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Capital Allowances

Oral Answers to Questions — Treasury – in the House of Commons at 2:30 pm on 16th March 2010.

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Photo of Ken Purchase Ken Purchase Labour, Wolverhampton North East 2:30 pm, 16th March 2010

What recent representations he has received from businesses on the level of capital allowances.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

We receive representations from a number of public and private sector organisations as part of our policy development and delivery. More than 500,000 businesses that invest are able to claim tax relief on their qualifying investment expenditure under the capital allowances regime. In 2010-11, it is estimated that £62 billion of capital expenditure investment will be made and supported by these allowances.

Photo of Ken Purchase Ken Purchase Labour, Wolverhampton North East

Does my hon. Friend recall that the polices of the Conservative Government of the 1980s and 1990s meant that it was far more tax-efficient to distribute what should have been retained profits for investment than to retool and re-kit our industry? That was especially true in the west midlands, where we lost a great deal in terms of modernisation. Will she tell us this afternoon that the policy of this Labour Government, which encourages investment, will continue?

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

I assure my hon. Friend that we believe that investment is crucial for the UK economy's long-term success. That is why we acted to support business investment during the recession by temporarily doubling the main rate of capital allowance. We support capital allowances-unlike the Opposition, who wish to cut allowances for investment.