HC Deb 05 June 1956 vol 553 cc1015-40
Mr. H. Wilson

I beg to move, That the Chairman, do report Progress and ask leave to sit again.

Can I make it clear that, in doing so, I do so principally in order to ask the Chancellor of the Exchequer if he will tell us his intentions about this sitting of the Committee? I am sure that he will agree that we have made really remarkable progress for the first day 'of the Committee stage of the Finance Bill. I do not know whether he can tell us if any other Finance Bill since the war has made so much progress in its first day in Committee. That shows the very constructive and co-operative attitude of the Opposition.

This is a very long and technical Bill, and had we wished to hold the Chancellor up—and I understand that Oppositions in the past have sometimes done so on Finance Bills, although I cannot recall any recent case—it would, I am sure the Chancellor will agree, have been possible to have put down 200, 300 or 400 Amendments to the Clauses which we have so far discussed, none of a filibustering character, but to subject the Bill to a thorough and careful examination.

We have not done that, but have limited ourselves very severely in the number of Amendments which we have put down. I am sure that the Chancellor will agree that the debates have been very valuable and the sort which he would welcome, even if he does not agree with all that we have said in them. He will also be aware that many more Amendments to the 36 Clauses of the Bill have been put down by his own side of the Committee than by ours, which shows very real restraint and austerity on our part. I am not complaining about hon. Members opposite for doing that. They have the same time-honoured duty as we have on all sides of the Committee to subject a Bill of this kind to very careful scrutiny.

I am sure that the Chancellor will agree that both in respect of the number of Amendments which we have put down and the speed with which we have disposed of them, remarkable progress has been made today. But for debating a Tory Amendment on cider and perry, we should have made even speedier progress, although the arguments produced by the hon. Member for Rye (Mr. Godman Irvine) convinced my hon. Friends, against our previous view, that it was necessary to divide on it. We had not thought that that would be so, until we heard the argument deployed.

That being so, I wonder whether the Chancellor will tell us how much further, if at all, he intends to go tonight. Hon. Gentlemen opposite are getting a little jaded, and I see signs of impatience, even in the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), who is usually very patient on these matters, perhaps because he has a powerful speech on Surtax to make on an Amendment standing in his name. I am sure that the noble Lord will agree with me that so important a debate as he intends to initiate—with what prospect of success, none of us can forecast—it would be better to begin when Members are feeling more fresh in the early afternoon. I should therefore be grateful if the Chancellor could tell us what progress he expects to make tonight.

Mr. H. Macmillan

I am very grateful to the Committee for the progress which has been made. We have dealt with some very important Clauses in a very agreeable atmosphere. I should have thought that it would have been for the general convenience of the Committee to have discussed Clause 6 tonight and perhaps also Clause 7. I think that Clause 8 is one to which the Opposition attach a good deal of importance, and I think that by the genial and friendly arrangements so often made between Governments and Oppositions it will now be possible to get in order a certain number of Amendments which would otherwise have been out of order and which would therefore have circumscribed debate. If it is possible to get that sort of Amendment in order and have a good debate, it is very much better to do so during the Committee stage. I hope, throughout the Bill, to consult the right hon. Gentleman upon those purely technical points which tend to curtail debate. in order to see how we can best assist the desire to debate these matters. I rather hoped that we might continue and see whether we could at least finish Clauses 6 and 7, with a view to making a start upon Clause 8 on Thursday.

Viscount Hinchingbrooke (Dorset, South)

On my own behalf and that of certain of my hon. Friends I should like to say that we shall, of course, be prepared to continue the debate so far as the wishes of the Government extend, but there is a possibility that it might be more convenient to the Committee if the whole of Clause 7 were taken, and not simply the Amendments, leaving the Question, That the Clause stand part of the Bill, to be discussed on Thursday afternoon. We shall be prepared to sit for as long as the Government desire, upon the understanding that the whole of Clause 7 is taken.

Mr. H. Wilson

I thank the Chancellor for what he said about the Amendments to Clause 8, and his general willingness to consult the Opposition if any further difficulties should arise. It may not be within the knowledge of all hon. Members that upon a narrow technical point certain Amendments to Clause 8 appeared to be out of order. The right hon. Gentleman has said that if similar points arise which are outside the fault or responsibility of any of us, he will be glad to be as helpful as he is going to be upon Clause 8.

With regard to further progress being made this evening, I would point out that the noble Lord the hon. Member for Dorset, South (Viscount Hinchingbrooke) has put down a very important Amendment, and there is also a series of Amendments to Clause 6 which are of considerable importance. That Clause is a very lengthy one, consisting of three pages of the Bill. It is a steam hammer to crack a shooting brake.

I appreciate that many of the Amendments may not be called, but I am quite sure that my hon. Friends who are responsible for them will wish to have some discussion upon them on the Question. "That the Clause stand part of the Bill." If the Chancellor wants to get Clause 6 tonight I submit that it is reasonable to suggest that we should do our best to co-operate with him—although I cannot give any undertaking on behalf of my hon. Friends, who feel very deeply moved on the subject of shooting brakes. Having said that, I hope that the Chancellor will not pursue the idea of going on with Clause 7. I would remind him —although I am sure he does not need reminding—that that Clause is an annual Income Tax Clause. For hundreds of years certain taxes have been voted annually, and the whole of our Constitution revolves round that fact. For over a century Income Tax has been the subject of an annual vote, and it would be constitutionally wrong to start a debate upon this important Clause at eleven or half-past eleven o'clock, when I am sure that hon. Members on both sides of the Committee want to approach the matter as objectively as possible and give it a full discussion.

Since we spent one and a half hours upon a Conservative Amendment dealing with cider and perry I do not think that it is too much to ask that upon the Income Tax Clause—even apart from the noble Lord's interesting Amendment— we should spend considerably more than one and a half hours if we are to keep a proper sense of perspective. Although we shall decide this question as we go along, according to the progress made, I hope that the Chancellor will not press us to begin consideration of Clause 7 this evening. If he does so, it may take rather a long time before it comes to a conclusion.

Mr. Rankin

The hon. Member for Dorset, South (Viscount Hinchingbrooke) has indicated that he is not prepared to accept the Chancellors' suggestion that we go on to the end of Clause 7 tonight.

Viscount Hinchingbrooke

indicated dissent.

Mr. Rankin

I thought that the noble Lord made it clear that he did not want the Question, "That the Clause stand part of the Bill ", to be discussed tonight.

Viscount Hinchingbrooke

The hon. Member is quite wrong. I suggested that it would be more convenient to the Committee if we either adjourned after disposing with Clause 6, or completed the whole of Clause 7. I thought that it would be a mistake to divide the Clause and take the Amendments now and debate the Question, "That the Clause stand part of the Bill," another day.

10.30 p.m.

Mr. Rankin

Does the Chancellor propose to accept the suggestion of the noble Lord?

Mr. H. Macmillan

I am grateful for what has been said by the right hon. Member for Huyton (Mr. H. Wilson) and I suggest that we have a "crack" at the shooting brakes to see how quickly they go, and whether they get a good gear; and then see what happens to Clause 7.

Mr. Jay

I agree with the noble Lord that it would be a great pity to split up the debate on Clause 7 into two parts. The inference I draw from that is that it would be unwise and inconvenient to embark on Clause 7 at all tonight. After all, it moves on to a totally different sphere, the discussion of direct taxation, which is quite separate from the considerations which we have been debating.

I do not think that we want to debate so important an issue as the whole of Surtax and Income Tax at the tail end of a debate, when even the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) may be getting a little past his best. I hope that the Chancellor will consider the possibility of starting that quite separately.

Mr. H. Wilson

I do not think we need discuss this matter much further. Perhaps we may now get back to Clause 6. I am in this difficulty, that if we feel that the debate is going too long it will be necessary to move what is sometimes called a dilatory Motion. Having exhausted my right to move to report Progress, I shall have no option, Sir Rhys, but to move, "That the Chairman do leave the Chair." I hope I shall not have to do that tonight, in view of the consequences which the Government have learned may follow from such a procedure. In view of what the Chancellor has said, I beg to ask leave to withdraw the Motion.

Mr. Proctor

I believe that the Chancellor wanted to dispose of Clause 7 and my right hon. Friend the Member for Huyton (Mr. H. Wilson) wishes to end our discussion tonight after consideration of Clause 6. Would it be convenient for the Chancellor to indicate that he will accept the view of the Opposition and agree that we should end our proceedings tonight when we have discussed Clause 6?

Question put and negatived.

Mr. R. Gresham Cooke (Twickenham)

I beg to move iu page 6, line 30, to leave out subsection (8).

The object of this Clause is to remove a loophole in the law by which people are at present able to acquire a van, take out the sides and put in windows, and thereby turn the vehicle into an estate car and avoid the payment of Purchase Tax. We are all agreed that this loophole should be stopped, and the Customs and Excise officials are able to call on people to satisfy them that the law has been complied with. But subsection (8) provides that on the application form for a Road Fund licence a question may be put down relating to the enforcement of Purchase Tax. which is quite a new departure.

The proposal contained in the subsection enables the form to be used for a purpose which is different from that for which it was originally created. The form is drawn up by the Ministry of Transport and Civil Aviation and is sent out by local authoritles for the collection of the licence money. A year or two ago the public were dissatisfied about a proposal to put a question on the form asking whether or not there was a radio on the vehicle and whether a licence had been issued for it. After certain discussions in this Chamber. that ques- tion was withdrawn from the form, because it was agreed that it was not a proper question to have on the form, and that there was probably no legal sanction for it.

Therefore, I suggest that it is probably not right to have questions about Purchase Tax put on this form. We do not want any more questions than are necessary for the public to answer, and we do not want questions that are irrelevant to the Road Fund licence.

Mr. Mitchison

I hope the Chancellor will not accede to this request. I am a little surprised that the hon. Member for Twickenham (Mr. Gresham Cooke) should move this Amendment, apparently wishing to have two forms, because one would not serve the purpose. It may be that there no statutory sanction exists. If that is so, that justifies the existence of the subsection which we are discussing. We are at present proposing to give statutory sanction. As for the merits of the matter, it seems to me a very proper matter to be considered, and for information to be given about on the form which is concerned with licensing and licence duty. It is quite true, of course, that there has not been any previous statutory sanction because there has not been any previous provision such as is sought to be introduced by means of this Clause.

Speaking for myself and, I think, most of my right hon. and hon. Friends, I would say we see no reason whatever for the omission of this subsection, and we wonder what the fundamental purpose is in requesting its omission. Surely the hon. Member is as concerned as everybody else in seeing that proper and necessary information is given in cases where clearly there may be some difficulty in enforcing the provisions of the Clause if that information is not fully given.

Mr. H. Brooke

I would certainly raise no such objection to the action of my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) in moving this Amendment and bringing the point before the Committee, though I must say to him frankly that I cannot hold out any hope to him that the Government could accept it. Subsection (8) appears to us to be essential for the administration of the scheme.

What I have to do, I think, in making my case, is to assume that the general plan of the Clause is being accepted, because in subsection (8) we decide how we shall administer the new tax, if it is approved by the Committee. We considered this matter of administration and enforcement very carefully, we gave special thought to the position of the motorist, and we came to the conclusion that this was the simplest method of all, not only from the standpoint of the Customs and Excise authorities, who would enforce it, but from the standpoint of the ordinary car owner, too.

One disadvantage in the situation hitherto as it has affected shooting brakes and so on has been the existence of a good deal of ignorance, or at any rate uncertainty, about whether the vehicle was liable to additional Purchase Tax or not. We are seeking to remove a flaw in the law. We want everybody to know exactly where he stands, and to have his eyes fully open to the various possibilities.

I assure my hon. Friend that there is no intention of using the power given in subsection (8) to put upon the form difficult or confusing questions which will make the form harder to fill in or which may entrap the perfectly honest man who hates filling in forms, as most of us do. It will have the virtue of drawing the attention of everybody to the position as regards these vehicles, and may well save some people from unwittingly incurring liabilities. That is very much in the interests of all motorists.

I hope that my hon. Friend will accept it from me that the new questions on the form will embarrass nobody except the man who may possess a vehicle on which he ought to have paid tax and has not paid tax. If everybody were scrupulously honest and fully cognisant of the law, we could save a good deal of trouble in many directions. If we could count upon everybody to know all the facts about Customs duties and to make truthful declarations to the Customs officers at the ports, it would never be necessary to open anybody's suitcase. In fact, as we know from experience, it is often necessary, because of the behaviour of a very small minority, to impose upon the vast majority some rather annoying little formality in tax matters.

That is what is happening in this connection. It will be a very little formality, but I appreciate the desire of my hon. Friend to defend the honourable motorist from every additional nuisance and from additional form-filling. If he will examine the matter he will see that this provision is simply the easiest way in which the Clause can be enforced and the requirements of the law brought to everybody's attention.

Mr. Reader Harris (Heston and Isleworth)

If this is to be done—I do not agree with it being done—is it not desirable that a person shall not place himself unwittingly in the position of making a false statement on the form? Would it not be possible to provide a space in the log book to say whether or not Purchase Tax had been paid? If a man bought a van which was ten years old he could not possibly trace its history, because it would have gone through many hands. Would not the Minister consider an entry in the log book?

Mr. Brook

I will examine that suggestion.

Amendment negatived.

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. D. Howell

Some of my hon. Friends and I had a series of Amendments down to the Clause relating to the position of a small man who has his own garage, who builds a motorcar at the bottom of his garden, and then proceeds to use it in the races and trials in which motorists take part.

We understand the Clause and support its principal intention, which is to catch the man who buys a van without paying tax and converts it into a shooting brake. No one thought, until we saw in print the implementation of the Budget proposal on this matter, that the Clause would be drawn so widely as to catch people who, because of their hobby, build themselves a motor car from scrap parts and race it for their own pleasure.

Our Amendments were not called, for reasons best known to the Chair, but I appeal to the Chancellor to have regard to this matter and, if he is convinced by the arguments which we shall put forward, to produce a form of words on Report to eliminate from the effects of the Clause people who are just following their hobby.

10.45 p.m.

In the discussion on the Amendment which we had hoped would be called, we intended to say that anyone who built himself one of these cars from spare parts and later let it out for hire or for trade or business use should, of course, pay Purchase Tax upon it. We would all agree on that. It will be seen, therefore, that we are concerned with a specific point which could affect only a few hundred people but to whom the principle of whether they should be taxed upon their hobbies is nevertheless important.

This is the first time, certainly within my memory, that any Government have proposed that Purchase Tax should be paid on the results of a man's hobby. The motoring organisations and periodicals which deal with motor racing have expressed themselves forcibly as being opposed to the Clause. Constituents of mine have written to me pointing out that in any event it would be almost impossible for the Customs to put the Clause into effect.

One correspondent, who is a director, tells me that he bought the body of a car from a spare-parts dealer eight or nine years ago. He has been working on it in his spare hours ever since but he has kept no account of the time that he has devoted to the building of his special car. When modifications have occurred to him, he has added them. He has gone to expense in buying spare parts, while others he has made himself. In circumstances like that, when men have been working for years upon their cars, what genius from the Customs will fix the wholesale price of the vehicle, as must be done under the Bill? Surely it is an impossible task, even for the Customs to undertake

There is the added complication that after years of building a car, having notified the Customs that he is taking it for trials or for racing, an enthusiast wants to modify it. People who go in for this sort of thing are fond of tinkering about and like to add bits or take pieces away from engines. The Customs people would be almost permanently in the garages whenever such cars were modified. Some interesting words on this aspect appear it the current issue of Autosport, which says: The legal complications are endless, for who is to decide at what point the recon struction of an existing car becomes the making of a new one? Supposing one's Ford "Popular "suddenly sprouts a Lotus or Buckler frame, and then, in due course, appears with a Climax engine. At just what point does it become another vehicle? Those are pertinent remarks in that periodical's leading article.

This imposition is a tax upon the ingenuity of the people engaged in this hobby, and I think it is a wrong tax. Had it been in operation for some years, the Lotus firm, which is now one of our top-class firms in making racing and sports cars, probably would not now be in existence. The dollar-earning capacity of sports car firms has arisen from the ingenuity of men in a small way of business who have not been content to remain in the conventional mould but have gone out to do something better, and have done the thing which we in these Islands do perhaps better than anybody else, in using their ingenuity and skill to build a motor which no one else has produced.

One would have thought that ingenuity was something that ought to be welcomed, especially by the present Chancellor, and that is one reason why I am very hopeful that the right hon. Gentleman will realise that he is putting a tax on hobbies. He is crushing incentive and initiative, and I trust that he will give some thought to dealing with the matter during the later stages of the Bill, if he has not done so already.

My hon. Friend the Member for Lowestoft (Mr. Edward Evans), who is not here at the moment because he went to a dinner held downstairs in connection with trawling, but who thought that he would be back in time for this debate. has authorised me to say that his son has been busy building himself a sports car and a yacht. The same sort of initiative was needed in both cases. Apparently he will not be called upon to pay Purchase Tax on the yacht, but will have to do so on the motor car. That seems to be an anomaly. I put that forward not, of course, because I wish to suggest to the Treasury that Purchase Tax should be placed on the yacht, but to illustrate the anomaly.

If we are to have Purchase Tax Clauses drawn so widely in order to catch everything—which is a new principle in the life of this country—where is it going to end? If this principle is extended, the man who does a bit of carpentry as a hobby and who buys a beautiful piece of oak with which to make himself a dining table will have the Customs coming along and assessing him for Purchase Tax on the table. The same will apply to the electrician who builds himself a radio or television set; and, to take an extreme case. even the housewife who buys two ounces of wool with which to knit a pair of socks would be evading Purchase Tax, if this principle were extended.

I hope that the Committee will agree that it is quite wrong, in a legitimate Clause of this kind, designed to catch people who endeavour to evade the payment of Purchase Tax, to clamp down so widely as to affect a few hundred small men who, as a hobby, build, from spare parts, at the bottom of the garden, a vehicle which they intend to enter for races or rallies for their own pleasure. In that spirit I hope that the Chancellor will have a heart for these people who have contributed a great deal to the building up of the sports car industry in the country and who, I believe, want to play their part by using their initiative, and who certainly feel very strongly indeed about the action of the Chancellor in this connection.

Sir Ian Clark Hutchison (Edinburgh, West)

Although I welcome intention of the Clause, I am worried about its effect on those who may build cars as a hobby. Only this morning I received a letter from a constituent of mine who is connected with the engineering industry. He states that in his spare time he has, during the past nine years, devoted himself to both designing and building a car which is now approaching completion. He is very upset to think that if this Clause is passed in its present form he may be liable for a considerable amount of Purchase Tax.

It seems wrong that a man who is not wealthy, and who has over a period of years devoted his spare hours to useful creative purposes associated with his own industry, should be penalised in this way. Without at this late hour going into further details, I would ask the Chancellor of the Exchequer to see whether he cannot find some method whereby those who design and build cars for themselves in their spare time as a hobby could be exempted from the provisions of the Clause.

Mrs. Jean Mann (Coatbridge and Airdrie)

At this late hour I feel some trepidation about entering into a discussion on the construction or adaptation of vehicles into motor cars, and especially in doing so in an assembly in which I am surrounded by male Members. I imagine that some of those hon. Members might think that scooters would be more in my line, but there are one or two points about the Clause which I should like to put to the Chancellor. They are, I suggest, important points and they come from a constituent of mine who is very enterprising, and who has made a great success of his business, which is not that of building motor cars.

Building "specials" has been his hobby, and he tells me that this Bill will effectively stop "specials" building and, in the long run, will adversely affect our export trade in mass-produced cars. Hon. Members may think that that sounds somewhat far-fetched; but my constituent, in whom I have great faith, says that most real "specials" are built because production cars do not incorporate what the "specials" builder wants, and that when the "special" beats the production car in competition, the big makers take notice and incorporate the "special" ideas in their cars.

My constituent has had a number of his ideas incorporated in Air Force equipment. He says that the number of "specials" made is comparatively insignificant and the revenue from tax on them is negligible. They are made by enthusiasts who have enough faith in their ideas not to be put off by the very considerable labour and "know-how" required.

I think that hon. Members will all sympathise with the spirit which laboriously plods on in the pursuit of knowledge; an inquiring mind in the medical laboratory, or the scientific laboratory, or the engineering workshop, is very welcome, and especially do we welcome that inquiring mind which goes on after midnight when most of us are in bed. [Interruption.] I know that we are sometimes not in bed at midnight, but hon. Members do not stay here because they wish to do so.

My constituent says that the big makers are too busy making money to do much that is original, to go in for the "off the beaten track" type of experiment. They, he says, will deny this, but it is true. Perhaps the Chancellor is going to kill those who lay the golden eggs. By way of example, my constituent tells me that no production car yet has what is known as a De Dion rear axle—and perhaps I should explain that, as I am acquainted only with scooters, I cannot say what that is; but during the last year or two, "specials" with De Dion rear axles have proved their great superiority so that, in one, or at most, two years, there will be production cars so fitted.

The big makers will then be telling us how much better is that type of layout. There sounds to be some good sense about that, but what the big makers will not tell us is that they have "pinched" the idea from the "specials" builder after he had proved its worth and ironed out the snags from it by bitter experience.

My constituent says: If Purchase Tax is levied on specials. it will kill the craft stone dead. I do not think right hon. Gentlemen opposite would wish to contemplate that. He goes on: …the car industry will lose its best source of worthwhile improvements which will be so necessary to meet competition in the export market. Then the following statement is made: Very poor cars are good enough for the home market—sales prove that—but much better cars will be required to hold their place abroad … 11.0 p.m.

I think it will be agreed that my constituent has made a very good case for the exploring, adventurous spirit of British men in this sphere. The Chancellor will know whether it is worth his while to kill this venturesome spirit, which may in its own way contribute very greatly to the quality and export value of our cars.

Mr. Anthony Kershaw (Stroud)

I congratulate the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) upon the very excellent technical knowledge which she displayed of the motor industry. In the Army I learned just enough to know that the thing to do was not to open the bonnet of any motor vehicle.

I also hope that my right hon. Friend will find an opportunity to reword the Clause in such a way as to make it possible for the amateur who wishes to pursue a hobby to do it without attracting Purchase Tax. The terrain in my constituency on the edge of the Cotswolds might be regarded by some as a most disagreeable place for driving, but a lot of young men and women like to drive up and down the hills in cars which they themselves make. I am certain that it cannot be the intention of my right hon. Friend to make that pastime more expensive than it is at the moment. Surely the amount of revenue which would be forgone by an alteration permitting individuals, without altering Purchase Tax, to make these cars in their own garages and play with them, would be very small indeed.

I feel certain that there are very few hon. Members whose hearts do not throb a little at the sound of a very ancient Bentley. Even if my right hon. Friend is among such people, I shall think very little less of him than I do now. I hope that he will be able to alter the Clause in the way in which the hon. Member for Birmingham, All Saints (Mr. D. Howell) suggested.

Sir Robert Boothby (Aberdeenshire, East)

I think it is extremely undesirable that anybody should build any experimental or special cars in their back gardens out of old parts with De Dion axles, which were all the rage in 1902 but. as far as I know, have been obsolete ever since.

The whole of this project is fraught with danger. Our roads, which are in all conscience small enough in relation to the traffic which they have to carry, were never intended to be laboratorles for experiments—explosive experiments, according to the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) —of the kind that are now envisaged by hon. Members on both sides of the Committee.

The whole question opens up a hideous prospect of danger to everybody concerned, and I hope that my right hon. Friend will stand absolutely firm in the interests of the safety of the public.

Mr. T. L. Iremonger (Ilford. North)

I do not know whether I dissociate myself more vehemently from my hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby) or the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann). I think that my hon. Friend the Member for Aberdeenshire, East is absolutely wrong, but I should like a little more specifically to dissociate myself from what the hon. Lady said.

The hon. Lady went too far. The case could not have been presented more admirably than by the hon. Member for Birmingham, All Saints (Mr. D. Howell). In what we are asking my right hon. Friend to do, we must not go as far as the hon. Lady suggested. The distinction which we must make is that she asked him to exempt people who will try to make money from their enterprise.

Mrs. Mann

No. That is not the Amendment.

Mr. Iremonger

The hon. Lady was asking in her speech that those people who made use of their contraptions commercially should be exempt.

Mrs. Mann

No. Only for their own use.

Mr. Iremonger

In that case, I am entirely with her, but I got the impression that these people were promoting some form of commercial enterprise. I am glad that she has had the opportunity of clearing up what she meant.

I want to add my plea to that made from both sides of the Committee, with one notable exception, and to say that I hope that my right hon. Friend will bend his mind to this. Although we can see the virtue in the Clause and its general intention, it is surely not intended to penalise people who make their own cars. It would not be practical and it would be extremely difficult to catch them. They are making these things entirely for themselves and not to sell. In trying to put Purchase Tax on such enterprise we are introducing a new and quite wrong principle into the fiscal system.

I should like my right hon. Friend to give an assurance that between now and Report he will try to find a way of amending the Clause, so that when we consider it on Report we will find that the Government have put forward an Amendment.

Mr. Reader Harris (Heston and Isleworth)

I should like to lend my support to what has been said from both sides of the Committee. I have in my constituency one or two young men who make up these cars in their back gardens and garages. Any one of them may be another Mr. Rolls, another Mr. Royce, or Captain Bentley. It would be a great pity if the Government did anything to stultify their initiative and enterprise. On more than one occasion in the last few weeks I have had to say that I deplore the way in which the Government appear to be playing into the hands of the big combines and the big concerns. I said on another Bill that we should do nothing which stops little men starting up in business.

How many cars would be on the roads today if anybody who wanted to invent a car in the past had had to fork out £200 in Purchase Tax the moment he put four wheels on it? The Clause says: Where a person, whether registered or required to be registered or not, makes a vehicle to which this section applies …purchase tax shall be charged on the wholesale value of the car unless he makes it in the course of a business which ordinarily includes the manufacture of cars. There must be many young men who start to knock up a car in their garages and do not know, when they begin, whether it will develop into a business or not. They try it out. They do not know whether it will become a commercial proposition. Perhaps it will not. If it does, it is only right and proper that the moment they sell cars Purchase Tax should be paid. I am anxious that young men should not be stopped from experimenting in these early stages. despite what my hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby) has said.

My hon. Friend deplored the increase in the number of cars. Somewhere in somebody's constituency is a young man inventing a car which goes along the road and which, when it gets to a busy crossroads, does not rely on a fly-over or tunnel, but shoots out helicopter blades and jumps over it. Is he to be stopped?

Sir R. Boothby


Mr. Harris

I would hope that such a person was making a useful contribution. But if there is any such young man, inventing such a vehicle, I would lay a bet that the moment he gets it on the road there will be a chance that the then Chan- cellor of the Exchequer can whistle a Clause into his next Finance Bill putting a tax upon aeroplanes, so that the young man will be caught anyway. This seems to be a great pity. I therefore hope that the Chancellor will import some words into the Clause at a later stage to make sure that such persons are not penalised.

The Clause provides that a shooting brake or van which has not had Purchase Tax paid upon it when bought will be subject to that tax if it is altered by having windows put into it. I should have thought that such a provision ought not to apply if the vehicle is, say, more than ten years old. I can appreciate that it is reasonable that a person buying a new van should pay tax immediately he puts some windows into it, but in the case of a van which is already old I should have thought it unfair to ask that tax should be paid.

I must declare an interest in this matter, because I recently bought a van from the Post Office. It may not be generally known that Post Office vans are sold automatically after ten years. This van is old, and a good deal of money has been spent on getting it into running condition. It seems to me to be an imposition to ask for Purchase Tax to be paid in respect of such a vehicle if one puts windows into it.

Mr. Jay

I think we should all want to impose tax upon a person who, simply to avoid tax, buys a van and converts it into a car, but I think that all hon. Members, apart from the hon. Member for Aberdeenshire, East (Sir R. Boothby)with whom I usually agree—want to exempt from tax cars made by people in their own back yards, out of parts which they have somehow assembled. I wonder whether it would be possible to grant exemption from tax if two conditions are fulfilled. I will put this proposal in common sense rather than legalistic terms.

I suggest that a car should be exempt from tax when, first, it is converted or adapted from something which was not itself a vehicle before the adaptation process was begun and, secondly, when, having been made, it is used simply for the personal purposes of the maker, with the implication that if it were afterwards sold it would be eligible for tax. I wonder whether it would be possible to work out a solution upon those lines, which would get us out of our difficulty.

Mr. H. Brooke

The Question under discussion is, "That the Clause stand part of the Bill." Until we came to the speech of my hon. Friend the Member for Heston and Isleworth (Mr. R. Harris) I thought that very little would be said about the main purpose of the Clause. The hon. Member for Birmingham, All Saints (Mr. D. Howell) quite reasonably sought the opportunity to draw attention to thoughts which were in his mind when he put down certain Amendments which were not called. I can deal with the main question raised in the debate only if I go back and say a word about the original purpose of the Clause.

As has been explained in earlier debates, at present there is a fault in the law, under which people who know its precise provisions can convert a commercial van type of vehicle into a private car type of vehicle without paying any Purchase Tax, provided that they carry out the work themselves, and that it is not done in the course of or for the purposes of a business. That results in identical cars being on the road, some of which have had to pay tax as commercial vehicles and some as private cars —the tax position depending entirely upon the question whether the owner has had the job done in a garage or has done it himself and, in the latter case, is able to establish that it is purely for private purposes and has no business purpose.

This situation has given rise to a good deal of grievance. Local complaints have been made because people have found that they have incurred tax although their neighbours have managed to avoid it, either by luck or superior knowledge of the law. I have heard little criticism of the Government's decision to try to ensure that all conversions of commercial vehicles into private cars, or into the ordinary private car type of vehicle, shall be taxed in the same way. What hon. Members on both sides of the Committee have been raising is not whether that is right, but whether the Clause could be altered to exclude from liability to tax the man who builds, or remakes his car. It is interesting to see what happened under the law as it stood, when there was this flaw in it, this loophole.

11.15 p.m.

From being a loophole of which few people took private advantage it became commercially exploited. Firms which had understood the position made and sold conversion kits, with advice on the circumstances in which these kits could be used in a private garage or backyard so as to avoid liability to purchase tax. There was no moral obliquity in this. It has been suggested that there was evasion of the law, but everyone was acting honestly. There was a gap in the law, and they took advantage of it. There was no evil in it. There was confusion in people's minds. Now the Government, having closed one loophole, is being asked to leave open another. The main argument this evening has been in favour of the pure amateur who likes to play about with these things, to make experiments, and to produce a car of his own; but this very thing is followed up by some manufacturers, similarly to the manner in which the former loophole was used.

Kits are sold by certain manufacturers for making into cars—kits of parts supplied by the manufacturers which can be 'bought ready for turning into cars. Anyone buying one of these kits who has been clever enough to produce a car has hitherto not been liable to purchase tax. I understand the sympathy which this case arouses, but I must point out the difficulties in what hon. Members have been asking the Government to agree to. These things soon become more than a hobby. Several hon. Members have suggested that a liability to tax should arise if the car were subsequently sold, or were used for anything but a private purpose. The latter case, however, is almost impossible to define. There is no question 'that if a car is sold it ought to be subject to Purchase Tax, because the secondhand car market is what is technically called, in the jargon we use, a tax-laden market. If you have a car which you can put up for sale which has not paid Purchase Tax you can get a price for it which is based on the assumption that it has paid the tax. You will thereby derive a 'profit which is roughly equivalent to the present value of the Purchase Tax which has been paid in other circumstances.

I noticed that the hon. Member, in some of his Amendments, was seeking to introduce a further safeguard in suggesting that these motors should become liable to tax if no longer used for private purposes. If he will examine the matter further, he will see that it is extra- ordinarily difficult to decide where the words "personal purposes" end and the words "trade or business purposes" begin. Presumably, a person is using a car for personal purposes if he drives in it to his office, but if he decides to make a business call on the way he is using it for business purposes. To ask them to make such a decision would be putting an almost intolerable task on the people administering the law, whose sole purpose is to try to ensure that everyone is 'treated alike.

That is just the same difficulty which gave rise to so many grievances over the old commercial van conversion. People sought to prove that it was their intention to use the vehicle entirely for private purposes, and it was hard for the Customs 'and Excise officials to catch people who were using these vehicles for business purposes, as undoubtedly some people were.

There is another type of case which I have not mentioned, but I think was in the minds of some hon. Members; not that of the man who is buying a kit of parts and assembling them, or making his own car as a new vehicle, but the man who buys an old car, strips it down and then collects fresh parts from elsewhere and assembles a car which is very much better than the car he had previously. Let me make it clear that that man is not liable to Purchase Tax if he started originally with an old car on which Purchase Tax had been paid at some time. He can improve that vehicle in any way he likes and he will not render himself liable to Purchase Tax. I think that answers, in part, the question put to me by the right hon. Member for Battersea, North (Mr. Jay).

Mr. G. B. Drayson (Skipton)

Can my right hon. Friend say whether this applies equally to a man who buys an old chassis which is dated before Purchase Tax on cars was introduced? Suppose a man bought a car made in the 'thirties.

Mr. Brooke

I think that a man who bought a chassis of that age might very well fall foul of my hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby). I can tell my hon. Friend the Member for Skipton (Mr. Drayson) that if he finds an old chassis on which Purchase Tax has been paid because it was part of a commercial vehicle and not a car, and if he turns it into a car, he will be liable to pay the extra tax representing the difference between what had been paid and the tax today. But he would not have to pay the old 30 per cent. Purchase Tax on the chassis over again. I hope that I shall not be led into discussing the intricacies of the Purchase Tax, as I am anxious to address myself to the main question.

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. We should not re-create a situation in which there is a likelihood of unfairness between one person and another.

Mr. D. Howell

The right hon. Gentleman says we must not put an impossible task on the Customs and Excise. It is my main objection to the proposal in the Clause that it does put an impossible task on the Customs and Excise. I believe it to be an entirely impossible task for any Customs and Excise man to decide at any stage the wholesale price of one of these specials built by a man in a back garden over a period, perhaps. of some years, and not clocking himself on or off the job. It is an impossible task to decide what is the wholesale price for the purpose of tax.

Mr. Brooke

I do not think it is impossible to arrive at the wholesale price. We have to do that for an immense number of things in administering Purchase Tax. The Customs and Excise Department has solved this problem in every other case, and I do not think it will be defeated by this one. I thought the hon. Member was going to raise the question how the Customs and Excise Department would find out about the car in the first place. It would not be taxable until complete, but when complete and put on the road it would, presumably, need a licence, and there subsection (8), about which the Committee has come to a decision, would come into play.

I hope the Committee will agree that I have tried to answer fully the ques- tions which have been put to me. If my reply is a negative one, it is not because of lack of understanding of the problem, but because it is the only one which can be made to the point.

Mr. Blackburn

Would the right hon. Gentleman let the Committee into the secret of where those wonderful kits can be obtained?

Mr. Drayson

I do not think my right hon. Friend quite understood the question I put to him. When he was speaking of somebody who buys an old car—I took down his words at the time— he said, "If he strips it and reassembles it he will not be liable to Purchase Tax." Then, I think, he went on to say, "provided that the original car had itself paid Purchase Tax."

There are cars which were made in the 'thirties; there are many cars dating from 1935 and 1936 and onwards on the roads now, on which new bodies could be put. Purchase Tax was not paid on them because Purchase Tax did not exist when they were made. Would such an old car, with a new body, be reassesed at some figure for Purchase Tax? That was the question I put to my right hon. Friend.

I have a case, as, judging by the debate, other hon. Members have cases in their constituencies, of a constituent of mine who works in a garage, and who thought he would not be able to have a car of his own, but who has managed to buy an old chassis, and in his spare time he has put a new body on it. He tells me it has cost him about £70. He said that if it were assessed for tax the amount might be £80, or some such figure, that being the value put on the car. He would be quite unable to pay that much. He is planning to use the car for his summer holidays, and if he had to pay that tax or abandon the car he would have to rearrange his holiday plans and his family would be extremely disappointed.

I am under the impression the original chassis did not attract Purchase Tax because the tax was not in existence when it was made. I am sure the car will be perfectly roadworthy, and that if it should be driven to Aberdeen it would not cause my hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby) any anxiety.

Mr. Mitchison

I do not propose to take long, but as there have been several speeches from the other side of the Committee I should like to support what has been said by my hon. Friends on this side and what has been said, too, by practically every hon. Member who has spoken from the other side. Surely some attention must be paid to the amount of feeling that has been shown on this comparatively small point.

11.30 p.m.

The right hon. Gentleman was a little summary on the two points put to him by way of question by my right hon. Friend the Member for Battersea, North (Mr. Jay). The first was about private use of cars. The right hon. Gentleman said that it was impossible to draw the line between private use and what I may loosely term commercial use. May I draw his attention to the fact that the terms of the ordinary insurance policy are very similar to the words of the Amendment and that any person using a car beyond that use becomes liable not merely to a penalty but to obligatory disqualification for a considerable period? That may be a very heavy penalty indeed.

If the distinction is as difficult to draw as the right hon. Gentleman has suggested, a radical amendment of the law is not only due but is long overdue. This law has been worked for a long time, and the number of difficult cases is not large. I believe that it is a practical distinction to draw.

The next point is that in trying to stop a loophole we have, it was suggested, made another. I reply that in trying to stop a loophole the right hon. Gentleman has used a block much too big for the purpose and has actually obstructed quite a number of things he did not mean to obstruct. The difficulty lies in talking about making a car when the thing we are primarily aiming at is converting a non-Purchase-Tax vehicle into a car. I suggest that the right hon. Gentleman and the Chancellor ought to look at this matter again.

I will make one other suggestion. I followed carefully what the right hon. Gentleman said, but the only instance he produced of literally making a car and which attracted me as a good instance for his purpose was the one about the kits. Earlier in the debate an hon. Member asked about someone who made a pair of socks out of wool; the practical answer is that wool is subject to Purchase Tax. which is rather heavier on wool than on socks. Surely exactly the same can be done with kits.

I do not think that anyone wants to stop the man who does a bit of work in the backyard and builds up a vehicle out of something which was not a vehicle before. I cannot see any objection to allowing him to go on doing that. I deprecate the suggestion made by the hon. Member for Aberdeenshire, East (Sir R. Boothby)—if I understood him aright—that Purchase Tax should he used as a form of criminal penalty which will result in nobody having any cars at all. I agree with him that with many cars on the road it would be better, from many points of view, if there were fewer of them, but that ought not to be provided for by…

Sir R. Boothby

I referred to these "phoney" cars built in backyards, not to the general run of cars.

Mr. Mitchison

With all respect to the motor industry, not all "phoney" cars are built in backyards. Let us leave it at that for the moment.

I beg the right hon. Gentleman to look again at the Clause and see whether he really wants to cut out this sort of thing. If he wants to accept it, that can be done, and will not impose substantially greater burdens on the Customs and Excise Department than this already difficult Clause is bound to impose.

Mr. H. Brooke

I have made my speech and I do not intend to inflict a second speech on the Committee. I hope I have shown that I have appreciated the points that have been made, and I have said quite frankly and candidly that I do not think there is any way of meeting them without laying the administration of the law open to the same difficulties which we are seeking to remove.

I am sorry that I did not give my hon. Friend the Member for Skipton (Mr. Drayson) a detailed reply on the first occasion. If his constituent or friend originally acquired an old car or chassis of pre-Purchase Tax vintage and can produce evidence acceptable to the Cus- toms that it is of pre-Purchase Tax vintage, he will not be at risk of Purchase Tax whatever he makes it into henceforward. He may, however, be at risk of his life.

Mr. Jay

Can the Financial Secretary assure us that before the Report stage he will consider the suggestions which have been made this evening, and will let us know then whether he thinks they are practicable?

Mr. Brooke

I will certainly go over everything that has been said tonight, and my right hon. Friend the Chancellor of the Exchequer has been sitting here and has heard the whole of the debate. If I were to say more than that, I would raise hopes which perhaps could not be fulfilled. What would be the use of debating here if we did not examine everything which was said? I am certain that my right hon. Friend will wish to consider everything which has been said tonight.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Mr. H. Macmillan

I beg to move. That the Chairman do report Progress and ask leave to sit again.

As we have now completed Part I of the Bill, I think it would be the general wish of the Committee that we should now complete our labours for the night. The hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) observed favourably upon the inquiring minds that function after midnight, but perhaps on this first union of the Committee we need not follow her advice and might stop just before twenty minutes to twelve.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.