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Clause 1. — (Machinery and Plant.)

Part of Orders of the Day — Industrial Development Bill – in the House of Commons at 12:00 am on 11th August 1966.

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Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North 12:00 am, 11th August 1966

I beg to move, That this House doth disagree with the Lords in the said Amendment.

The substantive effect of this Amendment would be to make the investment grants introduced by the Bill payable to any restaurant or hotel for the plant and machinery—that is, equipment—installed in it. We had some extensive discussions on this issue during all the stages of the Bill in this House. The Government's view remains that it would not be appropriate to give assistance to the hotel industry in this way. To pay investment grants indiscriminately in respect of all equipment in all hotels, restaurants, public houses and other such institutions would be to make a much too wide and indiscriminate use of public money.

It was very largely because the investment allowances, by a series of court decisions, could be used on such a wide scale for all sorts of equipment for which they were not originally intended that it was decided to introduce this more selective and discriminating system of investment grants. For that basic reason—and also because of the cost involved—we would not think it right to return to the former system.

It can be forcibly argued, and I entirely agree with this argument, that many hotels and other tourist institutions are playing a great part in encouraging tourists to come to this country, and are thereby earning foreign exchange. That is certainly true—indeed, it is for that reason that the present Government have introduced, or continued, a number of schemes by which assistance is given to the hotel industry.

First, we must remember that by this Bill the initial allowance which is applicable to equipment used by hotels or restaurants is raised to 30 per cent. That is a generous level, and it will be open to all hotels all over the country, whether they are in development areas or outside them.

Secondly, hotel buildings which provide employment in development areas—and the development areas have been greatly widened so as to include, for instance, practically the whole of Scotland and Wales—will be eligible to receive the 25 per cent. building grant which applies within development areas. Thirdly, hotels are also eligible for B.O.T.A.X. C. assistance—loans, in particular—on the usual terms and conditions throughout all development areas.

In addition, I have been able to announce since the passage of the Bill through this House that, in view of the overseas earnings which many hotels help to bring to this country, the Government are introducing a further and new scheme for development loans from public money to a total of £5 million. It will be available for any development scheme for a hotel where it can be shown that there are real and good prospects of earnings from overseas tourists. We are basing our policy on a more selective approach, and we shall make this money available where it is clear that overseas earnings are in prospect. In addition to all that, I would remind the House that the Government are, in any case, paying a grant of £2 million a year to the British Travel Association, whose job is to encourage and assist the British tourist industry.

All these forms of assistance together are a major contribution to this industry and the recognition by the Government of the value of its services, but we must remember that, of the total earnings of the British hotel and catering industry, rather less than 10 per cent. accrues in the form of foreign exchange. That is a very much lower percentage than the nearer to 25 per cent. earned in exports by manufacturing industry. In my view, that real distinction justifies the basic principle of the Bill that the investment grants should be concentrated on plant and equipment used in manufacturing industry, and also justifies the very considerable help and assistance to the industry which the Government propose to give in the way I have described.

For all those reasons, it seems to us right to confine the investment grant broadly to manufacturing industry in the way provided in the Bill and to give our help selectively to the hotel industry in the other ways I have described. I therefore ask the House to disagree with this Amendment.