§ 24. Mr. John Hannamasked the Chancellor of the Exchequer what is his estimate of the cost to the Reveune of treating, for capital depreciation purposes, the hotel industry as an industry.
§ Mr. Patrick JenkinThe cost might be of the order of £15 million a year, but this estimate is subject to a wide margin of error.
§ Mr. HannamIn view of the small amount involved, is my hon. Friend aware of the growing concern amongst many Members and those concerned with this vital industry about the effects next April of the ending of the grants and loans scheme and the introduction of value added tax upon future investment in a vital part of our foreign earnings sector? Will he try to bring the Treasury out of its out-of-date attitude so that the hotel industry can be treated as one worthy of depreciation allowances.
§ Mr. JenkinI appreciate my hon. Friend's concern with these matters. We had a full discussion of this whole area of policy during the proceedingson the Finance Bill on 10th July. I cannot go further than what I said then. I remind my hon. Friend that there is a very great difficulty once one starts extending capital allowances to non-industrial buildings.
§ Sir Harmar NichollsIs my hon. Friend aware that, whether there are difficulties or not, fairness should come into this? The hotel industry, as part of the foreign currency earning tourist industry, is as much an export industry as is a normal manufacturing industry. The idea that it should be treated differently simply because it is different is not in keeping with the treatment we expect from this Government.
§ Mr. JenkinIt is exactly the argument of fairness which creates the difficulty. If we were to extend capital allowances to this category of non-industrial build- 1526 ing, there would be absolutely no line which we could draw short of extending them to the whole range, which would lead to a cost of between £250 million and £300 million and would require an increase of about one-sixth in the yield of corporation tax to make up for it.