Construction Contracts

HC Deb 19 April 1985 vol 77 cc290-1W

Mr. Colvin

asked the Chancellor of the Exchequer if he will make a statement about the use of variation of price clauses in Government construction contracts.

Mr. Peter Rees

The Government have decided to revert to the pre-1973 practice of agreeing to variation of price (VOP) clauses in their construction contracts only when these run for more than two years. The existing arrangements, which permit VOP in contracts which run for more than one year, were introduced at a time of high and rapidly escalating inflation. The Government's financial policies have brought inflation under control and will ensure that it remains under control.

This decision follows consultation with the construction industry, and careful consideration within the Government.

Departments will introduce the new arrangements as soon as possible.