Let us recognise what we are doing. This is not a relief of tax on expenditure. That is done in the annual allowances, which now amount to 100 per cent. over a period of seven years. But on top of those, as the Chancellor has said, there is something more to come, and that is 30 per cent. of what is purely a notional expenditure—no expenditure at all.
In other words, this 30 per cent. allowance is a straight subsidy to profits. It is another way of saying to industry, "Thirty per cent. of the cost of what you spend on new plant and equipment can be equilibrated against an equivalent amount of tax-free profits. Profits to the extent of 30 per cent. of the value of the new equipment will be free of taxation." It is a straight subsidy from taxation to industry and it is offered indiscriminately.
The Chancellor does not like the word "subsidy". In November, when he announced his proposals, he objected to the use of the term and said that it represented a reallocation of the burden. What burden is he reallocating? Who bears this burden? It is a substantial cost to the Exchequer. This year, it will amount to only £11 million, but next year it will amount to £50 million in a full year and in three years' time to £130 million.
The Chancellor has cunningly cast the burden of this reallocation on to future Labour Chancellors of the Exchequer. He gets the political credit in the current year, but he passes the burden on to the future. We have, therefore, a combination of retrospective legislation with prospective payment of the cost of it, and the cost will fall squarely and unfairly on the shoulders of the individual taxpayer.
The cost of these tax reliefs will not be paid by private industry. Although private industry will be encouraged and allowed to make bigger profits, these will be tax-free profits. The cost will be paid by the individual taxpayer, whether the direct or the indirect taxpayer, by having in future years to pay more in Income Tax, more in Purchase Tax and more it Excise duties than he would otherwise have to pay if these reliefs had not been given to private industry to enable it to make larger profits. Let us, therefore, be clear what is involved. This is calling upon the individual taxpayer to subsidise private industry to enable it to make bigger profits. One could make a case for that if it could be proved that it was in the national interest that that should be done. Of course, it is in the national interest that we should have more worthwhile investment, but not that there should be more worthless, useless and futile investment.
If we allow this proposal to go forward unamended, its effect will be that the individual taxpayer is called upon to subsidise the manufacture and construction of unneeded petrol pumps, breweries and bingo palaces and the equipment of lavish office blocks and hotels. The taxpayer will be asked to subsidise the investment of new machinery for the making of more cigarettes per worker and, quite possibly, for the installation of automatic contraceptive vending machines in brothels. The Economic Secretary appears to be shaking his head. I do not know why. There is no provision in the Clause which makes it possible for the Chancellor to refuse this tax concession to any firm or industry making anything for any purpose whatever.
The effect of all this will be to weaken the advantages offered in the development districts, because if in the whole of the country any firm which engages in new investment can get not only speeded-up 100 per cent. annual allowances, but a 30 per cent. Tax-free hand-out in addition, what inducement is there for anybody to go from the south-east of England into the North or to Scotland to expand in those areas? Therefore, the effect of non-discriminatory allowances under Clause 33 will be to weaken the advantages offered to the development districts in Clauses 38 and 39.
The problem which the country is facing is one of the proper use of its scarce natural resources. Every time we deal with public investment, Ministers come forward and tell us that there is a limitation on what we can do in public investment because we cannot stake too big a claim to the national resources of workers, plant, equipment, materials, and so on. The Minister of Housing and Local Government tells us that we cannot invest more in council housing because the resources of the building industry are wanted for other things. The Minister of Transport says that we cannot build motorways faster and we cannot build a Channel tunnel because there is a limitation on the available national resources.
The Minister of Education slashes the programmes of the local educational authorities for school building because he says that the nation cannot afford as high a rate of investment in the building of schools as the local education authorities want.