In my Budget Statement last year I said that the interim scheme of stock relief would continue for two more years. I then thought that this would give sufficient time to devise a permanent scheme which could take account of the views of the accounting profession and of industry. However, although the Government and others have welcomed the principle of current cost accounting, the Morpeth Committee's detailed proposals are still at exposure draft stage and are not yet firm. We need more time for discussion and consultation on a permanent scheme; the implications are very important for industry, and we must get it right. I propose therefore to continue the scheme in its present form, not only for 1977–78 but also for 1978–79.
As I have said many times before, in moving to a permanent scheme there will be no question of any general withdrawal of the relief given under the current scheme. I cannot, obviously, foretell at this stage what sort of transitional arrangements may be appropriate, since this will depend upon the form of the permanent scheme, but again I repeat that, if necessary, special provisions will be included to ensure that the change of system does not lead to cash flow difficulties for individual companies.
On the question of deferred tax, a good deal has been said also, notably by several sector working parties in their end-year reports, about the troubles that some companies meet when they seek to raise finance because of the existence in their balance sheets of large deferred tax provisions. But for the normal continuing business there is little or no risk that any substantial part of the deferred liability will in fact arise. This should now be better understood in the financial world.