HC Deb 02 December 1936 vol 318 cc1259-61
51 and 52. Mr. MACLAY

asked the Minister for the Co-ordination of Defence (1) whether there is any committee or body of experts engaged as a whole-time occupation in investigating and checking the extent of profits made by private firms engaged in Government contracts resulting from the Government's rearmament programme;

(2) whether when applying a test as to whether excessive profits are being made by firms engaged under Government contract in the supply of goods made necessary by the Government's rearmament programme, he will have instituted as careful investigations into the profits of sub-contractors as are carried out in the case if primary contractors?


The duty of assessing the amount of profit to be allowed in Government contracts resulting from the Government's rearmament programme, rests with the contracts branches of the three Defence Departments who work on a procedure agreed between those Departments and the Treasury, and are assisted by whole-time staffs of technical and cost accountants. The investigation of the profits of sub-contractors cannot always be carried out by the same methods as are employed in the cases of main contractors, but my hon. Friend may rest assured that it is the practice of the Departments to exercise as close a check as possible in both spheres, and that the matter is continually under review.


I appreciate the complexity of the problem, but may I ask the right hon. Gentleman whether he will satisfy himself that the experts are fully alive to the position, which is that the main contractors are showing small profits and large profits are shown by sub-contractors; and will he see that they closely investigate the possibility of financial connections between the main and sub-contractors?


Is the right hon. Gentleman still considering carrying out the recommendations of the Government's Royal Commission, which made specific recommendations to control profits?


That is another question altogether, but the Report of the Royal Commission is being very carefully examined by a Committee which will report in due course, and I hope that in no great length of time the Government will make a final decision.


Can the right hon. Gentleman assure the House that no extravagant profits are being made out of the national necessities regarding armaments?


I can assure the House that every possible step is being taken to prevent extravagant profits being made in respect of any of the contracts.


Are they being successful?


Arising out of the original answer, is the right hon. Gentleman satisfied with the procedure which is in force, having regard to the extraordinarily large profits that are being made in the aircraft industry; and, further, is he aware that a well-known large manufacturer recently offered to place his books before a chartered accountant with a view to giving an undertaking that he was making a reasonable profit, and that that offer was turned clown by the Committee?


Owing to the unsatisfactory replies that have been given, I will raise this matter on the Adjournment at the earliest opportunity.