§ I have in mind now the method first introduced in 1945 by a distinguished 50 predecessor, who was then Sir John Anderson. I propose to reinstate the system of initial allowances for capital expenditure on plant and machinery, on the construction of industrial buildings and on mining works. These initial allowances will operate for Profits Tax as well as Income Tax. The rate for plant and machinery will be 20 per cent. in respect of capital expenditure incurred after today. Besides helping industry this will of course be available for agricultural machinery and will push forward the drive for more food production at home. Twenty per cent. was the rate originally granted in 1945 and it seems to me adequate now. For capital expenditure on the construction of industrial buildings, the rate will be 10 per cent.; it never went beyond that.
§ There is something further I want to say about these allowances. In view of the great importance to our national economy of extractive industries and especially of new mining development, and the unique character of some of the expenditure, I propose that the rate of initial allowance for capital expenditure, both at home and overseas, on new mining works—a term that includes such things as pit shafts and oil wells, but not plant and machinery—shall be at 40 per cent. instead of the 10 per cent. that was formerly granted. These proposals will cost the Exchequer nothing this year, but for 1954–55 the cost is estimated at £50 million and thereafter at £84 million in a full year. They should go a long way in assisting industry in the re-equipment, modernisation and expansion that is necessary, and will produce an increased demand for investment this year.