§ As I have said, the indications all present are that, in the absence of new action, industrial investment would be 1039 likely to continue on a downward trend for a time. I have therefore come to the conclusion that there should be some additional and direct encouragement to investment but that this encouragement should be mainly of a temporary kind.
§ I propose to increase to 80 per cent. the rate of first year allowance on all capital expenditure on plant and machinery which now qualifies for an allowance of 60 per cent. As a deliberate incentive to early investment, this increase will apply only to expenditure incurred after today and before 1st August, 1973. Second, I propose to end the discrimination against the service industries in the present free depreciation rules by allowing free depreciation for immobile plant and machinery in use in service industries in the development areas. This additional relief will also take effect from tomorrow, but will not be subject to any time limit. These two changes together will benefit industry by about £40 million in the financial year 1972–73 and about £150 million in 1973–74. The necessary legislation will be in next year's Finance Bill.
§ These additional incentives are considerable, but I have always taken the view that investment intentions are in the main governed by the assessment which businessmen make of the prospects for demand. Investment will therefore also be revived by two further proposals.