HC Deb 24 June 1952 vol 502 cc2201-8

Motion made, and question proposed, "That this House do now adjourn."—[Major Conant.]

12.15 a.m.

Mr. John Rankin (Tradeston)

Despite the lateness of the hour I must draw the attention of the House to the widespread evasion of the Hire Purchase And Credit Sales Order which became effective on 1st February last. In the words of the hon. and learned Gentleman the Parliamentary Secretary to the Board of Trade the purpose of this Order is to check demands upon the productive capacity required for defence and for export."—[OFFICIAL REPORT, 13th March, 1952; Vol. 497, c. 1712.] If I may quote the right hon. Gentleman the Chancellor of the Exchequer in an earlier debate, the Order was necessary because 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.] The intention of the Government was, therefore, clear. It was to restrict credit, to limit spending and to free materials for defence and export.

The methods employed in this Order are, I take it, familiar to every hon. Member in the House. The initial payment was steeply raised as high as 33⅓ per cent. of the retail price of the article being bought. The period of repayment was sharply contracted indeed, and limited to 18 months. The effect of that was to be the effect which had been detailed both by the Parliamentary Secretary and the Chancellor of the Exchequer. I do not wish to look at the methods employed, but rather to examine some of the results which have followed the passing of this Order.

The hon. and learned Gentleman the Parliamentary Secretary to the Board of Trade said on 13th March: It would not be at all astonishing if in the working of this Order certain defects were found."—[OFFICIAL REPORT, 13th March, 1952; Vol. 497, c. 1716.] Those defects have been found. The Order is being evaded by a system of rental agreements and it is to this evasion that I am calling the attention of the House. The rental agreements avoid the heavy initial payment laid down by the Government or in many cases make it merely nominal. All the rental agreements ignore the legal obligation of the customer to discharge his debt within the time stipulated by this House and establish in place of that stipulated time purely arbitrary conditions.

Mr. A. C. Manuel (Central Ayrshire)

Racketeers.

Mr. Rankin

In some cases the rental agreement is partly verbal and in all cases its terms are onerous. Generally, it punishes those who keep the law and rewards those who are now breaking that law which it is the business of this House to maintain.

I should like to give the House some examples of what is taking place. May I say, first, that we are entitled to pay tribute to the fact that the Co-operative movement all over the country is seeking to support the Government in this Order and that for so doing they are being punished? One Co-operative society which sold 25 radio sets weekly before the Order was introduced is selling four radio sets weekly since the Order came into force and selling three bicycles every week as against 50 bicycles previously.

Another society which, from February to May, 1951, sold 1,200 radio and television sets, sold 262 in the same period of this year. Another society which, in May, 1951, sold 10 vacuum cleaners sold five in May of this year. Still another society which over a particular period last year had a radio trade of £2,837 showed a trade return of £1,162 for a similar period after the Order was passed.

These are sharp losses in trade. I know of course, that the Minister and the Government are patting themselves on the back and saying, "See how effective our Order has been. It has limited spending. It has restricted credit, so it is freeing all these materials for defence and export purposes." That is not the case, What has been happening is that the trade that is being lost by those who are seeking to keep the law is being gained now by those who are breaking the law.

I turn to the "Digest of Statistics" for May, 1952. Before the Order was introduced imposing these limitations in December last year, we were producing 57,000 television sets. In March of this year, after the order, we produced 71,000. In spite of the Order to restrict and limit, more television sets than ever are being produced. That clearly shows that these sets, which are not being kept as ornaments by the manufacturers, are going into trading concerns in this country and are being disposed of by rental agreement arrangements.

I admit that, in radio, the December figure, 131,000, shows a drop to 117,000; but our export, which was to be encouraged, shows only a rise from 53,000 to 58,000. In electric washing machines—here, again, the Minister hoped that this would increase exports—exports have fallen from 28,000 in December, before the Order, to 16,898 in March, after the Order. The number of vacuum cleaners produced, for the fourth quarter of 1951 was 79,000; for the first quarter of 1952 the number was 185,000. The number exported in the last quarter of 1951 was 34,000, and in the first quarter this year 70,000. The number retained on the home market had grown from 45,000 to 115,000.

These figures indicate that what is lost in trade by those whose practices are in keeping with the law is being won by those who are evading the law and, in addition, throwing this aspect of the Chancellor's Budget strategy to the four winds. The Minister will say, "Give me the facts and I will make the way of the transgressor hard." Many facts have been submitted to the Minister and I have here a bundle which he can and shall have. But that will be an ineffective process. No solution of the problem will be found by embarking on individual prosecutions. The Minister must either withdraw the Order or amend it to cover the case I have submitted.

Production is in many cases increasing, but exports are not. That indicates that the difference is being retained in the home market in spite of the Order. I suggest two things to the Minister. If he wants to restrain the sale of these commodities on the home market, why not do so at the production stage by limiting the supply of materials? Why go on giving the materials to these firms when a cut in sales is wanted? Is it not much easier to restrict and control the activities of 10 or 12 great manufacturing organisations rather than the sales of thousands of retailers all over the country?

Here is another suggestion. If we want to limit the spending of the individual and to protect him, as we must, why not limit the increase on the retail price of these commodities by an agreed percentage to cover the deferred payment? The present position is chaotic. Methods of repayment vary from no interest at all, as in the case of the Co-operative societies, to 30 or 40 per cent., or even higher. I have supplied individual cases to the Minister, and he should be aware of them; and I will not delay further by quoting them to the House.

The situation could be tidied up by allowing, in the case of those goods bought on the instalment plan, a fixed and known percentage increase on the retail price, as is already being done, I think, in the case of furniture. If the Minister is not prepared to withdraw his Order, then I trust that he will amend it along the lines I have indicated or at least in ways which will allow him to achieve the purpose which is not now being effected.

12.33 a.m.

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

I am grateful to the hon. Member for Tradeston (Mr. Rankin) for having given me some indication, both orally and by letter, of what he had in mind to raise tonight. Indeed, he also gave me an indication by the Question he put on 27th May of this year. As I told him in reply, Her Majesty's Government are aware that there has been an increase in the number of rental agreements for television and radio sets, and I made it clear that, if any cases were brought to our notice which proved, on investigation, to involve a breach of the Hire-Purchase and Credit Sale Agreements (Control) Order, action would be taken.

The hon. Member quoted, quite accurately, the aim of this Order, which I gave in the Adjournment debate on 13th March. Of the policy of the Order I propose to say nothing tonight, for reasons which I know the hon. Member will appreciate; namely, that the policy of that Order was challenged in this House by Prayer, and the matter proceeded to a Division, and the House approved the policy of the Order. The object, as I stated then, was to check demands on the productive capacity required for defence and export; and I then pointed out what the reason was for the choice of articles subject to the Order, namely, that they involved the metal using and engineering industries.

The first point which arises, since we are not discussing the policy of the Order, is whether the Government's object is, in fact, being defeated by an increased use of rental agreements which has followed the making of the Order. In spite of the figures given by the hon. Member, I assure the House that the answer to that question is "No." The object of the Order is not thereby being defeated.

There has been a substantial reduction in all kinds of credit trading which has not been offset by any of the devices of which the hon. Gentleman complained. I think the hon. Gentleman will see that that does not necessarily involve the questioning of his figures—although I do not pretend I have checked them all. As he knows, the Order affects retail sales. The figures he gave did not refer to retail sales, and one could not expect a fall in production except in the last two months. I think that when he gets the later figures he will be satisfied that there is no evidence at all that the object of the Government has been defeated.

Mr. Rankin

I recognised, of course, when I gave the figures that that escape was afforded to the hon. and learned Gentleman, and we must await the next month or two to see how the production figures go; but I wish him to realise that I did my best to get from the firms who are running the rental agreements what their sales were. They refused to talk, and, consequently, I was forced to go to the production end to get my figures and worked out my own conclusions along those lines.

Mr. Strauss

I listened with admiration to the care the hon. Gentleman had taken in the preparation of his case. On all the evidence available to the Government I can assure the House that our object is not being defeated by any of these devices.

The fall in sales has been very great. They have been quoted and even published in the case of radio and television sets, but I do not wish to go into a great many figures, and I would say at once that the drop is not by any means wholly attributable to this Order. The House will remember—to quote but one example—the doubling of the Purchase Tax in the 1951 Budget, and there are other matters which I could mention. But the evidence we have is that manufacturers are turning their capacity to re-armament and export.

I quite agree with the hon. Gentleman and other hon. Members that, while it is important to establish that the object of the Government in this Order is not being defeated, the House is quite right in desiring something more. They wish to know not only that the Order is the right policy and is achieving its object, but that it is achieving its object without injustice. I quite appreciate the interest felt on both sides of the House that that should be so, and that the unscrupulous should not profit while the honest suffer—that contraventions of the Order should not go on and be unpunished.

A number of practices which possibly involve contravention have been brought to our notice from several sources. Hon. Members on both sides have brought to our attention certain practices which seem to need investigation, and we have our inspectors. Investigation has followed, and the Board of Trade most certainly intend to prosecute in certain cases where sufficient evidence for prosecution is available.

Since these prosecutions are now contemplated, the House will appreciate that it would not be desirable for me to discuss matters which may come before the courts for judicial decision. It would not help any of the causes which the hon. Member or I have in mind. That precludes me from going into detail on a number of matters which I can quite understand might interest hon. Members, but I would add a few words in the hope that, if they receive any publicity, it may have a good effect and more than justify the hon. Member in having brought forward this matter for discussion tonight.

I would appeal to customers and shoppers. A customer will serve his own interest and the public interest if he takes the trouble at least to ascertain the nature of the transaction into which he is entering. He must not be so eager to obtain delivery of an article that he signs a document without troubling to read it, or, indeed, without finding out whether the article will ever become his. A man will, for example, be very foolish if he enters into a transaction where the total amount to be paid greatly exceeds the cash price of the article and the article will, nevertheless, not become his property. He really must take the trouble to read the agreement. It is very difficult indeed to help those who will not help themselves.

The hon. Member said that many of these hiring agreements were onerous. Some of the terms that have been brought to my notice would be very onerous indeed if the property in the goods was never to pass to the hirer; but I must point out that there are honest straight-forward rental agreements and that these are perfectly legal. It is not every hiring agreement which can be said to be an evasion of the Order. I appeal to customers to take the trouble to find out the nature of the transaction into which they are entering. Ordinary hiring agreements are perfectly legal.

Every trader is at liberty to enter into such hiring transactions, but the Board of Trade are determined to bring other transactions, in which the real, as contrasted with the pretended, arrangement involves a breach of the Order, before the criminal courts. I give that assurance to the House. That fact may act as a warning to the less honest traders and may prove an encouragement to the honest.

I say, therefore, to sum up, that, while I would be out of order in discussing the policy of this Order, which has the express approval of the House, I can tell the House that what we intended to effect by the Order has not been defeated by any of these practices; but in so far as some of these practices do involve a breach of the Order we intend to pursue them in the criminal courts.

Adjourned accordingly at a Quarter to One o'Clock a.m.