A matter has been brought to my attention and I am not sure on which section of the Bill it is appropriate. Had the matter been drawn to my attention earlier, I would have framed an amendment. I want to bring the matter before the Minister at this stage. It might be possible to draft an amendment for the Report Stage. The matter to which I refer deals with industrial buildings allowances. These allowances, as the Minister is probably aware, were first given in the Finance (Miscellaneous Provisions) Act of 1956, and provide for relief against tax in respect of all industrial buildings. Hotels were specifically included.
At that time let property was taxed under Schedule A. The Finance Act of last year brought all such property under Schedule D. The letting of houses and provisions of flats were in that respect recognised as an industry. I understand the Revenue authorities do not allow the industrial buildings allowances to be set off in respect of the capital expenditure on flats. It might be easier to give a specific example.
I have in mind a case where a house was purchased for a sum of £4,500. At least the expenditure on it would be £4,500. Of this sum, £3,000 approximately represented the amount required to recondition the house and a sum of £1,500 was regarded as the amount required to convert it into flats. The first figure, that is the sum of £3,000 or the amount spent on reconditioning the house, has been disallowed in total by the Exchequer. The second amount of £1,500 should, I think, be eligible for an industrial buildings allowance but, I understand, that the Exchequer do not regard it as so.
I might add that Schedule A tax on the property is £20, but the total tax under Schedule D is approximately £200. As the Minister is aware, under legislation passed in recent years, there has been a very considerable conversion, particularly of old houses, into flats or multiple dwellings. To that extent, it has made a contribution towards alleviating the housing problems as well as reconstructing old and large houses into dwellings of a more habitable and suitable size to meet present requirements.
I suggest that the question of considering the industrial building allowances might be widened in scope to include the type of work I have mentioned, which is at present outside the ambit of that relief. Expenditure in relation to this work is naturally considerable and the persons concerned, as well as bearing the increase in taxation which has occurred, have also to face the problem of meeting the greater expenditure involved in the conversion of these houses.
It has been suggested to me that the Finance (Miscellaneous Provisions) Act, 1956, should be extended in order to cover the type of cases involved in the example I have mentioned and which, to a very considerable extent, involve not merely capital expenditure but a form of investment which is of a desirable character and a form of expenditure which has many advantages, not least the one which I have mentioned—assisting in the provision of dwellings for those in need of them.