Contracts (Control of Prices).

Oral Answers to Questions — Royal Air Force. – in the House of Commons on 24th July 1935.

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Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

29.

asked the Secretary of State for Air whether, in view of the facts stated in a return to the Treasury in April, 1917, as to the results obtained in 86 national factories of different types in which it was revealed that, as compared with the lowest prices previously obtained by contract, savings had been effected to the extent of £9,000,000, and that certain factories erected at a cost of £1,500,000 had already effected savings very much in excess of the total cost of the factories, he is prepared to reconsider his attitude on the possibility of the adoption of this method of obtaining supplies?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

The return quoted did not deal with national factories for the manufacture of aircraft, none of which were producing in April, 1917; and, as I have already stated, the general results subsequently obtained from such factories compared unfavourably in point of cost and output with the results obtained from private enterprise. There are, therefore, no grounds whatever for recourse to national factories for the present programme—quite apart from the fact that that programme is due for completion by 31st March, 1937, by which date it would in any event be impossible to organise efficiently or indeed at all an entirely new system of production.

Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

30.

asked the Secretary of State for Air whether, in view of the fact that the supply of aircraft with regard to numbers, costs, and quality was gravely unsatisfactory during the War until January, 1917, when it was found necessary to concentrate all authority for supply under the controlled system then established under the Ministry of Munitions and which yielded greatly improved results, he will consider the institution of such a system with regard to the supplies now stated to be required?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

The improvement effected in aircraft supply in 1917 was primarily the result of the concentration of control of design and supply in the Air Board and Ministry of Munitions, in substitution for the earlier system under which the Admiralty, War Office and, to some extent, the Ministry of Munitions were competing against one another. A corresponding concentration is secured to-day through the existence of the Air Ministry. I am satisfied that any arbitrary interference with the present system, which is functioning satisfactorily, would be likely to lead to a deterioration, and not an improvement, in the numbers, cost and quality of aircraft produced.

Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

Is the right hon. Gentleman not aware that it was an essential ingredient of the control then instituted that the supply and distribution of machinery, material and other requirements was a part of the function of the Ministry, and it was not in the hands of separate individual firms? It was an immense saying.

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

I think the right hon. Gentleman is also aware that there is not a war on to-day, and that we are not in a state in which we have got to turn the whole industrial system of the country upside down.

Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

Is it not a fact that, according to the right hon. Gentleman's own statement, the producing firms are employed at maximum capacity and that the situation is exactly comparable to that of January, 1917, so far as this manufacture is concerned?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

Of course it is not. I did not say they were employed at maximum capacity. What I did say was that I was reasonably satisfied that the structure of the industry could deal with the Government's and all other demands. To say that because an industry is employed at 90 per cent. of its capacity, that is evidence of some awful situation in which you have to take abnormal measures, seems to me very strange.

Photo of Mr Herbert Williams Mr Herbert Williams , Croydon South

Would the right hon. Gentleman opposite say whether the costs estimates to which he referred included anything in respect of his 50,000 assistants who crawled all over the hotels in the West End of London?

Photo of Mr Wilfred Paling Mr Wilfred Paling , Wentworth

Is it not a fact that the nation's need has already been taken advantage of by these people by gambling in aircraft shares?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

I do not know who has been speculating in shares, but, if the hon. Gentleman heard the statement which I made, on the authority of Sir Hardman Lever and his colleagues, as to the willingness of these firms to submit the whole of their books for inspection, then I think that is a pretty unworthy suggestion.

Photo of Mr Thomas Williams Mr Thomas Williams , Don Valley

Will the right hon. Gentleman tell the House what the aeroplanes are being built for?

HON. MEMBERS:

Flying.

Photo of Mr David Kirkwood Mr David Kirkwood , Dumbarton District of Burghs

Is the right hon. Gentleman aware that, following the control of the factories in 1917, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) and the right hon. Gentleman the Member for Epping (Mr. Churchill) said that the output surpassed their utmost expectations, as a result of that organisation?

Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

33.

asked the Secretary of State for Air whether, in view of the large profits recently obtained in the issue of shares of different aircraft manufacturing companies and the concurrent increases of capital and overhead charges, he proposes to continue his dependence upon such companies for aircraft supplies; and whether he proposes to allow for such increased overhead charges in the prices he will be prepared to pay?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

An increase in the nominal share capital of a particular company and/or the placing of its shares on the market at a premium do not in any way affect the rates of profit or overheads to be allowed for in Air Ministry contracts.

Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

Is the right hon. Gentleman aware that, in connection with recent issues, there has been considerable increases in the capital attaching to these companies; and has not that capital to be paid for and allowed for in the overhead charges?

Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

I am afraid the right hon. Gentleman and I have very different ideas on the way to place contracts.