HC Deb 15 December 1970 vol 808 cc1106-8
25. Mr. Loveridge

asked the Chancellor of the Exchequer what is his estimate of the savings to be derived in 1971–72 by switching from investment grants to capital allowances, after allowing for the transitional arrangements.

Mr. Maurice Macmillan

In view of the transitional arrangements I do not expect significant Exchequer savings to arise before 1972–73.

Mr. Loveridge

Is my hon. Friend aware of the great satisfaction felt throughout the country that efficient companies in future—[HON. MEMBERS: "Reading."]—will receive more encouragement than the inefficient?

Mr. Macmillan rose

—

Mr. Speaker

Order. For the benefit of new Members, it is not in order to read supplementary questions.

Mr. Macmillan

In so far as right hon. and hon. Gentlemen opposite allowed me to hear my hon. Friend's supplementary question, may I thank him for it and agree with it.

Mr. Maclennan

If the hon. Gentleman does not expect to make a substantial saving by that period, may I ask whether he will tell us why he is choosing to flout the view of the C.B.I. in Scotland that investment grants were substantially more desirable and helpful to Scottish industry than investment allowances?

Mr. Macmillan

My right hon. Friend, in the course of our debates, has made perfectly clear—the hon. Gentleman can refer to the White Paper—the reason for substituting allowances for investment grants. My right hon. Friend has also made perfectly clear the extra help which is being given to the regions, including Scotland.

Mr. McMaster

Will my hon. Friend note that the switch is particularly damaging to Northern Ireland, where there is a very high rate of unemployment and where many existing firms find it difficult to make a profit? Will he see whether something can be done to ameliorate the position there?

Mr. Macmillan

I can reassure my hon. Friend that the difficult position of Northern Ireland is always under our consideration.

Mr. Jay

Has the hon. Gentleman studied the Increasing evidence of a decline in industrial investment since the change was announced? In the face of that evidence, do the Government mean to press on with the change?

Mr. Macmillan

The right hon. Gentleman should be very wary of drawing causal conclusions in that way. One thing that the change must do, taken in conjunction with the reductions in corporation tax and income tax, is to increase company liquidity in this first year and in the second year, to an extent that, as I explained in my Answer, we do not expect significant Exchequer savings to arise before 1972–73.