§ Dr. John A. Cunninghamasked the Secretary of State for Trade and Industry how many firms are currently involved in discussions with his Department about new industrial developments in Millom.
§ Mr. Anthony GrantTwo firms are currently involved in discussions with my Department relative to the Millom area.
§ Dr. John A. Cunninghamasked the Secretary of State for Trade and Industry on how many occasions the Local Employment Act financial advisory committee has failed to give a direct answer on claims for financial assistance referred to it by his Department in each of the last three years; and what subsequent steps were normally adopted by his Department.
§ Mr. Anthony GrantNone. But on occasion a final recommendation to the12W Department may be deferred pending receipt of further information from the applicant.
§ Dr. John A. Cunninghamasked the Secretary of State for Trade and Industry how many claims for operation grant were outstanding when the Industry Act became operative.
§ Mr. Anthony GrantOn 9th August 1972, when the Industry Act came into force, 68 applications for operational grant were under consideration.
§ Dr. John A. Cunninghamasked the Secretary of State for Trade and Industry what tests or requirements are necessary before a company is given a five year rent-free tenancy of an advance factory by his Department.
§ Mr. Anthony GrantFive-year rent-free periods could be considered before 22nd March 1972 for new incoming projects in the special development areas, subject to the provision of sufficient new employment. The appropriate industrial estates corporation, as landlord of an advance factory, would also have to be satisfied at the time of the applicant's financial standing.
§ Dr. John A. Cunninghamasked the Secretary of State for Trade and Industry how many companies in development areas who had claims for operational grant outstanding have been subsequently refused financial assistance under the Industry Act.
§ Mr. Anthony GrantI regret that information is not readily available in the form requested.
§ Mr. Hicksasked the Secretary of State for Trade and Industry if he will state the net present value of financial aids to companies in manufacturing and services which are located in development areas compared with those operating prior to June 1970.
§ Mr. Anthony GrantThe information is set out in the following table for both plant and machinery and industrial buildings. Since the discounted value for industry's investment projects will vary according to the mix of plant and buildings in each project, the table also contains for illustration a typical example.
13WThe table should be read in conjunction with the notes appended.
TABLE COMPARING THE NET PRESENT VALUE OF GRANTS AND TAX SAVINGS FROM CAPITAL ALLOWANCES, AS A PERCENTAGE OF COST OF INVESTMENT, FOR THE PRE-27TH OCTOBER 1970 SYSTEM AND THE NEW (POST-MARCH 1972) SYSTEM DEVELOPMENT AREAS Pre-October 1970 System New System New plant and machinery only*: Eligible for investment grant under pre-October 1970 system 49.8—52.4† 52.9 Ineligible for investment grant under pre-October 1970 system‡ 26.4—29.6 33.9 Secondhand plant and machinery 26.4—29.6 33.9 Industrial buildings only: If ineligible for Local Employment Act grant 24.9 43.9 Attracting a full LEA grant 41.4 43.9 Attracting a full higher LEA grant 48.0 43.9 A typical industrial investment project containing both plant and machinery and industrial buildings§: No LEA grant 44.8—46.9 51.1 Full LEA grant 48.1—50.2 51.1 Full higher LEA grant 49.4—51.5 51.1 *Excluding motor cars, ships, computers and assets used in scientific research, for which there were or are special arrangements. † Where a range of figures is given, they relate to the lowest (15 per cent.) and highest (25 per cent.) of the old writing down allowances. There was an intermediate rate of 20 per cent., but the average rate was between 16 per cent. and 17 per cent. so the lower net present value figure is more typical. ‡ This item provides, inter alia, a comparison of the value of grants and allowances to firms whose activities can be broadly described as service industry. § The ratio of plant to buildings is 4:1 which is about the average for investment by manufacturing industry in 1970. It has been assumed, for illustrative purposes, that the plant element qualified for both investment grants (pre-October 1970 system) and regional development grants (new system). Assumptions:
(i) Rate of discount 10 per cent.
(ii) 21-month delay for tax; 12-month delay for investment grants and LEA grants; 6-month delay for regional development grants.
(iii) Firms have sufficient profit to take advantage of tax allowance as early as possible (but see Note C below).
(iv) Life of assets: industrial buildings in excess of 22 years; plant and machinery 10 years (if written down at 25 per cent.) or 20 years (if written down at 15 per cent.). The undepreciated balance on plant and machinery taken as a balancing allowance.
(v) All assets brought into use in the year when expenditure was incurred in their purchase.
(vi) Grants and allowances at the rates in force at the end of the pre-October, 1970 system. For this reason, figures for both systems are calculated with Corporation Tax at 40 per cent. During most of the time the pre-October 1970 system operated (i.e. in respect of expenditure incurred between 17th January 1966 and 26th October 1970 inclusive) Corporation Tax was at 42½ per cent. or 45 per cent.
Notes: Significant differences between incentives systems not reflected in the table.
(a) The comparison is in terms of grants and taxation allowances in respect of capital expenditure on new buildings and new plant and machinery. No account is taken of other forms of assistance available under the old and new systems. These include, under the old system, loans and removal grants which were available in the development areas; and under the new system, selective assistance under section 7 of the Industry Act which is available on a wider basis than hitherto throughout the assisted areas and which includes loans, removal grants and interest relief grants for projects providing additional employment.
(b) Differences between the range of assets qualifying for grants and depreciation allowances. Normally only projects which provided additional employment in the assisted areas qualified for LEA grants which were reduced if the employment to be provided was insufficient to justify grant of the full amount; the new regional development grants are not linked to employment. More plant and machinery attracts the 100 per cent. first year allowance (free depreciation) under the later system than qualified for investment grant (e.g. plant used in the service industries and, in the manufacturing industries, office machinery, welfare and canteen equipment). There are also differences in the range of plant and machinery qualifying for investment grants in the pre-October 1970 system and qualifying for regional development grants under the new system.
(c) Difference in offset of capital allowances. The net present value of allowances is reduced if firms are unable, because of insufficient current profits, to claim their benefit at the earliest possible moment. To ease this position, the 100 per cent. first year allowance for plant and machinery in excess of current year profits may now be carried back against Corporation Tax profits of the previous three years. This provision was not available under the pre-October 1970 system.
(d) It should also be noted that the table does not take account of assistance available to specific industries only or of assistance available through such bodies as the Development Commission and Highlands and Islands Development Board.
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§ Mr. Joel Barnettasked the Secretary of State for Trade and Industry how many applications for investment grants have been received from firms in Lancashire; what was the total investment involved, what was the total claimed; and if he will make a statement.
§ Mr. Anthony GrantAbout 656,000 applications for investment grant have been made in respect of expenditure amounting to nearly £11,200 million. Grant paid amounts to about £2,650 million. Separate figures for Lancashire are not available.
§ Mr. Joel Barnettasked the Secretary of State for Trade and Industry what is the average length of time between application for an investment grant and the date of payment; how this time compares between Lancashire and the remainder of the United Kingdom; and if he will make a statement.
§ Mr. Anthony GrantThis information is not available. Applications for investment grant, which vary greatly in complexity, whether from Lancashire or elsewhere, are dealt with as expeditiously as possible once they are submitted with any necessary supporting documentation.
§ Mr. Joel Barnettasked the Secretary of State for Trade and Industry what is the longest time a firm has waited from the date of application for an investment
GOVERNMENT ASSISTANCE IN THE FORM OF GRANTS TO INDUSTRY Table A. 1966–67 to 1971–72 ((a) and (b)) 1971–72 Development Area 1966–67 1967–68 1968–69 1969–70 1970–71 Assistance excluding Investment Grants (c) Investment Grants (c) (£m.) (£m.) (£m.) (£m.) (£m.) (£m.) (£m.) Scottish … 11.1 49.8 62.3 74.1 75.9 10.5 Welsh … 1.8 22.4 37.4 39.4 47.6 6.2 Northern … 7.4 62.9 62.1 72.9 75.4 13.6 Merseyside … 7.2 36.2 48.4 56.9 64.5 4.9 South West … 0.4 2.2 4.2 4.9 6.9 1.0 All areas … 179.0 Total … 27.9 173.5 214.4 248.2 270.3 215.2 Notes:
(a) The figures in the table cover the following items: offers*of grants under the Local Employment Act; total investment grants paid in development areas, i.e. not the regional differential element; and grants made by the Highlands and Islands Development Board. It excludes grants which are available to specific industries only.
*(b) Figures on a development area basis are not readily available for payments of grant under the Local Employment Act for all of the years requested, and therefore offers of grant are included in the figures.
(c) Investment grants paid at the development area rate in 1971–72 amounted to some £179 million and further grants at the standard rate were made in respect of computers, and of plant hired out for use in construction and civil engineering, but no breakdown is available in the form requested.
16Wgrant and the date of payment; and if he will make a statement.
§ Mr. Anthony GrantNearly 650,000 applications for grant have been dealt with. It would require disproportionate effort to ascertain which of these led to the longest delay in payment.
§ Mr. Urwinasked the Secretary of State for Trade and Industry how many applications for industrial development grants submitted to his Department prior to October 1970 remain outstanding; how many have been refused; what is the total value; how many new jobs are involved; and what are the regional figures.
§ Mr. ChatawayAbout 430,000 applications for investment grant were received prior to October 1970 in respect of expenditure amounting to about £6,750 million. The precise statistical information requested is not available but it is estimated that relatively few of these older applications remain under negotiation.
§ Mr. Urwinasked the Secretary of State for Trade and Industry what was the total amount expended in grant aid toward industrial development in each of the development areas to 30th June in each year from 1967 to 1972; and what is the estimated amount for 1972–73.
§ Mr. Anthony GrantThis information is not available in the form requested but the table below gives the nearest approximation.
17W
Table B. Estimated Expenditure in 1972–73 Information on estimated expenditure in 1972–73 for individual development areas is not available. The latest estimate of expenditure in all development areas is as follows:— (£m.) Residual Payments of Grants under the Local Employment Acts 42.5* Investment Grants 140.0† Regional Development Grants 25.0 Grants under Section 7 of the Industry Act (i.e. grants for interest relief and the cost of removals) 0.1 Highlands and Islands Development Board 0.4 208.0 *The figure relates to estimates of payments and therefore is not strictly comparable with the figures included in Table A. † The total amount of investment grants expected to be paid in development areas is shown, not just the preferential element applicable to development areas; regional development grants are, of course, available only in the assisted areas.