BOFORS GUN-MOUNTINGS (CONTRACT). (Hansard, 24 October 1939)

§ Mr. Stokes
I wish to refer once again to a matter which I brought up in debate 1338 both on 8th June and 21st September, and I do so for two reasons. It is, first of all, a matter of personal explanation, as I wish to support the statement that I have made with figures, and, secondly, it is a matter, as I think, of very great public importance. I refer to the remarks which I made on both those occasions with regard to a sub-contract for the Bofors gun-mountings. May I briefly restate the story as I told it on 8th June? I referred then to the fact that a manufacturer of my acquaintance had been asked to quote a sub-contractor for the manufacture of certain mountings, and he had gone into the tender very carefully and put in his price. He was surprised when, the next morning, the telephone bell rang and an official, the managing director or some other responsible person, at the other end told him that his offer was of no use, to which he replied, "That is very disappointing, because we have been into it in great detail, and really we have not overloaded it." Voice from the other end, "Overloaded it? You are 50 per cent. too cheap." To cut a long story short, he was told that in fact he must increase his price, as it was absurd to place an order at that price. If he put in a tender at an increased price, he would receive the order in due course.
In winding up the Debate on 8th June the Chancellor of the Duchy of Lancaster likened me to a well-known Kipling character called Tomlinson, who always spoke from hearsay, who never had any facts or experience of his own, and who was never able to substantiate anything he said. I am not accustomed to be questioned as to the veracity of my statements in my own business, and I want to make it clear that everything said in that Debate has been more than substantiated by evidence which has since been produced. In fact, mine was rather an under- than an overstatement because the first price put in by the sub-contractor was £72 and when he re-tendered it was £148 14s. The story, as I understand it, appears to be this. A well-known firm of manufacturers was given the responsibility to act as agents by the Government for the manufacture of this Bofors gun. In due course, they invited tenders from firm A, which I do not know, for the particular parts they wished to have sub-contracted. In due 1339 course, firm A quoted a price of £220 for this mounting. They then said that if they had a quantity the price would be reduced to £190, and subsequently they stated that they hoped to reduce it to £180. That was on 19th January, 1939.
On 6th February, as a result of an invitation to quote, by the same agents who were responsible for the whole of the manufacture of this gun, firm B, who are my acquaintances, put in a quotation of £72. It then appears that the agents made representations to firm B that they must have made a mistake and left things out, because the figures, in their opinion, were so utterly different from those they had had from firm A. To cut a long story short, because I do not know all the details, firm B eventually put in a figure of £148 14s. There was only a fortnight between these two quotations. I only wish to make one comment for the benefit of hon. Members who are not engineers. This business of wangling specifications when you re-tender is the oldest one known to the trade, and it is one of the standard ways of getting round quoted prices.
I would like to ask the Minister several questions, which I hope he will see fit to answer to-night. Why was it really necessary to appoint a firm which was entirely inexperienced as far as gun production goes as agents for the whole production of this gun? Does that firm of agents quote the War Office for their supplies, or are they left to arrive at a satisfactory price to suit themselves? Presuming the firm of agents are capable people, I am surely entitled to assume that the specifications which they sent to firm B were identical with those they originally sent to firm A. From that I want to know why it was, when they received the price of firm B, that they were in such a great hurry to persuade firm B to put their price up. As an ordinary commercial man I might see that these people were wrong in their price, but allow the matter to take its course, and if I found at the end of the contract that they were in a hole, I would do what I could to help them out reasonably.
But that, from the report of the conversations which took place, is not what happened at all. The agents were only too anxious immediately to tell firm B, 1340 "Your price is utterly ridiculous; put it up and we will give you an order. "They put it up to some effect, not by 50 per cent., but by 100 per cent., and even then they were some 50 per cent. below what firm A had quoted in the first instance. For the enlightenment of those Members of the House who are not engineers I say that it is utterly impossible, in my opinion as an engineer, for anybody in the case of an article of this size to make more than a 25 or 30 per cent. error. If they are capable of making a greater error they ought not to have been asked to quote, they are incapable people, and if they were incapable then the agents are incapable as well and ought not to have been appointed agents. If they are capable, then there is something very funny going on with regard to price adjustments. I understand, as indeed the sub-contractor states, that there was considerable modification, but if the specification as first sent to A was the one sent to B why was it necessary to say to B," Your price is wrong and you must put it up"? It seems a most irregular proceeding and quite contrary to the public interest.
I raised this matter on 8th June, when I was somewhat laughed at by the House for not producing names. I assisted the Minister as far as I could, but I endeavoured to explain that it is not fair to throw names across the Floor of the House because of the appalling result it has upon a man's business, and I declined to do so. But manufacturer B, as I stated on 21st September, acted in the public interest in coming forward and seeing the Minister himself. I want to know why, in view of the fact that there was only one agent and manufacturer responsible for the whole production of this gun, it has taken more than three months in order to get this matter properly ventilated. It seems to require a good deal of explanation from the Minister. I say at once, and I think he will bear me out, that so far from agreeing with me that my statement was correct, the Minister has all along taken the line that my statements are exaggerated, and though not without foundation entirely are not in accordance with what has been stated by the manufacturer. Therefore, I should like to refer to a correspondence I have had with the manufacturer. I wrote on 5th October to 1341 ask him whether he was, in fact, satisfied with his prices and what happened. I wrote It appears that on 6th February you quoted the price £72. I understood from you that at the time you quoted you were satisfied that this price was quite sufficient to cover you, with a reasonable profit. Am I correct? Subsequently, on 21st February, you submitted a revised quotation of £148 14s., which covered other certain requirements not included in the original offer. It would appear to me, and I shall be glad if you will let me know whether I am right or not, that there was a substantial difference between the new specification and the one originally submitted. The manufacturer replied: Between those two quotations there were a number of modifications made and a good deal of material"— Material, I would point out— was added on to the original list. That, of course, is the old game. Hence the difference in price. But that did not utterly satisfy me and I wrote: Am I to understand that you were satis-lied, as you told me, with the £72 for the specification as first presented? I appreciate what you say about the revised price and the different specification. The answer was, laconically, "Yes." I have nothing to add to what I have said before. I hope the Minister will see fit to explain the various points I have raised on this matter, which seems to be one of very great public importance.

§ The Minister of Supply (Mr. Burgin)
I am sure that the hon. Member for Ipswich (Mr. Stokes) will at once agree that, from the first moment when he made allegations of excessive price or of profiteering, I have endeavoured in every case to investigate the different instances he brought to my notice. I have here a pile of correspondence which I have had the pleasure of having with him. He has occasionally brought other hon. Members with him, and I have done my level best to investigate. The short answer to the allegations which the hon. Member makes to-night is that the events to which he refers did not happen. I shall ask the patience of the House in giving the whole of the facts, as I have taken the trouble to investigate them. I think the House would like to know, at the outset, that the armament manufacturer against whom this allegation of charging an excessive price is made is none other than Lord Nuffield; and he would be a bold 1342 man in this House or in this country who would make an allegation of profiteering against Lord Nuffield.
Let me go into the facts. The hon. Member for Ipswich is right: it would have been wrong, in the public Debate when he first called attention to this matter, to mention names, and I entirely agree. I never asked him for the names; that is certain. He is also right in saying that when it was ascertained that we were talking about the Bofors gun—there was some little dispute as to whether it was anti-tank or anti-aircraft, but it was subsequently identified as being an antiaircraft gun—and when that fact was established it was easy for me, from my official records, to determine that there was only one manufacturer outside the Royal Ordnance Factories who was making this particular type of gun or gun-mounting. The main contractor could then easily be ascertained. It is not so easy, when you have a main contractor who sub-contracts on a very large scale, to identify the sub-contractor.
There the hon. Member for Ipswich was helpful. He induced his friend the subcontractor to place himself in communication with me, and the sub-contractor came to my room in the House of Commons and told me the story. He did not confirm what the hon. Member for Ipswich had said in the House. I saw him in the presence of a civil servant. At the request of the sub-contractor no note was taken of the interview. Correspondence took place between me and the sub-contractor the same night and the following day. What the sub-contractor said was that the hon. Member for Ipswich had made use in the House of Commons of a chance conversation and that he had not accurately stated what, the sub-contractor himself would have said; and before—

§ Mr. Garro Jones
In what respect?

§ Mr. Burgin
Let me tell my own story first. Before making any allegation of any kind against the main contractor the sub-contractor asked leave to have the whole of his costs rechecked by his own costings department. I have a letter from him to that effect. The sub-contractor asked expressly, not only that his name should never be mentioned, but that nothing further should take place inside or outside the House until he had himself made this rechecking. I have not yet heard from him that he has made 1343 that rechecking. In the interval, as I now knew the name of the subcontractor, I made my own inquiry. Without revealing the sub-contractor's name—because I gave my word of honour that there should be no question of his being victimised or blacklisted, or anything of the kind, and that under no circumstances was his name to be disclosed —I sent for the managing director of the Nuffield Mechanisation Company. Lord Nuffield was the only effective shareholder at the time. The company has now changed hands and is a subsidiary, I believe, of Morris Motors. I sent for the managing director and I said to him, "I want to look through your lists and find someone who quoted approximately £72 for a particular Bofors mounting and who makes the allegation that, on that quotation being received by you, you told him to put up his price by 50 per cent. as a condition precedent of having an order." An investigation took place in the books and papers of the Nuffield Mechanisation Company, and subsequent interviews took place between the managing director of the Nuffield Mechanisation Company and my officials at the Ministry of Supply.
As a result of those investigations, I wrote to the hon. Member for Ipswich and set out the facts as I had ascertained them. What are they? They are these: In the early part of 1939 all the Royal Ordnance Factories were working to capacity. The Bofors anti-aircraft gun is a gun for dealing with low-flying aircraft. It is a gun of foreign invention and it was something quite new to this country. It was a question of making it quickly and in large numbers. What is the practice adopted by the supply organisation of the country? They say, rather than further milk the skilled staff of Woolwich, secure one of the large industrial organisations in the country and obtain their assistance. So Austin's, Morris's, Humber, Hillman, Stewart and Lloyds—these big industrial concerns that have buildings, capital, tools, skilled labour, machinery and management—are asked each in turn to take a factory and manage it on agency terms. There is no question of cost or price, but they are to secure the buildings, equip them, supply the staff, control the management and act in the name of the Government as agents supplying the technical elements. No greater source of engineering capacity exists in the country 1344 than Lord Nuffield with his immense organisation. The hon. Member for Ipswich sneers—

§ Mr. Stokes
I did not sneer.

§ Mr. Burgin
I beg the hon. Member's pardon.

§ Mr. Stokes
I regard that as an overstatement of the case. Lord Nuffield is a very eminent man and a very capable motor-car manufacturer, but I do not think Lord Nuffield would over-state himself as the right hon. Gentleman has just done.

§ Mr. Burgin
I thought it would be agreed that Lord Nuffield was capable of putting his hand to as much engineering skill as any other engineer in the country. In terms of aircraft or of armament stores, Lord Nuffield's companies figure amongst the best of the deliveries that the Ministry for which I am speaking enjoys at this moment. Lord Nuffield's company, the Nuffield Mechanisation Company, accordingly provided the building, equipped it, selected the staff and provided the management skill. They have no interest whatever in the price at which any particular subcontractor quotes, and therefore there is no motive and no inducement whatsoever to profiteer. Immediately the facts are examined, there is found to be no truth in the suggestion of profiteering in ringing up a sub-contractor and saying, "Your price is so ridiculously low and you must put it up."

§ Mr. Stokes
I have not made any accusation against Lord Nuffield. I merely said that firm A quoted a price and firm B quoted another, and the latter were then told by the Nuffield interest to put up their price. I say that is not in the public interest, and it is not the way business should be transacted in order to get the best price out of the manufacturer. He should have been left to continue and do the work, and, if he was found to go down the drain in the process, the Government would come to his aid and help him out.

§ Mr. Burgin
The hon. Member is not doing himself justice. The allegation has varied since it was first made in June. There was then no question of subcontractor A at all. All those facts were unknown to the hon. Member. The allegation was that a sub-contractor had 1345 been told by the main contractor to put his price up by 50 per cent. I have taken a great deal of trouble to go to the roots of all this because I think there is no more serious charge than a charge of profiteering. I have made it clear to all the contractors that, if there is a charge of profiteering proved, I am the very first one to hear of it, because my punishment would be severe. When you make a charge of profiteering you have three duties, one to the public, to investigate it to the full, to the man who makes it, to see that every fact that he brings out is investigated, and to the man against whom it is made, to see if there is any shred of foundation for it. Some of the feelings of the hon. Member occasionally go a long way. In one of his letters he said he thought every member of the armament ring ought to be strung up to a lamp-post.

§ Mr. Stokes
As a matter of fact. I did not say anything of the sort. What I said was that I would like to wring the neck of the armament firms in the ring. I do not withdraw that for a moment. I still feel like that.

§ Mr. Burgin
If the hon. Member thinks I have paraphrased his observation, I will leave him his own. It conveys, I think, the impression that I wanted to make. But I want to get back to this. The, Nuffield Mechanisation Company have no interest or inducement in altering the: price. Their one inducement is to deliver the effective article in accordance with the date they have given in their contract for delivery. One experience which every manufacturer of importance has had is that he has been let down by a sub-contractor not understanding the job that he undertakes. I doubt whether there is any manufacturer of size who has not had that experience. The Nuffield Mechanisation Company were confronted with two specifications for identically the same thing, one by a very well-known company, a household word, who have not only quoted £200 odd for this particular mounting, but have delivered mountings in accordance with their contract, and whose contract is open as any others, to full costing by the Department. That contractor A happened to be someone who would be the least likely to want to incur the displeasure of the Nuffield organisation. They have been contractors on a very large scale; they have put up one of the 1346 largest armament factories in the country, from which this nation is deriving immense benefit. They are, in short, a first-class firm, with first-class costing capacity, and with a first-class record, and they have carried out that record in the deliveries that they have made. [Interruption.]I am not proposing to mention names.

§ Mr. Gallacher
And they made first-class profits.

§ Mr. Burgin
There is no question of first-class profits arising. The Nuffield Company, knowing that for large deliveries and for expansion on a big scale they are bound to have sub-contractors, have sub-contractors on a very large scale. For these particular mountings they had sub-contractor A, who quoted something over the £200—the actual figure was in the hon. Member's letter.

§ Mr. Stokes
£220, and £190 for the other.

§ Mr. Gallacher
For one—for doing a number, £180.

§ Mr. Burgin
That is not quite right. The price quoted was a margin between £190 and £220. It was an estimate, before the work was begun. When they had delivered a number of these heavy gun-mountings—which are something which they are not accustomed to make; something they had never made in peace-time —they said that they thought that the ultimate price at which they would invoice them to the Government would be nearer £190 than £220, and that it might go down as low as £180. As against subcontractor A, with £220 and a possible fall to £190, the Nuffield Company received from a firm of ironpmasters, who had never been engaged in armaments at all, a price of £72. The telephone conversation, so far from being "You must put up your price by 50 per cent.," was an invitation to come and talk the matter over, as it was apparent, from a comparison of a price of £72 by an inexperienced firm and of £220 by an experienced firm, either that one was overcharging or that the other had made a grotesque mistake; and it is no use trying to hold a contractor to an absurd mistake. In connection with the War Office there have been cases where a man has put in a ridiculous tender and the Department has held him to the tender; and they have had nothing 1347 but abuse ever since. In this case subcontractor B was sent for, and he was asked, "Is it not clear that you have left a lot out?" To the credit of B, he admitted that he had left a lot out; that he had misunderstood the work involved, and had failed to make due account for material and processes.

§ Mr. Garro Jones
If it was in the specification, how could he have failed to take it into account?

§ Mr. Burgin
He did not read the specification correctly. Sub-contractor B recognised that there was a great deal in the work, which he had contracted to do at £72, which found no place in his costings. He was unfamiliar with the work, he was entirely inexperienced in what it involved, and he had quoted something which it was impossible for him to adhere to. Some modifications were made in the specification, but these were nothing like enough to account for the difference. The real difference lay in the recognition by sub-contractor B that there was something which he had not charged for.

§ Mr. Gallacher
Will you tell me one thing?

§ Mr. Burgin
Not now. I am not interested in sub-contractor A or in subcontractor B, but I am vitally interested in the Bofors gun—and if the House knew all the facts they would want more of these guns. I have no doubt that it is entirely wrong for a main contractor, like the Nuffield Company, to allow a subcontractor to quote an impossible price. It will only mean disappointment. The whole assembly line will come to an end because that particulae sub-contractor could not deliver on the day. In point of fact what has happened? Contractor A has delivered; contractor B has not. [An HON. MEMBER: "Why?"] That really is not my responsibility. The Nuffield firm has power to test its own sub-contractors. We are wanting to broaden the basis of manufacture, and have a great many firms taught, and if by reason of this experience this new big firm of ironmasters in the Midlands is enabled to be added to these civilian firms that can swing over to armament manufacture, the country will be the better for it. But the idea that there is anything wrong in calling a man's attention to the 1348 fact that his costing seems to show that he has made a mistake and has left something out is a very wrong one.

§ Mr. Stokes
Two hundred per cent.

§ Mr. Burgin
I am not interested in the percentage at the moment. I have the power to cost these contracts, but you do not put in a costing until there has been a delivery and there is something to cost. Firm A has delivered some and I can cost them. Firm B has not yet delivered at all, and I have no power to cost them, but I have the power to cost when delivery is made.

§ Mr. Burgin
Let me finish my own story, after which I shall be glad to give way to hon. Members who want to ask questions.

§ Mr. Gallacher
I want to ask one.

§ Mr. Burgin
The hon. Member's question will be so much the better if he listens first. I want to tell hon. Members that, apart from this particular Nuffield organisation, where there is an absolute flat denial that the contractor was ever told to increase his price by a particular figure at all, but where, I claim, in accordance with the engineering practice, the attention of the sub-contractor was called to the fact that his tender was ludicrous—I want to say apart from that —and my own Ministry have placed orders for some £110,000,000 since the 3rd September—we should adopt exactly this practice, if somebody put in a tender, to show that, if they were completely unaware of the task that they were to carry out, we should have no faith in it being carried out and we should send for the works manager or a director, and say, "Go over these costs carefully and see whether you have not made a mistake." That was exactly what happened in this case, and when sub-contractor B, at the suggestion of the hon. Member for Ipswich came to see me, which he did on the 31st July, he wrote to me on the 1st August this letter: I should like to thank you for giving me so much of your valuable time. I hope you were interested in what I was able to tell you. I much appreciate your promise to keep this matter confidential. I should be obliged if you would let me have a copy of any note your Secretary may have made in the conversations for my files. If there 1349 is anything I can do to assist, I shall be very happy to do it. I shall be looking through our original estimates next week when the member of my staff returns from his holiday and will write to you again. I wrote back: Thank you for your private and confidential letter. I was glad to have the chance of a talk with you, and I look forward to hearing from you again after the member of your staff has returned from holiday. At my express direction no written note of any kind was made of your talk with us, and if anything at any time goes on the file, it will be a short memorandum dictated by myself. I should like you to feel that this question of excessive costs in any article of supply is a matter of very great interest to myself and advisers, and I should welcome any information that from time to time you may feel able to bring to my notice. There is an exchange of letters by subcontractor "B," who asks for an opportunity of checking these costs before anything further is done in that matter. From that moment to this that sub-contractor has not made any further communication and the House may draw its own conclusion.

§ Mr. Logan
I understand from the Minister that the original quotation was for £72 from sub-contractor B. It was intimated to him that the Minister would like to see him. He came along and he was interviewed, and as a result he sent in an estimate of £148. What I am anxious to know is this: if in the first place he was wrong in his estimate, did he make any improvement in his new estimate, and did he deliver the goods at the new price of £148?

§ Mr. Burgin
Whether it was the subcontractor's fault or whether there has been difficulty in estimating I do not want to make heavy weather about it. In fact sub-contractor B has not yet made that delivery. As far as I know he rechecked the costs. He satisfied himself that a good deal had been left out in the original estimate and he doubled the figure. I think it would be fair to him to say that he would feel that that figure would give him a profit. It would be fair also to say that he said to himself, "It will come out in the wash after there has been delivers and we have been able to check it."

§ Mr. Logan
I do not want to make any charges but I should like to have a further explanation in regard to the £72. Having 1350 given the further estimate, which was £76 in excess of the original estimate, I take it that that estimate was accepted, that there has been no delivery and no complaint about an estimate of £76 above the original estimate.

§ Mr. Stokes
May I put this question to the Minister? From beginning to end is he aware that the sub-contractor has been kept informed of what I have been saying, and despite interviews and correspondence there has been no vestige of a denial but rather a confirmation that the telephone conversation as reported by me in this House is correct.

§ Mr. Burgin
How can I answer a question of that kind? The sub-contractor, in response to a request from the hon. Member for Ipswich, comes to see me and he tells me that the hon. Member for Ipswich spoke without his authority. That is what the sub-contractor said to me.

§ Mr. Stokes
That is not the point.

§ Mr. Burgin
It is.

§ Mr. Garro Jones
Be honest about it, for Heaven's sake.

§ Mr. Magnay
Who is the complainant, the hon. Member for Ipswich (Mr. Stokes) or sub-contractor B? I understand that sub-contractor B makes a mistake, and the explanation as given by the Minister is to many of us complete. How can the hon. Member for Ipswich now try to justify himself, in view of the statement made to the Minister by sub-contractor B?

§ Mr. Gallacher
There is one point which puzzles me. The Nuffield Trust send for sub-contractor B and advise him in connection with the specification, and as a result of the advice given by the Nuffield Trust in connection with the specification this inexperienced firm quoted £148. This was accepted by the Nuffield people because on their advice it was reasonable. How then does it come about that the Nuffield Trust have accepted a quotation of £220 from a very experienced firm?

§ Mr. Burgin
I will tell the hon. Member. The Nuffield Company are agents for the Government, producing a complete article. The Nuffield Company make a large part of it themselves through subcontractor A. This particular mounting is sub-contracted. Having a price with 1351 which they are perfectly content, from a firm they know they can rely upon and from whom they know they will get contract delivery, at a price varying between £190 and £220—

§ Mr. Gallacher
From this experienced firm?

§ Mr. Burgin
—An experienced firm— when they got a price of £72, a difference of one-third, they said: "This must be inexperience; come to see us." The firm goes to see them, inexperienced if you like, but a very well-known firm, a big firm of iron masters and colliery owners, very well known to a great many people in this country. They say, "Thank you. We realise that there was a lot more in it than we thought. We realise that our price is too low"—and they quote double.

§ Mr. Garro Jones
On a different specification.

§ Mr. Burgin
On a different specification and one, as I have said, which does not justify the difference. I have it on the authority of the Director-General of Munitions Productions that the changes in the specifications are not such as to justify a difference in price between £70 and £140, and I have told the House that the manufacturer realised that there was more in the manufacturing process for which he had quoted than he had at first understood. It is not the business of the Nuffield Company to spoon-feed sub-contractors. If a sub-contractor thinks he can deliver at £148 and the Nuffield Company think that their price of £180 is the proper price, that is the sub-contractor's business. It is not the business of the Nuffield Company. But all this will come out in prices when there have been deliveries and when my costings scheme can trace the articles back. The proof that there is something not quite satisfactory as regards the B company seems to be shown by the fact that there has not yet been delivery.

§ Mr. Markham
It is evident that the crux of the whole matter is what is the fair price for this equipment, and the test which may be applied is the costings price of the equipment as manufactured in Royal Ordnance factories.

§ Mr. Stokes
Woolwich.

§ Mr. Markham
I prefer not to give the place for obvious reasons, but I ask whether the Minister can give us the comparative cost of this equipment as it is made in the State factories under expert supervision and say whether the price compares favourably or unfavourably with the Nuffield Company. [Interruption.]Is it suggested by hon. Members opposite that a Royal Ordnance factory is less efficient than the Nuffield people? For years past hon. Members opposite who represent dockyard areas and other areas with Royal Ordnance factories have strongly attacked the Government for not giving more work to these areas, urging that it can be done cheaper and more efficiently under Government control than under private control. Here we have an acid test as to whether the price that is charged by the Nuffield Company is a reasonable one or not. It seems to me that sub-contractor B was an ignoramus in this particular type of work. The Minister, who is loyal to War Office contractors, said that it was a big firm, but everyone who has any experience in these matters will understand that you must expect mistakes of no little magnitude if inexperienced contractors are given work they have never done before. That is what happened here. I wish the Minister had been able to expose this firm, and I wish, incidentally, that he had said rather more about those who are making what is obviously a most unjust allegation against the Government.

§ Mr. Stokes
May I answer the hon. Member?

§ Mr. Speaker
We cannot carry on the Debate with constant interruptions.

§ Mr. A. Edwards
I should like to say this for the Minister of Supply. Having been connected with this particular problem from the beginning, I have felt from the outset that the right hon. Gentleman is just as concerned as we are about stamping out profiteering. The right hon. Gentleman said that he was determined to get to the bottom of it, and I think that he has honestly tried to do so; but I do not agree with his conclusions. The hon. Member for South Nottingham (Mr. Markham) has dealt with the question of a comparison with the ordnance factory. It so happens that yesterday I was talking to a business man who was supplying the Minister of Supply 1353 with certain commodities at 30s. a hundred. He has permission to supply other people at 36s. a hundred. A week or two ago he received an inquiry for 19,000 of these articles and he quoted 36s. a hundred. He got the order and delivery instructions, and the goods had to be delivered to an ordnance factory, with which the hon. Member for South Nottingham wants to have a comparison with regard to costs. There was a profit to be got, and possibly the price would be at least 40s. or 45s. The Minister is able to buy these things at 30s. a hundred. I do not understand how the ordnance factory has the right to purchase on that basis, because I understood that the Minister had control. If the ordnance factory buys on that basis, how would it be a fair test to make a comparison with such a factory? The hon. Member for South Nottingham must not get so indignant when he has listened to only a small part of the case.
When this matter was first raised, I said that if my hon. Friend the Member for Ipswich (Mr. Stokes) was not right in what he was saying, he ought to be exposed in the House, but that if he was telling the truth, then the Minister had a very great responsibility. When the right hon. Gentleman the Chancellor of the Duchy of Lancaster was speaking on the first occasion on which the matter was raised, he referred to my hon. Friend as a man who talked about things that he got from hearsay, but never had any proof. It is very unfair of Ministers to answer charges of this sort in that way, when nobody will give the House the names or the facts. To-night the Minister has preferred not to mention certain names, as also has the hon. Member for South Nottingham.

§ Mr. Markham
Surely, that should not be raised against one? It is in the national interests that certain facts should be withheld from the House. If the hon. Member is impugning my honesty, then I will say at once that I can give him, outside the House, the fullest details, such as one could not give in the House at the present time. The reason one keeps quiet on these matters is that one realises that certain information would be very helpful to the enemy in present circumstances.

§ Mr. Edwards
The hon. Member has confirmed the point I was making. My hon. Friend the Member for Ipswich had 1354 the same reason for not mentioning names, but the Chancellor of the Duchy of Lancaster said some very rude things about him and sneered at him for not disclosing names. There was on that occasion an uproar in the House for a minute or two because my hon. Friend would not mention names, precisely for that reason. I think the House owes an apology to my hon. Friend on that score. Then he said with a grand gesture, "I must leave the House to be the judge of the matter." Well, one thing has been established to-night. Let us be fair. What my hon. Friend said was exactly the fact. There may be an explanation of it, but the fact is that a firm was asked to quote on a specification and they quoted £72 and they were told it was not enough. Ultimately the firm quoted a price double that figure and it has been accepted.

§ Mr. Burgin
The hon. Member, I am sure, wants to be scrupulously fair. The allegation made by the hon. Member for Ipswich (Mr. Stokes) was that when the tender for £72 was put in, the sub-contractor was telephoned to and was told, "Put up your price by 50 per cent. and you will get the contract." Nothing of that kind ever happened at all, and Lord Nuffield would be intensely anxious to meet the man who said it.

§ Mr. Edwards
Nobody is impugning Lord Nuffield's honesty and integrity. He has nothing whatever to do with it. He has no more to do with this quotation or how it was arrived at than the Minister. It is no use pretending that my hon. Friend is attacking Lord Nuffield. At the time he had no idea that Lord Nuffield was connected with this at all. None of us had. It is only to-night that it has been stated, though a night or two ago I was given to understand that that might be the firm. But do not let us pretend that Lord Nuffield had anything to do with the quotation or knew anything about it. We have established this fact —that what my hon. Friend said is correct, namely, that somebody quoted £72 for this job and ultimately quoted double that price and that it was accepted. What the Minister says now is that such a statement was never made over the telephone. I did not expect when the Minister began to investigate this case that these people would come forward and say, "That is quite right; we were rather clumsy about it." I did not expect them to say, "We 1355 told this man that he would have to wangle the price." They would not admit that they had made a mistake and that is perhaps the reason why the Minister is concerned to defend them, if he can honestly do it. He is concerned to give the impression that they could not have made a mistake, but it is not a question of a mistake being made.
All that has happened is that we have the Minister's word against my hon. Friend's, that no such conversation took place on the telephone as was stated, but here is the fact, and we must not attempt to escape from it. The last quotation given by my hon. Friend to-night is a letter from the gentleman interviewed by the Minister and he was asked a specific question, "Were you satisfied with £72 for that original specification?" and the answer was "Yes." The Minister must not smile. It will not excuse the Minister if somebody has made a mistake. It is all right for him to explain away all the difficulties on his side and not to listen to the facts on this side. But I am saying nothing that is not established fact—established by the Minister himself. The Minister has established that what my hon. Friend said was precisely the fact. He wants to eliminate a certain part of my hon. Friend's statement about the telephone conversation, but that is all. He admits that the difference between the first specification and the other specification was not sufficient to account for the increase in price. [Interruption.]No, that is not against me. If you get a firm with some dignity and reputation to uphold they are not going to admit that they made such a big blunder as that.
I am going to bring to the Minister's notice to-morrow another case about a big concern and one of the Government Departments. A quotation was asked for a certain forging. The people to whom I am referring quoted £160. Their representative was called into this Government Department and told, "That is a lot of money." We have heard about spoon-feeding but these firms are soon told, if their prices are too much. I have never heard of such a case in my whole experience as to tell a firm which had made a quotation, "You must not be spoon-fed, but you will have to quote a little more." In the case to which I have just referred, it was said, "If you will have that thing properly designed by your men, we can 1356 deliver the same job for £40."That is another Government Department—a difference between £40 and £160—and I am going to bring that before the Minister. We are concerned about this, and I do not want the Minister to treat these matters too lightly or to think that his job is merely to justify people in this House. If anybody has made a mistake, it is his job to say so. Will he put these two specifications before my hon. Friend and myself and let us come to his Department and see them, alongside of Lord Nuffield's experts, if he likes? That would show willing. I shall be perfectly satisfied and will come back to this House and apologise if we have made a mistake, and if we have not made a mistake, will the Minister apologise? Will he accept that offer now?

§ Mr. Burgin
I do not know enough about the disclosure of specifications to non-contracting people to reply at once. I would like very much, if it were in my power, to accept the offer immediately, but I think hon. Members will understand that I would like to make inquiries first. I am not at all sure whether specifications for armaments are the sort of thing that ought to be disclosed. If it is in my power to disclose the two specifications, I would very much like to do it. The hon. Member for East Middlesbrough talks of some mistake. There has never been a mistake on the part of the Nuffield Company at all, and the ultimate price of this Bofors mounting is not yet determined with either contractor A or contractor B, because it depends on the cost after it has been made. There is no mistake by the Nuffield Company. If there has been a mistake at all, it has been on the part of the sub-contractors.

§ Mr. Edwards
The Minister is answering the very case that I am asking to have an opportunity of judging for ourselves. All that we are asking the Minister to do is to give us facilities, and I understand that his answer is, if there is nothing against that—

§ Mr. Burgin
If there is no military reason why there should not take place an interview in my room at the Ministry, at which these documents can be tabled and the hon. Members for East Middles-brough and Ipswich can come and look at them, I should like to do it, but the hon. Members and the House will under- 1357 stand that we are dealing with a main article of Defence, and I must in time of war take some elementary precautions to inform myself about the established practice.

§ Mr. Edwards
What I am asking is not that we shall have a casual look in his room—

§ Mr. Burgin
I did not mean that.

§ Mr. Edwards
My hon. Friend is used to dealing with specifications of this kind. I am not so much, but I am not without some experience of them. If they were presented to my hon. Friend's company to-morrow, he would want time to go into them. I dare say within one interview we could check up on that anyhow, but we would like to sit down at the job and to make a fair comparison between specifications Nos. 1 and 2, and find out whether the £72 has any relation whatever to the £220.

§ Mr. Burgin
I can say at once that the £73 and the £220 were on identical specifications.

§ Mr. Edwards
Then the firm who quoted £72 were so stupid, so utterly incompetent—

§ Mr. Burgin
Inexperience involves incompetence.

§ Mr. Edwards
But there is a difference in quotations on precisely the same specification between £72 and £220. Either one man has charged far too much or the other far too little. The Minister has agreed that after a fair investigation we will find out what would be a fair price. We are not going to have one or two experts in his own Department. We want an independent investigation, and it would be a good thing if the Government made this a test, because we are at the beginning of the war. The Minister has spent over £100,000,000, and it might avoid the expenditure of another £100,000,000 out of the pockets of the taxpayers and the men who are fighting at the front if we had such an investigation. We make a fair offer which has been accepted. After the examination either we shall come to the House and say that we are satisfied with the Minister's explanation, or he will come and say that these people have overcharged.

§ Mr. Burgin
Will the hon. Member realise what he is saying? How will the comparison of the original specification with the second one establish any other fact than whether sub-contractor B was or was not quoting too low in the first instance. How will it affect subcontractor A at all? I am only making this point because it is very right, when we have a Debate of this kind, that we should attempt to get at the facts so that we should not find ourselves at the end of the evening in a position in which we are not either of us getting what we are seeking. I warn the hon. Member now that any comparison between the £72 and the £140 will only have a bearing on subcontractor B. It will have no bearing whatever on sub-contractor A, on the Nuffield Company, or on the Ministry.

§ Mr. Edwards
We are going to establish whether the £72 or the £220 was a fair price. The other thing that we shall establish is this—and we must leave the House to judge, as the Chancellor of the Duchy said after discussing the matter on the first occasion—whether the request to quote on the revised specification was merely a way of covering up the whole job or, as my hon. Friend called it, jobbery? When the firm were asked to raise their price it was a different specification on which they quoted the higher price. The Minster has never given that explanation. We know that the firm quoted £72 and ultimately put in a price for £142, but we are told that they were told to do it or they would not get the job. That is a serious allegation. At the end of it the Minister might have come to the House and said, "That is quite right and I warned these people. I am going to take serious action if such a thing happens again." There would have been another way of overcoming it. It is that they thought it better to quote on a different specification so that they got a higher price.
We want to know whether there was such a difference in these specifications as to justify the higher price and whether it was an essential alteration. If we have got that out of this Debate it will have been worth while. I am satisfied, however, that we have the Minister's undertaking to do what I have asked and that we shall be able to establish an important fact which should be established on the Floor of the House. He has made very 1359 serious allegations against my hon. Friend, or at least he has questioned his veracity, telling us that no such conversation on the telephone took place. My hon. Friend, after a lot of difficulty and trouble, got his friend to see the Minister. I believe my hon. Friend wanted to be present but was not given the privilege.

§ Mr. Burgin
There must be some limit to these ex parte statements. There is no foundation at all for that statement. The hon. Member for Ipswich wrote recently and asked whether he could be present on the next occasion with the manufacturer, and I at once offered him that opportunity. Really, the hon. Member for East Middlesbrough has not got hold of the point that when the manufacturer did come he did not confirm what the hon. Member for Ipswich had said.

§ Mr. Edwards
On the other hand, we have had the two letters, the first one saying he quoted the price on a given specification, and the last letter—the Minister cannot escape this, everything else is immaterial—in which my hon. Friend asked "Were you satisfied with the price you quoted on the original specification?" to which the manufacturer said "Yes." There is no question about that.

§ Mr. Burgin
No, I said it condemns sub-contractor B. If B, after recognising to the full that his first specification did not cover a number of the processes involved in making the article, now confirms that he was satisfied with his price of £72, it shows that he was more inaccurate than I have given him credit for.

§ Mr. Edwards
His revised price was on another specification and not the original one. What is the use of the Minister trying to mislead the House on that? He is given a specification and quotes a price, and he still says that he was satisfied with that price. The Minister says that he does not know what he is talking about. The Minister is not competent to say that, even with his advisers. We have agreed to-night that we want to test out his advisers. It is on record in this Debate that B said "I understood the specification, I knew what I was doing, I quoted £72, and it was a fair price." They only get out of it by asking him to quote upon another specification.

§ Mr. Markham
The hon. Member has got hold of the wrong end of the stick. He is confusing sub-contractor B with A. If he will stick to one or the other we may find a little commonsense in what he is saying.

§ Mr. Edwards
I am sorry if the hon. Member claims a prerogative of common-sense and denies it to everyone else. I have tried to be reasonable. I have given the Minister full credit and I do not think anyone will question that the gentleman who quoted £72 for a specified job admitted in the last letter which was quoted by my hon. Friend, that he is still satisfied with the £72 quotation which he gave. That is not questioned. Is there any lack of commonsense in that?

§ Mr. Craven-Ellis
Was that letter dated prior to the amended specification?

§ Mr. Stokes
10th October.

§ Mr. Craven-Ellis
But was it prior to the amended specification?

§ Mr. Stokes
No, months afterwards.

§ Mr. Craven-Ellis
Then he was satisfied with the estimate on the original specification, and the question between us is the first specification and the second specification.

§ Mr. Edwards
The point is that B was asked to quote on one specification and quotes on that specification, and stands by what he quoted on that specification. We believe, though we may be wrong, that the people responsible, having got into some difficulties, did not like to admit they had made a mistake. They claim infallibility. So they say, "Let us wash the whole thing out and put forward a new specification," on which he quoted £148, but the man still says, Had they not given me a second specification I would have been glad to carry out the original specification for £72."It is not true, as the Minister has tried to establish, that he did not know his job, was inexperienced and incompetent. He said, "I am satisfied," and the Minister said: "I am amazed at the man being more stupid than I thought he was." Is it not possible that the explanation may be that the man is saying as plainly as he can that the people who quoted £120 were just robbing the Government? Is not that the logical conclusion, as logical as that 1361 of the Minister? It is all very well for the Minister to sit there and defend these people. It may be that these people were honest in asking £220 and that this man was just a fool. He may be a fool for all we know, but he comes out as a consistent fool, anyway. [Interruption.]The Government in certain Departments have been endeavouring to organise scarcity in the midst of plenty.
I am satisfied, having had this Debate, with the understanding with the Minister that we are to have an opportunity of looking at the original specification to see whether it was worth the £72, or whether it was worth £220. Perhaps he will not deprive us of the privilege and luxury of looking at specification number two. We may have a definite idea whether it was worth while to drag in a second specification; whether it was for honest purposes or to cover up something which was not straight dealing.

§ Captain Hammersley
I have no desire to whitewash the Minister and no special knowledge in this case, but J happened to know something about the Bofors gun before the Minister of Supply had anything to do with it. It seems to me that the national interest in connection with the Bofors gun was simply that we should obtain supplies of that gun at reasonable prices within a reasonable period of time. As hon. Members know, the Bofors gun was manufactured by a foreign country, and Lord Nuffield made himself responsible for manufacturing it here. When he did so, he was warned that in respect of some of his estimates he was going to be much too optimistic. Those warnings, in fact, came true. I imagine that the fact that those warnings were realised is well known to the Ministry of Supply. It is very easy for a manufacturer of metal goods of various characters to receive a specification in respect of a specialised armament and to say that he can deliver a particular part at a particular time and to make the quotation to the best of his ability.
In respect of this mechanism, of a character that is extremely complicated, the original manufacturers warned the British manufacturers that the latter were much too optimistic in their quantities. Events have shown not only that they were optimistic but that a lot of their sub-contractors were optimistic. There- 1362 fore, in this House, we have not to consider minute points; we have to consider the main point of the interest of the country, which is to get deliveries of this gun at reasonable prices in a reasonable time.

§ Mr. A. Edwards
Nobody questions that.

§ Captain Hammersley
I must make the point that price and period of delivery are important. I address myself to this problem with no special knowledge of this case, but with the knowledge that it is important, in a transaction of this character, to be assured that the manufacturers of the gun-mountings are really capable of carrying out the job. It is going to be no satisfaction to the Ministry of Supply to be able to tell a man that it may be 75 per cent. satisfactory but it may fail in some necessary part—in the machinery or in it's quality of steel. When it is put forward that this particular sub-contractor "A"is still satisfied that he would have been able to deliver the goods at £72 and has not in fact done so at a very much higher price, one must bear in mind that, these considerations having taken place and that the whole delivery of perhaps hundreds of guns is to be made, it is not in the national interest that the Minister of Supply should induce his contractors to place orders with subcontractors who may have very little experience, the result of which will be that the necessary armaments of the country are going to be delayed and that perhaps —this is the important part—they are going to fail in some vital characteristic.
I am not in a position to know anything about the rights and wrongs of this particular case, but I do know the history of the Bofors gun; I do know that definite promises were made with respect to delivery which were not carried out, and I know the country is suffering from it. It is the duty of the Minister of Supply to get deliveries of this gun at the earliest opportunity. I, therefore, support the attitude of the Minister in pointing out the necessity of the goods coming forward to specification and being produced by people who know their job.

§ Mr. Paling
I am rather befogged, and I think the Minister is responsible. I have been trying to think over what he said. I think he brought in a lot of irrelevant matter and did not stick closely 1363 to the rather simple question that has to be solved. Like some of my hon. Friends behind me, I could not see what Lord Nuffield had to do with it. A very simple question has been asked, and the Minister was using a lot of verbiage in order to avoid the main issue. After the many allegations which have been made about profiteering and will probably continue to be made, if this is the kind of examination that is going to be made into those allegations I am wondering whether we shall get much satisfaction. Frankly,. I did not get much satisfaction from what the Minister said to-night, and I hope that hon. Members behind me will press the challenge which they have made to the Minister, in order to see whether we cannot get to the bottom of this matter. I was interested in the righteously indignant speech of the hon. Gentleman the Member for South Nottingham (Mr. Markham). A man was pilloried because he made such a shocking mistake as to produce an article cheaply! I noted with what ease it was accepted that it should have been produced as dearly as possible, and that the price should have been made as high as possible.

§ Mr. Magnay
They could not have done it at a lower price.

§ Mr. Paling
The hon. Gentleman has made up his mind already that the price must be high. I hope that this matter will be examined from this angle. It is amazing to me, when a maximum price of £220 is quoted and a minimum of about £180, that a contractor who quotes a figure of £72 should not be given an opportunity of trying to do it. When I was on a local authority one of the things that we were instructed to do was seriously to consider the lowest tender. If we accepted a tender above it we had to account to the Department here. I think that might have been done in this case.

§ Captain Hammersley
Is the hon. Gentleman putting forward as a serious statement that if he knew as a fact, from his technical knowledge, that the price quoted was inadequate and that it would not produce the goods he would be prepared— it is only a part—to run the risk with the whole particular article?

§ Mr. Paling
I did not say anything of the kind. I am simply saying there were 1364 two prices. It was accepted that the highest price must be right. It was not accepted that the lowest price could possibly be right. No one knows now which of the two is right. It is rather an unusual practice, when you get a low figure like that, to tell the contractor it is too low and he must alter it, because that is virtually what has been done. Lord Nuffield has been held out as a paragon of all the virtues, who knows what he is talking about. I accept that, and I accept that he knew that the firm he was asking to quote had some standing and that it was used to reading specifications and knew what they meant. I was interested also to hear the Minister say that they had not even gone to the trouble of reading the specification.

§ Mr. Burgin
I never said anything of the kind. I said they had not read it correctly. As a matter of fact £72 was less than the cost of the ingredients.

§ Mr. Paling
I do not know whether it was or not. Perhaps that will come out in the washing. It is an amazing thing to say about a firm of the standing of this firm that they do not know how to read a specification. I do not accept that. I am profoundly dissatisfied with the way the Minister has dealt with this business. I do not know which is right, but it cannot be allowed to rest where it is. Whether £72 or £148, £180 or £220 is the right figure, no one knows. We ought to get to know who is right and who is wrong, and which is the right price, and we ought to get to know whether this is the Minister's way of dealing with these questions when they are brought up and whether this is the manner in which he tries to suppress profiteering in any case brought to his notice. I am dissatisfied with his answer and I hope my Friends will press their challenge to an ultimate conclusion.

§ Mr. Garro Jones
I think the House of Commons owes it to itself, certainly the Minister owes it to himself, to allow this matter to be threshed out till the truth is known. I want to pay a tribute to a previous incident in which I entered into correspondence with the right hon. Gentleman, which in many respects bears some similarity to the question now at issue between us. The local authority from the city that I represent received two tenders for the construction of a 1365 bridge. One was no less than £27,000 below the other. The local authority said, just as Lord Nuffield said in the case we are considering, that because the one tender was £27,000 cheaper than the other it was impossible that the cheaper firm could build the bridge efficiently. I sent the papers and the facts to the Minister, and, to his credit, he investigated the whole matter, and the local authority of Aberdeen was saved £27,000. The bridge now stands a monument to the error of judgment of the local authority, the honesty of the Minister in having the matter threshed out, and the skill, let me say, of the much-maligned engineer who submitted the lowest tender.
As far as I have been able to follow these matters, there has been a great deal of confusion thrown over this issue. There is only one point on which there is any direct conflict of evidence as to fact: that is in reference to what was said in the telephone conversation; and it seems to me that is not a matter of the first import. It is agreed that the first figure quoted by sub-contractor B was £72. It is then agreed that the firm submitted a revised tender of £148. But, between those two figures, there are two factors to consider. One is the amendment of the specification, and the other is the re-studying of the revised specification by the sub-contracting firm. We want to know whether that revised specification was put in in order to obscure the crookedness of the rejection of the lower tender, or whether it was in fact due to a mistake in estimating on the part of the subcontracting firm B. The Minister has been good enough to say that, provided that no military secrets will be endangered, he is prepared to allow both specifications to be investigated —not only, I am sure, by my two hon. Friends, unaided by expert costing accountants. But he ought to go into all the matters which are actually at issue, except the telephone, conversation—and there, where we are dealing with purely hearsay evidence, it is not of sufficient importance to worry about what actually took place.
Moreover, I submit that no military secret can be endangered. This gun was being made in foreign countries, and its plans and specifications are availabe to hundreds of British citizens. I am certain that there can be no substantial danger in adding to the number who 1366 already know those plans my two hon. Friends and the expert accountants who will assist them. I appeal to hon. Members, for the credit of the House of Commons, to see that these things are threshed out. By their very nature it is difficult to get to the core of facts, but there are many charges of racketeering in armaments. We all have dossiers of rumours. I have many which appal me, but I am not able to bring them up because of the difficulty of getting proof. I hope that this matter will be fully threshed out.

§ Mr. A. Edwards
The impression may have been given, as a result of this Debate, that someone here was attacking Lord Nuffield. May I say that the Minister was the first to mention him? When we began the Debate we did not know that he was concerned, and not a word has been said against him.

§ Mr. Burgin
With permission, may I say one word more? My point in mentioning Lord Nuffield as the contractor was to clear away the idea that there was any profiteering motive. My mention of his name was followed by my mentioning that this was an agency. I thought that it was important to mention the name of the contractor, who is the personification of integrity, in order to show that there was no profiteering motive. I am sorry that my method of investigation should have so displeased the hon. Member for Wentworth (Mr. Paling). I have gone to great pains to get to the bottom of the whole thing. I have had the manufacturer and his staff down time after time in order to go into the whole of the facts. If the allegation that the man was told to put up his price by a specific percentage is withdrawn, and all we are really investigating is whether £72, or £142 or £180 is the correct price, it is a much easier investigation. But it was put from the start as an allegation that the manufacturer had himself prevailed upon the sub-contractor to increase his tender by a given percentage, and nothing of that kind obtained.
The hon. Member for North Aberdeen (Mr. Garro Jones) spoke about thrashing this matter out. No one would be happier. I have done everything a Minister in a Department can do to thrash it out. Hon. Members opposite have suggested 1367 some further discussion on documents which in their view would help. I think they are completely mistaken in thinking that they have any relevancy to or bearing on the transaction at all. I have promised that I will look into it. The hon. Member must remember that when we are making a Continental gun we always improve it. The Bren gun or anything else which is made here is not the original method. Changes are going on. Therefore there may be a military difficulty, and I do not want it to be attributed to me that there is obstruction if there is such a military obstruction. Profiteering, whether small or large, is equally distasteful, equally serious and is equally being investigated. I come back to this—it is my responsibility to deliver these Bofors guns, and I am impressed with the fact that contractor A, against whom so much has been said to-night, the 1368 man who tendered for £220 and has cut it down to £180, has made deliveries and is up to time. I have not yet had other deliveries. The more contracts I can get of the "A"type delivered, the better will the armies in the field be supplied with weapons of defence.

§ Mr. Paling
The Minister accused me of lack of courtesy and I did not intend anything of the kind. The right hon. Gentleman is the very essence of courtesy. I said that I did not think that the methods he used in this case were likely to prove whether profiteering existed or not.