§ 73. Mr. Merlyn Reesasked the Minister of Aviation if the second report of the Lang inquiry has been received.
§ Mr. Roy JenkinsSir John Lang has presented his Report on the second part of the terms of reference given to his inquiry. Copies now available in the Vote Office.
In his first Report, Sir John Lang dealt with the circumstances in which excessive prices were agreed by the Ministry of Aviation with Ferranti Ltd. for guided weapon contracts. The second Report considers whether any changes in organisation or procedure are necessary to ensure better assessment of prices for similar contracts in future.
It is a valuable Report, and I should like to express gratitude to Sir John and his colleagues for the excellent work they have done.
The Report contains 36 conclusions and recommendations about contracts and procedures and five about organisation and staffing. A number of them are in line with views already formed in my Department and action on them is in hand. I think that the Chancellor of the Exchequer and I will want to accept most of the others. Some will need a good deal of study, including the recommendations that post costing should not be introduced into fixed price contracts and that changes should be made in the method of valuing fixed assets for the purpose of calculating capital employed and depreciation.
One important recommendation in the Report is that there should be equality of information between the Ministry and its contractors up to the time prices are fixed. This accords with the view expressed by the Public Accounts Committee and is welcomed by the Government.
The Government are undertaking a review of the profit formula and in doing so will take account of the comments of industry on the Report. In this review 64W they will have regard both to the general need to encourage efficiency and to the requirements of a national policy for prices and incomes.