§ Mr. Mallonasked the Secretary of State for Northern Ireland why Northern Ireland has incurred a cut in the standard capital grant rate from 20 per cent. to 12.5 per cent; and what is his estimate of the percentage reduction in real terms.
§ Mr. ViggersThe decision to reduce the rate of standard capital grant was taken because this scheme does not provide good value for public money. Due to its automatic nature the scheme is unable to take account of factors such as the relationship between the investment and the creation of jobs or whether the project would have proceeded irrespective of grant assistance. In addition SCG has created a displacement effect whereby the grant aiding of some firms has placed their competitors, who are also dependent on local markets at a disadvantage.
The grant rate change is expected to result in a reduction in SCG expenditure this year of £1.75 million and £5 million in the next financial year. This represents 781W some 1 per cent. and 3 per cent. respectively of the current year's planned expenditure on industrial support and development.
The Government intend that available funds should be targeted increasingly on the stimulation of new developments, the promotion of competitiveness and the introduction of better design, quality and marketing. It is intended that this change of emphasis should be achieved by greater use of IDB's and LEDU's selective assistance schemes.