HC Deb 23 February 1978 vol 944 cc1678-9
5. Mr. Adley

asked the Chancellor of the Exchequer if he intends to allow hotels to qualify for industrial building allowances, as pertains in the other eight EEC countries; and if he will make a statement.

9. Mr. Hicks

asked the Chancellor of the Exchequer what representations he has received that hotels should be eligible for industrial building allowances; and if he will make a statement.

Mr. Robert Sheldon

My right hon. Friend has received a number of representations on this point. I have noted the suggestion of the hon. Member for Christchurch and Lymington (Mr. Adley) but I cannot anticipate the Budget Statement.

Mr. Adley

Since the Minister knows my interest in the industry, will he accept that the non-classification of hotels for the industrial building allowance is the greatest single barrier to new investment and job creation? Does he agree that the notional tax loss that would be suffered if the proposal in my Question were implemented should be well and truly out-weighed by the new investment that would result if hotels were so classified?

Mr. Sheldon

We are now examining this matter. The cost of extending the industrial building allowance to new hotel building would be about £30 million The hon. Gentleman must remember the considerable assistance that is already being given by means of capital allowances, which cover up to one-third, or even more, of the cost of building new hotels or additions to them.

Mr. Hicks

Does the Minister agree that a notional tax loss of approximately £30 million would bring far more benefits to the economy than would some of the payments made by this Government to other sectors of economic activity?

Mr. Sheldon

I have no doubt that the development of hotels would be advantageous, and we shall do our best to encourage that activity. On the question of the indusrial building allowance being extended to the hotel industry, I would point out that the Treasury is now examining the matter. If we have anything to report, it will be done in the course of the Budget debates.

Mr. Michael Shaw

Will the Minister bear in mind the competition between British hotels and hotels abroad, which is very keen? Does he appreciate the severe disadvantage suffered by those who wish to invest in new buildings and to modernise buildings because there are not the super profits to put into vast new ventures unless an allowance of this nature is made?

Mr. Sheldon

I do not accept all that the hon. Gentleman says. Clearly, there is still a considerable amount of hotel development taking place, but there is enough in this point to warrant the further examination that is being given to the matter.