May 11 PLEASE YOUR LORDSHIPS.
1.—We have examined the questions referred to us by Your
Lordships’ Minute of 8rd February, 1927. We have held 14
meetings and have heard evidence from one or more witnesses
from the undermentioned Departments :—
Treasury.
Admiralty.
War Office.
Air Ministry.
India Office.
General Post Office.
Office of Works.
Stationery Office.
Government Actuary’s Department.
We have obtained from the above-named Departments and
also from the Ministries of Transport and Pensions, the Boards
of Inland Revenue and Customs and Excise, and the Royal
Mint such further detailed information as we have required;
and we now beg to submit the following report.
2.—By our reference we were directed
(1) To consider the principles on which charges for
services (other than ordinary allied services) rendered inter-
departmentally, where it is desirable that they should be
made, should be assessed and to make recommendations ;
(2) to consider and make recommendations also as to the
principles on which charges for similar services rendered
extra-departmentally should’ be calculated.
In this reference a distinction is drawn between services
tendered ‘* inter-departmentally ’ and extra-depart-
mentally * respectively, and it is necessary at the outset
to consider how these terms are to be defined.
On the one hand we are obviously concerned with transactions
between two Departments financed in the ordinary way from
the Exchequer, and at the sole cost of the Exchequer, by annual
votes of Parliament to which the expenditure of the Department
is directly charged. In such cases it makes no difference to
the burden on the taxpayer how the charge, assuming it 1s to
be incurred in any case, is distributed. Once it has been settled
that the Department primarily concerned with a particular task
cannot undertake it so economically as a second Department,
which therefore is chosen to perform it as agent, it is clear that
no financial transaction between the Departments can alter the
total cost. For a given charge the net result to the Budget
is the same whether the Department which receives the service
repays the agent Department the whole or part or none of
the cost involved.
In sharp contrast to transactions of this type must be
set the caees where a Government Devartment renders services
A2ROD