Clause 30
Finance (No. 2) Bill
4:30 pm
Julia Goldsworthy (Shadow Chief Secretary To the Treasury, Treasury; Falmouth and Camborne, Liberal Democrat)
The issue is whether the Treasury decided that it wanted creases down the front or not. It seems to keep changing every year.
I know that the Minister does not particularly approve of the report referred to earlier, which was undertaken for the Institute of Chartered Accountants in England and Wales by the Manchester and Nottingham business schools. The report examined the role of tax incentives in capital investment and expenditure. Looking specifically at the capital allowance issue, the report found that
“if it is intended that the capital allowances regime should provide positive incentives to increase or accelerate the level of investment in capital, this is not being achieved. Capital allowances, with the exception of some generous investment incentives such as those for environmentally friendly investment, are too small to influence the expected payoffs from the investment.”
The Minister has already expressed his concerns about the small scale of the study, and other hon. Members have referred to it as a focus group. Does the Treasury know whether the businesses claiming such capital allowances are aware of the fact that the capital allowance has increased and select it, or do its figures showing take-up of the scheme actually reflect small businesses that have already made a business investment decision and then look to see what allowances are available?
It is doubtful that capital allowances accelerate investment. Any further uncertainty would undermine it.