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Capital Account,
Building Works
Department.

Special plant for new #.

New System extended to Torpedo Factory.

Percentage
increased at Enfield,
Waltham and
Birmingham.

For the Building Works Department proper, exclusive of Arsenal general services under its charge, such as Electric Light, Gas, Railways, &c., there has hitherto been no Capital Account. It has not been possible, therefore, to recover the Army share of Capital expenditure by the ordinary method of a depreciation charge, and it has been the practice to recover it annually in full, leaving the Ordnance Factory share to be capitalised in the Central Capital Account. This matter has been pressed on the attention of the War Office since 1896–7, and although the unsatisfactory nature of the existing arrangement has been admitted, it is only recently that steps have been taken to effect a remedy. I understand that in November, 1906, a valuation of Ordnance Factory buildings was commenced, and I am informed that that this will enable the matter of a Capital Account to be taken up.

In continuation of paragraph 6 of my Report of last year I have to observe that the sum of £8,939 15s. 0d., based on 71,518 rifles at 2s. 6d. each, has been written-off and recovered through productions of the year in respect of expenditure on special plant for the new Magazine rifle, leaving the sum of £2,095 12s. 2d. to be taken up in 1906–7.

In anticipation of the final transactions in connection with the sale of the Royal Small Arms Factory, Birmingham, which took place in June, 1906, the unabsorbed balance of expenditure on special plant at Birmingham was transferred during 1905–6 to the books of the Royal Small Arms Factory, Enfield, in order that it might be taken up in the cost of Enfield productions. As the special plant at Birmingham was included in the sale of the Factory, I have pointed out that by the procedure adopted the outstanding value of the plant will be recovered twice, once in the proceeds of sale, and again in the price of the rifles, and I have suggested that the more correct procedure would have been to write off the value in the same way as the value of the Buildings, Machinery, &c., will presumably have to be written off as soon as the transactions in connection with the sale are completed. The correspondence with the War Office on the subject was still proceeding at the date of this Report.

MACHINERY CHARGES.

5. In 1905–6 the new system of distributing machinery charges by means of percentages on the wages of the men working at the machines has been introduced into the Torpedo Factory, thus completing the extension of the new system to all the Factories at Woolwich. The application of the system to the Royal Small Arms Factory at Enfield and the Royal Gunpowder Factory at Waltham is awaiting a revision of rates which is now under consideration.

Although the balances of machinery charges unabsorbed under the new system showed a reduction as compared with 1904–5, the amount unabsorbed in the Carriage Department was still proportionately large, and the same remark applies to the Torpedo Factory, to which Department, however, as stated above, the new scheme was applied for the first time in 1905–6. In reply to my inquiries on this subject I have been informe that the question of these unabsorbed balances has been under consideration, and that they are mainly due to machinery not in use. Detailed information is stated to be under preparation, and a further communication has been promised.

INDIRECT ExPENDITURE.

6. A table at the foot of the Statement of Indirect Expenditure on page 8 shows the percentage of indirect expenditure (exclusive of machinery charges and special indirect expenditure) calculated on the amount of direct labour expenditure in each Factory. In the following cases the rates are higher than last year:

1905–6. 1904–5.

Enfield - - - - - 68.39 58.89
Waltham - - - - - 134.96 95-97
- - | Ordinary - - - 87.62 54-51
Birmingham it.' . . . § 43-18

The increase appears to be due in each of these cases mainly to a reduction in the amount of wages bearing the percentage. At Enfield and Birmingham the actual indirect charges in 1905–6 include the cost of inspecting the component parts of rifles manufactured by the Factory, an operation which was formerly carried out by the Chief Inspector of Small Arms.

PRODUCTION STATEMENT.

7. Of 19,406 lbs. of Gunpowder R.F.G.2 manufactured at Waltham, 14,410 lbs. were priced at £5 8s. 9%d. per 100 lbs., as compared with £3 1s. 0}d. in 1904–5, and 4,996 lbs were accepted as Blank F.G. New at £2 14s. 84d. per 100 lbs.(page 408). I am informed that the high price of R.F.G.2 was mainly due to the fact that the whole quantity had to be re-worked after rejection. After re-working, 4,996 lbs. were not considered sufficiently good for acceptance as R.F.G.2, but were accepted as blank at the rate for Blank F.G. New, and the difference between their value at this rate and the actual cost of their manufacture was spread over the cost of the quantity accepted as R.F.G.2. It is also stated that all the Waltham Abbey prices were adversely affected by the restricted output in 1905–6.

PIECE-WORK PRICES.

8. My attention has been drawn to the considerable reduction that has been effected in the piece-work prices for operations in the Royal Carriage Department. The improvement is attributed to a change in the method of fixing piece-work rates. This duty, which had previously been carried out by Principal Foremen, subject to the supervision of the Manager and the approval of the Superintendent, is now performed by a specially constituted Rate-fixing Branch composed of selected men who are stated to have a complete and up-to-date mastery of their trades and the accessories thereof. The piecework prices for new jobs are settled upon a proper scientific basis before the work is taken in hand, due regard being had to all the features of the particular job. Old prices are reviewed as occasion serves, and confirmed or altered. The branch has also to decide on the most efficient and economical way in which the work is to be done, to design tools, jigs, gauges, and templates, to consult with the Drawing Office as to the economical aspect of designs, to advise as to the cheapest material suitable, and to assist in demanding it in the best way. It is satisfactory to learn, also, that, under the new system, the men have been able to earn their full money without difficulty and without complaint.

OVERTIME.—BUILDING Works DEPARTMENT.

9. In the course of the examination it was noticed that a large amount of overtime was continuously worked by the Office Staff of the Building Works Department. It appeared that throughout the year an average of between 12 and 13 men worked over two hours overtime each per diem, the total overtime recorded amounting to 8,302 hours. One man worked 34 hours overtime in a particular week; two cases of over 32 hours and 14 cases of from 20 to 27 hours were also noticed. In reply to my inquiry on the subject, the Army Council have informed me that the question has been referred to a Committee which has recently been appointed to inquire generally into the staff and duties of the Building Works Department, and that a further communication will be addressed to me when that Committee has completed its investigation.

ALLOCATION OF WAGES IN BUILDING WoRks DEPARTMENT.

10. An independent check on the allocation of wages is secured by means of worktakers in all the Departments at Woolwich with the exception of the Building Works Department. This exception was the subject of correspondence between my Department and the War Office in 1902–3, when I was informed that the introduction of any work-taking system had so far been found impracticable, but that, if further experience should modify this view, the point would not be lost sight of. In reply, however, to a recent inquiry whether the question had been reconsidered, the War Office state that it has not been found practicable to introduce a system of work-taking into the Building Works Department, as the conditions of work are unsuitable, such a system being only applicable when the men employed are concentrated in one place. In the Building Works Department, it is contended, the men are so scattered and move so frequently that a very considerable portion of the work-taker's time would be occupied in tracing them. -

Cost of Gunpowder manufactured at Waltham Abbey.

Rate-fixing Branch.

Excessive Overtin’”

System of Worktakers in Building Works Department stated to be impracticable.

Extent of Stocktaking, 1905–6.

Surplus of Teak
Scantling at
Woolwich.

Surplus of Coal at Entield.

Machinery Stocktaking, Enfield.

Agreement with Credits shown under Appropriaticns in aid of the Vote.

The efficacy of the system of work-taking, both in securing a reliable account of work done and wages earned, and in assisting to obtain from the men a fair day's work in return for their wages, is, I think, generally acknowledged, and it is regrettable that the system is found to be inapplicable to accounts of this character, which lend themselves to manipulation for the purpose of adjusting expenditure to estimate.

STOCKTAKING.

11. The usual independent stocktaking of Ordnance Factory Stores by representatives of the Director-General of Army Finance was carried out in 1905-6, and covered items of stock at the Royal Small Arms Factory, Enfield, the Royal Gun Factory, Waltham Abbey, the Brennan Torpedo Factory, and the Central Stores, Woolwich. The discrepancies disclosed were comparatively small. o

Stock was also taken by Ordnance Factories' Officers at Woolwich, Enfield, and Birmingham.

At Woolwich a considerable surplus of Teak Scantling was discovered, the actual stock being 20,905 cubic feet, value £5,251, as compared with the ledger charge of 5,998 cubie feet, value £1,539. The discrepancy is attributed mainly to an inaccurate method of measuring issues, the cubic contents having been arrived at by stocking the scantling upon a truck and taking the overall measurements of the pile. The issue as recorded in the ledger was consequently in excess of the actual quantity issued. It appears that stock had not previously been taken of this scantling, which was first obtained from contractors in 1899. I understand that improved methods of measurement have now been adopted.

The stock of coal at Enfield was found to be in excess of the quantity on ledger charge to the extent of 1,900 tons, value £1,258.15s., and in explanation it is stated that the contractors probably sent in quantities in excess of those charged for, and that the issues to the boiler houses were in some cases less than the quantities written off. Stock had not been taken since 1890–91. The Superintendent proposes to make arrangements for a periodical stocktaking in future, and to have the weight of issues frequently checked.

The method adopted at Woolwich for verifying stocks of coal was explained to the Committee last year (Questions 5050–52, Minutes of Evidence), and I am informed that the question of issuing definite regulations as to the receipt and issue of coal, and the verification of stocks at all the Factories, is under consideration by the War Office.

At Enfield stock was taken of machinery in view of the necessity for converting a large number of machines to meet the altered requirements of the Factory, the last previous stocktaking of machinery having been carried out in 1897; and as a result machinery to the value of £189 16s. 1d. was found deficient, and a surplus valued at £1,435 was brought on charge. It appears that no regulations exist for the periodical inspection of machinery on charge, but I have recently been informed that the general question of stocktaking of machinery will be considered.

CREDITS IN THE BALANCE SHEET.

12. I append the usual statement showing the agreement between the Credits in the Balance Sheet and those in the Appropriation Account of the Ordnance Factories.

John A. Kempe, Comptroller General of the Receipt and Issue of His Majesty's Exchequer, and

Auditor General of Public Accounts. Exchequer and Audit Department, 20 February, 1907.

STATEMENT shewing the Scheme of Agreement between the Ordnance Factories Balance Sheet and Credits under Appropriations in Aid of Ordnance Factories Vote 1905–06.

Production Add Semi- Deduct Semi- Net Total Ordnance 1905–06. Manufactures TotAL. Manufactures as per Balance Factories 31 March 1906. 31 March 1905. Sheet 1905–06. Appropriations in Cr. Cr. Cr. Dr. Aid 1905–06. | | PRODUCTION: #2 s. d £ s. d £ s. £ s. d 42 s d #2 s. d. Articles manufactured and Services per- 817,211 13 11 formed : 462,558 5 8 86,154 19 9 Army Vote 9 - - - - - 1,478,905 13 1 503,322 3 6 1,982,227 13 616,302 17 3 1,365,924 19 4 1,365,924 19 4 | | Army (Other Votes), as per detail, 62,180 18 4 1,816 0 2 64,996 18 2,46S 2 8 62,528 15 10 62,528 15 10 pages 17 and 18. Colonies - - - 12,265 4 7 5,543 3 5 17,808 8 3,653 7 7 14,155 0 5 14,155 0 5 | Navy Vote 9 - - - - 1,365,159 9 2 40),180 11 6 1,765,340 0 454,195 4 4 1,311,144 16 4 1,311,144 16 4 Navy, Other Repayments 42,314 15 6 59,739 11 0 102,054 6 40,049 4 11 62,005 1 7 62,005 1 7 India - - - 159,989 15 9 37,700 15 7 197,690 11 51,779 13 3 145,910 18 1 145,910 18 1 SUNDRIES AND MISCELLANEOUS : | Sale of Old Stores, &c. - - - - 88,443 1 9 88,443 1 9 | t Miscellaneous Receipts and Re- - - - - 36,578 12 4 36,573 12 4 funds Prior Years. i -! £ 3,086,686 5 8 3,086,686 5 8

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