§ Mr. Harold Walker
asked the Secretary of State for Employment if private contractors carrying out reimbursable cost contracts for his Department will be subject to the cash limit constraints which apply to public sector employers, and in what way, or if such contractors will be automatically reimbursed for extra labour costs irrespective of the level of wage and salary settlements they may enter into.
§ Mr. Mayhew
Contractors are not reimbursed extra labour costs under firm price contracts, but where a contract provides for the reimbursement to the contractor of actual or calculated costs, that reimbursement will reflect nationally agreed wage settlements.
There is, however, a cash limit on procurement by my Department and any excessive increase in contractors' costs would, therefore, mean less work for them.