§ LORD HARRIS rose to call attention to circumstances connected with a contract at a certain aerodrome, and to ask His Majesty's Government what are the terms of the contract, and what Department of Government is responsible for it; and, if necessary, to move for Papers.
§ The noble Lord said: My Lords, I haw felt it my duty to draw public attention to this matter by putting a Question in the 609 House, and appropriately enough, it seems, after what has been said by the noble Duke who is sitting on the Cross Bench, and also by the noble Earl, Lord Selborne. I have put the matter generally in my Question, because I found great difficulty in tracing what Department was responsible for the particular contract in question. I tried the Board of Works first of all, but I found it did not concern them. Subsequently I gave information to the Air Ministry and to the Munitions Department; so that I hope I have conveyed to the Department which is concerned the name of the place where the contract was placed. I did not think it would be in order to publish, the name of the place as it might he giving away information.
§ What I complain of is the system on which these contracts are given. They are given on the lines that the contractor is paid by a percentage on the amount of the cost. On March 4, I think it was, the Air Ministry wrote to a certain Farmers' Federation to the effect that they noted the protest of the Federation, but that, having regard to the exceptionally difficult circumstances which now obtain and the urgency of getting the special work of aerodrome construction started promptly and executed quickly, no form of contract other than that of payment of cost plus a percentage was possible at present. But an assurance was given that all expenditure was carefully checked, and that no contractor was able to fix rates arbitrarily or to incur unlimited expenses. The expression that "all expenditure is carefully checked" is somewhat vague. There are two kinds of checking—checking in an office, and checking on the spot. Those are two very different things. I should say that any system of check on the spot in the specific case of which I am thinking does not exist.
§ I had occasion recently, at a sitting of a Tribunal, to comment upon the procedure at this particular aerodrome; and from the body of the Court there rose one after another several gentlemen who corroborated what I had said, and who were full of complaints as to the system that was being pursued in various places in my own county; in the first place, by attracting away men by giving a rate of wage much in excess of that given in the neighbourhood; and, secondly, the great waste of time and money incurred because the men were not working hard. I do not complain of men going away from the employment in which 610 they are given the ordinary wages of agriculture and going to some contractor who is ready to pay them more. What I complain of is that they are not fully employed when they are there, and that the Government—which will state, I fancy, that they cannot get this work done except by a system of percentage on cost—does not employ a sufficiently close scrutiny of the system that is going on in these various works. Consequently men are being taken on unnecessarily for the amount of work to be done, and are being paid extravagant wages, and this system does not contribute towards economy in public expenditure. If the contractor is left free to pursue his own sweet will unchecked by the Department, human nature being what it is, possibly he will engage more labour than is necessary, and not insist upon that labour being constantly employed, with the result that those works are costing a great deal more than necessary, and that the contractor is obtaining a very much higher profit than that to which he is entitled.
§ The result of my remarks at the Tribunal was that the Press took notice of the matter; and following upon that I received a great deal of information from all parts of the country. At this late hour of the evening I will not trouble your Lordships with quotations; but in every case allegations are made which, if they are true, I think the Government ought to regret, because it is the fault of their system. If these statements are true, they are verymuch to the discredit of the Department concerned because they do not keep a sufficient check over the contractor. Goodness knows one does not want to see a larger body of Government employees than is necessary; but under a Government system which allows a contractor to be paid by a percentage on the cost of production it is obvious that, if that cost of production is to be properly kept in order, there must be a severe system of check. In the particular case to which I am referring there was no such system of checking. That is not fair to the taxpayer. It is not fair to the neighbourhood, which is losing men from other classes of work; and in addition these men are not producing as much for the wages paid to them as ought to be the case.
§ I have just looked at the evening papers and I see an article headed "Payment by Results." I strongly recommend to the Department concerned with the giving out 611 of these contracts that they should study that article carefully; for certainly in the case of the information which has been supplied to me the system of payment by results is not being followed; and no attempt at a severe system of check is being made to secure payment by results. I have received my information from various parts of the country—Midland, Eastern, and Southern. I do not propose to read it, but I can supply it to the member of the Government who will reply, if he so desires. The allegations are really perfectly astounding as to the amount of wages given. I cannot prove the allegations, therefore I do not produce them as evidence; but in the specific case to which I refer in my Question I could prove, if necessary in a Court of Law, that an employee of mine left me—I do not complain because he left, although he had no reason for leaving as he himself acknowledged—and went to a neighbouring aerodrome where he was given, not at his own job, because he was a horseman, but as an ordinary labourer, nearly double as much as I had been giving him, and at the end of a week—he was a very honest man—he came back. He said he could not stand the waste of time which was going on there, that he put in in ordinary work in two hours more than he put in in the whole day at the aerodrome, and that at one time he was throwing a few bricks in one direction and then occupied the remaining time by throwing them back again. At the end of a week he was so sick of it that he came back to me at the ordinary rate of wage. There is an honest man. If it is true—and in this particular case it is true—that this kind of thing is going on, I do not use too strong language if I say it is perfectly abominable that the taxpayer should be robbed in this way.
§ I have put down at the end of my Question that if necessary I will move for Papers. I hope the noble Lord will be able to give me such information as will not necessitate that, but I am certainly not going to allow this matter to drop. It is far too important. It is not merely discouraging to other employers of labour in the neighbourhood, as pointed out by Lord Selborne and the Duke of Marlborough, but it is prostituting the whole system of labour in this country. If men are to be allowed to take to jobs of this kind, to be paid enormous wages, and not to be expected to do work, it is absolutely unsound in principle and is going to do a great deal of harm to this country, and it 612 will be necessary for me, if I cannot get the information I want, which is as regards the system and the check upon that system, to pursue the matter a great deal further, and to bring before your Lordships a mass of evidence, which I have no doubt I can do, from persons who have the experience which, in the case I have mentioned, I possess.
§ LORD ROTHERMERE
My Lords, the best reply that I can make to the noble Lord's speech is to tell your Lordships the policy of the Air Ministry in regard to contracts for the construction of aerodromes. The Ministry would very much have liked to base all these contracts on the payment of a lump sum for the work done, but this is not practicable under present conditions. It was found that no contractor of standing would enter into such a contract, except he was allowed a very large sum for contingencies and profit—such a sum, in fact, as would enormously enhance the cost. Moreover, before undertaking such a contract the contractor, in order to frame an estimate, would require in the case of large aerodromes a period of two months or more to enable him to have levels taken, to provide for drawings and a complete schedule of all there was, and to have all the quantities measured. We could not spare any time for this purpose.
There is no work being undertaken in this country at the present moment of more importance than the construction of aerodromes. We are very much behind-hand in this work, and we shall be exceedingly fortunate if all the construction work is finished in time to meet our urgent necessities. No fewer than 130 aerodromes are under construction. Instead of the "bulk payment" contract, we have been reluctantly compelled to adopt the "percentage and cost" for the contract. To work this as satisfactorily as possible, all contractors are very carefully selected. No contractor is allowed to earn more than a profit of 4 per cent. (which includes all his administrative charges) on the first £250,000 cost of charges and material, falling to 3 per cent. on the second £250,000, and 2½ per cent. on all sums in excess of half a million pounds. These costs are carefully checked by technical people and all accounts are audited by the Finance Department of the Air Ministry. I am not satisfied that this check is sufficient and am instituting further checks to meet some of the criticisms I have received.
613 Coming to the matter of wages, I wish to impress upon the house that, however exorbitant the rate of wages may sound, no wages are paid at more than the trade union rate in the district where the work is being done, or such rate of wages as is allowed as a result of arbitration before the Committee on Production. In a great many of these agricultural districts of England for work on aerodromes the ordinary rate of pay is 52s., 58s., and in one case 64s. per week, but it is the standard trade union rate which the Government are agreed to pay. I have had to explain this matter carefully in quite a large number of letters. Complaints have reached me from many quarters. I know that even as compared with the 25s. a week rate of wages now given to agricultural labourers, the wages paid in the construction of aerodromes in country districts seem entirely out of proportion. This may be so, but it is not a matter which the Air Ministry can really control. Like other Government Departments, we must pay the trade union rate of wages, and if alongside an aerodrome under construction, agricultural labourers are only earning 25s. a week, whilst men using a pick and shovel are earning more than double this rate of wages on aerodrome work, it is unfortunate, but it cannot be helped.
We are by no means satisfied with the amount of work that is being done in these aerodromes, but it is an extremely difficult question to deal with. I am afraid that in regard to all Government work throughout the country, whether shipbuilding or the construction of aerodromes, there is not that same amount of work being done by individual workmen which we should all like to see. The matter is receiving our most earnest attention. We have in charge of all this work an Administrator General of the Air Ministry, one of the most competent men in this country, Sir John Hunter, who, I am informed, is quite the best constructioner engineer in this country, and who gives his unremitting attention not only to the work itself but to all such points as have been raised by Lord Harris and the Earl of Seaborne.
I am greatly obliged for the reply of the noble Lord, and upon his assurance that he is not satisfied himself with the check that is being kept on this expenditure, and his promise that he will look into it—for it is quite obvious from the 614 reply supplied by the Department that he certainly, in the particular case to which I referred, and I suppose also his Department, are entirely ignorant of the facts—I shall not move for Papers. The noble Lord laid a great deal of stress upon the importance of building aerodromes and the particular character of that class of building. In the particular case to which I have referred the aerodrome was built months ago and finished, and the only work where this man was given this exorbitant rate of pay for ordinary labour, and not skilled labour, was to shift a few huts and dig a trench for a water pipe. For that he was given, I imagine, double the rates for agricultural wages. I do not move for Papers.