43. Sir F. HALLasked if the arrangement under which contracts for the supply of munitions are paid for on a prime cost basis plus percentage, including a percentage on labour costs, is governed by Regulations made by the Treasury; whether such Regulations provide that only such labour costs shall be paid for as arise from the observance of 1391 the Government's Fair-Wage Clauses or arbitration awards; and if, having regard to the extent to which irregular labour payments are made by contractors to attract workmen now that leaving certificates are no longer necessary, the Treasury will take steps, with a view to safeguarding the financial interests of the country by pressing for a more satisfactory system of contracts, which will make it incumbent on contractors to quote an inclusive price for labour charges?
§ The FINANCIAL SECRETARY to the MINISTRY of MUNITIONS (Sir Laming Worthington-Evans)The answer to the first part of the question is in the negative. Ministry of Munitions contracts of this type now contain provision that the percentage of profit shall be based on the rates of wages current on the date of the contract, and that neither the contractor nor his sub-contractors shall pay rates of wages or bonuses in excess of the standard current in the district without the previous authority in writing of the Minister. With a view to ensuring that only such rates of wages and war advances shall be paid as have been approved by the Departments concerned, representatives of the Labour Department co-operate, where necessary, with the Investigating Accountants of the Ministry to check the rates of wages charged under contracts where the Ministry is directly interested in the costs. As has previously been explained, contracts on the cost and percentage basis are restricted to a minimum and are only adopted where owing to the amount of work being indeterminate there is great difficulty in arriving at a fixed price.
Sir F. HALLAre we to understand now that no contracts are placed at a percentage over and above the cost, and that, therefore, the contracts considered by the Government for controlling wages are on a fixed basis, and are that way now?
§ Sir L. WORTHINGTON-EVANSI think my hon. and gallant Friend must read my answer. Contracts based on a percentage of costs have been reduced to a minimum but not abolished altogether, and on those that do exist there is no additional profit by reason of increased wages.
§ Sir L. WORTHINGTON-EVANSHe does not get a percentage on the increase. If the hon. and gallant Member will look at my answer he will see that the point is covered.