Investment Incentives

HC Deb 03 February 1971 vol 810 cc1669-71

31. Mr. John Smith

asked the Secretary of State for Scotland if he will cause the Scottish Development Department to undertake a comparative review of the advantages and disadvantages of tax allowances as opposed to direct grants for the attraction of industry.

Mr. Gordon Campbell

My right hon. Friend the Secretary of State for Trade and Industry is keeping a careful watch on progress under the new system of investment incentives, which his Department with its direct industrial contacts is in the best position to do.

Mr. Smith

Will the right hon. Gentleman not admit that the change from investment grants to free depreciation was made as the result of a decision to cut public expenditure and not as a result of a thorough study of the comparative advantages for regional development? Will he agree that the result of this change is that Scotland will get a lot less investment from the Government than it used to get?

Mr. Campbell

The answer is "No" to both points.

Mr. James Hamilton

Is the right hon. Gentleman aware that the C.B.I. in Scotland also put forward the point of view that a discontinuation of investment allowances would be detrimental to Scottish industry? Is he further aware that industrialists in my constituency have put forward the same point of view in relation to grants? Will he not reconsider the position, bearing in mind the unemployment situation in the development areas?

Mr. Campbell

Various industries will see advantages in the new system, for example, labour-intensive industries and the service industries, which previously had no help. There will be an opportunity in the debate later today for all of this to be discussed.

Mr. Dell

How can the Secretary of State for Trade and Industry consider this matter when the figures for tax allowances cannot be divided regionally but can be given only for the country as a whole?

Mr. Campbell

The Question was about the attraction of industry. My right hon. Friend has direct contacts with industry which makes his Department the best to carry out this review.

Mr. Brewis

Is it not the case that the Department of Trade and Industry inquiry showed that 60 per cent. of industrialists prefer the free depreciation? Is it not possible that the customer is right on this occasion?

Mr. Campbell

We have always accepted that there may be some capital-intensive industries which may not find the new system as beneficial to them as the old. But there are many other industries which will regard the new system as better for them.

Dr. Dickson Mabon

Is the right hon. Gentleman aware that this is a very serious matter of concern to all which he should reconsider? I refer to the answers which he gave a moment ago, both in the negative. Are not the Government pledged to keep the proportion, not the total, of money for regional aid the same as it is at present for Scotland? Is not the amount of money to go down? This is a public expenditure exercise. In view of the question of my right hon. Friend the Member for Birkenhead (Mr. Dell), if the study is going on, should not the right hon. Gentleman consider publishing the results of it in a year or so to demonstrate whether what he asserts is true?

Mr. Campbell

We have already stated several times from the Dispatch Box that, broadly, the amount of money in the differential for the development areas is to remain the same and the proportion is to increase.