HC Deb 04 June 1962 vol 661 cc28-30
The President of the Board of Trade (Mr. F. J. Erroll)

With permission, I should like to make a statement on hire-purchase controls.

The Government have decided that it is now possible to make some relaxation in the regulations under which a minimum deposit of 20 per cent. of the purchase price has been required in hire-purchase transactions. The control was reintroduced on 28th April, 1960. The maximum period for the payment of the balance due on most goods was extended from two to three years on 19th January, 1961.

I shall accordingly be laying before Parliament later today the text of an Order reducing from 20 per cent. to 10 per cent. the minimum initial deposit on all goods, except motor vehicles, which are at present subject to the requirement of a 20 per cent. deposit under the Orders controlling hire purchase and credit sales. These reductions will come into effect tomorrow.

The maximum period of three years for the payment of the balance of the purchase price will remain unchanged, as will the list of goods for which the minimum deposit requirement is already 10 per cent. There will also be no change m the Control of Hiring Order which lays down minimum advance payments for rental transactions.

The goods affected by this change include television sets, radio sets, gramophones, refrigerators and washing machines.

Mr. Darling

Is there any significance in the timing of this statement? As on a previous occasion when the restrictions were eased a General Election was somewhat nearer, has this statement any reference to the by-elections which are to take place this week? As the Chancellor of the Exchequer is still telling the trade unions that restraint cannot be eased and that we are not out of the wood yet and that the restrictions must go on in many respects, has this easing of hire-purchase restrictions any relevance? How does it fit into the pattern of the Chancellor's usual statements about restraint? Has the right hon. Gentleman had any requests from manufacturers for this easing, as many of them have stated that they like a 20 per cent. minimum deposit because it protects them from people who go in for transactions a little too easily?

Mr. Erroll

Of course, the statement has nothing to do with by-elections. The new rates, taken in conjunction with those which remain unchanged, represent a commercial pattern which is appropriate in present circumstances. Of course, I have received many representations from manufacturers at different times, and I believe that generally speaking this would accord with their wishes.

Mr. Cronin

Can the right hon. Gentleman say how the teachers, nurses and civil servants will be able to raise the money to make these payments?

Mr. Erroll

In those cases where the Order makes changes, they will have to put down only half as much money from tomorrow as was the case before.

Mr. Holt

What are the economic reasons for this relaxation?

Mr. Erroll

The economic reasons are that the position of the country is such that this change, which is mainly for commercial reasons, is justified. The Government have had it under consideration for some time.

Mr. Albu

In view of the recent increase of Purchase Tax on furniture, can the right hon. Gentleman say whether he as now prepared to abolish the ban on "add-to" agreements for furniture?

Mr. Erroll

We considered that proposal very carefully, but we cannot go so far as to allow "add-to" agreements to be reinstated.

Mr. Edelman

As the motor car industry is still working well below maximum capacity, why has that industry been excluded from the relative advantages of these changes?

Mr. Erroll

Because the commercial pattern which I mentioned justifies 10 per cent. for consumer durables but about 20 per cent. for motor cars.

Mr. S. Silverman

Can we now have an equally detailed statement about the Government's policy on cotton, and can the right hon. Gentleman tell us whether there is any hope of any early by. election in Lancashire?

Mr. Erroll

Only if the hon. Gentleman would care to resign.

Mr. Bence

Are we to take it from the right hon. Gentleman's statement that the state of the country is such that it is now quite safe for more and more people to get into debt but not safe to give them more purchasing power?

Mr. Erroll

Hire-purchase debt has been going down, and the economic position of the country is such that it is passable to allow this modest relaxation to take place.