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worked out in detail later. This procedure will not, as hitherto, entail any risk of the Colony's not receiving its full allocation of Colonial Develop- ment and Welfare assistance. While, however, schemes included in the plan need not be worked out in detail at the beginning, the best approximate estimate possible should be given of the cost of each scheme. Otherwise there will be no means of assessing either the total cost of the plan or whether it is well balanced.
(c) It is contemplated that the total cost of the schemes included in the expenditure side of the plan may normally be somewhat in excess of the resources now foreseen to be available, but the schemes included in the plans should be divided into a few broad priority categories. This is needed in order to give elasticity to the plan so that whatever the amount of resources (within broad limits) proves in the end to be available, the work undertaken under the plan will cover the more essential needs of the Colony first. Adequate attention to measures designed to conserve and develop the fundamental natural resources of the Colony is particularly important because no object of development is likely to have greater long term benefits to the community concerned. These remarks, however, are not intended to imply that the same pro- portionate allocation of expenditure as between different main objects will be appropriate in the case of each Colony. Local circumstances obviously must be the finally deciding factor in each case.
(d) Balance is desirable, not merely between different fields of expendi- ture, but also in regard to individual schemes. Individual schemes which involve too large a proportion of the total cost of the development pro- gramme carry with them obvious dangers. Similarly, plans should not be composed of a large number of small schemes, the inter-relationship of which has not been carefully considered and co-ordinated.
(2) Revenue side of the plan:—
(a) Items to be included. The financial side of the plan should include the following:
(1) The allocation of assistance under the Colonial Development and Welfare Act, to which reference is made in paragraph 7 of the despatch which accompanies this memorandum.
(2) Such part, if any, of the Colony's estimated surplus balances at the beginning of the ten-year period covered by the new Act, i.e., 1st April, 1946, as it is considered legitimate to allocate to the develop- ment programme.
(3) Such sums, if any, as it is reasonably expected can be set aside during the ten-year period from future revenue sources having regard to possible increases of revenue during the ten-year period from develop- ment or increased taxation.
(4) The proceeds of any loans which the Colonial Government pro- poses to seek permission to raise in London in order to finance the development programme.
(5) The proceeds of any loans which the Colonial Government expects to be able to raise locally for the same purpose.
Obviously not all the above sources of finance will be available in each Colony, and most of the estimates in the case of items other than the Colonial Development and Welfare allocation can, at this date, be guesses only. Nevertheless, Colonial Governments will doubtless agree that it is desirable in framing development plans to make the best estimate possible of all the resources likely to be available. The estimates should,
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of course, later be revised from time to time to keep them as realistic as possible.
(b) Use of Colonial Development and Welfare Allocation.-As all sums issued from the Colonial Development and Welfare Vote, whether by way of free grant or of loan count equally against the total sum provided by the Act, it is clear that Colonies will benefit more by taking their assistance in the form of grants rather than loans. This does not, of course, mean that it would be legitimate for a Colony to ask for a free grant of the whole cost of schemes which are clearly suitable for finance by means of loan, e.g., schemes which are expected to be revenue earning. Where a scheme is financed by a publicly issued loan, con- sideration could be given to the grant of assistance from the Colonial Development and Welfare Vote in the form of free grant of interest over an initial period on the loan capital employed in the scheme.
Since it is impossible to foresee all objects for which schemes may be required over so long a period as the ten years covered by the new Act, it is suggested that in framing their plans, all Colonial Governments, in addition to making provision for specific objects in priority categories on the lines suggested above, should retain at the outset a proportion of their Colonial Development and Welfare funds unallocated to specific projects, so that it may be available to meet unforeseen excesses of expenditure on approved schemes, and in order to avoid any danger that all resources will be so fully mortgaged that nothing will be avail- able for contingencies.
(3) Submission of comprehensive plans:—
As soon as each Colonial Government has prepared its comprehensive plan it should be forwarded to the Secretary of State so that it may be considered by him in consultation with his Advisers. It is not expected that this consideration should cause any delay in carrying out the develop- ment programine, since, as stated in the despatch, it will be open to Colonial Governments to continue to submit urgent schemes for approval before the whole plan has been settled.
III. Submission of individual schemes
Colonial Governments are already fully familiar with the procedure to be followed in the submission of individual schemes for assistance under the Colonial Development and Welfare Act, since this procedure is already in operation for schemes submitted under the Colonial Development and Welfare Act, 1940. The following suggestions are, however, made in the light of previous experience with schemes submitted under that Act: -
(1) Technical Advice. The importance of basing schemes on the best technical advice scarcely needs emphasis. Many Colonial Governments, however, will now be planning to undertake considerable works and in the case of such larger works and particularly works of a specialised character -such, for example, as hospitals, irrigation works, water supplies, elec- tricity developments and slum clearance schemes involving town planning -the desirability of obtaining the best technical advice is particularly great. In cases where it is considered advisable for expert advice to be obtained from outside the Colony, the cost of obtaining such advice may reasonably form the subject of an application for a free grant from the Colonial Development and Welfare Vote.
(2) Revenue earning schemes.--As explained in paragraph 2(b) of Section II above, free grants will not normally be made from the Colonial Develop- ment and Welfare Vote to cover the whole cost of schemes, such as housing,
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