Printing Machinery (Hansard, 15 November 1976)

Mr. Alan Williams

The following is a summary of the recommendations for Government contained in the report by the NEDO Sector Working Party on the printing machinery sector and the action taken to implement them.

Short Term Recommendations. Recommendation.—Assistance to the industry under Section 8 of the Industry Act 1972 should be introduced at the earliest possible date. Action.—These arrangements were launched on 13th August 1976. Recommendation.—Financial institutions should be encouraged to regard stock appreciation tax relief as shareholders' funds rather than contingent liabilities of a company when considering the amount of short/medium term loans which they might prudently advance. Action.—The Chancellor of the Exchequer, in his Budget Statement, announced that stock appreciation relief would be continued in broadly the same form for a further two years and made clear his intention to introduce a permanent scheme of relief as soon as possible. 431W Thus for the great majority of companies stock relief implied a deferral of tax into the indefinite future. At the same time there has been a great deal of discussion within the accountancy profession on how far deferred tax should be shown in company accounts and the Government has contributed to this through its representatives on the Morpeth Committee and the Accounting Standards Committee. As a result the Accounting Standards Committee has now deferred the implementation of the accounting standard, which would have required full deferred tax accounting, pending a thorough review. There is every prospect that the eventual outcome will be satisfactory to all concerned. Recommendation.—Assistance should be provided for stockholding by manufacturers of vital materials and components and the accelerated projects scheme should be extended to give priority assistance to manufacturers of such products. Action.—Priority has been given to such products in the allocation of funds under the accelerated projects scheme. This scheme was of limited duration and it was not considered appropriate to extend it. However, the Department is putting forward proposals for a further use of the powers under Section 8 of the Industry Act 1972 to stimulate new investment in areas requiring particular improvements. The Government take the view that in general funds from public resources are better devoted to encouraging fixed investment than to financing additions to stocks for which finance is generally available on commercial terms. But the Government has made available an additional £50 million to enable the BSC to increase stocks of semi-finished steel. Recommendation.—Fiscal and monetary policies should be designed to produce prospective improvement in aggregate demand at an orderly and sustainable pace. Action.—As the White Paper "An Approach to Industrial Strategy" (Cmnd. 6315), made clear, the Government have accepted the need for a stable economic policy environment so that industry can have the confidence to exploit opportunities for expansion. While they cannot guarantee that other objectives or constraints will not from time to time require or compel policy changes which affect industry, they have undertaken that more weight will be given to industrial needs, and more consistently than hitherto. Recommendation.—ECGD to give automatic cover, with upper limits, to customers with good claims records. Action.—ECGD has explained the modifications introduced earlier this year to the credit limit provisions of its comprehensive short-term guarantees. The effect of these modifications is that, in the short-term field, not only have attempts been made to speed decisions, but to some extent ECGD already operates in the manner suggested: policyholders are able to transact business without obtaining a formal credit limit approval from ECGD in respect of each and every buyer. But ECGD has stated that where larger items are concerned and covered by its supplemental extended terms guarantees, it must approve an applica- 432W tion for cover for every contract in order to assess and control the risks it undertakes. Recommendation.—Restrict the 100 per cent. first year depreciation allowance to investment in new equipment and machinery only. Action.—Acceptance of this recommendation is ruled out by the commitment given by the Chancellor in his Budget Statement to maintain the present system of 100 per cent. first-year depreciation allowances in the interests of maintaining a stable tax environment for industry Moreover the Inland Revenue has provided a detailed explanation of other practical and policy reasons why the recommendation could not be accepted.

Medium-Term recommendations. Recommendation.—To consider assistance for smaller firms wishing to employ consultants. Action.—The new Section 8 arrangements referred to in the first recommendation set out above include provisions for assistance to small firms wishing to employ consultants to advise on their operational efficiency. Recommendation.—To consider the means by which the "marketing" of the various forms of aid and assistance to industry could be improved. Action.—Details of the new Section 8 arrangements have been circulated to all firms and trade associations in the industry and officials of the Department are in regular contact with firms in the industry concerning other forms of Government aid available to them. Recommendation.—To consider the desirability of certifying machinery which complies with Health and Safety at Work legislation. Action.—The Health and Safety Commission proposes to set up a number of industry based advisory committees within the framework of its advisory structure to consider the various problems, including SWP recommendations, relating to safety and health within their industries. Recommendation.—To consider a large-scale publicity campaign to attract young people to work in industry and demonstrate the priority which the Government now places on a prosperous manufacturing sector. Action.—It is mainly for industry to ensure that young people are made fully aware of the career opportunities which industry can offer. Careers advice is provided in schools and by the Employment Services Agency. In addition there is a wide range of activities carried out by Government and other bodies to promote understanding of industry and industrial careers. The Government made it clear in the White Paper (Cmnd 6315) that they intend to give greater priority to the needs of manufacturing industry and they have confirmed this on repeated occasions since then.