§ Mr. Skinner
asked the Secretary of State for Industry what estimate he has made of the cost of the Government's support for the RB211–22 aero-engine; and how this compares with previous estimates.
§ Mr. Benn
The latest estimate of the costs to the Government since 4th February 1971 of the development of the RB211–22 aero-engine, together with the net cost of production and sale of 555 engines, is £142 million. The estimate in the White Paper "Rolls Royce and the RB211 aero-engine" on January 1972 was £170 million. I am sure that it will be a matter of satisfaction to the House that the present estimate is more favourable than was anticipated in 1972.371W
Part of the reduction is due to savings in costs in real terms, but the two estimates are not fully comparable, and part is due also to changes in financing arrangements and to a more complete estimate of the value of the work in progress taken over from the receiver.
The latest estimate also takes account of a recent contract between the Government and Rolls-Royce (1971) Ltd. under which the Government will contribute up to £20 million towards the cost of warranty liabilities on the first 555 engines. In addition the contract provides that Rolls-Royce (1971) Ltd. will pay a levy to the Government of 7 per cent. of the selling price of each RB211-22 engine sold after the first 555.