§ 43. Mr. Beswickasked the Minister of Supply to what extent the form of contract accepted by his Department for research, development and production work by private industrial firms, provides for increased payments by his Department to meet the cost of increased wages paid by the contracting firms.
§ The Parliamentary Secretary to the Ministry of Supply (Mr. W. J. Taylor)The Department's policy is to make contracts at firm prices wherever practicable and to agree to a wages variation clause only where it is justified by the circumstances. It would take an unjustifiable amount of time to extract information about the proportion of total contracts which include variation provisions.
§ Mr. BeswickIs it not a fact that, according to the evidence given to various Select Committees, the majority of contracts contain this wages variation clause? Does this not mean that wage increases are passed on automatically to his Department? Does the hon. Gentleman not agree that these arms contracts are the pacemakers of inflation? In view of that, does he not think that it is not only morally unjustifiable but economically futile for his Government to stop wage increases to health workers and to permit these increases to be passed on automatically to his Department?
§ Mr. TaylorI do not accept the assumptions in the latter part of the hon. Member's supplementary question. There are some difficulties in this matter. My Department insists upon a fixed price contract wherever possible, but in the case of research and development contracts it is not always possible to estimate with precision the amount of work involved in the contract and, therefore, some latitude must be left with the Department.