FURNITURE INDUSTRY (HIRE-PURCHASE RESTRICTIONS) (Hansard, 26 April 1956)

§ Mr. Victor Collins (Shoreditch and Finsbury)
After a long day of complicated argument, I now have to ask the Parliamentary Secretary to listen a little longer to an important subject, because it affects the employment of a considerable body of workers throughout the country. I refer to the effect of hire-purchase restrictions on the furniture industry. As I am a furniture manufacturer myself, I should like to declare my interest.
The House will be aware that when the D Scheme was abandoned, items of furniture which, under that scheme, had been tax-free became liable to 5 per cent. Purchase Tax. This meant that almost all furniture in the lower and middle price ranges became subject to an increase in price of 1s. in the £, which was a handicap to the industry.
Another handicap suffered by the trade was the Order, introduced in February last year, insisting on a 15 per cent. initial deposit on hire-purchase transactions. This has recently been increased to 20 per cent. This is now proving a serious deterrent to business, particularly in the case of young people setting up home for the first time.
The third, and very serious, burden was the Order, also made in February last year, forbidding the consolidation of hire-purchase agreements. This means that hirers cannot make additional purchases and add them to the first agreements without making a fresh deposit.
Last year, these regulations caused unemployment and short-time working from March to June in what is normally a busy time of the year. There was some recovery later, but output on the whole last year was well below that of 1954. This year the combined effects of the credit squeeze, the increased deposit charge and the Purchase Tax have been catastrophic. Unemployment and short-time working have reached levels greater 2126 than in any other industry, indeed greater than any experienced in this country since the tragic days of 1932.
The Minister of Labour and the President of the Board of Trade have tried to minimise the position or explain it away. Therefore, it is necessary to establish the facts. Normally, there are about 100,000 workers in the furniture industry. During the recent employment debate the Minister of Labour stated that only some 7,000 of them were on short-time. I immediately challenged that and pointed out that, according to a survey conducted by the National Union of Furniture Trade Operatives on 16th March, there were, out of 45,563 of its members—that is a very good and reliable sample out of 100,000–2,059, or 5 per cent., wholly unemployed, and 12,146, or 26½ per cent., on short-time. That is a total of 31½ per cent. wholly or partly unemployed, a very considerable percentage. I sent these figures to the Minister, who promised to sort out the discrepancy between his figures and those produced by the union.
The Minister wrote to me on 10th April and explained that the difference between the two sets of figures arose, first, because the Ministry figures were for February and not March, and, secondly, because he had excluded all firms with fewer than 11 employees. There is, of course, a considerable number of such firms in the industry, and that alone invalidates the Minister's figures. Thirdly, his officers had noted only whole days worked short, and had taken no account whatever of cases where fewer hours had been worked per day, or of production workers who had been compelled to reduce their output and earnings. It is much more convenient, particularly for small firms, when it is desired to work short-time, to have fewer hours per day. By that means they have their workers there every day and they are on hand if orders should come in. Fourthly, the Minister had excluded workers engaged in the manufacture of radio cabinets. This section of the industry has been very badly affected.
In other words, the Minister's letter was an admission that his official figures were completely and utterly false because they were based on inadequate premises, and his final guess that there were some 10,000 furniture workers on short-time 2127 has very little relationship to the unfortunate truth. I find it disturbing that a responsible Minister should boldly quote figures in this way when the data on which they were based were inadequate and, therefore, misleading.
On the 16th of this month, one month after the first survey, the unions completed a second survey on approximately the same sample of 45,292 members. This showed not 2,000 unemployed, but 3,025, or 7 per cent., wholly unemployed and 13,125, or 29 per cent., on short time. That is a total of 36 per cent. wholly or partly unemployed, a big increase on the previous month, thus proving that the situation is steadily getting worse.
I must emphasise to the Minister that the figures of 3,025 wholly unemployed and 13,125 on short time are not the total figures for the trade. That is the mistake which the Ministry made. These are the men wholly unemployed or on short time out of a total of only 45,000 furniture workers, and it is known that the situation is at least as bad throughout the industry. The total unemployment or short time is therefore around 36,000 out of a total of 100,000.
The Minister will appreciate that since most of the men on short time are working three days a week, and some only two days a week, it means that on 16th April there was the equivalent of 20 per cent. wholly unemployed in the industry. I am sure he will agree that this is justification for the statement I made a few minutes ago that the present situation is as bad as that in 1932. It must surely go beyond anything which the Government expected their policy to accomplish. Of course, if they desired to put one-fifth of the industry out of employment they will say so tonight, but I do not believe they did.
I want to emphasise that the position is not uniform throughout the industry. Some sections are harder hit than others. The largest firm in the trade is, nominally at least, still working a full week by storing a large part of its output in such storage space as it can get, including a a cotton mill. It is conducting an advertising campaign in the hope of sales materialising, but if they do not the results will be disastrous.
2128 The soft furnishing section of the industry is almost at a standstill. In Newcastle, they say that there is not a single firm which is working full time. In Liverpool, there is only one. Other towns say that the trade has disintegrated. Forty firms have closed altogether and others threaten to do so.
In my own constituency there are many furniture workers. One branch with 3,000 workers has 2,004 on short time and 173 discharged. That means that in that branch seven out of every ten men are wholly or partly unemployed. One shop sacked 240 out of 260 men and put the remainder on a three-day week. My hon. Friends and I have interviewed the union officials and the men, and I can assure the Minister that I am not overstating the case. These are the facts.
I should like to dispose very briefly of one or two suggestions which have been made by the Minister in respect to the industry. First, the President of the Board of Trade said that there is a seasonal decline in the furniture industry in March. That is nonsense. January is the quiet month. In February there is the furniture exhibition and that is followed normally by a period of full demand which goes on up to August. The only year when demand in March was less than in February was in 1953 when the Utility Scheme was abandoned in favour of the D Scheme and Purchase Tax, and in July last year when the 15 per cent. deposit was introduced. In short, the trade should be busy now and not slack.
Secondly, there is the allegation that the furniture industry has been overproducing. There is absolutely no basis for this assertion, because there are no figures for pre-war production by which a comparison can be made. The index of furniture deliveries which has been produced since the war, however, shows that, taking 1948 as 100, by 1953 there was a 48 per cent. increase. The Minister should ask, "An increase in what?" In 1948, the industry was on the points system, and subject to almost every imaginable restriction upon production. It was, admittedly, far below its normal output. Indeed, there was a restriction upon plywood until April, 1952, and up to the end of 1953 production was artificially curtailed.
2129 The year 1954 was the first fully free year, and in that year the index went up to 172. Last year, however, it fell back nine points, to 163. If anything, I would say that this is less than the expected level of demand under conditions of full employment. It is certainly not an expanding production.
What I have said proves that there is very serious unemployment, which is not due to a seasonal slackening in demand, and that furniture output has not expanded beyond the demand which can normally be expected. I therefore urge the Government to take swift action to lessen the over-stringent effects of their policy, which go far beyond what they could have intended for this industry. It is no answer to say that many of these men can find other work. Perhaps they can, but what work? Some of these men have become car washers and others park-keepers. They are very necessary jobs, but not of a kind which in the national interest, one would expect or compel craftsmen with, perhaps, 20 years' experience to take up. If they have to do those jobs it is a waste of the nation's manpower.
I want to make one or two suggestions. First, so far as I am aware, neither the trade unions nor the producers propose "no deposit" trading, but they submit that the initial deposit should be cut to 10 per cent. I most strongly urge that immediate steps be taken to end the prohibition of consolidation and hire agreements. Although these apply to all commodities on hire purchase, they really affect only the furniture industry.
People do not buy a second motor car, refrigerator or television set on hire purchase before they have finished paying for the first, but it is usual for people with small means, when furnishing a home, not to buy all their requirements at once but to make additional purchases after paying off part of the original debt. In this way they run into less trouble than they might do if they were persuaded to buy all their requirements at once, which is liable to happen under present conditions. As it is now, they must wait until the first transaction is finished, or pay another deposit for any new purchase. Many cannot afford to do this. In effect, this ban applies a 2130 quite unfair discrimination solely against the furniture industry.
I know that there are technical difficulties in removing the ban, but the industry will gladly assist the Board of Trade to find a way out of those difficulties. It could be provided that a further purchase must not increase the total sum owed beyond the amount of the original debt, or that there could be no additional purchase before a reasonable period had elapsed after the first transaction had been commenced. I hope the Minister will not say—as his right hon. Friend said in answer to a Question of mine—that this will mean a return to "no deposit" trading. That is a contradiction in terms, because they cannot add to the original agreement without having first paid a deposit on it. I hope that the Parliamentary Secretary can accept the principle of my argument and arrange for the resumption of consolidated agreements.
I also ask him to say that he will look into the question of retail profit margins. Under the Utility Scheme they were 33 per cent. Now they are 45 per cent., rising to 50 per cent., on top of factory prices. With Purchase Tax and now the 20 per cent. hire-purchase deposit, that makes a tremendous difference to people of small means who want to furnish their homes, particularly people getting new flats or houses and wanting to furnish for the first time.
I would remind the hon. and learned Member that the Board of Trade Inquiry into hire-purchase trade, which began last October—the Report is a most valuable document—revealed that only 3 per cent. of all the hire-purchase credit is attributable to furniture, compared with 72 per cent. for sales of cars, commercial vehicles, motor cycles, caravans, and so on, and 8 per cent. for radio. In other words, only 3 per cent. of all the hire-purchase credit is for furniture. That is a drop in the ocean. The slight easement which I have suggested cannot affect the Government's credit policy, but I submit that it can—and I hope the hon. and learned Gentleman will take steps to ensure that it will—restore to employment thousands of good craftsmen who are now standing idle through no fault of their own.

§ The Parliamentary Secretary to the Board of Trade (Mr. Derek Walker-Smith)
The hon. Member for Shoreditch and Finsbury (Mr. Collins) has presented the case showing the impact of the hire-purchase restrictions on the furniture industry and has made certain recommendations. As he will appreciate, the House decided on 12th March in favour of those hire-purchase restrictions, and we cannot debate that whole issue again; but, equally, we are in this difficulty—that we cannot consider industries in isolation in this matter. The hire-purchase operation is necessarily a general operation, part of a wider financial policy deriving from a broad national need, and it follows that if the immediate effects on any particular industry are unwelcome that is a matter for regret, but it cannot prevail against the national good.
I think it is important to see precisely what is the present position of the furniture industry in relation to the post-war years and, also, how far that is due to the causes to which the hon. Member ascribed it. He gave certain figures for unemployment—and his figures are based on a sample taken by the union concerned, N.U.F.T.O. The N.U.F.T.O. sample which he quoted shows that, dealing with the wholly unemployed, as distinct from those on short-time working, about 3,000 were unemployed. I am able to give the total figures in respect of unemployment. The number wholly unemployed is 2,324; temporarily stopped, 2,923; making a total of unemployed in the industry of 5,247. My figure is larger than his, because mine is the whole figure whereas his represents a union sample.

§ Mr. Collins
Does that include radio?

§ Mr. Walker-Smith
Furniture and upholstery.
The unemployment figures are, in fact, lower than they were in April and May of last year, although it is true that, apart from those two months, they are higher than they were in any month since January, 1953. But in the early part—the corresponding months—of 1953 and 1954, they were still well over 4,000, at a time when there were no hire-purchase restrictions in respect of the furniture industry; and the gap is, therefore, 2132 not very wide. Within the total of 5,247, the wholly unemployed, as distinct from those temporarily stopped, are now more than they were a year ago, in March, 1955, but they are slightly fewer than in March, 1954, when, again, there were no hire-purchase restrictions on furniture.
The hon. Member will appreciate that when we are dealing with short-time working we are not able to be on the same firm statistical ground as we are with unemployment figures. He has quoted a figure of about 13,000 from the N.U.F.T.O. sample, upon which he then estimated an increase to get the national position. As the hon. Member knows, and has been told in the House, the Ministry of Labour figure in this respect is now 11,000. He says that it does not take sufficient into account, but as we cannot be on a firm statistical basis in this, I must prefer on the whole, without for a moment underestimating the importance of short-time working, to base inferences more on the figures of unemployment which we actually know.

§ Mr. Collins
The Ministry of Labour expressly admits that its figure excludes the three very important sections to which I referred in my speech. It cannot be accurate.

§ Mr. Walker-Smith
The hon. Member may be right in saying that N.U.F.T.O. has been able to find people on short-time who do not figure in the Ministry of Labour's 11,000. It may be so. I cannot say that it is not so, because we are not on a firm statistical base in this respect.
Let us look at the regions concerned, namely, London and the South-East, which includes the hon. Member's constituency, the North-West, and the Southern Region, which includes High Wycombe. We have these figures, comparing the unemployed at 12th March with vacancies at 4th April in the furniture and upholstery trades—London and South-East, unemployed 2,298, vacancies 785; North-West, unemployed 726; vacancies 201; Southern, unemployed 162, vacancies 148. As one would expect, it is clear that the vacancies in the furniture industry cannot absorb all the unemployed, but the general position remains favourable in these regions.
2133 The figures for all industries were as follows: London and South-East, unemployed 49,578, vacancies 106,315; North-West, 39,650 and 46,500; Southern, 10,950 and 22,712.

§ Mr. Collins
All industries?

§ Mr. Walker-Smith
Yes, having given the position of the furniture industry I then gave the general position.
The hon. Member referred to the round figure of 100,000 employed in the industry. At the end of February, no fewer than 133,900 people were employed in the furniture industry. That is more than at any time between January and September, 1953 and substantially the same as in the period January to September, 1954. During both these periods there were no hire-purchase restrictions on furniture.
I do not use the phrase "over-production" which the hon. Member mentioned, but I think it is right that we should consider this situation against the considerable buoyancy in the industry between the years 1953 and 1955. The hon. Member has given the indices of production, which show the figures of 172 in 1954 and of 163 in 1955 compared with 100 in 1948. That works out at a quarterly average of deliveries in 1953 of £25 million, in 1954 of £28½ million and in 1955 of £27½ million.
Taking the fourth quarter of 1955, there were deliveries of £33½ million as against £35 million in the fourth quarter of 1954 and over £30 million in the fourth quarter of 1953. So the last quarter of 1955, although lower than the peak period, the last quarter of 1954, was substantially above the corresponding period in 1953.
On the question of the impact of these hire-purchase restrictions. I would like to pray in aid what was said at the conference at the annual meeting of the North-West Furniture Trades Federation in Manchester, as reported in the Cabinet Maker and Complete House Furnisher for 31st March, in which one representative said that hire-purchase restrictions were not wholly to blame for sluggish trade 2134 conditions; another said that the furniture trade's difficulties could be traced to an accumulation of circumstances; and a third said that there was a very slow but steady improvement in trade. So the latter did not take so pessimistic a view as the hon. Gentleman, who referred to it as "catastrophic."
The hon. Gentleman asked for a cut in the deposits to 10 per cent. and an end of the prohibition on consolidated agreements. On the question of the cut to 10 per cent., he will appreciate that the Order which this House passed on 12th March increased the deposit to 20 per cent., while for many other goods the figure is 50 per cent. It was already at 15 per cent., and neither the hon. Gentleman nor any hon. Member in the party opposite voted against the Order which imposed the 15 per cent. net minimum deposit. So it was a little quixotic and paradoxical for the hon. Gentleman now to ask for a cut to 10 per cent.
It is true that consolidated agreements are a form of no-deposit trading—not in the literal sense which the hon. Gentleman mentioned, because there is an initial deposit—but the added agreement, the second, is carried forward on the initial deposit, and to that extent it is a no-deposit agreement. It is clear that the end of the prohibition on consolidated agreements now would mean an extention of credit trading, at a time when the national interest has, unfortunately, demanded an abatement of credit trading in the interests of our general balance of payments position. I do not think that the figures as we have them tell such a melancholy story as the hon. Gentleman suggests, particularly when viewed against the buoyancy in the industry in the last year or two. In so far as there is a decline, it should not be—