As indicated in the reply given to the hon. Member for Shoreditch (Mr. Thurtle) on 12th March last, steps were taken at the commencement of the rearmament programme to ensure that excessive profits are not made 1074 by contractors. The policy of His Majesty's Government is that, in cases where it is impossible to secure effective competitive tendering, contracts should be settled on the basis of allowing a fair and reasonable profit, having regard to the circumstances of each case, including such factors as the extent of the orders and a reasonable return on the capital assets directly employed. The information necessary to determine a fair price is obtained by such methods as examination of contractors' books by the Defence Department's accountants or by the preparation of technical estimates of costs.
§ Mr. A. V. Alexander
Does the right hon. Gentleman regard a 30 per cent, return on the capital of the aircraft companies as a reasonable profit?
That must similarly be settled by the relation between the profit and the capital of the company. We have to take into account the amount of work that is being done, and the volume.
§ Mr. H. G. Williams
Are the firms engaged in carrying out these contracts given a free hand to pay any wages they like in order to attract men from other occupations?