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Departmental Contractors (Cash Limits)

Volume 974: debated on Monday 26 November 1979

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asked the Secretary of State for Energy 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.

Contractors are not reimbursed extra labour costs under fixed price contracts but, where a contract provides for the reimbursement to the contractor of actual or calculated costs, that reimbursement will reflect the level of relevant nationally agreed wage settlements.There are, however, cash limits on expenditure which can be incurred by my Department. Any excessive increase in contractors costs would therefore mean less work for them.