§ 12. Mr. Moreasked the Minister of Public Building and Works whether he will announce his policy on firm price contracts in relation to the construction industry.
§ Mr. MellishI am satisfied that the policy of firm price contracts in the construction industry is sound and should continue. The policy adopted by Government and recommended to public authorities is to invite tenders on a firm price basis where the contract period is two years or less and where the work has been thoroughly pre-planned.
§ Mr. MoreApart from the question of S.E.T., which the Minister has already referred to, can he say whether these contracts do cover all possible fluctuations in taxation? If not, how can he expect to get realistic firm price tenders if the situation is liable to be upset by Government action over taxation?
§ Mr. MellishThe hon. Gentleman is entitled to his view. The vast majority 237 of the building industry is covered by the fluctuation clauses in the R.I.B.A. form of contract; the exception is a tiny few. There is an anomaly with regard to the civil engineers, about which I am in discussions with my right hon. Friend the Chancellor of the Exchequer. I understand that the industry welcomes fixed price contracts in principle.
§ Mr. Chichester-ClarkSurely the Minister will concede that since the public sector is the client for 90 per cent. of civil engineering work there must be an unanswerable case for allowing proper fluctuation clauses in respect of S.E.T?
§ Mr. MellishI am discussing the matter with other Ministers and can say no more about it, except that I am alerted to the problem.