Clause 69
Finance Bill
11:30 am

Justine Greening (Shadow Minister, Treasury; Putney, Conservative)

The clause repeals section 29 of the Capital Allowances Act 2001, which gave plant and machinery allowances to businesses that incurred expenditure in undertaking required fire precautions as a result of being served with a prohibition notice by a fire authority. I understand that expenditure for such purposes would include structural works and alterations to buildings, for example fire extinguishers, signage, alarms and sprinkler systems—critical spend for ensuring that workplaces are safe for those who work in them. However, as I am sure the Exchequer Secretary will mention, ironically, the relief was available only if a notice had been served as a result of non-compliance under a self-assessment regime. Those businesses that incurred spend responsibly in the area, because they were taking fire precautions, were not able to obtain relief, whereas those that had not bothered but were caught and handed a non-compliance notice, were given relief. Ironically, preferential tax treatment was given to people for bad behaviour. The repeal in the clause is therefore understandable.

My main query for the Minister is about the extent to which businesses will be captured by the measure. For example, how many non-compliance notices have been handed out by fire authorities over the past two or three years? Is this a minor tidying-up measure which the Government expect will have relatively little impact? Is it more about equity, or do the Government expect it to have a broader impact in sending out a message to businesses that non-compliance with these critical areas of health and safety will not be tolerated and certainly will not be given tax relief?

Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)

As the hon. Lady rightly points out, the clause repeals a section of the Capital Allowances Act which, since 1971, provided relief to capital expenditure on alterations to existing buildings required by a fire authority notice. Building regulations again have intervened and required the necessary fire safety precautions since 1976. The relief has served its purpose and is now little used. The hon. Lady should remember that most expenditure on fire prevention is deductible as revenue expenditure, or qualifies for capital allowances under first principles anyway.

The redundant nature of the requirement became even more clear in October 2006 when, instead of a certificate to improve, prohibition notices were introduced. I am told that approximately 50 prohibition notices are handed out a year. The hon. Lady rightly saw the irony in a system which gave a tax relief for those who put people’s lives at risk in order to put right the problem in the building, but did not encourage people who did it voluntarily and did not put people’s lives at risk to take that action. That is why the section is being repealed.