DRASTIC CUTS

Hauraki Plains Gazette, Volume 52, Issue 3253, 16 April 1943, Page 3

DRASTIC CUTS

PROFITS FROM ARMAMENTS FACTORIES IN ENGLAND ALL CONTRACTS INVESTIGATED The Government has cut the profits of an armament firm from £1,700,000 to £90,000. This was revealed in a White (Paper issued after the Government had taken action on disclosures about contracts made in the recent report of the Public Accounts Committee, specially in the case of the British Manufacturing Research Company, Ltd., of which Mr W. D. Kendall, M.P., is managing director.

The White Paper reveals that new prices have been settled on the basis of actual costs, plus profit at the rate of 4S per cent, on cost for 1940 1 and 3% per cent, on cost for 1941. The total profits for 1940 and 1941 respectively will be £38,745 and £51,600 on sales of £800,745 and £1,525,600. For the two years this is a profit of about £90,000 (before taxation). This compares with’ what would have been a total of nearly £1,700,000, if the prices arranged remained final.

As part of the general settlement, the Government will purchase from the company at cost less depreciation certain capital assets previously provided by the company for the purpose of extending their capacity. The committee had found that in relation to one contract entered into before the war the company gave the impression that they would not deliver guns to the Air Ministry until a price had. been fixed. There was no restriction of production or failure to deliver. But the committee ‘felt that the officers of the (Continued in next column)

Air Ministry in charge of the negotiations were influenced in concluding a price by the urgent desire to secure immediate deliveries.

The committee also found that the Ministry had difficulty in securing all necessary information, and the company’s refusal to give full access to their accounts and records was indefensible.

Finally, the committee states that the investigation recently made for the first time into actual costs discloses that the prices hitherto demanded by and paid to the company had been altogether excessive. As a' result, large sums which fireatly exceed any reasonable remuneration were in the hands of the company. The committee considered that the whole matter called for an early adjustment between the company and the department.