I beg to move,
That the Industrial Development (Eligible Assets) Order 1967 (S.I., 1967, No. 339), dated 7th March 1967, a copy of which was laid before this House on 14th March, be approved.
This rather technical Order will not detain the House long. It really applies to Northern Ireland, but I do not see any Northern Ireland Members present. Its purpose is to give the Board of Trade authority to pay investment grants on assets that are leased in Northern Ireland. As the House is aware, the Industrial Development Act, 1966, as a general rule provides for investment grants to be made only for assets to be used in business in Great Britain.
Northern Ireland has long had its own system of investment incentives, and the Parliament at Stormont passed last December the Industrial Investment (General Assistance) Act (Northern Ireland), 1966, whose provisions are very similar to those in our Act. They enable the Ministry of Commerce to make grants to persons carrying on business in Northern Ireland, if the machinery or plant or computers are provided for use in Northern Ireland.
Under our Industrial Development Act, the Board of Trade may make grants to persons carrying on business in Great Britain for machinery or plant for use in Great Britain, carrying on a qualifying industrial process, and for computers for use in Great Britain and for hovercraft. Where the user purchases any of these assets, there is no problem about making a grant towards his capital expenditure. But there is also a growing practice of leasing in British industry, which was provided for under Section 4 of the Act. Under this Section, the Board of Trade may make a grant to the lessor of an asset if it is leased to a person who would have qualified for a grant if he had bought it. Where the lessee would have qualified for a higher rate of grant because he uses the asset in a development area, then that higher rate is paid to the lessor.
If this Order was not made, any assets leased to Northern Ireland would fall between the two systems. The Board of Trade could not pay the lessor, because the lessee is outside Great Britain; and the Ministry of Commerce in Belfast could not pay either, because the lessor is outside Northern Ireland; and grants towards capital expenditure cannot be paid under either Act to lessees, since they are renting their equipment.
To avoid this anomaly my right hon. Friend, the President of the Board of Trade moved an Amendment to the Industrial Development Bill, which is now Section 7(2) of the Act. This gives the Board of Trade power to make this Order, when we are satisfied that reciprocal action has been taken in Northern Ireland. At that time the Northern Ireland legislation had not yet been passed. Now that it has been passed, and the Northern Ireland Government have made an Order under which the Ministry of Commerce can make grants to lessors in Northern Ireland who hire out assets to Great Britain, we can fulfil our part of the bargain, and make this Order.
I should perhaps explain that there is a special provision in Section 4 of our Act for construction plant hire, because this plant is normally hired out for short periods. As the result of the Order, a construction plant hire firm will be able to hire out machinery or plant on which it is getting grant anywhere in the United Kingdom.
Article 1 of the Order enables the Board of Trade to make grants under Section 4, even though the asset is to be used in a business in Northern Ireland and not in Great Britain. Article 2 provides that the rate of grant should be what it would be if Northern Ireland were a development area in Great Britain; for example, if the expenditure were incurred this year or next year, the rate would be 45 per cent. for machinery or plant, and for computers which are integrated with machinery or for scientific research. On other computers, on hovercraft and construction plant on short-term hire, the rate would be 25 per cent.
Section 7 of the Industrial Development Act empowers the Board of Trade to make Orders to vary the rate of grant or to make grants for additional assets not hitherto eligible, subject to this affirmative Resolution procedure. Since assets leased to Northern Ireland were not previously eligible for grant, technically the Order provides for the addition of eligible assets, but the number of applications which will benefit from it is likely to be rather small. The Order will apply to expenditure already incurred from the beginning of the investment grant scheme in both countries, because no grants will have been paid before the Order comes into operation.
I hope that that explanation is clear, and I ask the House to approve the Order.
Mr. Speaker, I must apologise to you and to the right hon. Gentleman for not being here when he rose to speak. I confess, however, that I have not felt the need for people to find me useful things to do in the morning.
I appreciate fully that the principle of the Order is in line with the principle of the parent Act, and the parent Act in relation to Northern Ireland would be something of a nonsense without it. At the same time, I would ask the right hon. Gentleman if he can tell us a little more about the way in which he sees the leasing powers working out. He will remember that, before the passing of the Act, we were concerned about how we were to administer a system by which grants were given to the lessee without necessarily knowing the length of the period during which he would be handling the equipment. That clearly makes a great deal of difference to eligibility for grant, particularly where we are concerned with development areas, of which Northern Ireland is obviously one. The equipment may be moved across the boundary of the development area, and that introduces the difficulty that different grants are payable.
We welcome the extension to Northern Ireland which, in effect, makes this United Kingdom legislation instead of Great Britain legislation, and no one on either side of the House would think it right if Northern Ireland were put under disadvantage owing to constitutional differences between the two parts of the Kingdom.
I should be grateful if the right hon. Gentleman could tell us how the leasing is working. I know that is a more general question, but some further information would be of great value.
As the hon. Gentleman will remember, we had discussions about this point during the passage of the Bill through the House. We think that the arrangements which were then discussed and laid down will work out satisfactorily. I am assured that, in dealing with the applications which have come forward, in effect we are asking for undertakings that, where the equipment is to be used in a development area, it will be in the development area for some time. The experience with applications so far received is that the leasing provisions are working satisfactorily, and we do not anticipate any great trouble here. Normally, the lease must be for a period of at least three years as laid down in the Act. If it is terminated earlier, it must be reported to the Board of Trade, when appropriate action will be taken to adjust the grant. In the case of construction plant hire, there is provision for short-term leasing, as I said.
I do not know whether there will be any teething troubles here. I am assured that the provisions laid down in the Act are working satisfactorily. For all practical purposes, Northern Ireland will be treated as a development area, and moving over the boundary there will be slightly more difficult than in Great Britain.