HC Deb 17 February 1966 vol 724 cc1524-5
36. Mr. G. Campbell

asked the President of the Board of Trade whether a firm which starts a project in a new development area, not previously in a development district, between 17th January 1966, and the date of entry into force of the legislation foreshadowed in paragraph 51 of Command Paper No. 2874, Investment Incentives, will qualify for the grants to be introduced under that legislation.

Mr. Darling

My right hon. Friend hopes to make a statement shortly on this and certain other questions arising in connection with the proposals in Cmnd. 2874.

Mr. Campbell

Does not this uncertainty lead to postponement of projects? Is this not, therefore, part of the Chancellor's credit squeeze rather than an inducement?

Mr. Darling

Yes, this is one of the factors. [Laughter.] I am not agreeing with the hon. Gentleman. This is one of the factors which my right hon. Friend will mention in a statement which will be made shortly.

Mr. Patrick Jenkin

Will the Minister's right hon. Friend be informing the House on that occasion whether there is to be any right of appeal against the refusal by the Board of Trade to give an investment grant in any circumstances?

Mr. Darling

I shall certainly put that point to my right hon. Friend.

40. Mr. Gresham Cooke

asked the President of the Board of Trade how much less the new scheme of investment incentives will cost Her Majesty's Government compared with the previous investment allowances; and if he will apply this saving to making payments earlier than 18 months hence.

Mr. Darling

I do not expect the new scheme of investment incentives to cost less than the previous arrangements. The second part of the Question therefore does not arise.

Mr. Cooke

Is the hon. Gentleman aware that many economists and accountants think that the Government are going to save £100 million on this scheme as compared with that introduced by the Conservative Government? In view of that, ought not the Government's scheme to have been brought in much more quickly?

Mr. Darling

We do not accept that because the previous scheme was associated with a company's profits and taxation. It is true that the cost of investment allowances under Income Tax and Profits Tax would have been substantially higher—upwards of £300 million—but this is merely because the value of investment allowances, unlike grants, reflects the level of taxation. The tax on retained profits under Corporation Tax will be significantly less under Income Tax.

Mr. Barber

The hon. Gentleman has given one side of the equation. Would he now tell us what is the difference in cost between the old system of investment allowances, which operated in 1964, and the new system of investment grants which will operate in the future?

Mr. Darling

It is quite impossible to answer that question because the cost of grants will depend upon the level of investment.