asked the Chancellor of the Exchequer how much capital allowances for the hotel industry are expected to cost in 1982–83 and 1983–84; what estimate he has made of the additional cost in 1982–83 and 1983–84 of capital allowances for industry at the new rate of 75 per cent; and what would be the cost of granting capital allowances for new retail buildings in 1982–83 and 1983–84 at the same rate as that for hotels.
[pursuant to his reply, 21 April 1982, c. 93]:
(a) On the cost of capital allowances for the hotel industry I refer my hon. Friend to the answer given to his question on 12 November 1981.—[Vol. 12, c. 128.]
(b) The estimated cost of the increase from 50 per cent. to 75 per cent. in the initial allowances for industrial buildngs would be £75 million in 1982–83 and £120 million in 1983–84 if sufficient profits were available to absorb in full the capital allowances claimed. The low level of profits in recent years means, however, that some of these capital allowances will be carried forward to be set against profits in future years and the actual costs are very tentatively estimated at £10 million in 1982–83 and £20 million in 1983–84.
(c) If capital allowances for new retail buildings at the same rate as for hotels had been introduced in the 1982 Budget, the estimated costs would be negligible in 1982–83 and some £30 million in 1983–84. This figure assumes all capital allowances claimed to be set against profits; it is not possible to estimate the actual cost in 1983–84 because of the lack of adequate data.
The eventual cost will depend on the build-up of the allowances and on the extent to which profits are available to absorb them. On the assumption that recent levels of capital expenditure are maintained and that sufficient profits are available to absorb the allowances in full, the eventual cost will be of the order of £40 million for (a) and £200 million for (c).