The tax relief on new plant and machinery announced by Jeremy Hunt as chancellor in 2023 was billed as a key part of the solution to the problem of Britain's low economic productivity.
Labour supported the measure at the time and has now promised to make it permanent.
An analysis by the thinktanks Demos and Common Wealth has found that the measure, known as full expensing, will cost nearly £30bn in lost tax revenue and spur a maximum of £10.5bn in fresh investment.
The Treasury says the move will generate £15bn in investment, still only half of what it has cost the taxpayer.
Andrew O'Brien, the policy director of Demos, said: "Full expensing is not the silver bullet to boost business investment that some had hoped."
This story is from the September 23, 2024 edition of The Guardian.
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This story is from the September 23, 2024 edition of The Guardian.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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