HC Deb 22 March 1967 vol 743 cc1726-30
The Minister of State, Ministry of Technology (Mr. John Stonehouse)

With permission, Mr. Speaker, I should like to make a statement.

The House will wish to know that Bristol Siddeley Engines Ltd. has repaid to the Ministry of Technology a sum of £3,960,000. The effect of this repayment has been to reduce the profits which the firm made on sales at fixed prices, totalling approximately £16½ million, under a number of contracts for the overhaul of certain types of aero-engines in the years 1959 to 1963. The repayment also includes an adjustment for the fact that, by mistake, double payment was made for certain work carried out on some of these contracts.

The Department's staff had called in 1964 for information about past costs before agreeing further prices. The attention of the senior management of the company was then drawn by its staff to the high profits and it very properly brought this matter to the attention of the Department.

The cause of the excessive profits was that, in each year, the firm submitted very high quotations which the Department's cost-estimating staff did not detect as being above a fair and reasonable figure. I have been assured that the board of the company which, of course, carries the ultimate responsibility for this repeated over-quoting, has given it particular attention. The Department itself might have been expected to notice this over-quoting; I am satisfied, however, that to some degree this lapse can be attributed to pressure of work and staff shortages at the time.

This case emphasises how necessary it is that Departments should obtain the right to equality of information with, contractors when prices are being negotiated. This is an issue on which the Government have been in negotiation with industry for some time and on which, clearly, an early decision should be taken.

Mr. R. Carr

Is it not clear that the company concerned here has behaved in a completely responsible manner, with proper concern for the public interest? Is it not also true that the errors which arose are as much due to faults within the Department as within the industry? May I ask the hon. Gentleman whether this does not emphasise the tremendous importance of coming to a decision on implementing the Lang Report, which has been in the hands of the Government for several years?

Mr. Stonehouse

These unfortunate events occurred when the right hon. Gentleman and his friends were in office. It was their responsibility entirely that the Ministry's staff was inadequate to deal with the problem. This is a case of very serious proportions, where the junior staff in a company failed to co-operate in the right way with the Ministry in submitting quotations for repair work.

I am satisfied that the senior directors of the firm have behaved correctly, particularly during the last few weeks in helping to bring this matter to a satisfactory conclusion. This is a much better situation than the right hon. Gentleman and his right hon. and hon. Friends had when they made a mess over the Ferranti case.

Mr. Carr

Is the Minister's implication about the last few weeks in relation to the directors' behaviour suggesting that prior to that they did not behave responsibly? Will the hon. Gentleman answer my earlier question about the Lang Report, which has been in the Government's hands for two years?

Mr. Stonehouse

The senior directors of the firm behaved correctly throughout and did their best to advise the Ministry of the way in which the matter was mishandled in their own firm. I pay tribute to the way in which they have brought it to a satisfactory conclusion. However, it has been dragging on for a long time, and the negotiations between my Ministry and the firm have been protracted. It is only in recent weeks that we have been able to reach a satisfactory conclusion. It has been helped by the fact that, unlike the Ferranti case, there has been top security, and we have not had the leaks in the Press which were suffered during the Ferranti affair.

The Lang Report is a matter for current negotiation between my right hon. Friends and the C.B.I. Discussions are still going on and we hope very much that the C.B.I. will respond quickly to the proposals which we have made to it.

Mr. Thorpe

Does this not show, on the Minister's own statement, that the Technical Cost Department is scandalously under-staffed and at the moment is not competent to do a proper job on quotations and costings? In view of the opposition of the Labour Party, quite rightly, to the Ferranti scandal, and of the recommendations of Lang's second Report, is it not time that something was done and that the House should not merely be told that we are waiting for decisions in the future?

Mr. Stonehouse

We have dealt very effectively with increasing the strength of the Ministry staff to deal with these very important questions. The complement strength of the engineers in the Technical Cost Department has been increased by 78 per cent., and the actual strength has been increased by 77 per cent. The technical grades in the Technical Cost Department have actually increased by 23 per cent. We can claim that we have improved the position considerably, I think.

Mr. Dalyell

The Government's handling of this matter contrasts favourably with the previous Conservative Administration's handling of the Ferranti affair, not least because there have been no leaks to the Press. Although the Bristol Siddeley board has behaved honourably in this matter, is my hon. Friend also aware that some of us connected with Bloodhound on the Public Accounts Committee are alarmed that the problem of equality of information with contractors has not yet been solved? We look forward to his doing something about it.

Mr. Stonehouse

I thank my hon. Friend for his remarks on the first point. We have been glad that this matter has been dealt with in the strictest confidence between the firm and ourselves. That has helped this satisfactory conclusion to be reached.

I agree that it is vitally important that the Government should obtain equality of information and post-costing with these firms.

Mr. Ellis

Is my hon. Friend aware that some of us represent men and women who depend for their livelihood on work with this firm? Can he comment on what the Government's relationships are now with Bristol Siddeley? Can they look forward to having the whole matter cleared up and to a bright future for the firm in association with the Government?

Mr. Stonehouse

Relations are extremely good. Of course, the firm has now merged with Rolls-Royce. On the general relationship, I can give the assurance which has been asked for.

Mr. Onslow

Is the Minister telling the House that Recommendations 37 to 41 of the second Lang Report have been implemented to the full and there is no danger of a situation like this occurring again, or does he wish to qualify that?

Mr. Stonehouse

There is little likelihood, now that the number of technical staff in the Department has been increased, of such a case occurring again. The Government will be helped tremendously if the C.B.I. will respond to the request which we have made to it to come to agreement on the proposals.

Mr. Rose

Accepting that the senior directors have acted honourably, would the Minister say how they can be absolved from ultimate responsibility for the actions of their junior staff?

Mr. Stonehouse

I am satisfied that, ultimately, they are responsible. But we are pleased that the senior staff have behaved correctly in reporting the matter to us as soon as it came to their attention.