Mr. McNeil:

asked the First Lord of the Admiralty whether ships presently building on the Clyde, on orders placed within the last six months, are ordered on the basis of fixed price:; or on cost plus percentage terms?

The orders to which my hon. Friend refers are on a fixed price basis.

Mr. McNeil:

asked the First Lord of the Admiralty whether any action has been taken on the Seventh Report of the Select Committee on National Expenditure; and whether he can now make any statement on ships being repaired on the cost plus percentage basis?

I can assure my hon. Friend that the views expressed by the Select Committee have been carefully considered by the Admiralty, and have formed the subject of further reports to the Committee. As regards the second part of the Question, while steps are taken whenever possible to fix a lump sum, there are in repair work many instances where it is impossible to agree a price beforehand. It will be appreciated that normally it is not possible to determine the extent of the necessary repairs before the ship docks or is opened up, and the need to return her to service with the minimum of delay precludes negotiation of a fixed price before the repairs are started. The Admiralty are, therefore, operating an agreement with the Industry which safeguards the interests of the Government very strictly, and limits the remuneration payable to the repairer to a fair and reasonable profit. There is no question of the profit taking the form of an automatic percentage on cost.

Mr. McNeil:

Is the hon. Baronet satisfied that supervision is taking place afterwards in the scrutinising of costs, because there is grave dissatisfaction?

Yes, the costs are very carefully scrutinised by our own professional accountants.

Is any check on costs made during the progress of the work as well as after it has been concluded?

No, I think the check is made after the work has been completed.