HIRE PURCHASE

HC Deb 22 March 1955 vol 538 cc1993-2031

9.26 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

I beg to move, That an humble Address be presented to Her Majesty praying that the Defence Regulations (No. 1) Order, 1955 (S.I., 1955, No. 295), dated 24th February, 1955, a copy of which was laid before this House on 24th February, be annulled. I think it would be for the convenience of the House, Mr. Speaker, if, in moving this Prayer, I were to speak on the other Prayer on the Order Paper, relating to hire-purchase and credit sale agreements.

Mr. Speaker

If it would be for the convenience of the House to do so, then I think it would be preferable to discuss them both together.

Mr. Jenkins

Yes, Sir, it was my understanding that it would be for the convenience of the House to consider them together, and I therefore propose to speak to both Motions.

The Orders against which we are praying give effect to the hire-purchase restrictions which were announced by the Chancellor of the Exchequer towards the end of February. I think it will be agreed by the House that it is important that we should discuss the Orders, because they give effect to one of the three emergency steps which the Chancellor took some time ago to deal with the deteriorating economic situation. As I understand, what, broadly, these Orders do is restrict hire-purchase arrangements and credit sales in such a way that, so far as a wide range of articles is concerned, it will in future be necessary for the purchaser to pay a deposit of a minimum of 15 per cent. of the price of the article, and the period during which the remaining instalments can be paid cannot be longer than two years.

The first thing that should be said about the Government's hire-purchase policy is that in recent months there have been some very rapid change-abouts. It was in the middle of last July that either the Parliamentary Secretary to the Board of Trade or the President of the Board of Trade himself announced to the House the sweeping away of the restrictions that had then been in force for the previous two and a half years I understand that the main reason—there may have been subsidiary reasons—why the Government made that change by sweeping away the then existing restrictions last July was that the economic position had become somewhat healthier and that we could afford such a change.

Now, after only a very brief period, we are going back, not exactly to the position as it was before July, but at least to very substantial restrictions in this respect. If the question whether or not we have hire-purchase restrictions is a measure of the health of the economy, it is not a very good comment on the record of the Government that we have the restrictions on after two and a half years, have them off for only eight months, and then, after a short interval, have returned to a position in which we have to operate under these restrictions.

In view of the changes which the Government have announced, one is bound to feel a good deal of doubt at this stage about the wisdom of the Government and the Board of Trade in removing these restrictions last July.

The attitude of the Government is not clear to the whole development of hire purchase finance. Perhaps one could more conveniently use the term "instalment buying," because hire purchase means a particular aspect of this matter, whereas credit sales, probably equally important, are a rather different range. I understand that the distinction is that under a strict hire-purchase agreement the ownership of the goods remains in the hands of the seller until the last instalment has been paid, whereas in the case of a credit sale the ownership of the goods passes to the buyer as soon as the contract is entered into.

We have not had a clear statement of the Government's general policy towards this important part of our trading system. When the Chancellor first imposed restrictions in the early spring of 1952 he then said, in what one might almost call slightly disparaging terms, that: 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.] If that is how the Government regard this form of trading, the middle of July, 1954, was a slightly peculiar time to sweep away all these restrictions because, as we now know, that date on which restrictions were removed was exactly 14 days after the gold reserves had passed their peak and had begun to decline.

It does not show particular prescience on the part of the Government, or particularly good management of our affairs, that at a time when our situation was already beginning to deteriorate the Government chose that moment to sweep away existing restrictions and now, after eight months, they have to impose new restrictions. We all know, also, that the way in which they are imposing them has earned them a rather uneven Press. As the Parliamentary Secretary to the Board of Trade may be aware, the "Economist" dealt very harshly with the Government for choosing this particular form of physical control.

In a leading article, the "Economist" on 26th February last, said that this was a test case of the Government's intentions concerning free economy. It added: In whatever form the new orders are drawn up, they will offend against what should be a cardinal principle of economic policy: namely, that industry and the markets, guided by the individual preferences of millions of customers, will do much better in deciding how any general cuts—whether they are initiated by Bank Rate or by Budget policy—should be distributed than will any gentleman in Whitehall. That sounds very much like an extract from a speech by the former Secretary of State for the Colonies, Lord Chandos. I should like the Parliamentary Secretary to address himself to that point and tell us why the Government, in our present economic difficulty, in choosing generally to rely upon the indirect weapon of the Bank Rate, should single out hire purchase as requiring exceptional treatment by a direct control.

There is one other aspect of this matter to which I wish to refer, and to which I have referred previously in Questions. That is the appalling absence of adequate statistical material so far as the growth of hire purchase is concerned. It is literally the case that no commentator, so far as I know, in any newspaper, writing about this subject of hire purchase since it became very much in the news after the change of last July, has done so without pointing out the great statistical gap that exists.

The "Economist," "Financial Times," "The Times," "Daily Telegraph," "Sunday Express" and "Picture Post," which has an article on this subject which I was looking at just now, have all called attention to the fact that here was a very big statistical gap and that none of us knew what was the volume of credit outstanding, how it had grown in the past six months and how it was distributed over different types of goods.

It is clearly not impossible to obtain that information, for two reasons. The first is that over the restricted area of the field which relates to motor vehicles we have the information available. That is one aspect of hire purchase in which there is fairly adequate statistical coverage. We know the number of contracts entered into, and for what amount. It would be very useful to have similar information over the rest of the field.

I understand that such information is available easily and expeditiously in the United States of America where, of course, the question of instalment buying is of greater importance than it is in this country. But in this country it has in recent months risen very rapidly in im- portance. I think it is most undesirable that when dealing with a matter of such importance, and with something which I am sure the whole House will admit can be, though it need not necessarily be, an element of instability in our economy, we should move unnecessarily in the dark. I understand that no Government spokesman has denied the need for these figures, and he could hardly do so in view of the facts.

Mr. Gerald Nabarro (Kidderminster)

Many of us agree with the hon. Gentleman in some measure about the need for these statistics, but would he say how they can be collected easily? He has quoted the extraordinarily simple case of motor cars, which happen to be large and expensive items, but would he go to the other extreme and take, for example, the form of hire purchase operated on a weekly basis by great Universal Stores, with a multiplicity of items and a relatively small sum involved on each?

Mr. Jenkins

I am not for one moment denying that there may be problems involved in connection with such statistics, and that one certainly has to strike the balance of advantages, but, as the hon. Member will recall, I based my argument on the fact that it would be possible to provide the statistics on two points.

First, on the fact that information was available in the case of motor cars, and, secondly—and this concerns him much more—that in the U.S.A. there is a far wider statistical coverage than there is in this country. While I would not say that one is able to know about every contract entered into in America, one has fairly adequate information over a much wider field of coverage concerning items much smaller than motor cars, and covering, broadly speaking, the whole range of consumer goods. I hope that the Parliamentary Secretary will have something to say about this tonight.

As I was saying when the hon. Member for Kidderminster (Mr. Nabarro) rose, no Government spokesman either for the Board of Trade or for the Treasury has attempted to deny the value of getting such figures. They said that they would consider it. I asked a Question on 3rd February, and the President of the Board of Trade said that he was weighing the advantages of obtain- ing the information with the difficulties there might be so far as trade was concerned.

I questioned him again on 10th March, and he was still weighing the position. I should like to know whether the President of the Board of Trade has been able to weigh these two alternative considerations and come to a conclusion, because the changes which we have between the dates of these two Questions and the changes which we are considering under these Orders tonight does underline the urgent need for getting some information.

After all, why did the Chancellor decide to make this change? He presumably had in his mind some idea of the amount of hire-purchase credit outstanding and the way in which that volume of credit outstanding had grown over the previous eight months. He presumably had in his mind an idea of the amount by which he wished to restrict credit, but we have not been told any of those things. We have never heard from the Government—various private estimates have been made—the volume of credit outstanding at present.

Could we have from the Parliamentary Secretary tonight an estimate from the Government of the amount of hire-purchase and credit for consumer sales, because if the hon. and learned Gentleman cannot give us a rough indication of what the position is we are driven to the conclusion that the Chancellor has made very much of a leap in the dark? We also have additional support for the view that it is vitally necessary that urgent effort should be made to get these figures for which everybody is asking, but which only the Government can provide the initiative in obtaining.

I should like also to turn to one other aspect of the problem we are considering tonight. I should like to know to what extent the Parliamentary Secretary considers that these Statutory Orders against which we are praying achieve the objectives which the Government wish them to achieve. Is it, for instance, the case that there is a loophole in connection with credit sales? One of the principal aspects of the restriction which we are considering is that there should be a deposit of a minimum of 15 per cent., but I am sure it will be within the knowledge of most hon. Members that firms are still advertising arrangements under which goods can be bought on what is commonly called a hire-purchase arrangement without any deposit at all.

I understand that one way of getting round it is by calling it a credit sale and not a hire-purchase arrangement and, in fact, the instalments have to be repaid within a comparatively short period, within nine months, but is the Parliamentary Secretary satisfied that these advertisements appearing since the Order was laid saying that no deposit is necessary are not, in fact, contravening the spirit he is trying to achieve?

I should like to put another point to him. It was understood that the primary reason for the removal of the previously existing restrictions last July was that, in the Government's view, the economic situation had improved sufficiently to make this reasonable. There was also a subsidiary consideration, which was that a recent High Court decision in the case of Regina v. Proffitt had done a good deal to undermine the effectiveness of the existing regulations. In that case, the judgment was to the effect that where a wireless set was sold under some form of hire agreement with three alternative options at the end of the period of hiring there could be a limitless period for the paying of the instalments.

The hon. and learned Gentleman is aware that, following that decision, previous arrangements were widely believed to be ineffective. Can the Parliamentary Secretary tell us whether these regulations are going to be more effective than the previous ones? If so, how are they going to be effective and how does the decision in the case of Regina v. Proffitt bear on this?

I have indicated that one of our main objections to the Government's record in regard to hire purchase is that they have jumped about so quickly because they do not seem to know their own minds and do not appear to have any consistent policy on it. In the difficult economic situation which has now suddenly-appeared, and about which the Chancellor of the Exchequer did nothing to warn us, we do not necessarily say that these Orders are wrong, though we think it undesirable that there should be such a quick turn round as there has been in the last eight months.

Undoubtedly in the growth of consumer spending which took place, particularly in the latter part of 1954, so far as the mass of the population is concerned hire-purchase arrangements and credit sales have had a great deal to do with it. So far as the rather more limited number of people in the population are concerned, Stock Exchange gains have had something to do with it, but these people came out of the year better because they came out without any increased burden of debt, whereas the others came out with an increased burden of debt.

Whether or not these restrictions are desirable at the present time in the difficult economic situation in which the Chancellor tells us we now find ourselves, there can be no doubt that the sudden reversals of policy over the last eight months are highly undesirable, and there are a number of detailed aspects about which we require more information. Further, there can be no doubt that the importance which hire purchase has assumed, underlined by the fact that when the Chancellor made three proposals a month ago hire purchase was one of them, makes it clear that we need the fullest possible statistical information, that this is not available, and that the Board of Trade ought to do something about it. Otherwise, the Chancellor will be left to operate in the dark in this important economic matter.

9.47 p.m.

Mr. Harold Lever (Manchester, Cheetham)

I beg to second the Motion.

I think it was one of our Front Bench authorities who, in a satirical moment, felt that this was an opportunity to get me to support something which my hon. Friend the Member for Stechford (Mr. Roy Jenkins) has said. As he speaks always with authority and in an orthodox manner on economics, and as I speak in a manner which is unorthodox, obscure and without any authority whatever, it gives me particular pleasure to support my hon. Friend, whom I admire greatly, and sometimes by criticising him I express that admiration in a discreet way.

My hon. Friend has raised the question of the desirability of this Order, and I shall venture to offer the House with as much brevity as I can command—

Mr. Nabarro

Not two hours ten minutes of it.

Mr. Lever

—my reasons why I think it is a bad one. In the first place, it must be recalled that this Order is part of what is said to be the economic policy of the Chancellor, by which he is endeavouring to secure that the inbalance of payments which has recently emerged shall be corrected.

By this Order, as well as by other measures, the Chancellor is revealing what I consider to be a balloon mentality on economic affairs, on which I have had occasion to address this House before. By that I mean that if we pinch part of the balloon at one point, it inevitably swells up at another point more convenient to our economic planners. I have found from experience that when we keep on pinching the balloon to make it bulge where we think it more appropriate to be bulgy—namely, the overseas balance of payments—it may burst in our faces.

The Chancellor stands in danger because he is now a victim of his own reputation. The right hon. Gentleman came into office and, without doing anything, he found that our balance of payments was improving. Everybody in the House knows, when we are not scoring party political points, that this has had nothing whatever to do with the Chancellor or with Tory policy. It has been caused by world forces. When world forces moved swiftly behind the Chancellor, he found our balance of payments position improving and came with increasing complacency and self-admiration to the Dispatch Box to applaud himself and modestly acknowledge the plaudits for the great achievements, for which he was in no way responsible. He gave me the impression that he was in the same school as the ancient Aztec emperors, who solemnly vowed on taking office that they would make the sun pursue its wonted course from East to West. The Chancellor had as much to do with the improvement in our balance of payments position as the Aztec emperors had with the sun's course.

The Chancellor's difficulty is that, having got into a lift which is going up, he believes his ascent is due not to any mechanical action on the part of the lift but to the movement of his arms. Now the lift is going down, he naturally thinks that, in the national interest, if he gesticulates enough he will remain airborne. Unfortunately—

Mr. Deputy-Speaker

Whether the Chancellor remains airborne or not does not arise on this Motion.

Mr. Lever

I am afraid that it is not immediately apparent to you, Mr. Deputy-Speaker, that the matter has a direct relationship with the Motion. The Order is the product of precisely the circumstance which I have narrated to the House. However, I will not trespass on your good nature, and I will conclude that point of argument by saying that the whole policy of restricting consumer consumption in the hope that one will get an improvement in the balance of payment position is an unproven thesis.

There is not the smallest reason to suppose that if the Order and similar Measures are put into effect they will do more than hinder people in purchasing necessary perambulators and cause considerable dislocation in the furniture manufacturing industry. Instead of there being a movement, as the economists suppose, from these articles towards the manufacture of jet engines for export, a movement from the East End of London to the middle of Birmingham, these industries go through a slack time and employ the same number of people for fewer hours and smaller wages, and the result is that goods become dearer and people are deprived of the necessaries which make life a little more tolerable.

Then, when we have had a dose of that unpleasant medicine and it has not worked, instead of drawing the correct conclusion, the Chancellor is inclined to think of something even more unpleasant than that which he has already inflicted upon us. It is a misguided Order based on an unproven thesis, not unpalatable to some people, which assumes that anything unpleasant is bound to be of considerable moral and economic advantage in the long run. For that reason, I hope the House will not too readily approve the Order.

My second point is about the way in which the Chancellor has behaved. I am glad that my right hon. Friend the Member for Battersea, North (Mr. Jay) is present, although he may be embarrassed by being defended by me. He was often charged with having a bureaucratic mind, and it was said that he was imposing controls and hitting at consumers and the like out of wanton doctrinaire policy. It is precisely that which has brought the Chancellor to this sorry pass. For doctrinaire reasons, the Chancellor swept away controls. Probably the Women's Conservative Association had a jamboree at that time and he thought how nice it would be to go to it and show them what real freedom meant, and so about that time he announced that he would remove all the controls on hire purchase.

I have constantly urged upon the House and upon successive Chancellors of the Exchequer, that the planning should be done gradually, that they should do a little at the time and be modest about it, comparing theory with reality. I am told that I am against planning because I want to do it in a careful, modest way instead of dramatically and with newspaper flourishes. Instead of doing that, the right hon. Gentleman, for doctrinaire reasons, swept all controls away, and now he has to come to the House again.

This is coming back to precisely what my right hon. Friends were so wrongly accused of doing when in office. Hon. Gentlemen opposite used to say, "This legislation is well intended, but of course these poor chaps know nothing about business and how it works and they are making a hash of it and cutting industry to ribbons by the way they are behaving." But that is what the Chancellor is doing. Having swept controls aside, he allowed more and more of these goods to be turned out at less and less price. Everybody was very happy, and then the Chancellor suddenly and abruptly and without any regard to business-like methods cut hire-purchase facilities. He did not do it gradually to allow people to adjust themselves. He has thrown the whole of the furniture trade into chaos as he has done with other trades who were dependent on the hire-purchase market.

Mr. John Hall (Wycombe)

Will the hon. Member tell us where the furniture trade is in chaos?

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East)

I know that the hon. Lady the Member for Tynemouth (Miss Ward) knows that there has been a good deal of difficulty in that very industry.

Miss Irene Ward (Tynemouth) rose—

Mr. Deputy-Speaker (Sir Charles MacAndrew)

I think that the hon. Lady will be called, if she abides in patience for a minute.

Mr. Lever

I think that the hon. Lady wanted to ask me a question and I was ready to give way. If she waits until I have sat down—

Mr. Nabarro

What about carpets?

Mr. Lever

There is no doubt whatever in those branches of industry where the home market takes the greatest part of our output and where the greater part is dependent upon hire purchase, this sudden and unbusinesslike change, which for doctrinaire reasons has become necessary, will cause great distress.

I hope that in future the Chancellor will satisfy himself before acting in this irresponsible way of the consequences of his policy and that he will consult with business people and the trade unions affected. He should consult with some of the trades. One day he is inviting them to make the ceiling their target and the next he is trying to trample them down to the floor. I am not referring to the interjection of the hon. Member for Kidderminster (Mr. Nabarro). I should have thought that representing an industry which greatly depended upon hire-purchase sales he would have thought it necessary to say a word in opposition to these Orders.

Mr. Nabarro

I did not rise at the moment the hon. Member referred to acute dislocation in the furniture trade, because my hon. Friend the Member for Tynemouth was rebuked for so doing, but I want to correct him at once. The Kidderminster carpet industry is in a highly flourishing and prosperous condition and is no way affected, as far as I am aware, by the readjustment of hire purchase under this Order.

Mr. Lever

One would not expect an immediate effect to be the dislocation of the carpet industry, but let us wait until this Order has taken effect. At present the carpet industry is, like many of these industries, very busily engaged on the back-log of orders taken when the retail trade was flourishing. There is no doubt at all that in the furniture industry orders are being cancelled and manufacturers are very short of work. There is no doubt at all, because there a great deal of harm has been done to the consumption trade. We know that these industries must be affected. If they were not to be affected, why should we have an Order? If the Government are not out to squash hire purchase, what is the point of the Order?

The Order is deliberately designed to restrict consumption in these industries. I hope that when the hon. Member goes back to Kidderminster in a couple of months' time he will get a hot reception for the very callous indifference he has shown to the interests of his constituents. I can understand that in most cases we can count upon the incompetence of the Government, but here their determined decision is to restrict consumption in these industries and we can safely rest assured that they will accomplish their intention. Those are my objections to the Order. I hope that the Minister will at least succeed in creating an honest doubt in my mind which will enable me to abstain, but at the moment I am very much inclined to express direct opposition to the Order.

I hope that it will be in order for the Minister to tell us whether the Government are aware of the tremendous importance which this class of trade will play in our economy and whether they are considering general legislation to put the hire-purchase trade on a proper footing so that the consumer may be protected, not by a 15 per cent. deposit, but by suitable legislation. Such legislation should extend the work of the Hire Purchase Act which Ellen Wilkinson brought in and should make it up-to-date. The consumer would then enjoy the benefit of real protection. This is necessary because of the varied practices which exist. Many firms are perfectly in order in the treatment of their customers, but many rackets are undoubtedly being worked under the guise of hire purchase. I hope the Minister will be able to reply on this point.

10.2 p.m.

Miss Irene Ward (Tynemouth)

I always endeavour, as a Parliamentary representative ought, to be absolutely objective about any decision which is being taken by the Government, or indeed by the Opposition, as it relates to my constituency. That is the basis of our democratic system.

Therefore, though I am a supporter of the Government because they have done a magnificent job for the country, I feel it is fair to put the point of view of the furniture trade in my constituency. I do not want anybody to be misled about the effect on a very large furniture factory in my constituency. It is the Tyne furniture factory, which is on the West Chirton Trading Estate. I believe that it is the biggest furniture manufacturing factory in the country, if not in Europe.

The firm is very well known in our part of the world. It is a very good employer. The general policy of the management is not only to give employment, and good employment, on Tyneside, but to help in the social amenities of North Shields. We feel that the Tyne furniture factory and its management have done a first-class job for Tyneside and North Shields.

Very shortly after my right hon. Friend the Chancellor of the Exchequer took his decision, the general manager said that the factory had to go on short time. He pointed out—I think it is true, because the records show it—that at this time of the year there is always a falling off in orders. The rush of wedding orders before the Budget has probably made use of the stocks of furniture that were available, and there is always slackening of trade at this period of the year; but the general manager pointed out that it was also due to the announced policy of the Government with regard to hire purchase. I therefore feel that it is right when we are discussing this Order that the facts should be known to the House.

It is important to remember that if the economy of the country is not satisfactory difficulties arise not only for the Tyne furniture factory but throughout the whole range of British industry. I was very interested to note that the late Marshal Stalin said—and please do not call me to order, Mr. Deputy-Speaker, because it really is in order—that the British were very peculiar people because they wanted both to have their cake and to eat it. [Hon. Members: "Roosevelt."] I think that is profoundly true of the present situation. We certainly want stability in the country and, so far as the furniture factory is concerned, we want to maintain full employment.

I want to put on record that until 1936 when the Conservative Government under the late Mr. Baldwin conceived the idea of starting trading estates, which have been of such enormous benefit to my part of the world, we never should have had—

Mr. Deputy-Speaker

I am very reluctant to disagree with the hon. Lady, but I think that she is out of order.

Miss Ward

Then I shall get in order in exactly one minute. By the establishment of the trading estates we have the Tyne furniture factory, and because we have the Tyne furniture factory I am able to take part in this discussion on the Order. Though the factory is on short-time working, I am quite certain that people on Tyneside are profoundly grateful to have it there, and I am sure that in a very short time it will be working full time once again.

I should like to make this observation on the objections raised by the Opposition to the Hire Purchase Order. I would remind hon. Members opposite that if people who want to buy furniture would put aside for a period the amount of money which they would be paying in instalments, but which in fact has now to go to the deposit, it only means that they delay the order for their furniture for a relatively short time. I cannot help feeling that if the people in the country and on the Tyneside who wish to maintain full employment and economic stability would just exercise some of their shrewd caution and save their money for a very few weeks, the wheels of trade would soon turn again and the people themselves would not be worse off.

Though I realise that it is very unpleasant, it is only a question of exercising for a very short time a little discipline with the cash that one has available. I think the chance our people will have, and the action they will take in the maintenance of stability, is one which, taking the long view, they will probably welcome. Though I have to put the full facts before the House and to express myself as I always do—because I regard with the greatest perturbation any signs of deterioration in employment on Tyneside—I think that this is purely a temporary difficulty which will be overcome, and I feel that the decision of the Government to take action before the horse has left the stable is worthy of everyone's support.

Mr. John Hall

Would my hon. Friend not agree that at about the time of the Furniture Exhibition there is always a certain amount of slackness in the furniture industry? Would she not also agree that reputable retailers throughout the country have been operating on terms very similar to those laid down in the Order, and, indeed, involving a slightly smaller deposit?

Miss Ward

I do not happen to be an expert on the manufacture of furniture. I have tried to give the facts as the general manager of the Tyne furniture factory has given them to me. I have said that he stated there was a slack period in the furniture industry, and I accept it, but I do not think anything I have said in any way conflicts with the point of view put forward by my hon. Friend.

10.12 p.m.

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East)

I am sure we all welcome the explanation by the hon. Lady the Member for Tynemouth (Miss Ward) of the difficulties that have been occasioned in Tynemouth by the Government's recent policy. We are anxious about the fact that the Government, first of all, decide to withdraw the restrictions upon hire purchase with the result that there is an enormous expansion of hire-purchase trade, and then within a matter of months the restriction is reimposed, even though in a rather changed form. It is that continuous alteration to which we wish particularly to call attention.

I want to give one or two examples. I have had my attention called to the effect of this policy upon the cycle industry. I understand that recently, at any rate since the withdrawal of restrictions, about 60 per cent. at least of the cycle trade has been carried on the basis of hire-purchase agreements of one sort or another, and the trade is certainly anxious about the effect upon their work of this new decision of the Government. There is no doubt that it has had the effect of cancelling orders to a considerable extent. Therefore, these are matters to which we ought to call the Government's attention, and we ought to expect the Government to give us much more full information about the extent and development of hire purchase than we have so far had.

It seems rather odd that during the last few months the Government seem to have singled out the cycle trade for a particularly heavy blow. We recently had to protest against the Government's action in bringing in a new, specially-designed form of Purchase Tax with respect to one particular type of attachment to cycles which, up till then, had escaped Purchase Tax. The Government then came along in a white sheet to apologise for increasing Purchase Tax when the supporters of the Government had been calling for reductions for many years. Then, as if that was not enough—

Mr. Deputy-Speaker

It is enough.

Mr. Blenkinsop

I appreciate the point that you are about to raise, Mr. Deputy-Speaker. I think it is particularly unfortunate that the Government have taken a further step to make difficult the position of the cycle trade, which is considerably affected by the Order and the reimposition of restrictions on hire purchase.

Mr. Nabarro

All the Order does is to require a deposit of 15 per cent. Surely the hon. Gentleman believes in practising what he preaches. Did he not put down a deposit of £150 to come to the House in anticipation of financial benefits to follow?

Mr. Blenkinsop

The hon. Member may be thinking of some past misfortunes of his own from which he has not been able to secure the return of that sum.

We are considering the difficulties of many trades directly affected by the Order and I was calling attention to one example. Many firms say that they would not object so much to the effect of the Order were it not that many less reputable firms appear to be able to get round its conditions and to carry on their practice of supplying goods on something equivalent to hire purchase without deposit.

My hon. Friend the Member for Stechford (Mr. Roy Jenkins) called attention to some practices by which firms escape the control under the Hire Purchase Act and he referred to credit sales as one example. That is a form which apparently is still not covered by the operation of the Order. It is clear that many reputable firms resent the way in which they are being singled out for penalty when other less reputable firms can get away scot-free with the arrangements which they have been carrying on for a considerable time. What action do the Government propose to take to try to widen the scope of the Order to bring within its ambit some of the malpractices which, as is well known, have been going on for some time?

Mr. John Hall

Is it not true that, whereas no deposit is charged in those cases, the period of credit is much shorter and, therefore, the terms of repayment are not as attractive to the buyer?

Mr. Blenkinsop

That may well be true. I do not pretend to have the personal knowledge of the hon. Member for Wycombe (Mr. John Hall).

It is true, as one of my hon. Friends reminds me, that the repayment period has to be under one year in these credit sale cases, but I want also to refer to another type of arrangement which escapes scot-free under the Order and which is well known as a renting agreement. Under it, the property never passes at all, but many people are persuaded or fooled into believing that they are taking part in a hire-purchase agreement when they are not.

It is practices of this kind, sometimes perhaps of doubtful legality but in most cases, unhappily, quite legal, which make particularly difficult the position of good traders who are carrying out their hire-purchase trade in a proper and efficient way and which, naturally, encourage them to protest against the manner in which they are being singled out when other firms are carrying on their business without deposit and without proper regulation or control.

It is fair that we should ask for full information from the Government about the scale of hire purchase before we allow the Order to go through. Although it may be necessary to reimpose some restrictions on hire purchase, at the same time it is surely important that there should be a sense of fairness of treatment between firm and firm—and that is not the case at present. On those grounds I feel that my hon. Friend's comments are fully justified and I hope that the Government will give much more information to us than they have given up to now.

10.20 p.m.

Mr. F. J. Enroll (Altrincham and Sale)

When I originally heard the announcement of these new hire-purchase restrictions I fell to wondering what important effect they could have on the economy. I still remain far from convinced that these new restrictions will make so very much difference to the balance of payments as we on this side of the House would generally like to imagine. The restrictions will fall most heavily on the lighter type of consumer product, such as furniture, carpets, small radio receiving sets and the like—commodities which do not absorb a very great deal in the way of raw materials or labour. I hope that we on this side of the House will not fall into the easy error of imagining that any balance of payments difficulties which may loom ahead are to be readily solved by the simple technique of battening down on hire purchase, because, while there is a high level of wages, the goods will be purchased just the same whether there is hire-purchase restriction or not.

I do not hold that hire purchase is a bad thing, as is so often made out by those who claim to understand the economy. On the other hand, I believe that hire purchase with generously extended payments is a right thing for an economy such as ours, and with a population constantly improving in intelligence and capacity to manage its own affairs. I was, therefore, sorry that it was necessary to introduce this restriction, particularly in regard to the limit of payments to two years for furniture, because it is furniture particularly that a young married couple need when they take on a house. It must be a very real burden to a young couple to repay the whole cost of their furniture in two years. In any case, it seems slightly illogical to me that while one may have 25 years, or, in the case of one building society, up to 35 years in which to complete the purchase of a house, one must, nevertheless, be limited to only S two years in which to furnish it.

I know it has been said that it is no very great hardship to put down a deposit of at least 15 per cent. of the total purchase price of the article. For those of us accustomed to paying at the time for what we want, it seems ridiculously small, but, for a person accustomed to working on a weekly wage as distinct from a monthly salary or quarterly fees, it is a very difficult thing to save up as much as 15 per cent. of the cost of a labour-saving article he may want to install in his nice new home. It has been said that the reintroduction of the 15 per cent. deposit will make a person think whether he really wants a thing or not before embarking on the purchase.

At first sight that is a very forceful argument—it would be if it came from hon. Members opposite—but we on this side of the House do not believe in governessy Government. I would not mind if a person made a mistake, bought on an impulse and later found that he did not want what he had bought. He would then have learnt his lesson and would do better next time. I do not think it is any part of our duty to go in for governessy Government of that sort.

It is said that hire purchase is an unsatisfactory feature of our life today. On the contrary, it is part of our economy. One has to think of the young wage earner—earning a substantial wage, thank goodness, these days—who has money in his pocket. If he does not use it for hire-purchase instalments he will use it for something else.

Mr. Nabarro

Football pools.

Mr. Erroll

Yes, on football pools, or on cinemas, or on cigarettes, or in the public house.

He is not going to acquire the habit of buying useful goods which will be both a pleasure to himself and to his wife. He will, instead, acquire the habit of spending money only on goods which are consumed as soon as purchased—although, admittedly, they will bring substantial revenue to the Chancellor of the Exchequer. It must be remembered, too, that if he starts the habit of buying on instalments at an early age, then, when the essential goods have been bought, he will have acquired the habit of putting away a sum each week, and, when the essential goods have been acquired, that habit may be channelled into the National Savings movement for the rest of the individual's life.

In this matter, instead of relying on these Orders, we could have relied on the common sense of the British public, because it has been shown that the man who goes in for hire purchase behaves extremely sensibly in the matter. Hire-purchase debts are reckoned to be the best commercial debts in the country, and some of the most extreme forms of hire purchase, such as getting one's summer holiday on hire purchase, are not at all popular, thus showing that the public has a sense of the limitations there ought to be on the methods of acquiring goods or services by hire purchase.

It must be remembered, too, that a man a large part of whose goods are obtained on hire purchase is a man far less likely to embark on frivolous lightning strikes, because he is a man who wants to keep up his hire-purchase payments. Therefore, the hire-purchase system is important not only in maintaining full employment, but in maintaining a full week's work every week. While I shall assist in resisting this Prayer I shall do so with a heavy heart, and in the hope that very soon the Government can dispense with these Orders.

10.27 p.m.

Mr. Ivor Owen Thomas (The Wrekin)

I have not yet been able to discover, even listening to this debate, any reason for the Government's policy in this matter. The more I study the lists and conditions of sale in the Hire-Purchase and Credit Sales Agreements (Control) Order the more amazed I am at the lack of reasoning behind it.

For an example of the utter imbecility of the provisions of the Order I refer to certain items in the First Schedule. It will be noted that the minimum amount that must be paid at once for various items is laid down at 15 per cent. of the purchase price, and the maximum period allowed for the subsequent periodical payments is 24 months in the great majority of cases, although in a few cases it is 48 months.

As an example of what appears to me to be the entire lack of reasoning in this Order, I mention refrigerators. Refrigerators having a storage capacity not exceeding 12 cubic feet come within the restrictions, and one must pay 15 per cent. down and clear the outstanding amount in not more than 24 months.

This leads me to conclude that if the refrigerator I buy is of a capacity of 13 cubic feet, I can do as I like about paying for it. Is that right? [HON. MEMBERS: "Yes."] What is the reason for that? If I choose to buy a refrigerator of any capacity up to 12 cubic feet, these restrictions are imposed upon me, whereas if I choose to buy a refrigerator of any capacity over 12 cubic feet, I can enter into any arrangement I like about my monthly or periodical payments.

Sir William Darling (Edinburgh, South)

The 12 cubic feet domestic refrigerator is such as the hon. Gentleman would have in his kitchen. He would not want to fill four rooms of his house with a refrigerator four times larger than he needed, would he?

Mr. Thomas

I am not talking about the size of the house; I am talking about the size of the refrigerator. I am merely pointing out—whether it is a householder or anyone else who wishes to buy the refrigerator—that this restriction applies. As the sentiments of the hon. Member for Edinburgh, South (Sir W. Darling) seem to be centred in the trading community, perhaps he will revise his remarks.

The First Schedule of the Order covers perambulators, baby carriages and push chairs. Under the same restrictive arrangements, if a person cannot afford to pay for his perambulator within a maximum of 24 months, he will have to carry his child about with him. Is that it? This is penalising people who cannot afford to pay spot cash for such necessary articles of family life as perambulators, baby carriages and push-chairs. If they cannot save up enough to pay spot cash or to pay for these things within the restricted period of 24 months, they must go without that which they need.

The fourteenth item listed in the Schedule reads: Washing machines and washers which are designed for heating water by electricity or gas but which are not otherwise designed for operation by electricity or gas, including wash boilers and coppers. What does that mean?

Incidentally, the period in which people are allowed to pay for any of those articles is more generous, in that it is 48 months instead of 24 months. But the meaning of that item, as I understand, is that if someone buys a washing machine which is designed for heating water by electricity or gas, but is not otherwise designed for operation by electricity or gas, his period of payment for it is limited to 48 months; whereas if it can not only heat water by electricity or gas but can also operate by electricity or gas—in other words, if, instead of turning the handle by hand, the machine is made to operate by power—the purchaser is not allowed to pay for it over a period purchase arrangement.

What is the reason for that distinction? Surely, if the newly-wed housewife wishes to buy a machine which not only heats water by electricity or gas but is work- able by electricity or gas, she should be allowed to make her choice of the kind of machine she purchases and there should be no restriction upon the period within which she is allowed to pay for either. It would be rendering a service to the community generally to leave things as they were. That would induce people to purchase far more efficient types of domestic appliances than they would do if the restrictions in these Orders were in operation.

I want to make special reference to caravans. Incidentally, the Minister might indicate where his caravan has rested. I have had a communication from makers of caravans who call attention to parts of the restrictions on hire purchase which will react most unfairly on those members of the public who use caravans as mobile homes. These caravans were not included in the old restrictions on hire purchase and the makers say that quite a large percentage are still purchased as homes.

They hope that a strong protest will have effect immediately in connection with these restrictions. It is pointed out that under the existing arrangements one person can apparently buy a house and have 20 or more years to pay for it but another individual, whose occupation makes it essential for him to have a mobile home, is restricted to periodical payments over two years. That is obviously grossly unfair. I hope that the Minister will find it possible to give sympathetic consideration to that point.

Generally, the reasoning on which these Orders are based is fallacious, assuming that the premises on which the Government took their previous action were valid. Why is it that within such a short period of the removal of these restrictions the Government have found it necessary to reimpose them? The Minister, in replying to the debate, owes it to the House and to the country to give a much more valid reason for his policy than anything that we have so far heard or seen in print in connection with the introduction of these Orders.

10.40 p.m.

Mr. Gerald Nabarro (Kidderminster)

I have rarely listened to a Motion, moved and seconded by hon. Members opposite, where such diametrically opposed views and principles have been expressed. The hon. Member for Cheetham (Mr. H. Lever), who seconded the Motion, seemed to suggest throughout his speech that there is no need at all for any regulation of hire-purchase transactions, either as to the amount paid as a deposit or as to the length of time for repayment.

The hon. Member for Stechford (Mr. Roy Jenkins), on the other hand, as a purist in the Socialist sense of the word, wishes, with an abracadabra of rules and regulations, to induce the general public to obey the dictates of his particular political theories.

For my part, I find myself at one point only in agreement with the hon. Member, and that is that it would be manifestly in the national interest for a simple formula to be devised for collection, analysis and publication of statistics of hire-purchase transactions. But I do not want the American model, which the hon. Gentleman seems to infer in his speech would be a good thing, namely, a return to a central statistical bureau of each and every hire-purchase transaction. If statistics are to be collected in this country, I think it should be done on the general basis that the returns are made to Somerset House annually as in connection with the requirements of the Companies Act. Every company carrying on hire-purchase trade would then return, once a year, the total sum of money that has been involved by extended credit payments and the approximate dates on which repayments fall due to be made. In that respect, I agree with the hon. Gentleman.

May I turn for one moment to a particular item stipulated in the Hire-Purchase and Credit Sale Agreements (Control) Order, namely, floor coverings including carpets, which are, of course, associated with furniture. Several hon. Members have said earlier that dislocation has been caused to the furniture trades by the effects of this Order and uncertainties particularly as to the trend of future sales. That is not so with the carpet trade. This Order was made on 24th February. The carpet trade, and notably the association which represents the manufacturers in that industry, the Association of British Carpet Manufacturers, have had one month to consider the implications of the reimposition of a very mild and limited form of hire-purchase restrictions and have made no representations to me about this Order. and neither has any carpet manufacturer in my constituency—and practically one half of the entire carpet manufacturing industry of the United Kingdom is centred in the Kidderminster district.

Had there been any uncertainties created by the terms of the Order I have no doubt that, in view of the forthright fashion in which carpet manufacturers approach me in connection with other matters upon which they feel concern, notably Purchase Tax, they would have informed me of their grievances and apprehensions about this Order.

I support a system which requires that any member of the consuming general public should pay a reasonable sum in deposit upon a hire-purchase transaction covering an article or articles such as furniture or other goods covered by this Order. I think it is profligate financially and often improvident, and is conducive to unhappiness in the home on account of over-spending and other forward commitments for hire-purchase arrangements to be made on the "Never, never" as it is colloquially called, when no deposit is asked for and, for example, ten years given to pay the balance for the article concerned. That is the sort of thing that has developed in the course of eight months since the earlier hire-purchase restrictions were lifted altogether.

When my right hon. Friend the Chancellor announced the reimposition of the milder regulations under this Order, he said he would seek permanent powers in this connection which foreshadows, I fancy, future legislation on the subject. Personally, I would support such legislation based upon a statutory requirement that there should be a deposit varied according to the class of article concerned of 15 to 20 per cent. of the purchase value with the whole of the remaining sum of money to be repaid over a reasonable period of months which, I believe, is to be found in this Order and correctly stated to be about two years for the kinds of goods concerned.

The hon. Member for Stechford suggested that the Chancellor of the Exchequer had been a little too venturesome or even financially adventurous in removing all hire-purchase restrictions, last July. My right hon. Friend the Chancellor believes, as I believe, that Conservative freedom works. But there are many imponderables. [Interruption.] Yes there are many imponderables in postwar economic affairs, and if, before hon. Gentlemen opposite become so mirthful, I may be allowed to complete my point, I would say something which, I think, accentuates those imponderables.

Only a few days ago, the chairman of a building society, handling large investment moneys, had occasion to say that he could not account for the very great increase in personal savings which has occurred in the last couple of years or so. Nor could anybody else accurately account for it. It is just one of those phenomena which has occurred in this period of a year or two and like this great increase in hire-purchase trade which, because of the no deposit arrangement and the greatly extended period of credit, was tending to get out of hand.

It is for that reason that I want modest regulations; and not only modest regulations involving greater foresight on the part of consumers, but also an incentive to thrift; because, if people are not persuaded at one and the same time to commit themselves to a large number of hire-purchase agreements often involving no deposit, and many years for the purpose of repayment, then the concomitant will be a greater incentive to thrift and personal savings in every form.

For these few reasons, and for many Others upon which there is not the time to express a view tonight, I suggest that this is a wise Order and a sensible precursor to the permanent powers which, I hope, the Chancellor will come to the House to seek in due course for regulation of hire-purchase transactions. Those powers should cover such relevant matters as deposits, length of period for repayment of balances under hire-purchase contracts, and maximum rates of interest, all of which, I believe, to be most desirable in the national interest.

10.47 p.m.

Mr. Douglas Jay (Battersea, North)

We want to know tonight if Her Majesty's Government have really got into such a dreadful muddle as they seem to have done. Why relax these restrictions last summer and then suddenly clap them on again, as was done a month ago? My hon. Friend the Member for Stechford (Mr. Roy Jenkins) said that by last July the gold reserves were already falling; so that last summer would have seemed a queer time to have let these restrictions go. It was in March, 1954, exactly a year ago, that the rise in import prices, which is mainly responsible for this situation, began; so this situation had been going on for five months when the Government let go these restrictions.

The Chancellor told us that he wanted to counter excessive internal demand—which may be a gloomy indicator to the Budget—but hire-purchase activity is only one form of creating internal demand. Mr. Gibson Jarvie has recently uttered a howl of hatred against the Government in language which leads one to think that he believes a Labour Government still to be in power. I have seldom found myself in any sort of agreement with Mr. Gibson Jarvie in the past, but I must say that I find some substance now in his question, "Why pick on hire-purchase?"

The Chancellor said, after his recent statement, that hire-purchase had really got out of hand, but I would like to ask the Parliamentary Secretary to the Board of Trade to give the evidence for supposing that it has got excessively out of bounds and to an extent which is not true of anything else which is comparable. I do not know what the evidence is. I know that bank advances for hire-purchase purposes increased by 55 per cent. from February of last year as compared with three months ago, but the total bank advances for that purpose, so far as I know, are only £30 million today and represent only one and a half per cent. of the total of bank advances.

I believe it is said that the total of hire purchase debt outstanding is about £450 million. I do not know whether we really know that for certain, or whether it is merely an estimate. Can the Parliamentary Secretary tell us? Can he tell us whether the Government have tried to find out, or have they acted in the one field where we do not in the least know the facts? If so, I should have thought that that was rather curious behaviour.

The Chancellor also told us that he had asked the Capital Issues Committee and the banks to restrict advances for hire-purchase facilities. He actually said that he had asked them to adopt a "more restrictive attitude towards such advances." I imagine that that phrase must have been drafted by the Parliamentary Secretary himself, for the idea of the Chancellor adopting a more restrictive attitude suggests the governess, as the hon. Member for Altrincham and Sale (Mr. Erroll) said.

Why this attitude towards bank advances for hire purchase and nothing else? Are we to know whether the Chancellor simultaneously asked the banks to be generally more restrictive in their lending? After all, bank advances, of which hire-purchase loans are only one and a half per cent., have now reached an all-time high level of well over £2,000 million, of which nearly £400 million are personal and professional advances. On the face of it, that would appear to be more directed to the excessive internal demand which worries the Chancellor than the single item of hire purchase. Indeed, I expect that the Parliamentary Secretary has noticed that loans to stockbrokers have actually increased by as much as 100 per cent. between the later months of 1953 and the later months of 1954, and I rather wonder why that did not attract the attention of the Chancellor.

Mr. Nabarro

"Bears."

Mr. Jay

It seems unlikely that it would have been "bears" in the later months of 1954.

Sir W. Darling

Is that not a very good argument for the increase in the Bank Rate? Does it not mean that the rate should have been made even higher?

Mr. Jay

I am sure the hon. Member realises that we are discussing hire purchase rather than the Bank Rate, but on another occasion, we can no doubt discuss that.

The Chancellor also told us that the Government are now pursuing a policy of generally limiting home demand. It seems to us that this is a strange way of going about it. I suppose that he wants to restrict demand for motor cars and television sets and things which he considers to be partly luxuries, but he is penalising the ordinary families buying furniture for essential purposes. One would wonder whether it would not have been more sensible to have used Purchase Tax, which could have discriminated between one type of commodity and another. In point of fact, while the Chancellor is limiting the purchase of furniture with the affects of which we have heard, he has actually taken Purchase Tax off fur coats in the last few weeks. That is a rather curious example of Government policy.

I was struck by what the hon. Lady for Tynemouth (Miss Ward) said about the furniture factory in West Chirton, partly because I was in some way responsible for introducing the firm there and have followed it since. My information is that 1,100 people employed in Tyneside Plywood are now working only three days a week as a result of this Order. I do not see how it helps the balance of payments to have 1,100 people in Tynemouth working only three days a week.

Mr. William Shepherd (Cheadle)

Is it not true that the Wolfson Group in the last four weeks almost stopped its buying for internal, national domestic reasons and that that is why there is less demand in the furniture trade?

Mr. Jay

The hon. Lady seemed to think it had something to do with the Order, and that certainly was my information.

Miss Ward

I think I must put this straight. The general manager told me that it was something to do with the Order.

Mr. Jay

I am indebted to the hon. Lady, because that is precisely what I was saying. As the factory stands on a Board of Trade Trading Estate, perhaps the Parliamentary Secretary would tell us whether the 1,100 people there are on short-time.

Why do the Government propose to take statutory powers in this case for limiting demand when they do not propose to do the same in other examples of boom or expanding activity? The Chancellor said that permanent legislation was to be introduced. Could the Parliamentary Secretary tell us how soon that will be done?

We should not object to measures for regulating hire purchase as part of a general policy or plan for steering the economy of this country, but I do not understand why the Government think it right to legislate in the case of hire purchase and not in the case of dividend limitation, for instance. Could it not be argued that increased dividends have contributed just as much to the excessive demand in recent months? Why introduce statutory control here and not tighten exchange control, which, one would have thought, might have contributed a great deal more to the present balance of payments situation? In view of the comparative figures of bank advances on hire purchase, on the one hand, and stock exchange advances on the other hand, one would have thought that the Government might have done something in that respect, too.

It seems to be the Government view that Conservative freedom works all right in the Stock Exchange, the foreign exchange market and decisions on dividends but not when we come to the ordinary person buying furniture and other household requirements. It does not seem to us either that that is a fair proposition or that this discriminating partial measure in itself will contribute anything substantial to a still-worsening balance of payments situation.

10.58 p.m.

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

I think it would be convenient if I gave a general account of the purpose and effect of the Order and, in the course of it, answered the questions or criticisms which have come from various quarters. I will then check from my notes of individual speeches to see whether I have omitted anything.

These Orders were announced by the Chancellor of the Exchequer on 24th February. The Hire-Purchase Order is one of the steps taken by the Government to maintain a sound balance of payments. It is part of the Government's general policy of limiting home demand. The House will recall that other parts were the increase in the Bank Rate, the letter to the Capital Issues Committee and the use of the Exchange Equalisation Fund.

This Order, the intention of which is to moderate excessive home demand, is in the interests of our balance of payments and should help to balance our external accounts. It does not indicate any animus whatever against hire purchase as a form of trading. On the contrary, hire purchase has a permanent and useful place in the economy. It has been recognised and dealt with in permanent statutes. The Hire-Purchase Act, 1938. was mentioned by the hon. Member for Cheetham (Mr. H. Lever), but he must have been absent for a period when an amending Act was passed in 1954, because he overlooked the existence of that Act, the passage of which showed that this Parliament, too, has had in mind the wisdom of keeping the permanent legislation up to date.

The reason my right hon. Friend foreshadowed a further Act is because we prefer to act in these matters under permanent powers and not under Defence Regulations. During the past year there has undoubtedly been a rapid increase in the volume of outstanding credit. I admit the difficulty of giving exact statistics. I will have more to say on the points raised by the hon. Member for Stechford (Mr. Roy Jenkins), who has taken an interest in these matters. I agree with him that there are no exact figures available of the outstanding credit. I cannot make a better estimate of the total outstanding, at the end of 1954, than has been made in the "Economist" and elsewhere as being between £350 million and £450 million—a probable increase during the year of about £100 million. The lendings by members of the British Bankers Association, recently published, is only one portion of that amount. I will deal with the increase in these figures later.

What does the Order do? It imposes control on the disposal and possession of certain goods under hire-purchase agreements, and under credit sale agreements, except those in which payment is to be completed in less than nine months. Let me say to the hon. Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) that a credit sale, the total period of which is less than nine months, does not evade the Order. It is deliberately allowed under the Order. As one of my hon. Friends said, in an intervention, the sum demanded is a good deal higher than the sum demanded for the longer periods. There was a similar exclusion from the last Order, and this is in no sense evasion. This Order does not cover simple hire. There are bona fide cases of the hire of goods of which motor-car hiring is a well-known example.

Let me say, and I am sure that hon. Members on both sides have often given the same advice, that any purchaser, or hire purchaser, will be well advised to look at the written document and make sure about the nature of the transaction into which he is entering, for example, whether the goods will be his property at the end. If the transaction is really hire purchase, but is deceptively disguised, I do not think it will be found that it is outside the reach of the law.

Regarding the goods in the Schedule; these may be roughly described as durable consumer goods. The earlier Orders, which were removed in July, have been mentioned. There were two special differences between these and the present Order. The range of the goods now covered is wider, but the terms are less onerous. The deposit is 15 per cent. instead of what was usual in the former Orders, namely one-third. The period for payment is normally two years instead of 18 months. It is four years in certain cases—cookers, water heaters, and wash boilers—set out at the end of the Schedule.

The need for this Order does not now rest, as did the need for the former, on the need for restricting the use of metal-using goods that were required for defence and export. The aim of the present Order is to reduce internal demand roughly over the whole field of durable consumer goods. We do not believe that it is calculated to cause hardship, but it will oblige people to find the money rather more quickly.

Mr. Roy Jenkins

Could the hon. and learned Gentleman tell us by approximately how much it is expected to reduce the demand?

Mr. Strauss

I do not believe that an exact calculation will be possible, but I think that the hon. Member will have no difficulty whatsover in realising that there is a great difference between having to produce 15 per cent. deposit as a condition of starting to buy furniture and being able to get it without putting down any deposit whatever.

Mr. William Ross (Kilmarnock)

In making that assertion, is the hon. and learned Gentleman satisfied that there will not arise what happened in the case of a company in Ayrshire, about which I wrote to him, where people could not afford a deposit and were sent along the corridor to a financial trust belonging to the company which lent them the money at so much interest a week?

Mr. Strauss

Provided that people can make a deposit in money, there is nothing to stop them borrowing the money in any way they like, but if they simply enter into a paper transaction where no cash is given at all—I cannot remember the case to which the hon. Gentleman refers, but there have been some cases of that sort—the transaction is hit by the Order and is illegal.

Mr. Ross

They might as well tear it up.

Mr. Strauss

Not at all. Whatever else the public does or does not know, it knows what is meant by borrowing from a moneylender. There is no deception about that at all. It is subject to its own laws which provide relief against unconscionable transactions and so on.

As far as this Order is concerned, the essential point is the deposit and the period of payment. Its effect on furniture has been considered in particular. I want to point out that there is not such an enormous difference between the deposit specified in the Order and the sort of deposit that has been customary before. During the long period of control of some furniture the deposit was 12½per cent. More recently the deposit recommended by the National Association of Retail Furnishers was 10 per cent. I think that the figure of 15 per cent., though undoubtedly a tightening of the terms and though undoubtedly more difficult for some people, is not such an unreasonable extension as to mean the sort of revolutionary change in the furniture industry that has been suggested in some quarters.

One hon Member mentioned caravans. The National Caravan Council has asked for the removal of all caravans from the Order. Some firms have suggested a three-year payment period instead of a two-year one for certain residential caravans costing between £600 and £800. These representations are being considered, but I cannot give a decision tonight. In general, I think we shall have to be convinced that there are very good reasons for making any exception to the Order, having regard to the general moderation of its terms.

It has been suggested in certain economic arguments that general credit restriction might be sufficient by itself. That, of course, is a possible line for an economist to take, that once we had general restriction through the Bank Rate and so forth, nothing further would be necessary, but in the opinion of the Government this Order reinforces the general restriction. The hire-purchase companies have funds derived from sources which are outside those general restrictions, and the effect of the Order is to concentrate the restrictions on durable consumer goods, thus leaving more of the restricted credit available for industrial investment.

The hon. Member for Stechford and others were quite right, we have not got the information we should all like on statistics. It does not follow that we would be wise in getting it if the method of getting it imposed a very great burden on the trading community What we are urgently seeking to do, and hope to succeed in doing, is to devise a scheme by which, by making representative inquiries, we can obtain a much better idea of the total amount than we have at present.

There is no doubt at all about the very great increase in hire-purchase trading. Sales of articles normally sold by hire purchase jumped very sharply—radio, television and electrical goods are examples. But, suppose for a moment we did not have all these figures, suppose that there was not that demonstrable proof but that it was merely a matter of judgment and commonsense. I think my hon. Friends have some reason to trust the judgment of the Chancellor of the Exchequer in these matters. The new figures from the banks of advances for hire purchase show a sharp rate of increase—50 per cent. in the last three months—and the total figure trebled in the last 12 months.

Mr. Jay

Even though, admittedly, there has been a very large percentage rise, what is the evidence that this is really an overriding element in the economy as a whole?

Mr. Strauss

I did not say it was, and neither did the Chancellor. What was said by the Chancellor was that hire purchase had got out of hand and needed to be curbed, not to the extent of being done away with but by being subjected to moderate restraint. The moderate restraint to which it has been subjected is not so very different from the restraint already practised by many of the best traders in these matters.

I will not give such figures as are available; they have been analysed in the "Economist." They come mainly from Hire Purchase Information Ltd. as the hon. Member for Stechford mentioned and from Radio and Television Retailers Association, annual figures of value published by the Gas Council and the British Electricity Authority and the balance sheets of companies. But I must say this in reply to one suggestion of my hon. Friend the Member for Kidderminster (Mr. Nabarro). Any annual figures are of course insufficient for the purpose we have in mind.

Mr. Roy Jenkins

I wonder if the hon. Gentleman will answer one question? He has indicated that steps are being taken to go some little distance towards closing the statistical gap. Has he consulted retail organisations, such as the Retailer Distributors' Association, who are primarily concerned, and has he got any answer from them?

Mr. Nabarro

My hon. and learned Friend will, I am sure, realise that he will get into a great deal of trouble with my hon. Friends and me if there is any suggestion made that we should follow the American system whereby every hire-purchase transaction has to be reported to a central statistical bureau, with the enormous amount of paper work that involves.

Mr. Strauss

For once my hon. Friend is less than fair, and he apparently did not listen to the earlier part of my speech with his usual attention or he would have noticed that I said we were very anxious to obtain this further information without an unnecessary burden on the trading community. That is why we contemplate getting voluntary representative samples by consultations with those concerned.

The hon. Member for Stechford asked me about our contact with retailers. Retailers are already voluntarily giving us, apart altogether from hire purchase, a certain amount of additional information for which we asked fairly recently. I think we can—and we are anxious to do this—obtain the information we still desire without a burden upon the business community.

Some hon. Members made a good deal of the point that this Government removed the earlier and different restrictions for the period they did, and now, when the position has changed, impose them again. This Government are not at all ashamed of taking such different action from time to time as may be necessary, and do not hesitate to do so even if such action may occasionally not be popular. That is why they differ so greatly from their predecessors, who allowed an appalling adverse balance of trade to get to disastrous dimensions without taking any steps at all to put it right.

Mr. Jay

Will the hon. and learned Gentleman answer the question actually asked? Why did the Government introduce relaxations after the situation had already begun to deteriorate? That is what we asked.

Mr. Strauss

There is no necessary connection between restrictions on the hire purchase of certain metal-using goods and some change in the gold balance. They are not necessarily connected at all. I do not know whether the right hon. Gentleman was or was not in favour of the removal of those restrictions at the time they were removed. Of course, the Government of which he was a member did not even put them on.

Mr. Jay

Is the hon. and learned Gentleman saying this Order has nothing to do with the balance of payments situation?

Mr. Strauss

Of course I am not saying that. I said precisely the opposite at the very beginning.

The hon. Member for Stechford asked me one important question, which may have been asked also by another hon. Member. He asked, were not the former restrictions, before we took them off, being defeated and evaded and made useless, and will not the present Order suffer from the same defects? The answer as to the former restrictions is in general, no. They were not useless, and this has been admitted by many hon. Members opposite, who all alleged a great change and increase in hire purchase the moment the restrictions were taken off. However, the hon. Member is right about the effect in one particular case. It was the case of The Queen against R. W. Proffitt, Ltd. That decision, which was given on 19th March last year, was undoubtedly awkward. There is no doubt about that. For technical reasons that decision could not be the subject of appeal, and before a test case could be brought the Order had been withdrawn. We have dealt with the serious difficulty raised by that decision by inserting some new words in the definition of "hire-purchase agreement." He will find them on page 3: .. whether on the performance of any act by the parties to the agreement or any of them or in any other circumstances. The effect of the addition of those words is to get over the possibility of evasion which was revealed by the decision in the case mentioned by the hon. Gentleman.

Mr. I. O. Thomas

Are we to understand from that explanation of this reversal of policy within a short period of a few months that, when these restrictions were removed, the Government concluded that the economic situation was favourable and that, now they are re-imposing these restrictions, they are doing so because they have concluded that the economic situation is getting worse?

Mr. Strauss

The hon. Gentleman nearly had a brain wave, but not quite. The reason why the Government have re-imposed these restrictions can be read distinctly in the statement of my right hon. Friend when he announced this. Although the fundamental economic position was better than it had been, my right hon. Friend was acting in time to prevent it from degenerating, which was in striking contrast to the Government which the hon. Gentleman supported so disastrously and for so long.

My hon. Friend the Member for Tynemouth (Miss Ward) appealed for the furniture trade. For the reasons I have given, I do not believe that the fears she expressed are well founded. I have dealt with the two points made by the hon. Member for Newcastle-upon-Tyne, East on rental agreements and credit-sale agreements for less than nine months—

Mr. Blenkinsop

Bicycles.

Mr. Strauss

Oh, yes, bicycles. There was a great deal of what the hon. Gentleman said about bicycles which was out of order, but he thought they were specially hit by the terms of the Order. I do not think that they are. He also seemed to think that people were evading the Order by having a scheme of credit sale contracts for less than nine months. Such contracts are not an evasion. My hon. Friend the Member for Altrincham and Sale (Mr. Erroll) under-estimated the possible danger of inflation. Of course the Government do not say that there is anything wrong with hire purchase agreements as such, but he will realise that if there is no deposit it is possible that there will be a certain strain of expenditure on goods made from imported supplies, and that if no deposit is given there will be extra money in the pocket of the purchaser for buying something else.

Mr. Blenkinsop

The Minister said that he was particularly anxious to stop credit schemes for which no deposits are demanded. Is not that a reason why action should be taken with regard to rental agreements?

Mr. Strauss

Rental agreements are not subject to the Order, and there is no reason why they should be, provided that the person well knows that he is going in for a rental agreement and will never get the property. If there is any question of misleading or fraud, there is the existing law.

To sum up, the position is that the Order is a useful addition to the general restriction through the Bank Rate. It reinforces that and operates in certain spheres where that would not necessarily operate. The right hon. Member for Battersea, North (Mr. Jay) spoke about bank advances for other things altogether. When he was reminded by my hon. Friend the Member for Edinburgh, South (Sir W. Darling) of the importance of the Bank Rate, the right hon. Gentleman said that we were not discussing the Bank Rate, but in fact he was discussing it very conveniently until he was interrupted by my hon. Friend.

The Bank Rate looks after a great deal but not everything. [An Hon. Member: "Dividends."] I would refer the House to the Answer which my hon. Friend the Economic Secretary to the Treasury gave on 3rd February. The right hon. Member for Battersea, North seemed to think that it was wrong that if people bought ordinary shares in 1938 they had now, as the Answer I mentioned showed, only lost half of the value of their money. He thought that they ought to have lost the lot. We disagree. For the reasons which I have given, we think that this is a good Order, worthy of the support of the House.

Question put and negatived.

Miss Ward

Hon. Members opposite have not the guts to vote when the time comes.