§ My last change in direct taxation relates to industrial investment. When I used to work in industry I learnt the prudence of writing off the capital cost of new plant reasonably quickly, so as to be in a position to replace it by something still better when it turned up. I am sure that that is the right policy for British industry in general.
§ My predecessors have made changes in the system of taxation for capital assets in accordance with the need to encourage or discourage investment expenditure in the aggregate. I said earlier that I hoped that plans for future developments in industry will continue to be made with confidence and I want to give a little practical encouragement in this direction. I accordingly propose to increase the present initial allowances by a quarter so that they become 25 per cent. for plant and machinery and 12½ per cent. for industrial building. For mining works the rate will remain at the special rate of 40 per cent.
§ These new rates will apply to qualifying capital expenditure becoming due and payable on and after today. These increases should be of particular help to actively developing concerns which need to retain in the business a high proportion of their profits. This will, in many cases, provide a compensating benefit for the slightly increased Profits Tax which the concern may have to pay. The cost of these improvements in initial allowances will be negligible this year, £16 million next year, and £23 million in a full year.