HC Deb 03 July 1952 vol 503 cc756-66

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Redmayne.]

10.50 p.m.

Mr. Stephen McAdden (Southend, East)

I am grateful for the opportunity of being able to raise, even at this late hour, a question of which I have given notice to my right hon. Friend and to which, I hope, a reply will be forthcoming from a representative of the Board of Trade. I want to draw the attention of the House to the question of the hire purchase restrictions. It will be within the recollection of the House that a week or so ago this matter was brought to its attention in a somewhat different form.

Tonight, I wish particularly to raise the question because it is my belief that the Order concerning hire purchase, which was introduced by the President some time ago, and which was prayed against in the House, but finally approved, is one which was designed for the purpose of cutting back upon the production of certain items of industrial equipment. Radio and television sets and vacuum cleaners and things of that description were brought within the purview of the Order so that production could be cut back in the interests both of the export trade and of re-armament.

While I generally can agree—even if I did not, it would not materially matter, because the House has already approved of it—in principle with, and support, the decision of the House to give approval to this Order in its general sense, I must say that, on examination, it would appear to me that its effects have been far more far-reaching than was intended when the Order received the approval of the House. It is because I so believe that I want to invite my hon. and learned Friend's attention to some of the happenings that have occurred since the Order was approved, and to ask him whether, in fact, in introducing the Order, the President had in mind any clear picture of what effect it would have.

I can, as I say, well understand the desirability, in the view of the Government and of the House, of seeing that there should be a reduction in the domestic consumption of certain items, but I cannot bring myself to believe that that decision to restrict consumption was taken without some very careful examination as to the effect it would have on the industries concerned, and it seems to me to be fairly reasonable to assume that, when they made this decision, the Government had a certain percentage in mind of the amount of reduction to be effected. Indeed, I believe I am correct in saying that the Chancellor, earlier this year, intimated that in his view there should be a reduction of something like a third in the amount of the goods covered by the Order to be consumed in the home market.

It seems to me, although contrary views were expressed, as my hon. and learned Friend will remember, in the debate last week as to how much production has, in fact, been affected, that examination of the figures shows something rather catastrophic has occurred. Manufacturers' supplies of radio and television sets, about which I propose to speak particularly, necessarily reflect market conditions with a time lag. It takes a little time for a decline of manufacturers' supplies to be reflected in the retail trade.

In the period from March to May, compared with the previous three months, it appears that there was a decline in radio sets of 29 per cent. and in the number of television sets supplied of 17 per cent. If we compare the first five months of this year with the first five months of last year the figures are even more alarming. We find that the decline in radios is 58 per cent., in radiograms, 62 per cent.; whereas in television there was a slight increase of 1 per cent. But the position becomes even more serious if we compare the second quarter of 1952 with the second quarter of 1951, for in that particular quarter we find that the decline in the manufacturers' supplies in radios was minus 65 per cent., in radiograms, minus 79 per cent., and in television, minus 18 per cent.

I should explain that the figures which I am quoting included the June figure, which is an estimated figure based upon the nearest assumption which it is possible to establish from those manufacturers who are members of the British Radio and Electricity Manufacturers' Association, who represent 90 per cent. of the trade, and whose figures I think can be regarded as reliable.

I think it only fair to explain that it is possible to argue that, while it cannot be denied that there has been a catastrophic decline in demand for radio and television sets since this Order was instituted, there has not been so marked a decline in the turnover in the radio and television business. Comparing the first five months of 1952 with the first five months of 1951 one finds the decline in turnover is from £26 million to £21 million, and it might be argued that that decline in turnover, being some 20 per cent., is nothing to get excited about. On the other hand, it seems to me to be important to remember that there has been maintained to a limited extent the sale of television sets, which are more expensive than radios and radiogrammes, with the result that that does not give quite a true picture.

Even in the case of television sets one finds a decline in turnover from the beginning of this year, the growth of which is becoming so marked that I think my hon. and learned Friend ought to consider whether this does not indicate a catastrophic decline. The turnover has gone from minus 17 per cent. in January to minus 11 per cent. in February, minus 19 per cent. in March, minus 30 per cent. in April, and, in May, minus 40 per cent. So we see that there is a growing, and rapidly growing, decline in the sale of radio and television sets.

While there may be every justification for arguing, as was argued when the Order was first introduced, that it is necessary to restrict domestic consumption in the interests of the export trade and of the re-armament programme, if the home trade is allowed to decline to an extent greater than was originally envisaged it must inevitably result in great hardship to an industry which has led the world in this particular scientific development, and which is of tremendous value not only to our re-armament drive but to our export trade as well. I do not think the Parliamentary Secretary will deny the great contribution which this industry has made to the export trade. It has done remarkably well. Indeed, one finds that the export figures have been worthy of every possible praise.

I notice that according to the "Financial Times"—I do not say that is necessarily an authoritative interpretation of the Government's view—

Sir William Darling (Edinburgh, South)

Why not?

Mr. McAdden

I do not say that it is not or that it is. I merely quote it as a reputable newspaper whose views are entitled to be regarded with respect. The "Financial Times" says this in its issue of 14th June: The original production plans for radio and television sets this year envisaged a continuation of the rising output of 1951, but at the beginning of the year the Chancellor demanded a one-third cut in the production of sets for the home market, and in February the curbs on hire-purchase were imposed. The restriction on hire-purchase may mean the cut will be achieved without any further action at the production end as regards radio sets. That is a very modest under-statement of the real position.

The fact is that, not only has that cut been effected, but it has been effected in such a disastrous manner that I suggest consideration should now be given to whether the effect the Parliamentary Secretary desired has not been more than accomplished, and whether some easement of the position might not reasonably be effected. I do think it is important for the Parliamentary Secretary when considering this question to bear in mind the interdependence of home and export sales.

Mr. Edward Heath (Bexley)

Could the hon. Gentleman tell me whether the figures he is quoting are the reductions caused in hire-purchase or reductions on overall sales?

Mr. McAdden

That is a very interesting point. The figures I have quoted are applicable to all sales. What is significant is that you find the rapid acceleration in the decline of radio and television sales only since the operation of this Order. While it is true that other measures have contributed to the decline it has been made far, far worse as a result of the introduction of these hire-purchase Orders.

Mr. Kenneth Thompson (Liverpool, Walton)

Has the hon. Member considered whether this has any relation whatever to the quality of the B.B.C. broadcasts?

Mr. McAdden

I do not want to get drawn away on that. You, Mr. Speaker, would correct me if I even appeared to be drawn away on a discussion of the quality or otherwise of the B.B.C. broadcasts.

The Government, obviously, does not intend that there shall be no radio or television sales. They have approved the opening of two new television stations, one in Scotland and one in the north of England, and it appears that since they have approved the opening of these stations it is not their intention to send out programmes which no one will see.

If I am right in the assumption that people will be able to see something of the programmes to be transmitted from the stations they have opened and others they propose to open in the future, it seems equally desirable that they should see whether these hire-purchase restrictions are working in such a way as to make it difficult, if not impossible, for many of these people who are being brought within range of these new stations to be able to derive the pleasure the Government presumably hopes they will derive. It seems to me that the effect of these regulations has been to make it exceedingly difficult for them to be able to purchase sets. This fact has been proved by the figures I have put before the House, and I hope that the Parliamentary Secretary will give consideration to them.

One should pay due regard to the interdependence of the home and export trade. It is impossible to develop the export trade in this particular field if one is not to have some kind of a home market of a reasonable order. The idea that it is possible for us to produce in quantity and at reasonable prices unless one is assured of a reasonable home market is not a sensible attitude to adopt. Important as the defence programme is, anxious as we all are to see it develop and anxious as the industry is to play its part, the domestic radio is the end product of the component and valve producers who are essential to the defence programme. Valve producers cannot be fully and productively employed producing only for the defence programme. There must be some other outlet for their production.

I have, in my remarks, done what I could to concentrate in the main on radio and television, because they are industries of which I have some little knowledge. It will not be beyond the memory of the House that the constituency I represent happens to have within its borders a large section of the radio and television industry. Consequently, I am not uninterested in seeing that due consideration is given to the effect of this Order on employment in my constituency. I do not suggest at all that there is any marked unemployment in this industry, but one should take note of the positive trends existing at present and try to correct the possibility of unemployment before it eventuates; and, if the Government are giving serious consideration to the effects of the Order, it ought to be possible for us to be told what is the decline in the production of radio and television sets. It ought to be possible for us to be told what was the anticipated decline, what decline has actually taken place and, thirdly, what action Her Majesty's Government proposes to put things right.

I have spoken of radio and television, but if one turns to other commodities covered by this Order, one finds that they include electric immersion heaters, electric washing machines, and vacuum cleaners; and, dealing with the last-named, supplies to the home market in the first quarter of this year totalled 115,000, whereas, in the comparable quarater of 1951, the figure was 204,900. That is practically a 50 per cent. drop in the home market supplies of vacuum cleaners. Can the Parliamentary Secretary say whether that was the figure envisaged, or whether it was a lesser figure? If a lesser figure, does he propose any action, either by way of withdrawing the Order, or by substituting some other?

When it comes to the question of washing machines, there is also a very con- siderable reduction on the figures for previous years, and I hope that the Parliamentary Secretary, who, I see, is indicating that the time is fast running out, will now have the opportunity to give the fullest possible answer. I hope that he will bear in mind the importance of this industry affected by this Order, for that industry appreciates that it is expected to make some contribution to the difficult national situation. But, one would like to feel that it is not being inflicted with a greater burden than the Government originally intended it should bear. I hope that the Government appreciates that the decline is of a very serious order, and that we shall now be told that something will be done, and done quickly, to help the industry.

11.9 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss)

I can assure my hon. Friend the Member for Southend, East (Mr. McAdden) who raised this subject tonight, that Her Majesty's Government are well aware of the importance of this industry. Indeed, I cannot think that, at the present time, whether we consider exports or re-armament, any Government would be likely to overlook the importance of electronics. I thank him, too, for having given me some indication of the points he wished to raise.

The Hire Purchase and Credit-Sale Agreements (Control) Order, 1952, came into operation on 1st February of this year, and this is the third occasion that I have found myself at this Box dealing with that Order. The first occasion was when I answered a Prayer for its annulment, and when the House, on a Division, approved the policy of the Order. The second occasion was little more than a week ago, when I answered another Adjournment debate. What was then asserted in that debate was that the Order had had no effect whatever on production, and what is argued today is that it has had much too much effect. Those familiar with the rules of logic will know that, while both these propositions cannot be correct, both may be wrong.

My hon. Friend asked, among other questions, what was the intended effect of the Order on particular trades. The questions he put were, I think, based on a misconception. This Order does not impose a physical control. It is one of a number of monetary measures to restrict credit, and to prevent too much borrowed money using up materials and labour which would be better employed in producing goods for export and defence.

The other measures taken in this field were the raising of the Bank rate, the Funding operation, the request to the banks, and the directions to the Capital Issues Committee by the Chancellor of the Exchequer, particulars of which were given in answer to a Parliamentary Question on 7th December last year. On 29th January this year the Chancellor said this in the House: Credit restriction will also limit hire purchase, which is essentially a form of living beyond one's means."—[OFFICIAL REPORT, 29th January, 1952; Vol. 495, c. 59.] And in the reply I gave to the Prayer on 13th March I described the object of the Order thus: It is to check demands upon the productive capacity required for defence and for exports."—[OFFICIAL REPORT, 13th March, 1952; Vol. 497, c. 1712.] This is not, therefore, a physical control but a monetary control; but it is none the worse for that. It may well be that some physical controls are still necessary in the case of scarce raw materials; but monetary controls can not only supplement physical controls; they can sometimes supersede them and prove equally effective for their purpose, with far less interference with liberty and with consumers' choice. If the Government in this field relied wholly on physical controls, they would have to make an arbitrary decision on the output of all these different commodities, whereas it is possible in the way that has been adopted to leave far greater choice to consumers.

The real question is whether the time has come when credit need no longer be restricted, because our balance of payments problem has been solved. The House knows that, obviously, that time has not come. If they have followed the recent statements of the Chancellor of the Exchequer, the latest being given in the House yesterday, they know that, while there has been a great improvement, our goal of safety has not yet been reached, and that in a very difficult situation companies must be prepared to turn to production for defence and export, or to release labour and materials for that purpose. If there has been a fall in sales on the home market, the surplus capacity can, in most cases, be used in more important work or the labour can he absorbed elsewhere.

I do not wish to weary the House with many figures, but I should like to give these figures relating to exports of radio sets. In the first five months of 1950, 1951, and 1952, 93,000 sets, 176,000 sets and 206,000 sets, respectively, were exported. The figures for the first five months of this year are 15 per cent. higher than the comparable figures for 1951 and more than double those for 1950.

There has certainly been a reduction in sales by the shops, but that reduction has taken place not only in hire-purchase sales but in all sales, and in the very short time at my disposal, as my hon. Friend has referred to an article in the "Financial Times," let me also refer to something stated in a recent article in that newspaper. It is very dangerous to ascribe the diminution of sales to Purchase Tax or to restriction of hire-purchase, merely because one dislikes these things. The danger becomes all the more obvious when it is seen what has happened in the case of the sale of electric cookers, which happen to be subject neither to Purchase Tax nor to hire purchase or credit sale restrictions. Yet the figure of production in October, 1951, was 23,000 and in May, 1952, it was 16,000. The figures for deliveries to the home market were 16,000 in October, 1951, and 11,000 in May, 1952.

My hon. Friend very fairly admitted that the unemployment figure in the industry was very low indeed. The latest available figures show that on 12th May of this year for gramophones and wireless apparatus there were 1,562 wholly unemployed and 29 temporarily stopped out of a total of nearly 100,000, or, roughly, 1½ per cent. The corresponding figure for wireless valves and electric lamps was less than 1¼ per cent. As many as 1,161 vacancies for radio workers were notified to the employment exchanges in London and the South-East recently. At the same time the defence programme is continually making increasing demands on the industry.

For all these reasons we believe that the Order—with the other financial measures adopted by Her Majesty's Government—has promoted the purpose for which it was designed with a fair measure of success. At the same time, I would make it clear that it is no part of our purpose to close down any industry through the operation of this Order. Some fears have recently been expressed that the contraction of the radio and television trade has been too severe. The British Radio Equipment Manufacturers' Association have made representations to the Ministry of Supply and my hon. Friend the Parliamentary Secretary to the Ministry of Supply—who, I hope it will be noted, has been listening to tonight's debate—will meet the Association's representatives in a few days' time to discuss the matter.

In conclusion, I can assure the House that the Board of Trade have kept, and will continue to keep, in close touch with the Ministry of Supply about the effects of our Order on all the industries concerned.

11.18 p.m.

Mr. Harmar Nicholls (Peterborough)

The House will detect a ray of hope in the closing words of my hon. and learned Friend the Parliamentary Secretary. While we recognise the significance of the arguments he advanced in reply to the main points raised by my hon. Friend the Member for Southend, East (Mr. McAdden) it reflects great credit on the Parliamentary Secretary and on his hon. Friend the Parliamentary Secretary to the Ministry of Supply that they are prepared to meet with sympathy the deputation which he mentioned. That is the right approach and one which shows that the Government have a broad mind on this problem.

If a slight retraction will avoid any difficulty which might apply in my hon. Friend's constituency, it shows that the Government are meeting the big issues which are fundamental and that they are not fostering dissatisfaction which, if allowed to grow, would not be in the best interest of the nation. We hope to see arise from the closing words of the Parliamentary Secretary some tangible results which will give satisfaction to my hon. Friend the Member for Southend, East.

Adjourned accordingly at Nineteen Minutes past Eleven o'Clock.