HC Deb 08 February 1967 vol 740 cc1634-6
22. Mr. Costain

asked the President of the Board of Trade if he is aware of the confusion which exists in regard to determining the date on which expenditure is incurred for the purpose of claiming investment grant and that his Department's interpretation in paragraph 124 of its booklet is inconsistent with Section 13(4) of the Industrial Development Act, 1966; and whether he will clarify the situation.

Mr. Jay

The formula in paragraph 124 of the booklet, which was devised in consultation with the accountancy profession, explains the basis on which, in normal circumstances, claims that expenditure has been incurred will be accepted for grant purposes. Since the booklet was issued a temporary higher rate of grant has been introduced for expenditure incurred during 1967 and 1968. Expenditure will be eligible for grant at this higher rate only if the sums in question become payable during these two years regardless of when they are actually paid.

Mr. Costain

Is there not confusion over this matter, and does the right hon. Gentleman agree that, since this Question was put down, some clarification has been made? Will he do his best to publicise the facts?

Mr. Jay

There is some complexity, but I do not agree that there had been any confusion, at least not in our booklet. However, we are very glad by personal explanation at the offices as well as by the pamphlet to try to make these complicated details clear.

23. Mr. Costain

asked the President of the Board of Trade whether he is aware that the lack of specific guidance as to which types of machinery and plant qualify for investment grants is inhibiting industrial investment; whether he is aware that the booklet recently published by his Department has done little to clarify the position; and what steps he proposes to take to make the grants system provide an incentive to invest.

Mr. Jay

No, Sir. The booklet has been generally recognised as helpful, and for the great bulk of investment it is quite clear whether it is eligible or not. In cases of doubt, the Investment Grants Offices are ready to answer inquiries.

Mr. Costain

Does the right hon. Gentleman agree that the fact that this investment grant is not essentially mandatory puts a restriction on new investment? Will he make the position clearer so that people know that they are entitled to it not just as a prerogative?

Mr. Jay

That is another question, but I have repeatedly made clear that, where an item of plant comes within the categories laid down, the grant is, of course, payable.

Mr. Barnett

Will my right hon. Friend consider a fresh inquiry into the value of any incentive grant? Does he agree that, generally, the economic mood of the country plays by far the greatest part in the making of investment decisions, and will he, therefore, do all he can to encourage his Cabinet colleagues to give higher priority to growth in the economy?

Mr. Jay

I fully agree that there are other factors at work, but there have been so many inquiries into this subject in the last two years that I think it best to see how the present system works before taking any further decisions.

Sir G. Nabarro

Has the right hon. Gentleman observed that the last few words of the Question ask him to provide an incentive to invest? Does not he realise that the greatest incentive of all is not the rate of cash grant but the quick payment of it, and the delay under the present system of 18 to 21 months for payment is far too long?

Mr. Jay

Certainly, but, as I have repeatedly said, we aim to reduce the period to something like six months as quickly as possible.

Mr. Patrick Jenkin

Is not the right hon. Gentleman aware that it is the anomalies in the system which create so much trouble? Does he realise that, although the Act provided for grant for computers, his Department has indicated that it will refuse a grant for the peripheral equipment to a firm which wants to install it in order to use a centralised computer? Is not this utterly ludicrous, and will he look at the matter again?

Mr. Jay

The general principle throughout the great range of equipment is perfectly clear. I agree that, as always in these cases, there are marginal difficulties which are really better discussed at the Investment Grants Offices than across the Floor of the House.