§ Mr. Dellasked the Chancellor of the Exchequer if he will publish in the Official Report the calculations which lead him to conclude that the combined value of free depreciation and cash grants in development areas is worth about three times as much on a discounted basis to a development area firm which is profitable than to one which is unprofitable.
§ Mr. HigginsAssuming corporation tax at 40 per cent., a profitable firm in a 201W development area will recover for each £100 of investment in:
(a) plant and machinery only £40 in first year allowances £20 in regional development grants £60 Total
(b) plant/buildings in the ratio of 4: 1 £35.5 in first year and writing down allowances (rounded) £20 in regional development grants £55.5 Total The unprofitable firm will recover only the £20 in regional development grants in both examples.
If these recoveries are discounted at 10 per cent. per annum—on the basis of an interval of 21 months between investment and payment of tax and six months between investment and receipt of grant—the ratios of recovery for a profitable firm to those for an unprofitable firm are 2.8 in (a) and 2.7 in (b) above.