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Clause 60 - Extension of capital allowances

Part of Finance (No. 2) Bill – in a Public Bill Committee at 11:00 am on 13th May 2014.

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Photo of David Gauke David Gauke The Exchequer Secretary 11:00 am, 13th May 2014

Clause 60, as we have heard, extends the enhanced capital allowance scheme in enterprise zones by three years. Currently, a company must invest in a designated site by 31 March 2017 in order to claim enhanced capital allowances. The clause extends that period, so companies will be eligible provided that they invest before 31 March 2020. It also enables the Government to extend the ECA scheme, and those applying to low-emission cars, zero-emission goods vehicles and gas refuelling stations, through statutory instrument, rather than primary legislation in future. That will mean that Finance Bill space will not be required to implement such measures, saving parliamentary time—although possibly disappointing some members of the Committee.

The enterprise zones introduced by the Government are supporting regional growth. So far, enterprise zones have created more than 9,000 jobs and have attracted more than £1.2 billion of private sector investment. To give just one example, the Committee will welcome the announcement made by Siemens in March that it would invest £160 million in the Humber enterprise zone. A further £150 million will be invested by Associated British Ports in the Green Port Hull development. That combined investment will create 1,000 jobs directly. We want to see the success continue; that is why we are extending the financial incentives offered in enterprise zones for a further three years.

Enhanced capital allowances in enterprise zones allow businesses locating on designated ECA sites to claim a 100% allowance on investments made in new plant and machinery. There are currently seven enterprise zones in England with enhanced capital allowance sites—in the black country, the Humber, Liverpool, London, the north-east, Sheffield and the Tees valley. The scheme is designed to support very large, capital-intensive investments, which can take several years to finalise. Extending the end date of the scheme to 2020 will give the local enterprise partnerships that run enterprise zones more scope to land major investments.

The extension to the deadline for ECAs in enterprise zones will also apply to the three zones in Scotland and the three zones in Wales, which offer ECAs in addition to incentives in the gift of the Scottish Government and the Welsh Government. As well as extending enhanced capital allowances, we announced at the Budget that business rate discounts in enterprise zones will also be extended by three years. We will legislate for that separately in the Non-Domestic Rating (Rates Retention) Regulations.