§ Mr. Hazell
asked the Minister of Agriculture, Fisheries and Food what form of incentives to encourage investment in agricultural equipment will be given to replace the investment allowances which ended on 17th January.
§ Mr. Peart
The White Paper on Investment Incentives said that while agriculture, as a key industry, should receive appropriate investment incentives to replace investment allowances, the arrangements proposed for manufacturing industries would not be suitable. Those arrangements concentrate investment grants on plant and machinery to the exclusion, for example, of buildings. The Government therefore proposed that special arrangements appropriate for agriculture and horticulture should be worked out in consultation with the leaders of the industry which we regarded as very necessary in order that their views could be obtained. These consultations have been completed in the short period of four weeks since 17th January, and I am glad to say that the National Farmers' Union and the Scottish and Ulster Farmers' Unions, the Country Landowners Association and the Scottish Landowners Federation have agreed in principle with the following arrangements.
As regards items eligible for grant under the Farm Improvement Scheme and the Horticulture Improvement Scheme, 28W my agricultural colleagues and I propose to seek legislative authority to add a supplement of 5 per cent. to the 25 per cent. grant in the Farm Improvement Scheme as proposed in the Agriculture Bill at present before the House: and also to the grant of 33⅓ per cent. available under the Horticulture Improvement Scheme. This 5 per cent. supplement will also be available in appropriate cases on work eligible for other grants (e.g. water supply in England and Wales) provided that the total of the basic grant and the supplement could not exceed 50 per cent. These supplements would be available on work for which application for approval of proposals was made from 17th January, 1966.
I am also discussing with the Farmers' Unions proposals which will be brought forward in due course for extending the scope of the Horticulture Improvement Scheme.
To supplement these existing improvement schemes it is proposed to introduce a new grant at 10 per cent. on investment in farm buildings and other fixed equipment not qualifying for grant under those schemes (or any other grant from the Agricultural Departments). This new grant would be subject to a minimum size of farm business at the lower limit of the Small Farmers Scheme.
As regards machinery, it is intended to introduce a grant of 10 per cent. on new tractors and other self propelled machinery used in agriculture and horticulture which are licensed under the Vehicles (Excise) Acts as "agricultural machines" paying duty at an annual rate of £3 15s. It is proposed that this should be paid on new machinery purchased on or after 17th January, 1966, in three annual instalments on production to the Agricultural Departments of the registration book and the receipted purchase bill.
Finally, it is proposed to provide that new plant and machinery which does not receive any of the above incentives will receive a 30 per cent. initial allowance in place of the present 10 per cent. Secondhand plant and machinery will continue to receive an initial allowance of 30 per cent. Assets receiving any of the investment grants or supplements will receive no initial allowance.
Details of all these proposals are still being worked out and will be announced as soon as possible.