposite; cheers of delight. They say, "Go on; raise more money; throw it down the drain. There is plenty more where it came from. Take buckets of money and throw it away. At any rate, it is not private enterprise, but holy State enterprise, and therefore it must be good." They say, "Why not engage the unemployed on some productive enterprise?" They seem to neglect the important fact that it is not merely a question of making something but of getting something sold when it is made. Anybody may roar with delight about the munitions in the War. The facts have been quoted on every platform in the country and have been put into a book by that ignorant and arrogant man, Sir Leo Chiozza Money, as an instance of the success of State socialism—the State having been able to engage successfully in the mass production of an article which it could market in absolutely unlimited quantities. The mere fact that the marketing is the end of the transaction is entirely overlooked by the Labour party. That is proved by the fact that they have produced 100 locomotives which are standing idle with no buyers. That is no real contribution to the reduction of unemployment, no help to the economic position of the country. The 100 locomotives are there and that is all that the Labour party asks for. There is something that has been done, they say. Some material has been wasted and labour has been used on something that is useless when it might have been used on something else; and they are all happy and contented because £1,500,000 of the taxpayers' money has been squandered on this ridiculous experiment. [HON. MEMBERS: "That is not true."] If any hon. Member of the Labour party has an argument to put forward, for heaven's sake, let us hear it. They put themselves forward as an alternative Government, and this, they say, is the system upon which they will run the country. If they are to run the country on this system let us have it explained before they try it on the gigantic industries on which the main portion of 47 millions of people of this country depend.

Photo of Mr John Swan Mr John Swan , Barnard Castle

And one man out of six is walking the streets unemployed under the present system.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

That we have one man out of six walking the streets to-day is a terrible thing, and it would be more terrible if five out of six were unemployed and only one man were in a job, as would inevitably be the case if this system were applied throughout industry. No argument has been brought forward from the Labour benches. I resume my seat and challenge any Labour Member to produce some serious defence of this Vote.

Photo of Mr Charles Ammon Mr Charles Ammon , Camberwell North

I am quite new to the House, but I shall venture to take up the challenge of the hon. Member. There is nothing more lamentable than to see anyone with the experience of the hon. Member start an argument cm false premises and proceed to knock them down, and then to indicate that that means the death of the Socialist Labour party, as he is pleased to call it. I remember that about the first day I came into this House I heard the hon. and gallant Gentleman who has just spoken putting in a plea to have certain mines subsidised in a particular constituency. [HON. MEMBERS: "State socialism."]

Photo of Mr Charles Ammon Mr Charles Ammon , Camberwell North

I admit I have not much Parliamentary experience, but that certainly does seem to me to involve a slight inconsistency on the part of the hon and gallant Member.

Photo of Mr Walter Elliot Mr Walter Elliot , Lanark

I was arguing in favour of large relief works. If you call this relief work, then I have no objection. On that occasion, I was asking for relief works in my constituency. [HON. MEMBERS: "The same thing."]

Photo of Mr Charles Ammon Mr Charles Ammon , Camberwell North

I am obliged to the hon. and gallant Member for the interruption. He has given his whole case away. All along we have been pointing out that this was put into operation, not as an experiment, but at a time when it could have been of considerable danger and difficulty to have suddenly disbanded some 60,000 men in a small area and thrown them on the local rates, to say nothing of the disturbance that would have been created in other regions. I was then outside the House, but I have some knowledge of the discussions which went on here, and it was then seriously put forward, and, as far as I know, accepted by practically every party in the House, that it would be in the nature of a good insurance to lay down these works and keep these men at work, rather than suddenly disband them and put them on the streets.

Photo of Mr Charles Ammon Mr Charles Ammon , Camberwell North

The whole difference in the point of view of the hon. and gallant Member is that in the other instance to which I referred he wanted us to subsidise large capitalistic firms, or people interested, in order that a certain constituency in which he is interested might get some advantage from it. Here, on the other hand, the Government were doing their duty in looking after the interests of the community, as far as they could, and protecting the welfare of the men who, at a crisis in the country's history, worked night and day, not sparing themselves at any time, in order to deliver the goods and enable the men overseas to carry on. [HON. MEMBERS: "Oh, oh!"] Well, they finished the contracts to time, not like the private em- ployers, who would have let down the nation again and again, who would have kept over contracts, and who would have exploited the nation, even if it meant loss of life and the destruction of our men. [HON. MEMBERS: "Profiteers!"] This has to be remembered along with the other things.

I remember, too, that Sir Eric Geddes pointed out in this House that Woolwich Arsenal was delivering trucks at £100 cheaper than they were being delivered by private firms. All this has to be carried into the account when we come to deal with it. The argument put up by the hon. Member for the Exchange Division of Manchester (Sir J. Handles) was the most extraordinary I have ever heard. He talked about the turning out of goods, which reduced the price of certain others, in the market. The goods are not sold, and how on earth could they have done anything to reduce prices. This was the policy of the Government itself. This party here is a comparative handful in this House, and had the hon. and gallant Member for Lanark (Captain Elliot) and others been in earnest some time ago, when this was first brought forward, it need never have been put into operation. This House cannot escape its responsibility, and if the hon. and gallant Member did not protest at that time he is equally responsible with hon. Members on these benches in regard to this matter We must look at the whole position.

With all respect, I am bound to say that a good deal of what has come from hon. Gentleman like the one who has just spoken is humbug when they talk about this remunerative work. Ordnance work is at no time remunerative in the ordinary sense of the term. It is destructive effort. At least you have this advantage in this case, that you did something to preserve the moral of the workmen, and to prevent them from being thrown out of work and so swelling the ranks of the unemployed, when to do so would have caused considerable disturbance, and would have overloaded the burdened ratepayers in a very poor district to an extent that it would have been wrong to place upon them. This work, with all its failure, is being transferred to the taxpayers, but you have the goods, with the possibility of selling them. Even so, you are equalising the burden more than if the whole burden were borne on the rates, and the people are not reduced in moral to the extent to which they would be reduced. While there is a good deal to criticise in the scheme as put before us, I take up the challenge of the hon. gentleman opposite, and I think we have maintained our position, which is, that this was an insurance against possible trouble and people being thrown on the rates, and that the Government are justified, inasmuch as they have the goods. It is up to them to do what any business firm would do, and to endeavour to find a purchaser for them.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

I think the Committee would like some further information on some of the points which have been raised. The lecture started on the last Vote and has been continued on this Vote, and as I did not reply on the last Vote I think I may refer to it now. The right hon. Member for Peebles (Sir D. Maclean) pointed out what a heinous offence it is for a Department not to limit its expenditure to the amount voted, but to come later on with an Excess Vote. I do not disagree with him at all. I think it is a thing which has to bejustified, and justified up to the hilt, because no Department ought to spend more than is granted to it. I do not follow, however, his complaint when he said we ought to have come earlier, because in the nature of things an Excess Vote is one which comes in the year following that in which the expenditure has been made.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I was attacking the system.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

If the right hon. Gentleman was attacking the system and not the Department which I represent, I will leave it at that. He asked, however, why it was necessary to have an excess Vote at all. He seemed to be extremely surprised, and already to have forgotten that there was such a thing as a war, because every single item in the particular Vote he was referring to was a remnant of the War which only came to light after the year in which the expenditure had been incurred. I would remind the Committee that a Committee of this House—the Public Accounts Committee—has examined this Vote in detail, that it has had the Accounting Officer of the Department in front of it, and has cross-examined the Accounting Officer on each one of the items in this account. I agree that that does not prevent this Committee asking the Minister for further particulars. It is right that they should do so, and I am here for the purpose of answering them, but I want the Committee to remember that the detailed examination of this Vote has been made already by one of its own Committees, which has reported to the House advising it to grant this Vote.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I have not been able to find in the Vote Office the Appropriation Account from the Public Accounts Committee on this Vote at all. I have it on the Navy Appropriation Account for to-morrow. The only Vote, I can find in the Vote Office is an account for the year 1920, not 1920–21.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

I am not sure about that without looking. My right hon. Friend called attention to the fact that there was a loss on acetone, and said, "What an extraordinary thing that there should be £108,000 lost on the sale of acetone. What can it mean?" It means that the Ordnance Department, during the War, had a stock of acetone, which stood in their books at a cost—quite likely a low cost. I am not concerned to argue whether it was at a high cost or at a low cost. It was not required. The War ceased, so the acetone was sold, and, in order to square the account, we have got to come and say that the acetone has been sold at a loss of £108,000. That is why the figure is in this account. It was suggested that the Waltham figure was entirely a loss. It is not entirely a loss. It is stated that it is an expenditure which was not voted in the year 1920–21, and therefore it comes before the Committee now as an Excess Vote. I do not want the Committee to believe that the full amount of that expenditure has been added to the capital value of Waltham. A good deal of it was expended on maintenance and minor works, which probably do not add to the capital value at all, but it is not a loss, and it is not put down as a loss. It was a necessary expenditure.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I did not say it was a loss.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

It was said by another hon. Member. The right hon. Gentleman asked why there was a loss of £50,000 on the canteen. Of course, I made the same query. It is not the loss of a year.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

It was established during the War at Woolwich, not providing merely tea and buns and cigarettes, but food. The right hon. Gentleman has forgotten that at one time during the War there was a considerable difficulty in supplying those who were on national work with food, and therefore in this factory, as indeed in most private factories, a canteen was set up, and actual meals were supplied. Over a period of two or three years there was a loss of £50,000, or less than 14s. a person sup plied, over about 70,000 employés. It is a very small sum. I do not want to say that a Government Department running a canteen ought to trade at a loss. Of course, they ought not to trade at a loss, but when this was taken over by the War Office extra charges were put on, and there has been no loss in running the canteen since. This was again a war remnant, of a canteen set up by the Ministry of Munitions during the War, which I am now called upon to defend, and I cannot say that I feel much difficulty in defending it.

The next point is the real point, and that is the Government trading. Let me deal first with the locomotives and clear up a minor point as to the estimated cost of the locomotives. The hon. Member for Mossley (Mr. A. Hopkinson) suggested that this amounts to a cost of about £5,000 apiece. That is not so. The account says that £582,000 has been spent on these locomotives up to the 31st March, 1921. At that time they were not finished. This is a grant of money, not an estimate of cost. This is an Excess Vote of money for which the Committee is asked, up to the 31st March, 1921, of £582,000, which was their total cost at that moment.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

Does that not really mean that unless you sell the locomotives there is a dead loss?

11.0 P.M.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

If we never sold the locomotives, and that was all the cost, then the loss would be £582,000. But I am going to say something more. That was only the cost up to the 31st March, 1921, which is the date of this account. There has been more money spent since, and the total cost of these locomotives is estimated at £16,000 a piece, and so the total sum finally to be spent on these locomotives is probably £1,600,000. I want to be quite frank with the Committee. I do not want the Committee to run away with the idea that they will cost half-a-million. They will cost a great deal more, but I will now review the circumstances. About December, 1918, just after the Armistice, there were something between 60,000 and 70,000 employés at Woolwich, and there was a question what was to be done with them. The work had ceased, or rather the manufacturing work for the War had practically ceased; at any rate, it had slowed down; and the question was, what was to be done? A great deal of pressure was brought to bear on the Government at that time that some alternative work should be started, and in May, 1919, orders were given to Woolwich, which was then being run by the Ministry of Munitions—the War Office did not take it over until well in the middle of the year afterwards—to put in hand 100 locomotives. The picture which the hon. Member for Mossley painted to the House was not at all a picture of that time. He said that the rails were strewn with locomotives that had come back from France, that they were all rotting, that there was no sale for them. What foolish people to put in hand, as alternative work, 100 locomotives! That is the prophet after the event. It is so easy to be wise after the event, but at that time there was no output of locomotives. There was an apparent great demand for locomotives, and, looking about for alternative work, always assuming that you were going to adopt the policy of giving alternative work, this was as good alternative work as you could find at Woolwich. There was a scarcity of locomotives, and if you were looking about as an engineering expert you would have chosen locomotives as readily as anything else—not if you were so wise as the hon. Member for Mossley, but the ordinary person who was not gifted with prophecy, would have done so, and these people did so. These were not Government officials. These were commercial men, business men at the Ministry of Munitions, advisers, all looking about for some alternative work, and their eyes, unfortunately, fixed upon locomotives. Of course, if whoever was in charge of Munitions at the time had had the opportunity of consulting the hon. Member for Mossley, we should have done something else if we had to do alternative work.

Photo of Mr Austin Hopkinson Mr Austin Hopkinson , Mossley

Then the whole of these R.O.D. locomotives lying about at the present time were in existence at the end of 1918? The stocks were there, and anybody, except the business men employed by the Ministry of Munitions, would have had the sense to see when these locomotives were brought back from France that there would be a great excess in England.

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

There was no certainty that they were coming back from Prance, where they had been employed. I cannot fairly ask the Committee to listen while I further argue the question. I am simply stating the facts at the time. That we believed to be the position, and that is the reason why these locomotives were selected as alternative work. I do not want to deal at length with the policy of alternative work. The House at the time thought it ought to be tried. Of course, it is very easy to be wise after the event, but the matter was discussed, and at the time it seemed to be the right thing to do, and it was done.

Let me deal with the other alternative competitive work on which losses were made. It was done at very good prices. The losses are exposed in these accounts. Some of this work maintained employment at Woolwich at the time. But I do not want the Committee to think that this was money that came out of the Army Vote. This was 1920–21, not this year at all. The whole of this work was done in 1920–21, and it was done for the Ministry of Munitions; it had nothing whatever to do with the Army Vote, either of the Vote this year or of any previous year. I do not want the Committee to think that the policy being pursued is to go out into the street for alternative work in competition with private employers. That is not the policy. There is some work that can be done at Woolwich for other Government Departments. But there is no work there on which losses are being risked. I share with my hon. Friend the objection to Government trading. I am not going to argue that now, but the Committee ought to know that this is exceptional, and due to the conditions of the War, and that there is a minimum staff that has got to be kept up. They are making medals now—

Photo of Mr Worthington Evans Mr Worthington Evans , Colchester

Some of them are making medals, and there is one little order being completed of repairs to some railway wagons. Broadly speaking, however, they are on Government work, and it is right and proper that the minimum staff required for national safety should be retained there, and that they should be employed. They have got to be paid and they should be employed. I ask the Committee, therefore, not to have the idea that we are not quite conscious of the objections to Excess Votes, but I ask them to believe that both these Votes are War survivals, and to realise that by giving me this Vote they are not endorsing any policy of Government trading.

Photo of Mr Donald Maclean Mr Donald Maclean , Peebles and Southern

I want to say that my right hon. Friend has treated the Committee with remarkable but, not with him, unusual frankness. We have had a very useful discussion, and, as far as I am concerned, I have no desire to press this Amendment.

Photo of Captain Stafford Hotchkin Captain Stafford Hotchkin , Horncastle

With regard to these 100 locomotives. Very few of them, I understand, have been sold. [HON MEMBERS: "Divide!"] There was an opportunity some time ago of getting rid of the locomotives at a fairly remunerative price, but now they are almost unsaleable. It is a most regrettable thing that more business methods were not employed in regard to the whole of this business.

The DEPUTY-CHAIRMAN rose to put the Question

Photo of Major Collingwood Hamilton Major Collingwood Hamilton , Altrincham

I understood that the Amendment had been withdrawn.

Amendment negatived.