From Dave Morris (Ex Bunting) on the HMS Mercury site...
Not a paying off pennant, but an old commissioning pennant for a ship in the red squadron - `In the Royal Navy the commissioning pennant is flown continuously in every ship and establishment in commission unless displaced by a senior officer's Rank flag. The masthead pennant is a cross of St George in the hoist and a white fly.[3] Formerly, when the Royal Navy was divided into red, white and blue squadrons, there were four different pennants in use, the colour of the fly of three of the pennants corresponding with the colour of the squadron ensign, and a fourth for ships on independent commission (i.e. not attached to a squadron, therefore directly under the command of the Admiralty in London), with the fly containing (from top to bottom) red white and blue in a triband form (such ships would wear the red ensign). Modern commissioning pennants are significantly shorter than in previous centuries - typically 1m in length and only 10 cm at the hoist, tapering to a squared-off point' (From Wikipedia)
