New Industrial Buildings

– in the House of Commons on 25th April 1944.

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The other main industrial assets of importance in modernisation and re-equipment are industrial buildings. Allowance is made under the existing law in respect of the cost of repairs and maintenance of buildings, but apart from the special wartime provisions for exceptional depreciation of buildings provided since the beginning of 1937, the present law makes no allowance in respect of the depreciation of buildings except for the special allowance given for mills and factories. Again, I look at the main purpose, which is the modernisation and re-equipment of productive industry, and therefore to the buildings employed in productive industry. I think, therefore, both on practical grounds and on grounds of cost, that the existing differentiation between such buildings as factories on the one hand, and other trading premises such as shops and offices on the other hand, must be maintained. In the case of buildings such as factories—and I include in that term buildings associated therewith, say for the welfare of the staff or the storage of raw materials or goods produced —I propose that the cost of the building should be written off on the basis of a 50 years' life, by an annual depreciation allowance of 2 per cent. of the cost, and that as an immediate instalment of that allowance there should be an initial allowance, not of 20 per cent., but of 10 per cent., of the actual expenditure. The new depreciation allowance of 2 per cent., though not of course the initial allowance of 10 per cent., will apply to existing factories as well as new ones, in so far as the cost has not been written off under existing war-time conditions, and in so far as the life already run is less than 5o years. It will thus replace the existing mills and factories allowance.

My main proposal for the reconstruction period will thus consist in the deduction from taxable profits of 20 per cent. allowance on all expenditure on new plant and machinery, and 10 per cent. allowance on all expenditure on new industrial buildings. The allowance in respect of plant and machinery will cover all businesses, and will be of particular value to shipping, where it will materially assist the policy of keeping our incomparable Mercantile Marine thoroughly up to date, while incidentally, I hope, providing a steady flow of scrap to the steel industry.