TREATMENT OF TRANSFERRED ASSETS FOR PURPOSES OF INVESTMENT GRANTS (Hansard, 15 January 1971)

§ Mr. Douglas

I beg to move Amendment No. 6, in page 15, line 4, at end add— ( ) As soon as practicable after the appointed day the Secretary of State shall lay before both Houses of Parliament details of the total amount of investment grant made to the Authority in respect of the assets transferred to the companies under the Industrial Development Act 1966. On Second Reading, the Minister for Industry said that this Clause might not be appropriately worded, and my purpose in moving this Amendment is to seek clarification from the Government as to whether the present wording is to stand or whether the Government propose to move an Amendment in another place. If the wording as it stands is adequate, that might satisfy the Committee, However, if it is proposed to alter the Clause in another place, we in this Chamber shall lose an opportunity of eliciting from the Government a clear indication of the import of the change from investment grants to tax-based incentives.

Also, we wish to have from the Government an idea of the value of investment grants going to these two companies. The investment grants to be transferred act as an underlying basis upon which the two companies will become competitive in international marketing terms. I do not want to go over the ground which we covered on Second Reading, but I am still not satisfied that the change from investment grants to tax-based incentives affords necessarily a desirable basis on which to found a company of this kind. The Minister may say that we are not really founding a company, but the general tendency here is to look at the tripartite agreement and to try to read, as it were, between the lines, noting that our partners on the Continent might have been more favourably disposed to this type of co-operation were it based clearly and firmly on an investment grant procedure rather than a tax-based incentive procedure.

I am not happy that the transfer from investment grant to tax-based incentive is conducive to the long-term future of these companies, and neither do I think that the change is necessarily conducive to 411 the betterment of British industry in general. However, in the present context, the Amendment would require the Secretary of State to give us the information called for. If the Minister assures the Committee now that that type of information will be part of the Authority's report to which we referred a few minutes ago, I should be prepared to accept that, but I look forward to hearing what he has to say.

§ Sir J. Eden

I am obliged to the hon. Gentleman the Member for East Stirlingshire (Mr. Douglas) for moving this Amendment and giving me an opportunity to refer to what I said on the subject on Second Reading. As he said, I thought at that time that it might be necessary to bring forward a Government Amendment at this stage. As he recognises, this would be necessary to take account of the change in the system of investment inducements from grants to allowances and to ensure that in the transfer of assets from the Authority to the companies those which attract investment payments do in fact receive them when transferred into the new ownership.

Unfortunately, I am not yet in a position to bring forward an Amendment to this Bill such as I thought might be necessary. The matter still requires further consideration. However, as the hon. Gentleman realises, there may well have to be other legislation, and I do not think that it would be sensible at this stage to try to anticipate exactly the terms in which we shall deal with the changes relating to investment inducements. On the present Bill, there has been no attempt to take account of the possible effect of the proposed legislation relating to investment inducements, and, in fact, that Bill has not yet been drafted. It would not be right, or, indeed, possible, to try to anticipate its precise terms now.

However, if, when the new investment inducements Bill has been drafted, it appears that this Clause will no longer have the desired result of enabling the companies to receive all the investment grant which would have been payable to the Authority after the appointed day in respect of the assets transferred, an appropriate Amendment to the relevant Clause in that Bill will be made.

412 We are trying here to ensure, in a rather complex piece of machinery, that the assets transferred, in so far as they attract grant, still receive that grant even though they have been transferred to the companies. In practice, what we are dealing with is the trading fund, and the trading fund as a whole is to become the companies.

As regards information about the amount involved, this will become available through the publication of the Authority's own accounts, in which it would refer to the total amount of investment grant actually claimed. In so far as the Authority refers to the total of investment grant claimed, it is, in fact, referring to the trading fund which is the part out of which the companies are being created.

I apologise if I have made the matter appear more confused, but I hope that what I have said will enable the hon. Gentleman to withdraw his Amendment.