HC Deb 27 May 1971 vol 818 cc202-3W
Mr. Kilfedder

asked the Secretary of State for the Environment to what extent his Department has evidence indicating that existing tendering procedures on a fixed price basis have an effect on the prices of tenders for building contracts.

Mr. Amery

It is not possible to identify all the underlying factors which determine a particular set of tender prices. Nevertheless, the firm price tendering policy is disinflationary as it requires tenderers to exercise their commercial judgment under competitive conditions about future changes in construction costs. This gives contractors an incentive to complete their contracts on the most economic terms and in as short a time as possible.

Mr. Kilfedder

asked the Secretary of State for the Environment whether he will consider a modification in the present agreed tendering procedure for public authority contracts so as to allow fluctuations on labour where the contract period is of more than 18-months duration.

Mr. Amery

Before the Government's policy on firm price tendering was reaffirmed on 17th March, 1971, various methods of relaxing the existing policy, including that suggested by my hon. Friend, were considered. Many were, however, rejected on the ground that they would produce inflationary effects.

Mr. Kilfedder

asked the Secretary of State for the Environment whether he proposes to enter into negotiations with the Federation of Building Trade Employers with a view to changing the existing practice on tendering for public service contracts.

Mr. Amery

I have sent my hon. Friend a copy of my statement of 17th March, 1971, to the National Consultative Council for the Building and Civil Engineering Industries. In this I explained why the Government decided to retain the firm price tendering policy but offered to review the situation if circumstances showed this to be necessary. I have nothing to add to this statement.