§ Mr. Onslowasked the Chancellor of the Exchequer what is his estimate of the average annual saving that will result from the reduced target profit rate for noncompetitive Government contracts.
§ Mr. Peter Rees[pursuant to his reply, 3 May 1984, c. 224]: The profit formula for non-competitive Government contracts is used essentially for the pricing of non-competitive contracts placed by the Ministry of Defence. In a full year, the saving resulting from the reduced target profit rate which came into effect on 1 April 1984 is estimated to be about £70 million. The actual figure will depend on a number of factors, including the value of orders priced by reference to the profit formula and the extent to which work already priced by reference to the previous profit rate continues into future years.