Clause 35
Finance Bill
11:15 am
Adam Afriyie (Windsor, Conservative)
The clause concerns the short-term phased removal of agricultural and industrial buildings tax incentives, which were designed to encourage the building of such buildings. It amends parts 3 and 4 of the Capital Allowances Act 2001. I would welcome the simplification of capital tax allowances if that were the sole purpose of the measure. Certainly, an alignment of all sorts of allowances throughout the economy and business taxation to coincide with a simple, straight-line depreciation method would be an understandable manoeuvre; it would be a simplification.
Given that we all accept that it is clear that the economy has changed since the second world war, it would be understandable if we were to review the incentivising of the building of agricultural and industrial buildings. However, it seems that the Government have, to a degree, misled investors. It is a bit like offering somebody a chair and then, as they position themselves to sit down, pulling it away. The agricultural sector, hoteliers and the industrial sector—manufacturing companies—have been working on the basis that the allowances would continue for 25 years, and have made decisions intended to last for that period. All of a sudden, the Government have changed direction and said, “Actually, we are removing those allowances,” but have not compensated them in some other way. Indeed, as the hon. Lady pointed out, not only are the allowances being removed, but the changes disproportionately affect smaller businesses. They face the corporation tax increase over the next two or three years and they are also having their allowances taken away. A pincer movement is being made on smaller businesses, smaller agricultural businesses, hoteliers and, in particular, manufacturers.