§ Mr. John Mooreasked the Secretary of State for Industry what have been, since 1945, the different investment incentives offered to industry by Her Majesty's Government, specifying briefly what they were, when they were offered and when they were discontinued.
Mr. Alan WilliamsThree main types of general incentive have been used since 1945. These are: (a) Initial Allowances, which in effect accelerate the depreciation provided for by the normal writing down allowances; (b) Investment Allowances, representing a net addition to the sum allowable for depreciation by the normal writing down allowances; and, (c) Grants, a cash payment for a proportion of the cost of the capital investment.
Tables 1 and 2 are taken from C. L. Melliss and P. W. Richardson, "The Value of Investment Incentives for Manufacturing Industry 1946 to 1974" in A. Whiting (Ed.) "The Economics of Industrial Subsidies", HMSO, 1976. They show the various incentives in force from 1945 to the present day and the dates on which they were changed. It will be noted that the basic incentives have not been changed since 1972.
579WThe tables exclude a number of special measures often designed for the assisted areas. For example, the various Distribution of Industry Acts and Local Employment Acts enabled discretionary assistance including loans to be given to companies in the assisted areas and provided for the building of Government-owned
TABLE 1. STATUTORY GRANTS AND ALLOWANCES FOR PLANT AND MACHINERY CAPITAL EXPENDITURE BY MANUFACTURING INDUSTRY National Development areas Announcement date Investment allowances Initial allowances Writing*down allowances Grants Initial allowances Grants Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. 24th April 1945 … … 0 20 15.3 6th April 1949 … … 0 40 15.3 10th April 1951 … … 0 0 15.3 15th April 1953 … … 0 20 15.3 6th April 1954 … … 20 0 15.3 17th February 1956 … … 0 20 15.3 15th April 1958 … … 0 25 15.3 17th June 1958 … … 0 30 15.3 7th April 1959 … … 20 10 15.3 5th November 1962 … … 30 10 20 3rd April 1963 … … 30 10 20 100 10 17th January 1966 … … 20 20 40 1st December 1966† … … 20 25 45 1st January 1969† … … 20 20 40 27th October 1970 … … 35 25 100 19th July 1971‡ … … 55 25 100 21st March 1972 … … 100 100 20§ * These were based on a number of rates varying according to type of asset up to 1966. † The temporary grant increase of 1st December 1966 was announced to be limited to expenditure between 1st January 1967 and 31st December 1968. 1st January 1969 therefore refers to the date on which grants actually reverted to their previous levels. ‡ It was announced that this change would be of a limited duration applying to expenditure made before 1st August 1973. § Unlike the previous investment grants 1972 Regional Development Grants do not reduce the value of capital expenditure qualifying for tax allowances. The rate of grant is 22 per cent. in special development areas. 580W
TABLE 2. STATUTORY GRANTS AND ALLOWANCES FOR INDUSTRIAL BUILDINGS CAPITAL EXPENDITURE BU MANUFACTURING INDUSTRY* National Development areas Investment Initial Investment Initial Grants† Announcement date allowances allowances allowances allowances Lower Higher Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. 24th April 1945 … … 0 10 10th April 1951 … … 0 0 15th April 1953 … … 0 10 6th April 1954 … … 10 0 17th February 1956 … … 0 10 15th April 1958 … … 0 12.5 17th June 1958 … … 0 15 7th April 1959 … … 10 5 5th November 1962 … … 15 5 3rd April 1963 … … 15 5 15 5 25 17th January 1966 … … 0 15 0 15 25 35 14th April 1970† … … 0 30 0 40 25 35 27th October 1970 … … 0 30 0 40 35 45 21st March 1972 … … 0 40 0 40 20§ * Annual writing down allowances were 2 per cent. before 5th November 1962 and 4 per cent. thereafter on a straight line basis. † Grants up to 21st March 1972 paid under Local Employment Act and discretionary on creation of additional employment and its level. ‡ It was announced that this change would be of a limited duration applying to expenditure made before 6th April 1972. On 27th October 1970 it was however stated that the development area allowance would continue indefinitely. § 1972 Regional Development Grants apply to all industrial building in Development Areas and intermediate areas and unlike the previous investment grants do not reduce the value of capital expenditure qualifying for tax allowances. The rate of grant is 22 per cent. in special development areas. advance factories which have generally been offered on favourable terms. In recent years a wide range of selective assistance has been made available under the 1972 Industry Act including regional selective assistance, a number of industry schemes, the accelerated projects scheme and the new selective investment scheme.