Contracts (Control of Prices).

Oral Answers to Questions — Royal Air Force. – in the House of Commons on 25th July 1935.

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Photo of Sir Lindsay Everard Sir Lindsay Everard , Melton

34.

asked the Secretary of State for Air whether, in view of the expansion of the Royal Air Force, it is proposed to increase the number on the list of approved firms for the supply of aircraft to the Royal Air Force?

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

No, Sir; so far as can be foreseen at present, the necessity will not arise.

Photo of Sir Lindsay Everard Sir Lindsay Everard , Melton

Can my right hon. Friend say whether the non-approved firms will have a fair chance of being able to supply the requirements necessitated by the extra Air Force?

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

If a firm submitted designs of great value to us, I should certainly consider them.

Photo of Dr Christopher Addison Dr Christopher Addison , Swindon

40.

asked the Secretary of State for Air whether, in view of the fact that during the war, when there was dependence upon the maximum possible output of different firms, the prices obtainable by ordinary contract had to be substituted by others involving negotiations based on a power to investigate costs, and that reduced prices were then obtained which represented a saving of more than £400,000 per week, and that these savings were subsequently greatly increased, he will reconsider his attitude as to this method of ascertaining prices that are fair in the national interest as well as to the manufacturer?

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

As I have previously explained, the "Instructions to Proceed" now being issued to firms in connection with all major contracts contain a clause providing for costing and full examination of books, as neessary. In these circumstances I am unable to see what advantage there would be in securing by compulsion what is already available by agreement.

Photo of Mr Wilfred Paling Mr Wilfred Paling , Wentworth

41

asked the Secretary of State for Air (1) whether, in view of the evidence of the Secretary to the Air Ministry before the Public Accounts Committee on 14th May to the effect that 85 per cent. of the contracts placed during the current year will be on a non-competitive basis, he will say what steps he has taken to assure himself that the prices paid will be fair and reasonable;

(2) whether, in view of the evidence of the Secretary to the Air Ministry before the Public Accounts Committee on 14th May, to the effect that it may be necessary to apply to Parliament for additional powers to safeguard prices for aircraft supplies, he will state what powers are under consideration which the Minister does not at present possess;

(3) whether, in view of the evidence of the Secretary to the Air Ministry before the Public Accounts Committee on 14th May, to the effect that the position may require the whole maximum possible output of all the firms in the industry today, he will state what steps he will take to safeguard prices under these exceptional circumstances?

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

The steps that are being taken to safeguard prices have already been fully explained to the House. As I stated in the course of the Debate on the Air Supplementary Estimate last Monday, I have been assured (since the evidence referred to in the question was given) that all the information required as to costs will be forthcoming voluntarily from the contractors. In these circumstances there is no need for special powers.

Photo of Mr Wilfred Paling Mr Wilfred Paling , Wentworth

But according to the evidence given before the Committee, is there not something in the nature of a monopoly existing; and, in reply to a question a few minutes ago, did not the right hon. Gentleman indicate that he is prepared to enlarge the number of firms competing; and, according to his own philosophy, does he think this non-competition is a good thing for prices?

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

The hon. Member is wrong in supposing that there is no competition. There are certainly 15 aircraft firms on the regular list. There is, therefore, competition. As regards costings and particulars, I have explained very fully to the House that Sir Hardman Lever and his associates are absolutely satisfied that we are going to get by agreement all the facts and figures out of the firms that we require, and it would surely be both a waste of the time of this House and, incidentally, discourteous, if we were to pass a perfectly useless Act of Parliament when we can get all that we want by agreement.

Photo of Mr Wilfred Paling Mr Wilfred Paling , Wentworth

How can there be competition when it was stated to the Public Accounts Committee that last year competitive contracts were obtained to the extent of only 6 per cent., and it was estimated that the maximum this year, if it was reached, would be less than 15 per cent.?

Photo of Mr Alan Chorlton Mr Alan Chorlton , Manchester Platting

Is it not a fact that until quite lately many aircraft firms were sadly in want of orders?

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

While we may be able to get only a certain number of contracts on a strictly competitive basis, the knowledge we have of past work and past prices makes it possible to judge, apart altogether from the inspection of accounts which we have now got, of what is a reasonable and fair price to charge.