§ Order for Second Reading read.
§ 11.5 a.m.
§ Miss Wilkinson
I beg to move, "That the Bill be now read a Second time."
When a private Member has the good fortune to win a place in the Ballot, it is possible to use that good fortune in two ways. Either one can bring in a Bill which will reform the entire country and make it a decent place to live in, in which case there will be a good field day during the whole of the Friday sitting, but alas, one's efforts will be finished at four o'clock; or one can bring in some small Measure of social reform. If one follows the latter course, obviously one has to get a fair amount of agreement; one has to get not altogether what one wants, but what is the greatest common measure of agreement. Therefore, having decided to introduce a Bill dealing with a matter which has caused me grave concern for some years, I proceeded, with my known impartiality, to consult, as far as possible, those holding different views. I am glad to say that the result of that has been that the Bill has secured a surprising measure of agreement, and I wish to pay my tribute to those who have helped me. Many hon. Members will have received from the Hire Purchase Trade Association a letter expressing general approval of the Measure, with the information, of course, that it can be improved in the Committee. I have in my possession also a resolution from the Wireless Retailers' Association, which covers an immense part of the retail trade, saying that its councilagrees in principle to the draft Bill to be presented by you and desires to tender support in the hope that it will pass its Second Reading and go to the Committee stage, as stability in the hire-purchase trade is desired by the radio industry.Of course, when one gets so much agreement one begins to feel nervous. Nevertheless, on the whole, all those who have worked on this matter have been actuated by a desire to remove what is a growing social evil. I have in my possession, although I will not trouble the House by quoting them, a list of judicial criticisms of abuses in the present hire-purchase system, in which Judges have 730 said that they hoped the time was not far distant when something would be done to deal with this sharp practice.
I wish to make clear at the beginning, as I think is clear to anyone who has read the Bill, that the Bill is not against the hire-purchase system as such. The hire-purchase system is something of which I, and I dare say a good many hon. Members on this side, have taken advantage to the satisfaction of all concerned. It is a system by which people who normally would not be able to get credit, although I do not know whether I am included in that category, are able to obtain goods. People on weekly or monthly wages, who would not normally be able to get credit, are able to obtain goods by this system. But what has been a useful practice in the hands of reputable firms has really become, by intensity of competition, a source of grave scandal in what is recognised as the worst end of the trade, a scandal which no one in the House or outside would attempt to defend.
I would like to refer to one or two of the letters from the enormous pile of letters which I have received since it was intimated in the Press that I intended to introduce this Bill. Some of them deal with what is known as the "snatch-back." Decent firms do not want the goods back. They want the money, they are content with a reasonable profit, and they want the ordinary payment of the instalments to go on. But there are firms—I could mention names of considerable reputation, if advertising makes reputation—which want the goods back in order to resell them when, in fact, a considerable proportion of the cost has been paid. There is the difficulty that under the hire-purchase law, much of which is case law, the system exists by which the agreement grants the option to purchase only when all the stipulated conditions are fulfilled on the appointed day. One can then buy a grand piano or a suite of furniture for 1s., or whatever it may be.
The theory is that all the time one is paying only for the hire, and that at the end one pays the stipulated 1s. That means that it is open to the owner to repossess the goods at any time prior to the stipulated date if all the conditions have not been fulfilled. That is where the centre of the trouble lies; that is the cancer in the whole system. I will quote from one or two letters to show what 731 happens, For instance, a poor woman got furniture for which she was to pay a total of £27 1s. 9d. With some difficulty, she paid £25 16s. 9d., and then she got behind in her payments and was prosecuted, the court ordering £6 8s. 9d. for costs. While she was out charing, a van called, took away all the goods and what was considered to be £5 worth of other goods for the court costs. That is the sort of thing that is happening every day. I have a letter from a well-known Justice of the Peace in Manchester, where the men were regularly sent with a "bruiser." The writer of the letter says:A van called for the goods. One of these men was an ex-boxer, a regular brute, just the type of 'bruiser' to do the job. Mrs. Read, judging what their errand was, did not let them in, but they used force. Mrs. Read screamed, and a neighbour came to her aid. The boxer promptly floored him, and the men made off with the goods.As it happened, that woman went to the local Labour agent, and the men were prosecuted for assault and, I am glad to say, fined; but there are plenty of cases where that sort of thing goes on and the people are too poor or too terrorised to take the proper action in the court. It is of no use saying that the poor people have a remedy in law in such cases, for to them the law, especially in regard to hire purchase, is something that simply goes on piling up the costs which they have to pay. I give to the House only one instance of each sort of practice. Another quite indefensible scandal is the "linked-on" contract. There are cases where, for instance, a couple who have just been married want furniture, and get the goods on the hire-purchase system, and pay fairly regularly. In a case which I have in mind, the couple had got a parlour suite, the total cost, with some extra goods, being about £30. They paid up to the last four instalments.
Then a salesman came round and said they had paid very well and asked them would they like to buy some more. Their house was not properly furnished, and they agreed to have another £25 worth. This new purchase was not made the subject of a separate agreement, but they were given what is known as a "linked-on" agreement, that is to say, a new agreement which covered the amount of the original purchase which they had already almost paid and also the amount of the new purchase. The man fell out 732 of work when about one-third of the amount of the new purchase had been paid and the mere fact that he had paid one-third of the new amount made it clear that he had more than paid for the original purchase. But because the second purchase was linked on to the first in the agreement, the hire-purchase company claimed the lot, including what had already been paid for in full.
Then there is the scandal of high depreciation allowance coupled with the fact that there is no guarantee such as would ordinarily apply to the sale of goods. For example all, over London and other large cities in the smaller shops one sees notices to this effect. "Two shillings down and the set is yours." You pay your two shillings down and the set is delivered. There is no guarantee—except a very vague one of fitness for its purpose, which is probably unenforceable. You find that the set will not do what you want. In the particular case brought to my notice the purchaser could not get the Regional programme at all on the set, and only got the National programme very badly. But he was told that the company could not take back the set, and that he had to go on paying on it. Eventually the amount he had to pay was 66⅔ of the price, although he left the wireless set in the shop.
I do not go into the question here of the real value of these articles as compared with the amount which one is expected to pay for them, but I wish to draw attention to the manner in which the term "depreciation" is interpreted. A wireless set cannot depreciate very much in one week after it has been taken out of the shop, but if you take a set back because it will not work properly, you have to continue paying up the amount of depreciation named in the agreement, and the Court of Appeal has held that fair and reasonable depreciation is not less than 80 per cent. of the total value of the goods. Somebody ought to talk sense to the Court of Appeal. I do not know whether anybody has done it yet or not.
A further problem is the question of costs, and I think this is, perhaps, the most heartbreaking aspect of the subject. I have here a cutting—I think from the "Daily Mirror"—describing the case of a woman who, it is stated, could never say "No" to door-to-door canvassers. 733 As soon as the goods were delivered she would pawn them to get more money. The result was that one day her husband returned from work and found her dead in a gas-filled room. It is stated that he held up a bundle of tickets and said "These are what killed my wife." Then I have a very bright and cheerful letter from a gentleman who says:I have trained hundreds of men to overcome wives' objections and sales resistance against signing documents when their husbands are not present.I have also a letter from an officer of the Catholic Rescue Crusade who says he has many cases on his files of wives who have left home rather than face their husbands after having signed for goods which they really could not afford. In that way debts are piled up, and eventually people are faced with the inevitable consequences. I have here what strikes me as a peculiarly bad case. It is that of a very sensible woman in Cheshire who was approached by the representative of a certain cleaner company and asked to buy a cleaner on the hire-purchase system with a deposit of 10s. She told him she could not do it without her husband's consent. He then offered to leave the cleaner with her, pending her husband's approval, on a payment of 5s. security. Then we have the tragic story which is repeated over and over again:I also signed my name to some agreement which I did not take the trouble to read as the representative assured me that it was of no importance.When the husband returned home he did not approve of the transaction. He said he could not afford it, and he informed the company at once that they would have to take the cleaner away. Their representative called again during the husband's business hours and in a domineering manner declared that the wife has signed an agreement to purchase the cleaner, that on no consideration would the company take it back and that the matter would be taken into court if the instalments were not paid. I can give many other instances of how goods are pushed on to poor people who cannot afford to pay. One cannot altogether blame the touts, because they themselves are under the whip of starvation. They have to get a certain number of hire-purchase agreements through, because failure to do so means starvation for them. I have here a case where a man not only got a poor woman to sign for 734 a vacuum cleaner—although she had nothing to clean—but even paid the first instalment himself. Then followed continuous badgering not only of the poor woman, but of her relatives for the instalments.
One cannot defend cases like those, but the fact that every sort of sharp practice is being used pull down the whole standard of the trade. In most cases there is no idea of how much the woman has to pay. I have one case here—and I am very tempted to read out the name of the firm concerned—in which a blank space was left in the agreement for the amount when the woman signed, and the amount was filled in afterwards. It was an amount much in excess of the value of the goods. It is all very well if you can afford to go to law and employ lawyers to state your case against an agreement of that kind, but this was a poor woman living in a couple of rooms.
There, in broad outline, is the scandal as it exists to-day. I know the details will be filled in by some of my hon. Friends, and also by those hon. Members opposite who have promised to speak on this Bill. We have then to consider how the scandal can be stopped. I do not claim that this is a perfect Bill and I am interested to find that Judge Frankland, county court judge of South Yorkshire, speaking at the Luncheon Club at Leeds, said that this Bill was inadequate and did not go far enough. I never thought I would be lectured by a judge on the ground that I did not go far enough. I would only say to that judge that I would like to go a good deal further, but I want to get something done. I want a Bill which everybody will agree to work from the beginning, so that we can stop the worst of the scandals. Then, perhaps, we can deal with others later.
May I now go through the main Clauses of the Bill in order to make plain what it does? Clause 1 limits the Act to hire-purchase agreements and credit sale agreements. We have put in the latter because we did not want the shifting over of abuses by bringing in credit sales agreements if they were left out of the Bill. We have limited it to £100 total, because that is the limit of county court jurisdiction. Under strong pressure we agreed to £50 if only one article is comprised. That leaves out the cheap motor trade, I am afraid, but it mainly covers 735 the poor people whom we want to help. Then Clause 2 makes it obligatory that the hirer should be informed of the cash price, that is, of the amount for which he could get the goods if he was willing to pay cash, and there is a number of firms which would rather do anything than that. But the point is that that does protect the decent, reputable trader who wants a reasonable and fair profit and who says, "This is the amount—shall we say £30?—for this article. If you want it on hire purchase, then there is five or six per cent. interest on that. Then you know where you are, but some of them charge as much as 25 per cent.
Some years ago a certain firm put something in their window and said they would sell it at £12 10s., but a hire-purchase firm not far away was selling it at £27 10s. on hire purchase. Therefore, the agreement must state the hire-purchase price, the cash price, and the list of goods comprised. I may say that I had a letter from the National Federation of Grocers and Provision Dealers Associations strongly stressing this point. Then the agreement must be in writing, and we have taken over the Scottish law that if the price is under £20 and the goods comprised in the agreement are not for use in connection with the trade, calling, or profession of the hirer, it must be signed by the hirer personally. That is aimed at the door-to-door man. It is not often that the amount goes up to or beyond £20 if the goods are sold at the door step, where the wife signs in the absence of the man who ultimately will have to pay, or, in other words, pledges someone else's credit.
The next more important Clause is Clause 4, which deals with termination of hiring. Where a hire-purchase price is less than £50, the hirer may return the goods if one-third of the purchase price has been paid; if the price is over £50, they may be returned if a half has been paid, or agreement may provide for a lesser sum. I think about 25 per cent. all round would have been about fair, but I feel that a third or a half deals with the facts of the case, and facts, of course, have to be taken into consideration. You do not only buy goods from the shop, but goods that have had to be transported into the shop, on which commissions, railway freights, and so on have to be paid. When you actually take 736 those goods out of the shop, you are paying for all those various commissions and services as well as for the goods themselves. Therefore, it is a fair thing that you should pay for those, and I quite saw that point when it was put to me. I may say that on that point we got general agreement. It is a very rough kind of scale, but there is obviously much greater depreciation if you buy linoleum or carpet and have it cut to fit a room and then cannot pay for it, when really the owner has a grievance if he has it back, because it is of little use to anybody, whereas a wireless set which is just put in a room and then taken back is a different matter. But you cannot deal with all these things separately, so we have done it in this way.
Clause 5 deals with the question of forcible entry. I know that forcible entry is now illegal, but all the same it is done. Paragraph (b) of this Clause is to deal with a rather sharp practice of certain financial companies. In Clause 6 there is insistence that the hirer shall have a copy of the agreement free of charge to begin with, and on payment of 1s. if he needs one later on. I have had cases where as much as 10s. 6d. has been demanded for a copy of an agreement. Clause 7 puts the hirer in the same position as the buyer in respect to implied warranties and conditions. It deals with the whole question of warranty of goods. As things are at present, however poor and shoddy goods are, however much they fall to pieces when you get them, the hire purchaser has not very much right under the law, and you cannot return them except by paying very heavy depreciation. That Clause has been drafted with a good deal of care, and I think it pretty well meets the position.
By Clause 8 the hirer's right to terminate the agreement and to apply to the courts for relief is to be clearly set out in the agreement. One county court judge with whom I discussed this Bill said he would support a Clause if I put in that the hirer must be made to write out the entire agreement in his own handwriting. He said that was the only way by which you would ever be able to make some people read an agreement. That is true, I am afraid, even of ourselves occasionally. Clause 9 deals with the linking-up arrangement and makes it necessary, if a new set of goods is bought, to have a separate agreement. Then, under 737 Clause 10, the guarantor is given the same protection under the Act as the hirer. The question of the guarantor is rather pathetic. There is the case of the poor woman with a few savings who has a lodger. She comes along and says to her, "Oh, Mrs. So-and-So, you might just oblige me by signing your name here. It does not mean anything really, and, of course, I will pay, but please do me a favour and sign it." The poor woman signs, and I have had a case where a whole life's savings of £55 were taken to meet the default of one of these unscrupulous persons.
Clause 11, with Clauses 12 and 14, is really the gist of the Bill, and it deals with the owner's right to resume possession. It is not possible, unfortunately, to bring in any Bill so drastic as to protect the British citizen against the consequences of his own folly, and that is where I am afraid we are handing that little job on to the county court judge. The Clause provides that it shall not be possible for an owner immediately to resume possession of the goods. He must first of all give the hirer seven days' notice of intention to remedy a breach of contract, and during those seven days the hirer may take advantage of the procedure under the next Clause, Clause 12, which states that when the owner gives notice to the hirer the latter may apply within seven days to the court. Once that has happened, the owner cannot take any further steps to resume possession or compel payment until the hirer's application for relief has been heard.
In the next Clause, which needs a little redrafting, we try to give the owner the protection that this will not be held up indefinitely. Once he has made his application, the hirer must state where the goods are, and must not remove them from the jurisdiction of the court unless they are used for the purposes of his trade. If a man is in a dance band, for instance, and has a saxophone on hire purchase, and is living in Manchester, it is unreasonable that he should not be allowed to take the saxophone to Salford to play it, because that would prevent him from earning the money to pay for the instrument. If the hirer does not apply for relief—and there are many people who get paralysed if they receive a formal notice about anything, and put it behind the clock, hoping it will be 738 forgotten—and has not paid up and delivered up the goods, the trader may apply to the court for an order that the goods should be returned. That is Clause 13. Under Clause 14, the judge can help the hirer whom he is convinced is reasonably honest and trying to pay and is dealing with an unscrupulous owner. Once it comes into court, the court can order the return of the goods, but may stay the order for any time it thinks fit, or may make another order conditional on such payments from the hirer to the owner as the court thinks fit having regard to the circumstances of the case.
We have deliberately not given to the courts the right to vary the conditions of the agreement which the hirer has signed. That, I think, is a pretty big concession to the hire-purchase firms, but I was assured that the British Constitution might drop from its foundations if the judge were given the power to vary the agreement. On the other hand, while we finally agreed on that, the hire-purchase traders agreed—and I pay my tribute to them for it—that the court should have the right to suspend the order and to make these payments as reasonable and as low as seemed necessary to fit the case. It leaves a lot in the hands of the county court judge, but, on the whole, the tradition that has grown up in the county courts has been that the county court judge has over and over again stood as the friend of the poor and unfortunate litigants. Clause 15, which I think will need a more careful drafting, deals with the injustice to the owner that may be caused by delay. The words "less than" would, I think, be better as "more than," but that is a detail which can easily be altered in Committee.
Having done our best to protect the hirer, we start out in Clause 16 to protect the hire-purchase trader. This Clause protects him against the landlord coming in and seizing the goods for rent. I am afraid that here the hire-purchase companies and the landlords will have to fight the matter out, but as things are the goods automatically come under the law of distress. Clause 17 makes it necessary that, when the owner serves notice of his intention to resume possession, he must send a copy to the guarantor. At present, if there is a single default, or two or three defaults, 739 and the man is dealing with one of those snatch-back firms, the company can seize the goods, the man can be made bankrupt, and the guarantor must pay. Even if he offers the full amount, he cannot get the goods back when the owners have seized them, and they can be sold over and over again. This gives the guarantor the opportunity of coming in before that stage has been reached. Clause 18, again, protects the hire-purchase company with regard to Bankruptcy Act proceedings, where they have a right to property of which the bankrupt is the reputed owner. Clause 19 provides that the hirer shall keep the goods insured, and that the owner may resume possession without the seven days' notice if the goods are left uninsured. That is really to deal with the motor car trade where the law might be gravely broken if the man left the car not properly insured, and there was some doubt as to who was the actual owner. These are the main Clauses of the Bill. I would like to call attention to a rather serious misprint on the Schedule, where, in the heading, the words "hirer's intention" should be "owner's intention." That will be made right when the Bill goes into Committee.
May I make an appeal to the House and the Government? This is a Bill dealing with abuses which everybody admits. It is carefully devised so that it shall help those poor people who cannot afford to pay large amounts, or to get legal help if it is needed. People who can afford to do that are not included in the Bill. It deals with the very poor and the people who are struggling and suffering and who, once they get into the clutches of one of these firms, are driven to endless worry. No honourable or reputable interest has anything to fear from this Bill. The only people who have anything to fear are those who are unscrupulously using loopholes in the law as it exists. May I appeal to the Attorney-General to let us have the Second Reading, because, if he gives it his blessing, the Bill will go through?
§ 11.44 a.m.
§ Mr. Leslie
I beg to second the Motion.
This Bill is drafted in a manner that will be as just as possible to both parties to a contract. I would not for a moment 740 suggest that all traders in this system are rogues and tricksters. The fact is that for a long time honest traders have been disgusted with the practices of the less reputable traders, and would welcome any Measure that would prevent abuses. The hire-purchase system, carried out honestly and fairly as between traders and customers, helps people who are at times financially embarassed. Since the War this system of instalment buying, better known as hire purchase, has grown to an enormous extent, holding in its grip hundreds of thousands of the wage-earning population. It is estimated on competent authority that not less than 5,000,000 families in this country are in the clutches of this system for furniture and clothing alone. The agreements are signed by people who too often never read them; in fact they get very little chance to peruse them, because the plausible agent engages them in conversation and simply asks for their signature without offering much explanation. One vital clause in these agreements permits the trader to seize and to take back the goods if instalments are in arrears, even although it be the very last instalment, and there is no compensation to the hirer for the payments already made.
One would have thought that if the goods are taken back some compensation would be given to the hirer for the payments already made, after due allowance had been made for the wear and tear of the goods, but, unfortunately, that is not the case. There are on an average about 600 of these seizures daily. At a meeting in Leeds the other day Judge Frankland said:Week after week, month after month, I sit and listen to accounts of minor tragedies affecting the welfare of working people of this district, and in the vast majority of cases I am utterly powerless to avert that minor disaster to these people. The only well known commodity which in my experience has not been included in hire purchase is the more melancholy one of coffins.He went on to mention a case in which £57 had been paid on a piano the price of which was £60. He was asked to order that the piano should be returned, and said that he had no power to refuse to make such an order; but fortunately, he said, the solicitor in the case was from a reputable firm and agreed to an order for the payment of the rest of the instalments instead of an order allowing the owner to get back the piano.
741 I have here quite a number of cases which have come to my own knowledge. A piece of kitchen furniture was bought by a miner for £9 15s. od. After he had paid £8 17s. 6d. the article was seized, and no compensation was allowed. Then, after it had been touched up, it was resold at the original price. I know also of a commercial traveller who got married and obtained furniture to the value of £100 on the hire-purchase system. He became unemployed. Although he had paid £60 on that furniture, within six weeks his home was cleared and his £60 was lost. Over 500 wireless sets were taken back in one week in a provincial city, and the average payments made on these wireless sets before seizure represented over 25 per cent. of their value. One trader confided to another that he had taken a set back no fewer than seven times and had sold it for the eighth time at the original price, and he said that he had got his money back three times over. [Interruption.] I do not want to raise racial prejudices, but hon. Members can guess his nationality. I have heard of bedroom suites bought by the retailer for £5 15s. od. and sold by him for 18 guineas, and in the case of wireless sets there is an increase of 100 to 150 per cent. on manufacturers' prices.
Here is another difficulty which has arisen. People have been prevented from attending court to plead their cases by reason of the fact that the proceedings have been taken at courts in the towns where the firms have their headquarters; people residing in the North of England, for example, being summoned to appear in London. I am glad to say that judges have been dealing somewhat severely with such cases of late. The organiser of an association in Central London was recently approached by one of his members who was unemployed. He went home with the man and found that the man's house had been stripped of every stick of furniture with the exception of a mattress left on the floor, some bed covering, and a crucifix on the wall. That man had been married two and a-half years previously, had furnished his home on the hire-purchase system and had regularly paid his weekly instalments until the last five weeks.
In one case which came before the courts the judge issued an order for the 742 payment of 1d. a month. The piano-accordeon on which the money was claimed had already been returned and the defendant was without means, and was paralysed. That is an illustration of the treatment which is suffered by these hapless victims. Judge Richardson, in Durham County Court, recently made an order for the payment of a debt of six guineas at the rate of ½d. a month. There is one firm with headquarters in Manchester which takes over £200,000 a year out of Durham. They employ no assistants and pay no unemployment or health insurance, but get women in the different places to go round among their friends to collect orders on a commission basis. In the areas where slum clearance has taken place household goods are being fumigated and in many cases entirely destroyed, and people are rushing to the hire-purchase firms to refurnish their homes. In Newcastle alone there is a black-list, kept by the hire-purchase firms, of over 100,000 people barred by them because of having failed at some time to pay off their instalments. When a hirer intimates to a firm that he is temporarily embarrassed financially and asks for a week or two's grace, he receives within a few days a prospectus from a money lender. The House will see the connection. The original cost of some of these goods is shown by a circular letter sent to various firms by the manufacturers of "The clock that won't go wrong":We are in the happy position of being able to allow you a discount of 50 per cent. off the cash prices if you will undertake not to undercut our prices or terms, and a further discount of 5 per cent. for payment in seven days. We are thus offering you a profit rate of not less than 125 per cent. on your cost price.That is an indication of what the hirers have to pay. In the Irish Free State a Commission has been investigating the hire-purchase system, and its report characterises it as a money-lending rather than a trading system. Among the proposals made by this Commission are these: that all goods should become the property of the hirer on payment of the first instalment; that cash and hire-purchase prices should be plainly marked, together with the rate of interest charged for hire purchase; and that all hire-purchase shops should be under the constant supervision of Government inspectors. I think I have said enough to show the need for this protective measure, and I 743 hope that we shall have the support of the whole House.
§ 11.55 a.m.
§ Mr. Holmes
Attention was called in this House a few days ago to the fact that the Minister of Health, on the morning of the day when he was to move the Second Reading of a Bill on behalf of his Department, wrote what was practically a Second Reading speech in a London newspaper. That practice, obviously, has not the disapproval of the hon. Lady, because, on Wednesday, there appeared in a London morning paper what was practically the speech which she has delivered to-day. I am not commenting adversely upon the fact, because it is somewhat of a convenience to those who propose to speak in the Debate to know what the opener will say. She said one or two things in her article to which she has not referred to-day, and perhaps I might be allowed to refer to them in a few minutes. I am not complaining that she did not refer to them. I should like also to congratulate her upon looking so well after her recent holiday. I thought she put the case for the Bill most clearly and succinctly.
The reason for my intervention in the Debate is that for the past 20 years I have been chairman of one of the oldest hire-purchase businesses in this country. The business was established 60 years ago, and I believe it has had an honourable career throughout that period. Although we did hundreds of thousands of pounds' worth of business through our 60 establishments in Lancashire, Yorkshire, the Midlands, South Wales and the West Country in the year ended 31st March last, two-thirds of it was with our old customers, which shows that they are not dissatisfied with the treatment they have received. I warmly welcome the Bill, because it will rid us, as the hon. Lady has said, of the competition of unscrupulous people, and it will get rid of that scourge of the hire-purchase business, the door-to-door canvasser. It will also reduce to a minimum the practice which the hon. Lady has so well described by the term "snatch-back." The last thing a reputable firm selling by hire purchase wants to do is to resume possession of the goods. For the year ended 31st March, my own company took back only 4 per cent. of our sales. Those repossessions 744 consisted of two kinds. The first-third of that 4 per cent. was taken back at the hirers' own request. There is a provision in the Bill enabling any hirer, in certain conditions, to return goods to the owner. To show that some of us have anticipated the Bill, I will read from the standard agreement of my company this provision:The hirer may terminate the hiring by delivering up to the owners the said furniture and goods and paying all arrears of rent due and of any damage done previously to the delivery up of the said goods.We go even beyond the Bill.
§ Mr. David Grenfell
The hon. Member has said that the goods of his company have been returned at the rate of 4 per cent. per annum. Will he tell us what proportion of the sales comes back in the course of the year?
§ Mr. Holmes
Assume that we are doing a business of £500,000 a year. About £20,000 worth of goods comes back out of it.
§ Mr. Grenfell
The hon. Member sells goods by hire purchase, payment to be completed, say, in 10 years. If 4 per cent. comes back in one year, what comes back in 10 years?
§ Mr. Holmes
I can only say that there has never been any dispute. Let me continue about this 4 per cent. I have given this illustration: Assume that the sales are £500,000 a year; the amount of the goods returned is 4 per cent. One-third of the 4 per cent. is returned at the hirers' request. Most of the rest which is taken back is because of attempted fraud. The hon. Lady in her article said:On the other hand, not all hirers are suffering innocents. There are unscrupulous hirers as well.
§ Mr. Holmes
No one will say that a hire-purchase company is doing wrong when it re-possesses itself of furniture in 745 cases where attempts are being made to swindle. That class of case in the main constitutes the 4 per cent. My company never seeks to get back furniture if the people are unemployed or laid aside by illness. We try to help the people through. We have a goodwill to preserve.
Certain cases have been mentioned this morning, deplorable cases, in which people have been swindled. I hope the House will not conclude from those cases that the working people of this country are a silly lot who can be bamboozled with furniture that is not worth buying. The people are most discriminating. Our housewives probably know how to buy as well as anybody else in the world. They go from place to place, comparing one thing with another, before they make up their minds. The result has been the development of tremendous competition in the hire-purchase business during the past few years, and that the public have had a very sound deal with regard to it. If hon. Members examine the profits of hire-purchase companies they will see how badly some of them have done in the last few years, because of the extreme competition which has taken place and which has enabled the public to buy well. Although we all know of such cases, the hire-purchase system is, on the whole, of value to many people, and they get value for what they have paid.
There is something further which the hon. Lady mentioned in her article, but did not mention to-day. She said:I wish we could have added to the Bill the limitation of the period of credit to two years.Why not?
§ Mr. Holmes
I shall be only too delighted if that can be done. I think that credit is extended to too long a period. There is a story told that a woman walked into a well-known hire purchase shop and said to the proprietor, "Well, I have come to pay the last instalment on my daughter's perambulator." The proprietor said, "That is excellent; and how is the little girl?" The mother replied "She is splendid; she is getting married on Saturday." That story, of course, is not a true one, but unquestionably the giving of extended terms has gone beyond all reason, and I think that from a general social and economic point of view it would be well 746 for the House to consider whether it is not a mistake to mortgage the future too much by means of hire purchase. During the last few months the purchasing power of the people of this country has undoubtedly increased, and yet in the retail trades surprise has been expressed that their turnover has not gone up as much as they expected. I believe that one of the reasons for that is that a number of people have got behind with their hire-purchase payments, and are now paying from their increased wages instalments on goods which they bought two or three years ago. I say quite frankly to the hon. Lady that I am prepared to support her if she puts down an Amendment to restrict the giving of credit under a hire-purchase agreement to a limit of two-years. I hope the hon. Lady will obtain to-day a Second Reading for her Bill. I can tell her from experience that a private Member piloting a Bill through Committee sometimes finds the way rather difficult, but so far as I am concerned, while I shall ask her to accept one or two Amendments which I hope will be reasonable, I promise her that there shall be no obstruction on my part, and I wish her the best of luck.
§ 12.8 p.m.
§ Mr. Ernest Evans
There is no doubt that there has recently been a great increase in the use of what is commonly called the hire-purchase system. I do not object to the system as such. It seems to have been of great benefit to the company of which the hon. Member for Harwich (Mr. Holmes) is the chairman, and, apart from its effect on trade in general, I think it is of benefit to people in enabling them to acquire goods which without such a system would be beyond their reach. But the great increase in the use of this system makes it very important that it should be conducted on a level of the highest honour and integrity, and I am afraid that in many cases that standard has not been observed. Therefore I feel that it is the duty of Parliament to come to the aid and assistance of those who, while they may appreciate the usefulness of the facilities of the system, need, perhaps, some protection.
There are only two points in the Bill to which I want to refer. The hon. Member for Harwich has said that the working people of this country, and 747 particularly the women, are not simple, innocent people who cannot protect themselves. I think that most women can protect themselves, to whatever class of society they belong, but experience has shown that, while many housewives in this country are very clever, there are some who are not, and what we want to do is to protect the simple and innocent housewives, and, perhaps even more, the the men, against those people who are a little more clever than they. I welcome in particular the Clause which says that in future, when an agreement of this character is entered into, the purchaser shall be told the price of the goods. I think that that is very important, though I am not sure that it would be effective, for I think that probably the seller would alter the price in order to make it appear that the terms were good. At any rate, however, to the extent to which that can be done I welcome that part of the Bill which imposes upon the seller of the goods the responsibility of saying to the prospective purchaser, "You can buy this for so much now, and you can get it for another price on the hire-purchase system." That would be of some advantage to the prospective purchaser in giving him some idea of the true value of the goods, and also giving him information as to the price which he has to pay in order to obtain the facilities of the hire-purchase system.
The other part of the Bill which I welcome, though I wish it could be more effective, is Clause 8, which requires that, where a hire purchase agreement is printed, the type shall be at least as prominent as regards the items mentioned in paragraphs (a) and (b) as other parts of the contract. Here I think we come to a matter which is of vital importance, and to which, if I may say so, the Attorney-General ought to direct his attention. There is no doubt that the form in which many contracts are set out is really an abomination. They contain a few Clauses in large type which are more or less readable and understandable, but they incorporate a large number of conditions in type so small that it is difficult to read—so small that the difficulty in reading it causes a good many people to avoid reading it altogether. There is no doubt that the result of this is that people who enter into these agreements either fail to read them or do not 748 understand them, and then they find themselves faced with obligations into which they had no idea of entering. That has been emphasised within the last few weeks by the county court judge to whom the hon. Lady has referred—Judge Frankland. He said:Week after week, month after month, I listen to accounts of minor tragedies affecting the welfare of working people, and in the vast majority of cases I am utterly powerless to avert them.He went on to say that these agreements were extremely complex and well drawn up, and he could rarely find a loophole for relief. That does not apply only to these contracts; it applies to a good many others, and it is a matter to which attention ought to be given. I doubt very much, however, whether this Clause would be sufficiently effective to prevent that kind of thing. The only doubt I have is whether this Bill when it is passed, as I have no doubt it will be, will be effective. I am not here to challenge the honesty and integrity of the great majority of the persons concerned with the working of the hire-purchase system; it is against the bad lot that we are ranged; and I am afraid that the bad lot will find ways of getting round the Bill. At any rate, however, it is worth a fair trial, and therefore I am very glad to support the Second Reading.
§ 12.14 p.m.
§ Mr. Turton
While not agreeing with the cause of the hon. Lady's absence in Spain, I am sure we all welcome her back after her thunder and lightning journey to England, and I think she will find a very welcome non-contentious atmosphere here to-day. I want to congratulate her on her wisdom in the choice of her Bill. We have had a succession of Bills bringing before the House the Socialist policy of the dim future. In this case, like the practical lady that she is, she has brought the House down to the realities of life. In this connection I would like to pay a tribute to Dr. Mallon, the Warden of Toynbee Hall, who two years ago instigated a small non-party or all-party group of Members in this House who had been working on a Bill. I would also pay a tribute to Mr. Watkins, a very busy solicitor in London, who for two years has been working to get agreement between the hire-purchase companies and the social workers of this country. This Bill is brought here through the skill of 749 the hon. Lady, but without that spade work which has been done by Dr. Mallon and Mr. Watkins it would have been impossible.
I want to make one observation on the speech of the hon. Member for Harwich (Mr. Holmes). I cannot understand how the hon. Member could have put on the Paper the Motion that he put there earlier in the week asking for a rejection of this Bill if he holds the view that he has expressed to-day. The only explanation I can give is that he had not read the Bill, that he thought the Bill was out to attack all the hire-purchase companies. That is quite the reverse of the object. The only object of the Bill is to prevent unscrupulous men in the hire-purchase trade from being unscrupulous, and there is scope for that in the hire-purchase trade. I have often wondered what was the first hire-purchase agreement. I am very surprised that I have never found it in the Old Testament. Whatever it was, it has revolutionised the whole of the trade of the country. The hon. Member for Harwich, I thought, painted too gloomy a picture of the success and profits of hire-purchase companies. I have not gone into the details of all the companies, but there is one large company to which I shall refer.
§ Mr. Grenfell
There is a case mentioned in Holy Scripture. Did not Jacob serve seven years for Rachel?
§ Mr. Turton
I had thought of that, but I thought that the hon. Lady would not have liked me to quote that instance, and I understand that Rachel was never bought. I have here details of one company. On a capital of £925,000 it made £126,000 profit in one year and in the next year £155,000 profit. I am not attacking this company as having been unscrupulous or as having made undue profits. I think that hire-purchase companies have got an advantage. I will only say that it is very much easier, perhaps, to make profits out of hire-purchase agreements than out of agriculture. To go to the root of hire purchase, I would remind the House that American economists have said that the slump in America was created or was accelerated by the extent of hire-purchase agreements. However we look at the Bill and the problems affected, we must not forget that while hire purchase is an advantage in times of increasing industrial prosperity, it is 750 very dangerous and can cause great hardship and misery in times of slump. A great many of the hard cases that have been mentioned in the House are cases of men who on marriage or in good times have entered into hire-purchase agreements and when bad times have come have been forced into a position of misery by the agreements they have signed. At the present time the Court has no power to deal with those questions. The House will remember that in "The Merchant of Venice" Shylock said:The pound of flesh, which I demand of him,Is dearly bought; it is mine and I will have it.If you deny me, fye upon your law!There is no force in the decrees of Venice.That is really the position of the hire-purchase agreement to-day. Cases go to the county court and the judge cannot touch them. In England there is no law affecting them. I am sorry that the hon. Lady seemed to think—this is the only thing in which I disagreed with her—that Judge Frankland was lecturing her about hire-purchase agreements and her attitude to them. I have had long experience of Judge Frankland. He is a man with a very deep and wide knowledge of hire-purchase agreements, and he has always been as sympathetic as his status as a county court judge would allow in dealing with the hirer; and in his speech at the Luncheon Club he was trying, I think, to help and not to hinder the hon. Lady, and to suggest that perhaps in Committee we might go even further in helping the hirers of this country.
The Bill has been sufficiently dealt with by previous speakers, and I shall refer to only one Clause. This is not the first Bill to deal with hire purchase. There was a Hire-Purchase Agreement Bill for Scotland. It was passed in 1932, but it has, I believe, not had the success that it deserved because of the wiles of some most unscrupulous hire-purchase companies, which transferred their businesses from hire-purchase agreements to what are called credit sales agreements. One aspect of this Bill at which the House should look especially is the fact that it covers credit sale agreements. Let the House look at Clause 25, paragraph (c). It whittles down the credit sale agreements.'Credit sale agreement' means an agreement for the sale of goods under which 751 the purchase price is payable by five or more instalments of two pounds or under over a period of time.I regret that there is that modification of credit sale agreements, and with the experience of the 1932 Act I think the House might well consider whether we should not extend the Bill to cover more credit sale agreements than those defined in Clause 25.
§ Mr. Turton
If I had to define what a credit sale is I should say that my tailor's bill should not be included in a credit sale agreement. You should have a definition that will prevent evasion of the hire-purchase Act. We have had experience of the Scottish Act. I suggest that in Committee we look into this question and see how that definition could be broadened.
§ Mr. Silverman
A great many of the evils which the Bill seeks to destroy arise from the fact that under a hire-purchase agreement no property in the goods passes to the hirer. A great many, if not almost all of the abuses arise from that fact.
§ Mr. Turton
All I can tell the hon. Member is that the Hire-Purchase (Scotland) Act, 1932, is not working so well, because hire-purchase agreements are being changed to credit sales agreements. I can sec the difference between hire-purchase agreements and credit sales agreements, but if you want to make the Act watertight, you must cover this evasion. I am going to make this appeal to the Attorney-General. There will be, if this Bill gets a Second Reading, a long gap before the Committee stage is taken. We are getting towards Christmas, and there is, I understand, a Bill already occupying attention, with which my hon. Friend the Member for Harwich (Mr. Holmes) is concerned, in Standing Committee B. I hope that the interval will be used to circulate the contents of this Bill to all trade associations and chambers of commerce. I am quite certain the hon. Lady does not want to interfere with any lawful business. The object of the promoters is purely to prevent roguery in hire-purchase schemes; and if the Attorney-General or the President of the Board of Trade could 752 give this Bill wide publicity in those channels, I believe that a very useful purpose would be served. I hope they will be able to make some response to that appeal. One body of people who are concerned in this Bill are the public utility companies, who let out apparatus on hire purchase and include the cost of installing the apparatus in the hire-purchase price. This Bill ought to make some special provision for them.
Let me say a word about the agricultural position. During the last two years agriculture has very largely gone on hire purchase. I regret that this Bill may not cover the agricultural position. That is a difficulty it will not be easy to get over, because a farmer usually does not buy one or two beasts at £15, but a large number, so that the total amount of the purchase may be over £100. So I would like to see special provision for that. The hardship of the farmer is very great. He may find that his beasts are depreciating. He may find that a sudden slump in agriculture puts him in a different position. I do not want to delay the Second Reading by going into the wider ramifications of the agricultural question: I just want to state them; and I hope that something will be done in Committee. But there is one aspect of the agricultural position which is, I think, common to all—hire-purchase agreements, and that is the difficulty of the innocent purchaser. Suppose a farmer buys a number of sheep. He may find later that they are the subject of a hire-purchase agreement. He has paid a man for the sheep, and later the hire-purchase company come along to him, and say, "They are our sheep, and we shall have them back." The innocent purchaser loses both the sheep and the money he has paid. I think that, between the two, the innocent people who suffer and the innocent hire-purchase company, the one that should bear most of the loss, is the company which put those sheep in the position of appearing to belong to a man to whom they did not belong.
I want the House also to consider the case of an auctioneer selling goods and believing them to belong to a man when they are actually subject to a hire-purchase agreement. Year by year, 753 auctioneers lose large sums because, after they have sold goods in that way, a hire-purchase company comes and claims damages from them. Auctioneers in some cases are losing as much as £2,000 a year on this alone, and as hire purchase increases these losses increase. I would ask the hon. Lady to consider this, and to see if, in Committee, something cannot be done. There are very great abuses in connection with the hire-purchase laws, and, because I believe this Bill is going to remedy the major part of those abuses, I appeal to the House to give it a unanimous Second Reading.
§ 12.32 p.m.
§ Major Milner
I should like to associate myself with all that the hon. Member for Thirsk and Malton (Mr. Turton) has said, first in congratulating my hon. Friend the Member for Jarrow (Miss Wilkinson) on the manner in which she presented the Bill, and, secondly, in thanking those who have assisted her in its preparation, among them Dr. J. J. Mallon, Mr. Watkins and others, in and out of the trade, including a number of well-disposed lawyers. I should like to say that the hon. Gentleman is correct in referring to his Honour Judge Frankland as not intending in any way to attack my hon. Friend for introducing this Bill. On reading his remarks, I wrote to him, and he has written to me a letter, which I received this morning, which I understand to be a general commendation of the Bill. As I am completely unable to read more than a word here and there, I am not able to go further than that, but I am going to a chemist's shop across the way, to ask them to decipher the letter, as they are used to deciphering doctors' prescriptions. I understand the Bill has the commendation of his Honour Judge Frankland, and also of other judges who have in the past tried to protect people who have suffered as a result of hire-purchase agreements.
The hon. Member for Harwich (Mr. Holmes) referred to one matter on which I should like to say a word or two. I would like him to understand that I do not in any way reflect—far from it—on the company with which he is associated, but he mentioned that the hirer under his company's agreement might return the hired goods at any time on paying the appropriate rent due, and also compensation for damages—I am not sure of 754 the word he used—presumably for depreciation of the furniture. Perhaps the hon. Gentleman will make that clear.
§ Mr. Holmes
It says here:And for any damage done previously in the delivering of the said goods.I am sure that the hon. and gallant Member would not say that the furniture company should not ask for it, if furniture has been damaged. It is not wear and tear, it is damage, and we settle it by agreement. We might settle it by asking a member of the hon. and gallant Gentleman's profession, say, the hon. Gentleman the Member for Nelson and Colne (Mr. Silverman), to do it, but that would cost us money. We always do it by agreement with customers, but it is not for wear and tear.
§ Major Milner
If the hon. Member did ask my hon. Friend to act as arbitrator, though it might cost him something, it would have a result which would be both fair and satisfactory to both sides. My point is—and I think that the hon. Gentleman will agree on consideration—that the word "damages" is a little vague, and that in practice many hire-purchase companies at any rate do fix the figure for damages, or for what is really more usually called depreciation, at a very high rate. I have in my own experience known cases where that rate has been as high as 75 per cent., and I hope that the hon. Gentleman will look into that point and assure himself upon it.
§ Mr. Holmes
I hope that the hon. and gallant Member will not read into my use of the word "damages," the word "depreciation," because it is not depreciation: it is damage.
§ Major Milner
I am quite willing to accept the hon. Gentleman's words, but, again, damage is a term of very wide application, as he will appreciate. The great advantage of the Bill of my hon. Friend is that it is laid down specifically in Clause 4 that there shall be a mathematical calculation upon a fair and reasonable basis as to the proper amount that ought to be paid when furniture or other goods are returned, and I am also sure that the hon. Gentleman will agree that that is far and away the most satisfactory method.
§ Mr. Holmes
I assure the hon. and gallant Member that that is going to be as much against my company as against the hirer. At the moment we do not get it.
§ Major Milner
I am sure we all hope that will be so. The Bill, as my hon. Friend indicated, is not intended in any way as a reflection on the best type of hire-purchase trader, but coming as I do from the north of England, and from Leeds in particular, I imagine that there is no city throughout the length and breadth of the land which has so many furniture and similar companies letting out furniture and other goods on hire purchase as has the City of Leeds. How in the world they all make a living is always a matter of wonder to me, but presumably they do so, because others are springing up almost week by week. But it cannot be denied that there are to-day—and there have been in the past very gross impositions practised upon the most defenceless section of the community—the poorest of the poor. They have no capital other than their labour, are dependent upon a weekly wage, but yet are reasonably and properly desirous of having a decently-furnished home and such little luxuries for which they feel they can reasonably pay, with care and discretion, over a period, if the worker in the family keeps his or her job and has no untoward expenses.
Even with regard to that class, it must be admitted that for many years some hire-purchase traders have adopted very reprehensible practices. That has resulted, as I know from my own knowledge, in very great and undeserved hardships, and in many not minor tragedies, which was the term used by my hon. Friend who introduced the Bill, but major tragedies of the most serious type, and one sees in the newspapers these occurring almost day by day. I should like to pay a tribute in that connection to the county court Judges, who, notwithstanding the present inadequate state of the law, which really prevents them from giving adequate relief, have rendered a great service to those who obtain goods on hire-purchase when opportunity is offered to them.
As I understand the object of the Bill, it will protect the sensible and honest hirer, on the one hand, while permitting a legitimate and useful trade to operate upon a reasonable and fair basis, on the 756 other hand, as long as a straightforward and unambiguous deal is given to the hirer. The Bill seems to provide a balanced system of safeguards on both sides, and we believe that it will get rid of many of the most serious abuses of the present system, and still maintain the usefulness of the system in many cases. As the House will appreciate, the Bill, in many cases, is the result of compromise, and no doubt both sides, the hirers and the hire-purchase associations and others who may be interested, will desire alterations. In a difficult and complex system such as this, it is almost inevitable that some form of compromise will have to be adopted. The true test will lie in the spirit in which the Act is worked if and when it reaches the Statute Book. If it is found that it still provides loopholes, then those loopholes can be stopped by further legislation. I have not the slightest doubt that many of the gravest abuses will be done away with, and that the worst class of hire-purchase trader will probably find it unprofitable to continue his illegal practices, and may be he will be put out of business, which would be an extremely desirable thing.
To return to the specific terms of the Bill, Clauses 2, 4, 5, 6, 7, 8, 9 appear to be, in the main, in favour of the hirer. They make his position clear, and they lay down, which is very essential, the true nature of the transaction into which the hirer enters when he signs the hire-purchase agreement. Clauses 15, 16, 18 and 19 are in favour of the owner. They clarify his position and rights, and they enable him to retain his ownership in the circumstances set out in these Clauses. Clauses 11, 12 and 14 are largely mutual and are designed to maintain the status quo pending a court decision. As and when these matters are brought before the court, the court has a much wider discretion and much greater powers than it has ever had before in these matters. In the past judges have had, to a large extent, to take the law into their own hands. They have extracted, as in the case mentioned by my hon. Friend, undertakings from hire-purchase traders by persuasion, or perhaps a little pressure, which, of course, is morally right but possibly of doubtful legality. But, in future, those who administer the law will be able to stand upon this Bill and exercise the very wide discretion which is 757 vested in them. There are a number of other Clauses which I need not mention for the protection of guarantors, and a number of miscellaneous provisions of various kinds.
It seems to me, and I hope the House will take that view, that the advantages of the Bill as far as the hire purchaser is concerned are that the conditions both of cash and credit will be clearly stated, enabling a prospective hirer to compare terms. There is great desirability for showing the cash price, in regard to which there are many means of evasion under the Bill. I understand that in the case of the small class of hire-purchase traders such as furniture, articles for which the reasonable cash price to-day is, say, £30, may be marked up to a cash price of £39 or £37 10s., and the hire purchase price £40. I am afraid that the Bill does nothing to stop that practice. But it does afford a basis of comparison. While I do not agree with what has been said as to the ability of housewives to judge costs and prices, I think that if they will compare prices, and they insist upon the cash price being shown, the Bill will serve a very useful purpose. I hope that it may do so.
If and when a transaction is formally entered into, the hirer has the right at any time to get a copy of the hire-purchase agreement and later, on payment of 1s., he can get a copy of the agreement, together with an account of the position of affairs. From my experience it has not always been possible to get such an account, and when obtained it has not always been correct. Under the Bill if that is not supplied there is a penalty. The Bill will serve a useful purpose in that connection. The hirer will have the very great advantage—and this concerns the value of the goods—of having definite warranties under almost precisely the same terms as the purchaser of goods for cash. That will prevent unscrupulous firms from supplying shoddy goods. The practice of tacking or, as it has been termed, the practice of snatch-back traders, will be prevented by the Bill. Under the Bill, after notice has been given for distraint, the owner is to have certain rights which it is doubtful whether he possesses at the present time, pending the Court's decision. Meanwhile, the status quo remains. He has certain rights under the 758 Bankruptcy Acts, also rights of application to the court in some cases and is still able to exercise his common law right of resuming possession of his goods in other cases.
This is a balanced Bill. It does not go all the way and does not cover every point, and, in particular, it does not cover a point which I should like to see covered, namely, the possible misrepresentation by agents or touts, to which one hon. Member referred. He seemed to think that this Bill would stop the practice of touts going from house to house. I do not think that will be the case. I wish the Bill could provide for that. It certainly will provide prospective purchasers, if they will be reasonable and sensible, with an opportunity, by the inspection of the agreement, a copy of which he is to receive, and by the insistence upon personal signature to the agreement, to assure himself whether the representations are being carried out. It may be that at some future date additional legislation action will have to be taken in order to deal with a crying evil, namely, the practice of hire-purchasing firms employing commission agents as touts. That evil is not fully covered. I commend the Bill to the House, and hope that it will have a speedy passage into law.
§ 12.51 p.m.
§ Mr. H. G. Williams
I congratulate the hon. Member for Jarrow (Miss Wilkinson) on having used her great opportunity to present a Bill, which, after examination in Committee, is likely to become law, rather than deciding to indulge in one of the great constitutional changes which are sometimes sought to be enacted in Private Bills. I do not profess to understand the Bill, and I suppose that when we get into Committee the lawyers will enjoy themselves thoroughly in trying to explain to us what it all means. Generally speaking, I think we are all agreed with the object of the Bill, namely, to stop hire purchase from being carried on in the discreditable manner in which it appears to be carried on in certain parts of the country; but because we wish to do that we must be very careful that we do not hinder legitimate trade.
I am connected with the electric supply industry, and I have risen for the purpose of explaining very briefly some of the 759 difficulties which may arise, and to express the hope that those difficulties will be satisfactorily met during the Committee stage. The position of the electric supply industry is, to some extent, controlled by an Act which was passed in 1882—the Electric Lighting Act. Under that Act, in Sections 24 and 25, the electricity undertakers are given certain powers in respect of their property when it is situated on the premises of their customers. Those powers were, to some extent, added to and modified by Section 16 of the Electricity Act, 1909. The object of those Clauses was not merely financial but had also something to do with the safety of the consumers of electrical apparatus. With respect to this matter, I hope that it will be possible to make sure that the legitimate position of the industry is properly protected. The gas industry is affected differently in detail but similarly in principle by the Bill. Both industries are largely concerned in hire-purchase trading.
Most of the older houses in this country, houses built prior to 25 years ago, were not when they were built wired for electricity supply, and one of the problems which faces both municipalities and companies who are supplying electricity is that many would-be customers whose houses are not wired cannot afford immediately the capital necessary for the wiring. There have been developed schemes of assisted wiring, which are a specialised form of hire purchase. You cannot very well remove wires which have been installed, sometimes embedded in the walls. This is a particular kind of hire purchase in respect of which the Bill will require some small modification. Wires and switches embedded in or fixed to the walls are valueless if they are removed. Therefore, Clause 4, and there may be other Clauses, would need to give protection in respect of assisted wiring, the social importance of which is very great. By means of assisted wiring schemes a very large number of people are able to get the benefit of electricity who otherwise would be denied them. There may be other difficulties under Clause 4, which appears to assume that the residual value of the goods is the same irrespective of the nature of the goods. I do not think Clause 4 as it stands is satisfactory, and some modification will be wanted in these respects. All these points are, however, 760 Committee points. They do not challenge the principle of the Bill, and I hope the hon. Member will be successful in getting it through the Committee. As far as I can speak for the electrical industry, we shall be glad to co-operate with her and consult with her in advance in respect of Amendments which we may desire to insert in order to protect ourselves, having regard to the exceptional circumstances of the industry.
§ 12.56 p.m.
§ Mr. Silverman
in view of the welcome unanimity which the House has displayed in the reception of the Measure I hesitate to prolong the Debate, and if I do so it is only because I can claim to have had a rather wide experience of the law as it applies to working class households in which the question looms very large. Like the hon. Member for South Croydon (Mr. H. G. Williams) I do not regard hire purchase and credit sales as bad things in themselves. There is no more reason why the necessities and luxuries of life should not be gradually acquired out of income by people who cannot afford the capital outlay outright, than there is any reason why people should not buy their house, subject to a mortgage, and pay for it in that way. A learned judge the other day said that everything nowadays can be bought on hire purchase except coffins. I am a little doubtful how far that exception is really true, because if I understand the activities of some industrial assurance societies, it is largely the purchase of coffins by instalments.
But the principle is right. The great mass of the people have not the means of purchasing things which add to the comfort and dignity of their lives and there is no reason why this principle, under proper control, should not add largely to the comfort and happiness of people in general. What the House and the country have been compelled to realise is that when you are dealing with a mass of the population which has very little means it is no use relying on freedom of contract to prevent abuses. Just as the Legislature has had to interfere in the matter of rents with freedom of contract by passing successive Rent Restrictions Acts, just as the old notions as to freedom of contract have had to be largely discounted and whittled down under a series of trade union Acts, so in this 761 matter the experience of the whole community has shown that it is entirely unsafe to rely upon freedom of contract between a powerful company on the one side and a number of small customers without adequate means on the other. The hon. Member for Harwich (Mr. Holmes) gave an instance from the company with which he is associated. I know the agreement to which he referred—it is a good agreement—and the instance the hon. Member quoted shows how necessary it is that a Bill of this nature should be passed.
He quoted a clause in the agreement about permitting the hirer to return the goods at any time on payment of all arrears due under the agreement, and payment for damages. But the question of damages is not in any way defined in the agreement, nor does it include a provision for reasonable wear and tear. The hon. Member says that his company do not go outside, they do not have disputes, and that they settle the matter by agreement. But the question only arises when one of the customers finds himself unable to continue to discharge his obligations under the agreement and retains the goods. If he were not in that position no question of a return of the goods would arise, and when he returns these goods he is not in a position to dispute with the company as to what is a proper allowance for damages, what the damages amount to, or what is reasonable wear and tear. I think he will agree that the position of affairs is such that it is necessary to have a Bill of this nature.
No doubt there will be all sorts of points put forward in Committee. It may be that the Committee stage will be what the hon. Member for South Croydon described as a lawyer's holiday, but when the Bill becomes law, as I hope it will by Government support and assistance, although there will still be freedom for abuses, at any rate some of the wider breaches will be stopped, and there will be some kind of standard agreement postulated. The result may be a diminution of most of the minor offences and a cessation, I hope, of some of the major offences which have arisen out of the unregulated state of the law. I entirely agree with what has been said about the enormous damage that has been done by fraudulent misrepresentations, the kind of inducements which are held out by people who go from door-to-door 762 inducing people to sign hire-purchase agreements which they do not read, and which, indeed, are difficult to read. That is true.
After all, let us realise that all these questions in the last synopsis are problems of poverty, not merely in the case of the hirer, and not merely in many cases the seller of the goods, and certainly in the case of the touts and canvassers who are employed by hire-purchase companies, not always companies, to go round on terms of employment which are very often an invitation to fraud. In a great many cases no wage at all is paid, and in a great many other cases only a very nominal wage is paid in order that the employer may be able to use the criminal law of embezzlement if anything goes wrong with the collection of the instalments. By paying a nominal wage you make a man your servant, and if he does not return the money collected you can commence an action for embezzlement, but if you do not pay him a wage you can only start a civil action. Very often a nominal wage is paid to these men for this, and for no other reason. The real method whereby the canvasser is expected to earn his living is by a large proportion of the first two, three or four instalments, so that there is an enormous inducement on the canvasser to get at all costs a signature to an agreement and the instalments for a short time. I am not sure whether in the Bill anything can be done to deal with this problem, but if it can, I hope the Committee will make some attempt to deal with it. I feel confident that if the employment of canvassers in connection with these hire-purchase agreements were put on a basis which enabled the worker to earn a living reasonably in accordance with the work done, it would go a long way to stop a great proportion of the fraudulent misrepresentation by canvassers which arises from the canvassers' poverty.
§ 1.6 p.m.
§ The Attorney-General (Sir Donald Somervell)
I should like to begin by congratulating the hon. Lady the Member for Jarrow (Miss Wilkinson) on having introduced the Bill. She began her speech by saying that she had decided to abstain from any attempt to make all of us better by Act of Parliament, and to concentrate upon lesser evils, and deal with the abuses which have been recognised in every 763 quarter of the House to have grown up in connection with hire purchase. The hon. Member for Nelson and Colne (Mr. Silverman), in referring, in particular, to the evils of over-persuasive persons making representations which are not completely accurate and persuading people who they have reason to believe cannot really afford to keep up the payments to enter into hire-purchase agreements, said that both the canvassers and the people making the agreements were equally acting under economic pressure.
Apart from that abuse, there is a feature of hire-purchase agreements which might well call for the attention of Parliament, namely, the feature that the hirer, who is really the borrower, may, under many forms of agreement, pay a large proportion of the instalments, and then lose the article, but still be responsible for the balance. That is a type of evil which arose under the original form of mortgaging land under which there was complete forfeiture after six months. That evil was dealt with by the Lord High Chancellor at about the time when Shakespeare was writing the "Merchant of Venice," which might indeed have contained a reference to that stage in the progress of our law. Therefore, there is nothing novel about our legislating to deal with contracts which have results of that sort. There are, of course, other evils, which I will not recapitulate, since they have been dealt with by other hon. Members who have spoken, and they are familiar to all.
The main lines of the Bill, I think, clearly commend themselves to the House. The Government agree that this is a matter which demands the attention of Parliament, and I hope the Bill will receive a Second Reading. There are, naturally, points that will require to be dealt with, possibly from both angles. As has been said, the Bill is not directed against the normal and reputable use of the hire-purchase system, of which I dare say all of us have made use in our time, but against those who abuse that system. They are a pretty sharp set of customers, and the Bill will have to be scrutinised for the purpose of seeing that, as far as possible, all the loopholes are filled. I have thought of a possible loophole, which I shall not disclose to the House now, 764 but I shall consider whether it will not need to be dealt with on the Committee stage.
There are one or two points which I will mention now. The hon. Lady said that in Clause 15, which deals with the time of hearing of applications, she would have to suggest that the word "less" should be replaced by "more" I think I ought to point out to the promoters of the Bill that there are, and will be, difficulties which may well be insuperable about saying that a particualr form of application should be heard at a particular time. I thought it right to say that, because it may have some repercussions on the form of Clauses 12 and 13 and may have to be reconsidered. Moreover, we may have to consider the effects of the Clauses dealing with bankruptcy, and Clause 23, which deals with the rules, is not at present in the proper form. Other points may arise.
Broadly speaking, however, the Bill is one which may well commend itself, as indeed it obviously does, to hon. Members and be given a Second Reading in order that we may consider these points further in Committee. Before concluding, I should like to say, as did the hon. Lady, that the Bill throws a considerable burden upon the County Court judges. I was glad to hear from the hon. Lady, and from other hon. Members who have greater personal experience than I have of this class of case, a tribute to the County Court judges on the way in which they deal with these matters under the law as it is at present. Should this Bill become an Act, I am confident that they will be able to bear the burden and discharge the responsibilities laid upon them by the Bill.
§ Mr. Turton
Will my hon. and learned Friend deal with the point about the terms of the Bill being made known to the Chambers of Trade?
§ The Attorney-General
I do not know whether that is necessary, but I will bring the attention of my right hon. Friend the President of the Board of Trade to my hon. Friend's remarks. The Bill has already had considerable publicity, and I have heard from the Hire-Purchase Association in connection with it. I cannot believe that the Chambers of Trade, who follow the proceedings in the House when they concern a Bill of this kind, are 765 not familiar with it. If it were thought that any useful purpose would be served by doing what the hon. Member suggested, I have no doubt that my right hon. Friend would do it.
§ 1.13 p.m.
§ Mr. Montague
As the Bill has been accepted so unanimously, it is unnecessary, in winding up the Debate, to delay the proceedings very much. I do not intend to make many remarks this afternoon. I congratulate my hon. Friend the Member for Jarrow (Miss Wilkinson) upon her success, as well as upon the introduction of the Bill and the excellent speech which she made in moving the Second Reading. From the Attorney-General's remarks, I gathered that the Government will give adequate time for the passage of the Bill through the necessary stages.
§ The Attorney-General
This is a good Bill for the House to pass as a Private Member's Bill, but I have no authority to give, and did not give, any sort of assurance that it would be afforded any facilities other than those which a Private Member's Bill has.
§ Mr. Montague
I was not quite sure on that point, and that is why I spoke as I did. I hope the Government will find it within their compassion and heart to make time available for the further stages of the Bill, which is so unanimously supported and so widely desired. I would like to say a few words upon an aspect of the question with which I have had some experience, namely, the abolition of the door-to-door tout, as was suggested by the hon. Member for Harwich (Mr. Holmes). My hon. Friend the Member for Nelson and Colne (Mr. Silverman), put his finger on the reality of the case when he said that it boiled down to a question of poverty, not only with regard to hire purchase as such, but also with regard to those who tout from door to door and get people to sign agreements which they do not understand. Judge Frankland has already been quoted by several Members. He said one thing on that aspect of the subject which calls for further comment. He spoke about these employed men and said that there was no doubt about the morality of some of them, but then he went on:They are very largely a collection of extremely tricky and unscrupulous rogues. One of the great curses is that these men are paid a ludicrously small salary, very often about 766 20s. a week, with a very small amount for expenses. They have to allow for a living on the commission they get, obtaining customers under the scheme. A sequel is that they fall almost naturally to making the most appalling promises and untrue representations about the character and nature of the goods of which they are trying to dispose.There is something to be said for the door-to-door tout. I have been one myself. I have done the work, and I know the circumstances. I canvassed from door to door at one time for the sale of gramophones; in fact, I actually gave away gramophones. I carried a gramophone with me and told the housewife who came to the door in the middle of the day—the husband, of course, not being there—that I would leave the gramophone with her and that provided she signed a certain agreement she would get the gramophone free. The agreement provided that she would have to pay about double the ordinary price for records for a long period of time. Very often a woman was inveigled into signing one of these agreements because the instrument was there, very nicely polished, and looking very beautiful. Actually, it consisted of little more than casewood with a little bit of a spring, and so forth—quite a valueless article. But owing to the sordid lives which so many people lived and the circumstances which existed before the age of wireless, it was considered a very good thing to have a musical instrument in the home.
The agreement was of such a character that I could not understand it myself, let alone explain it to a harassed and often illiterate housewife. We had to steel our hearts. There was nothing directly fraudulent about the proposal. It was definite enough, provided the agreement was read and, as far as I know, there were no particularly onerous terms attached to it. But the point is that we were paid not a wage but a commission of 7s. 6d. upon each transaction, and in those days 7s. 6d. was a day's wage for a door-to-door canvasser. It meant that if one agreement was made in a day the canvasser's job for that day was done. Imagine going about the streets of suburban London depending upon one sale for a day's wage. In many cases—it did not apply to me, but it applied to a number of those who were with me—a night's lodging depended upon getting that 7s. 6d. Naturally those men, even if they were the best amateur lawyers in existence, would not go out of 767 their way to explain the terms of the agreement to the prospective purchaser.
That is the kind of thing that goes on. It is a poverty problem. It is an economic problem. That kind of thing would be unnecessary and absurd in any decently constructed society. Why should people have to get their living by touting for the sale of goods which are not wanted? At any rate if the people who buy really want the goods they can always buy them in the ordinary way on reasonable terms. By this system they are simply inveigled into buying goods which they do not want. But this, again, is only a question of degree when we consider the whole structure of capitalist civilisation. I am not going to deal with abstract questions. The hon. lady kept off questions of high economic policy and I propose to do the same, but I cannot help pointing out there is only a difference of degree between this kind of thing, which drops so easily into fraudulent practice, and many other more respectable phases of modern capitalism.
The hon. Members for South Croydon (Mr. H. G. Williams) and Thirsk and Molton (Mr. Turton) referred to gas and electricity and other public utility societies. The hon. Member for South Croydon pointed out the difficulties which might arise on Clause 4 with regard to these bodies. It is impossible, of course, to return wires which have been plugged into a wall but that is a problem which exists in any case, and it makes no difference to the Bill. It is a problem which is peculiar to that kind of industry and that kind of service. The answer to any point of that kind is the fact that, as regards electricity and gas, there are municipal supplies on hire-purchase terms conducted by local authorities. They are conducted efficiently and without any danger to anyone, even to the municipality itself. People are not expected to "pay through the nose" and the terms are, if anything, more generous than those obtainable from private competitive firms, or even certain public utility societies. In the borough, one of the divisions of which I represent, we have a public utility showroom. The local Conservatives tried to prevent us selling goods but we beat them and are selling those goods—electric washers, cookers and so forth—on terms of hire purchase. I understand that no difficulty 768 of the kind referred to has ever arisen. People are treated fairly and they get efficient service from the municipality.
I suggest that it would be a good idea if the whole question of furnishing, for instance, were considered in the light of the instance which I have just given. Our discussion has been concerned mainly with furniture. A wireless set is furniture, and even a motor car is furniture of a kind. Why should furnishing not be made part of the housing service, at any rate with regard to new houses of any kind? No one can say that that is an extravagant suggestion, because it happens to be the law of the land today. In 1925 two Housing Acts were passed, one for England and one for Scotland. In Section 57 of the English Act and the corresponding section of the Scottish Act local authorities are given powerto alter, enlarge, repair, or improve any house so erected, converted, or acquired, and may fit out, furnish, and supply any such houses with all requisite furniture, fittings, and conveniences.There are municipalities—Leeds is one notable instance—which have adopted that provision. The majority of municipalities seem to have forgotten about its existence, but it is exceedingly useful when you are transferring people from slums to decent housing estates, where they have to have new furniture. They may never have had any decent furniture in their lives, and now that they have an opportunity of living in something like reasonable conditions, they should be able to get some good furniture. In Kilsyth the thing has been done to a wonderful degree, for there people go into a house almost half furnished by the municipality, and the point is that they do not have to pay so very much more in rent for that good well-made furniture, not packing case stuff, for in some cases as much as a third less than stuff comparable in looks would be under ordinary hire-purchase agreements.
If that can be done by a local authority under the existing law, I feel sure that it might be extended by local authorities in various parts of the country, and certainly the results of that practice would justify this Measure, which has been commended so well to this House by its sponsors to-day and which has been accepted by the House without any real substance of criticism. As a last word, I 769 hope the Government will do their best to back this Bill and see that it gets through its stages, amended as may be necessary, so that we may put an end, to some extent at any rate, to a scandal that has been going on for too long.
§ 1.27 p.m.
Mr. Edmund Harvey
I do not wish to delay the House for more than a moment or two, but I hope that, although the learned Attorney-General could not promise—and we quite understand the reasons—Government facilities for the later stages of the Bill, Amendments may be made on the Committee stage to strengthen the Bill as far as may be possible, and in particular to take advantage of the suggestion made by the hon. Member for Harwich (Mr. Holmes) that there may be some limitation of the time during which hire-purchase agreements are held to be valid, so as to prevent these long-continued payments, ending up in tragic misfortunes to the home. There is one point that I wish particularly to press in that connection. I think the Clause of the Bill which deals with the matter does not give sufficient protection in certain cases where the need is peculiarly pressing.
As a prison visitor, I have come across cases where the operation of the existing law presses very hardly. To mention one instance, this summer I was visiting a young man in prison, and he had just received a letter from his wife. They had a family of young children, and they had a perambulator, which had been paid for all but 5s., and if that 5s. was not paid, the perambulator would be lost. It was quite impossible for the young man himself to pay it in prison, and his wife was only receiving public assistance while he was there. Of course, in that case the matter was quickly settled, but there are many cases where there is no possibility of help being given and where suffering is inflicted, although a large part of the payment has already been made.
Not sufficiently, I think. I believe the Bill will need strengthening in Committee to provide for cases of that kind, and I hope that the good will that the Attorney-General has already shown 770 will bear good fruit and that the House will now allow the Bill to get to its Committee stage.
§ Question, "That the Bill be now read a Second time," put, and agreed to.
§ Bill read a Second time, and committed to a Standing Committee.