Clause 7.—(CHARGE OF PURCHASE TAX ON CONVERSION OF GOODS VEHICLE TO PASSENGER VEHICLE OR THE LIKE.) (Hansard, 11 July 1956)

§ Mr. H. Brooke
I beg to move, in page 5, line 13, after "vehicle", to insert: to which this section does not apply into one'. Perhaps it would be for the convenience of the House if we were to consider, along with this Amendment, the next 11 Amendments on the Notice Paper to Clause 7.
These 12 Amendments deal with a matter which was discussed in Committee rather late at night on the Question, "That the Clause stand part of the Bill." They are concerned with the liability to Purchase Tax of what are known as 453 "specials", cars made by amateur enthusiasts. When I was replying to that debate, I said that we would consider, between then and the Report stage, everything which had been said.
I had at that time to express the view that it would be right to draw the tax line between, on the one hand, the car made out of an old car which had been bought by an amateur enthusiast and stripped down and rebuilt, which, as I said, if Purchase Tax had already been paid upon it, would not be the subject of any further Purchase Tax, and, on the other hand, the car which was not constructed out of an old car but assembled either out of a kit which had been bought or from a complete collection of parts made or picked up by the man who was doing the job, and, no doubt, greatly enjoying it.
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We have fulfilled our promise of giving further consideration to this matter and we have come to the conclusion that that is not the right place to draw the line. Nor, after further examination, do we believe that it would be workable, because in the last resort it might be quite impossible to determine whether, in the case of a particular car, it had originated in an old car, or the pieces of the old car might have disappeared in the process.
There is one danger of which I must tell the House. If the proposal in these Amendments to exempt the "specials" from tax were to be exploited commercially, we would have to look at the position again. I am not suggesting that the kind of people engaged in these activities are the kind of people who would want to get an unfair tax advantage, but hon. Members know from their experience of the tax law that sometimes an exemption which has been granted in all good faith may be exploited by a different class of person. If the freedom which the Amendments will now leave to amateur engineers to make cars tax free were at any time to be exploited on a commercial scale, the Government of the day might well have to take steps to check such activities.
Having said that, however, I offer this set of Amendments to the House for what they are worth, and I personally think that they are worth a good deal. They will entirely free from charge to Purchase Tax the amateur who builds a car by 454 assembling or completing the assembly of the parts, or who constructs or completes the construction of the body. It certainly was the sense of the Committee that hon. Members would be pleased if the Government could do this; and from the letters which I have subsequently received from hon. Members, on both sides, I have a sneaking feeling that for once the Financial Secretary may be popular in proposing these Amendments.

§ Mr. Cyril Bence (Dunbartonshire, East)
While it is a great gratification to myself and to a young man who lives but two doors from me that these Amendments have been put down, there has been some agitation not far from me over the last three months. About three and a half years ago, this young man became an apprentice in Albion Motors. His father has an empty garage attached to his house and the young man started going around to scrap yards and picking up spare parts and bits of old iron. With advice here and there, he started to build a motor car and three months ago he finished it. It is not at all a bad job. Those who have indulged in the game of making amateur cars know that we call them jalopies.
The position under the Clause originally was that this young man would have to go to the Inland Revenue to get the car taxed for the purposes of assessing Purchase Tax. Some of the parts he had bought. He spent £150 to £200 over the last three and a half years in buying odd things. He bought a Ford 10 engine for a few pounds and got it rebored and relined. Then he got some scrap metal and it was cut into the shape of wings, beaten out and planished. Then he did some welding and completed the wings. The wheels were picked up in scrap yards, but some of the parts were bought new, such as the distributor and carburettor, on which Purchase Tax was paid.
The problem was, how was the vehicle to be assessed for tax? How could the Inland Revenue assess the Purchase Tax to be charged on it? We did our best to calculate it and we estimated that if the car was put on the road and the man applied for a log book, he would have to pay £150 to £180 Purchase Tax. The young man built the car over three and a half years by spending his pocket money each week. At this rate, he would need 455 to have saved his pocket money for another four years to pay the Purchase Tax before he could put it on the road. Then he would have been 25 years of age and thinking of getting married, and that would have been the end of the jalopy.
Amateur work of this nature is not uncommon. Lads all over the country indulge in this sort of thing, just as we did after the First World War. I remember that many of my contemporaries were putting up wireless masts. We were told off by our parents because the dining room or drawing room was full of wires and bits of metal. We were making radio sets of all shapes and sizes, starting with the "cat's whisker" set and finishing with the seven-valve set. Frightful contraptions were to be seen in the kitchen or dining room. Young fellows will do this sort of thing.
When the Bill was introduced, it struck me that the Clause was a shocking thing to impose on young engineers who indulge in this kind of thing at home. Although one may not regard these cars as commercial propositions, there is no better training to make a creative engineer than this indulgence in amateur engineering at home.
The young fellow who is only 20 years of age, and who lives a couple of doors from my home, shows, in the building of his car, great creative capacity. Had the Purchase Tax remained on that kind of engineering product from the back yard of a young apprentice, it would have put a damper on thousands of young boys who are apprentices in engineering shops, who have the capacity, the energy and the creative imagination to evolve and develop engineering processes.
I have been in the engineering industry since 1917. Many may not realise that some of our finest engineering techniques in the factories today have come not from the higher research establishments, but from the simple, natural intelligence of an apprentice in a factory, operating a machine, who has seen an easier way to operate it than the manufacturer thought when he designed it. This kind of work by engineers in their back yards and in their homes plays a great part in the evolution of manufacturing techniques and engineering design.
456 I express my gratitude for the Amendments as an engineer and as one who indulged in making things from the age of 16 until I was married. One's wife will not stand what one's mother has put up with, so I had to stop the work. We did all these engineering jobs at home, making bicycles and motor cycles. I made two of them and they went very well until I nearly broke my neck on one of them.
When I first saw the Clause, and looked back to my youth and to my contemporaries among the apprentice engineers, I considered it one of the worst things that the Government had done to stifle the enterprise and ingenuity of our young generation of engineers. I am grateful that the Chancellor has seen fit to listen to the pleas which were made in Committee, and by correspondence, to abolish the Purchase Tax in this way and I thank him on behalf of my constituents.

§ Sir Ian Clark Hutchison (Edinburgh, West)
When this matter was discussed in Committee on 5th June I was one of those on this side of the House who pointed out the unfortunate effects of the Clause. I agree very strongly with the hon. Member for Dunbartonshire, East (Mr. Bence) that it would have had the effect of prejudicing and discouraging young engineers and others who do very useful work in their spare time. I should like to thank the Financial Secretary and the Government for meeting us and for removing an obnoxious provision from the Finance Bill.

§ Mr. Frederick Mulley (Sheffield, Park)
I have so often criticised the Financial Secretary that it is pleasant to be able for once to congratulate him on these sensible Amendments to this very dull Bill.
I am sure that the House will appreciate that, had the Clause gone through in its original terms, it would not only have deprived an important section of our young engineers of some enjoyment and pleasure, but would also perhaps have retarded the development of design which, it is claimed, comes from people who have made cars themselves in this way. I believe that it would also have had serious consequences for the people who make small racing cars, and that it would have had a detrimental effect on the motor racing 457 sport, which, in turn, might have affected our export sales, because, oddly enough, I believe that it is our racing and sports car manufacturers who are still able to hold their own in the American market.
I am sure that, by meeting the wishes of amateur enthusiasts and people who make cars from parts, the Government have done a very sensible thing. I am sure that the House will also agree with the warning that has been given. If this concession is abused in a commercial sense, and if people attempt to exploit the real purpose for which it is given, the warning has already been given, and I hope it will not be necessary for the Government to introduce further legislation on this point. I am sure that the Government have done a very sensible thing in proposing this series of Amendments, and I welcome them.

§ Mr. Douglas Jay (Battersea, North)
I should like to thank and compliment the Financial Secretary to the Treasury for making this concession, for several reasons. First, because he seems to have adopted the suggestion made by myself during the Committee stage, though, I admit, rather on the spur of the moment; secondly, because this seems to be almost the only occasion on this Bill when the Government have felt able to accept a proposal which did not come from my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton). The third reason is that the Financial Secretary told us during the Committee stage that this was really quite an impossible thing to do. He said: I must advise the Committee that my right hon. Friend does not see any way in which this Clause could be amended so as to meet the case of a man who builds a perfectly good car for himself out of bits he has picked up or a kit he has bought. As a House of Commons, we must seek to avoid giving to the Customs and Excise officials a task which cannot reasonably be performed."—[OFFICIAL REPORT, 5th June, 1956; Vol. 553, c. 1039.] With a little help and advice from all over the House, the Financial Secretary now finds himself able to do these things, and I think it is a tribute to the value of the work which we do, both as a Committee and as a House, and for all these reasons I wish to compliment the Financial Secretary.