asked the Secretary of State for Wales 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.

There is a cash limit on the amounts available for procurement by my Department. Any unexpected increase in contractors' costs would reduce the amounts of business they can be given.For contracts where the price may be varied to take account of changes in wage and material costs, the variations are calculated in accordance with a formula normally based on published indices. The formula is not affected by cash limits. In the case of cost plus contracts, costs are taken into account as may be providcd for in the terms of the individual contract.