Schedule 21 - First-year allowances for expenditure wholly for a ring fence trade
Finance Bill
5:15 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
First, I am interested to note that the logic of choosing 24 per cent. was the simple arithmetic of applying a multiplier of four and not a professional study of its impact on capital allowances. The Minister referred generally to a considerable cost, and I should be interested if she would quantify that figure. My understanding is that with about 10 per cent. of assets generally being long-life assets, the cost would not be hugely material. I have already set out our arguments. Ultimately, it is back to the principal argument—that it is part of a package designed to keep investment as high as possible. For all the reasons that we put forward, we would broadly argue that anything that is doable that is likely to be on the plus side if its revenue cost is not that great would be sensibly done.
The Government still have not made their intentions clear about royalties, despite having loosely promised to do certain things, and I understand that, contrary to my previous understanding, that royalty is relevant to about 20 per cent. of new investment and is particularly relevant to maximising the recovery of an existing field and to the inner drilling of wells. I do not know whether the Minister has anything further to say about when the Government will complete the package.
Overall, we are not debating a huge issue of principle. I hope that the Government will consider it further. Notwithstanding the vote that we just had, if the Government were privately wise enough to do their own investigation of the effects of the package on the industry during the coming nine to 12 months, they could be a little more generous in this territory without a massive tax impact. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.