§ 58. Mr. Nunnasked the Chancellor of the Exchequer what steps he is taking to prevent increases in cost of goods supplied to Government Departments now that the 100 per cent. Excess Profits Tax has removed the financial incentive to economies in costs of production?
§ Sir K. WoodI appreciate my hon. Friend's anxiety that the existence of the Excess Profits Tax should not be permitted to result in increased costs to the State. So far as concerns fixed price contracts, the incentive to economical production is not removed by the existence of this tax at 100 per cent. In the case of 25 other contracts I rely upon the normal system of price fixing and of supervision of work in progress to obviate the danger to which my hon. Friend refers. Every effort is made to ensure that profit is not independent of efficiency and economy in production.