§ 37. Mr. GARRO JONESasked the Under-Secretary of State for Air whether he is aware that the costs of material required for the production of aircraft are rising; and what steps will be taken to prevent the delay in fixing prices which is inherent in the Instructions to Proceed system resulting in the Government having to pay more for their requirements?
§ Sir P. SASSOONAlthough there have been rises in the prices of particular materials, I have no evidence of any all-round increases such as would materially affect the cost of aircraft. In any case it is not considered that the delay in fixing prices which may arise in the case of Instructions to Proceed will result in the Government having to pay more for their requirements than they would under any other system of contract. One advantage of the system is that it enables the contractor to place forward contracts for his materials at current market quotations.
§ Mr. GARRO JONESHow can the price be as low now when the prices of materials are lower than they will be when prices are fixed in 12 months' time, when prices are higher?
§ Sir P. SASSOONThat is the whole point. Production can go on immediately without any delay. The materials which are now bought are bought at present day prices.
§ Mr. GARRO JONESWill the prices be fixed on the basis of the raw material prices when the orders were given or when the machines are delivered?
§ Sir P. SASSOONA provisional price is fixed now.