New Clause.—(HIRER'S LIABILITY ON TERMINATION BY OWNER.)

HC Deb 24 June 1964 vol 697 cc407-55

Where the owner lawfully recovers possession of any goods subject to a hire-purchase agreement (in circumstances other than those referred to in section 4 of the principal Act), and in any action begun after the commencement of this Act the owner makes a claim for moneys due under the said agreement a provision of the agreement purporting to set out an amount (or a method of arriving at an amount) to be payable by a hirer to the owner in the event of such lawful recovery of possession, shall be enforceable if in the opinion of the Court the amount or the method as the case may be is reasonable having regard to—

1. (a) the hire-purchase price of the goods,
2. (b) the sums already paid by the hirer to the owner pursuant to or in connection with the agreement,
3. (c) the value of the goods at the date of recovering possession,
4. (d) the expenses incurred by the owner in connection with the recovery of the goods and their storage or disposal.

This section shall have effect notwithstanding the provision of section 5(c) of the principal Act.— [Mr. A. J. Irvine.]

Brought up, and read the First time.

3.41 p.m.

Mr. A. J. Irvine (Liverpool, Edge Hill)

I beg to move, That the Clause be read a Second time.

Mr. Speaker

I would propose that we should discuss with this new Clause, new Clause No. 12—"Rights of owner on repossession of goods.", which I would call for a separate Division, if desired—new Clause No. 13—" Amendment of Section 4 of the principal Act."—and Amendments Nos. 41, 110, 111 and 122.

Mr. A. J. Irvine

That will be convenient, Mr. Speaker.

The new Clause arises out of the decision taken in Committee to apply the true measure of damages principle to the termination of hire-purchase contracts. If there was a need to introduce that principle into the measurement of damages at all, it was obviously made greater by the wide extension of the financial limits which the Bill applies. The decision taken in Committee has undoubtedly given rise to a great deal of thought and discussion by all those concerned. In view of the number and scale of hire-purchase transactions and the number of families affected, this obviously raises a matter of very great importance indeed.

The Clause deals with the cases where the owner recovers possession of the goods in circumstances where the hirer has not exercised his right under the 1938 Act to terminate the contract by notice. I think that it is necessary to consider the point in the context generally of the rights and liabilities of the parties on hire-purchase contracts. I should like to have the opportunity to put forward the Clause with that background and in that context.

In 1938, at the date of the principal Act, Parliament was very vigilant towards the whole concept of hire purchase. The whole idea of hire purchase was more suspect then that it is now. I have no doubt that in giving the hirer the right to terminate the agreement by notice, as the 1938 Act did, it was felt that a rather drastic innovation was being made in the law. The 1938 Act imposed, as the price, so to speak, that the hirer had to pay for receiving that concession, some onerous provisions as to what he would have to pay when he exercised that right.

It could not be a sum less than half the hire-purchase price and, if the hirer had paid as much as half of the hire-purchase price, in addition to that the instalments due up to the date on which he gave his notice terminating the contract. This could operate, and in some instances did operate, harshly, especially when the chattel was delivered back to the owner in good condition, when it had been well looked after and had not markedly depreciated in value.

It is an important change in the law which has been effected. In Committee, we dealt with this matter by an Amendment to Clause 1 to introduce the principle of the true measure of damages in cases where contracts are terminated by notice given by the hirer under the 1938 Act. It may be thought, and I hope it will be thought, that that was a useful decision to have arrived at. It was felt that, if this adjustment was made, some regard should be had to the position of the owner, because the Amendment we achieved was confined to what the hirer would have to pay in the event of his terminating the contract by notice. It was felt that, some change having been made under that head, it was proper to have some regard to the owner's position. The need for this was felt to be all the greater because the effect of decided cases has been severely to limit the damages which owners can recover when hire purchase contracts are terminated.

3.45 p.m.

It was the desire of many hon. Members, in Committee, that this whole problem should be dealt with compendiously. It was this which led, as I understood—I want to put this perfectly fairly—some hon. Members opposite who were on the Committee to abstain and enable us to carry the Amendment which is now enshrined in Clause 1. We were glad of that. We felt considerable sympathy with those hon. Members opposite who abstained on this ground. Our common objective, a least in part at that stage, was to try to persuade the Government to make an overall and compendious treatment of this problem of damage and introduce in round terms the principle of the true measure of damages in a fashion which would do justice both to owners and to hirers.

The Government's reaction to this situation was to decide to accept the principle of our Amendment, which the House will see is now in Clause 1(5). I say "accept the principle", because there is later to be proposed from the Government side an Amendment to the wording of the subsection. The Government decided to accept the matter in principle and to leave the whole thing at that. This seemed to us not a proper course to take. We felt that it would not be playing fair to acquiesce in that way of dealing with the matter, nor would it be in the public interest so to do.

The Clause has the objective of endeavouring to do what we thought was acceptable in principle to large numbers of hon. Members on both sides in Committee, to make the true measure of damages principle more widely applicable than the Bill as it at present stands does. When the hirer is in breach of contract—that is the situation with which the Clause is concerned—and the owner recovers the chattel, the owner may sometimes, under the existing law and in present circumstances, be very severely disadvantaged in the assessment of the damages which he recovers.

The figure comprised in the contract setting out what is regarded between the parties to be an appropriate amount to be recovered by way of damages in the event of the contract being terminated may not be enforceable because it may be treated by the courts as a penalty and not as a genuine pre-estimate of damage. The courts have, perhaps, been particularly strict in their application of the concept of penalty relative to damages for breach of contract in hire-purchase transactions; no doubt because they have regarded hire-purchase transactions as having distinctive and special characteristics justifying that attitude towards them.

The Clause is designed to get over that difficulty. It is, on the face of it, designed to assist the owner and we think that this is the proper and right thing to do because we feel that if we are altering the law to make it possible for the hirer to pay rather less than at present when he terminates by notice—as we effected by an Amendment which the Government now acknowledge as part of Clause 1—we see no harm in giving this element of relief to owners. Indeed, we are inclined to think that, by and large, this is a fair thing to do.

It means that great importance will in future, if our proposed Clause becomes part of our law, attach to the form of the contract because the idea is to incorporate into the contract a pre-estimate of damage or, alternatively, a method of arriving at such an estimate—and that would be an amount which the owner would be entitled to recover or apply, as the case may be, in the event of a breach of contract. He would be entitled to recover that figure comprised in the contract as a pre-estimate if the amount of the figure or the method contained in the contract by which the figure was arrived at was regarded by the court as reasonable, having regard to the matters set out in the proposed Clause, the hire-purchase price of the goods, the sums already paid by the hirer to the owner pursuant to or in connection with the agreement, the value of the goods at the date of recovering possession and the expenses incurred by the owner in connection with the recovery of the goods and their storage or disposal.

The proposals in the Clause do not go the length which the finance houses desire. They would like, as I understand the position, to put their entitlement when they recover possession on all fours with what they are to get under Section 4 of the principal Act, as amended by Clause 1 of the Bill, when the hirer terminates by notice. At first sight, the House may think that there is a lot to be said for that view. It sounds all right. Yet a number of my hon. Friends and I have throughout recoiled from the idea that special safeguards to protect hirers—and remember that the 1938 Act was basically a consumer protection Act—should be treated as equivalently applicable to owners.

We take the view, for example, that the proposal in the Clause is preferable to what is proposed in new Clause 13, which purports to deal with the owner on the same basis as our proposals in the Amendment which the Government accepted, which is now part of Clause 1 and which deals with the hirer. I ask the House, in that connection, what is the result? It means—and this is a valid objection to it—that an owner who terminates the contract, perhaps at an early stage after a very small number of instalments have been paid, calls in aid, by virtue of new Clause 13, a process of compensation for himself which at any rate starts from the 1938 Act position; that the hirer must pay at least half the purchase price. I do not like that in principle.

It is perfectly true that, by the Amendment in Clause 1, that original 1938 provision is profoundly modified and on that modification would have to be founded any argument in favour of new Clause 13. None the less, I do not think that the assessment of the money on this hypothesis recoverable by the owner should start from a point so favourable to him, especially when that point was originally selected as part of a scheme of things designed to safeguard the hirer and to give him, as it did, a novel right to terminate the operation by notice.

I would have the same kind of criticism to offer to new Clause 12. That gives more aid to the owner than does the Clause that I have proposed. It does that because it offers damages to the owner apart, as I read it, from any pre-estimate that has been comprised in the contract. That seems to be going too far, although I do not think that at this stage I need say more. I venture to make the same criticism of the Amendment to new Clause 9 in the name of my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman). He is recommending a change in the wording of our proposed new Clause and—

Mr. Speaker

Order. I should have said that neither of the Amendments to the new Clause in the name of the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) is selected.

Mr. Irvine

I am obliged for that advice, Mr. Speaker. I was simply about to comment, in passing, that that Amendment seemed to have an effect similar to the effect that would flow from new Clause 12 and be open to the objection I have indicated; that it would be going somewhat too far in the direction of assisting the owner as distinct from the hirer and upsetting the rather narrow balance which hon. Members on both sides of the House would best like to achieve.

As I said earlier, the 1938 provisions relating to the payment to be made by the hirer on termination were not advantageous to the hirer in the same sense as was the grant of the right to terminate by notice. The benefit which the hirer got from the 1938 Act was substantially the right to terminate.

That having been given, the money terms attached to the right of termination were fairly onerous upon him. Even though, by virtue of changes made in the Bill in Committee, we have adjusted them so that they may be more favourable to the hirer, I still do not think that they necessarily provide the right starting point from which to measure the owner's damage.

4.0 p.m.

It is arguable that something on the lines of new Clause 12 or new Clause 13 may be better than simply leaving this whole problem alone. As to that, we reserve our position. Be that as it may, the best way of effecting the purpose which is so widely held in different parts of the House is by the language of our new Clause, which we regard as striking the right balance,

I trust that in future an objective historian will note that in this matter of rewriting the law relative to damages on the breach and termination of hire-purchase contracts, a tired Government left it to the Opposition to do the constructive work both of finding out, recommending and formulating the appropriate remedies for faults in the existing law which called for remedy.

Dr. Reginald Bennett (Gosport and Fareham)

It is not in order for me now to move either new Clause No. 12 or new Clause No. 13, in my name, so I will merely animadvert upon them. I am pained, if nothing more, to find that in a matter in which the consciences of no less than 20 of my honourable colleagues on this side of the House are exercised to the extent of having put their names to a Clause to which my name is the first, my right hon. Friend the Secretary of State should not be present to discuss the matter.

I am very upset about this. I do not accuse my right hon. Friend of discourtesy to me—1 have had the benefit of long discussion with him in his room on this subject; but when many of my hon. Friends on this side who have not taken part in any of the former stages of the Bill have attended to listen to the debate to hear discussion of this serious matter, on which it is clear that the consciences of my colleagues are divided, to put it mildly, my right hon. Friend should be here to state his case. I say this without insult to my hon. Friend the Parliamentary Secretary, but this is a grave matter and I am sorry.

As on Second Reading, I should declare a financial interest in the industry. I repeat, however, as I said then, that I hope that this interest enables me to have knowledge on a subject which so many of my hon. Friends have discovered to be too abstruse for them to attempt to delve into and that it does not cloud my judgment of what is right and what is equitable.

The hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) has expounded the principle to which the new Clauses seek to give expression. I do not believe that it can be imputed to self-interest on the part of hire-purchase companies that this type of adjustment in the case of broken contracts is brought forward. I have heard that imputation made, but it is unworthy and I will seek to explain why by saying that it is not only the hire-purchase industry which seeks this principle. As the hon. and learned Member for Edge Hill said towards the end of his remarks, my new Clause No. 13 represents the common denominator of opinion of the finance houses. New Clause No. 12 is by no means acceptable to them. If it seems to the hon. and learned Member to favour the owners or finance houses more than his own new Clause, it may do in one respect, but in another respect it does not, since my Clause seeks to be permissive and a guide to the courts whereas the Opposition new Clause is mandatory.

In any event, what I seek to establish is that this is not a matter of sectional interest. If it were, the House would be justified in affording it scant regard as being a self-interested manoeuvre. I should, however, like to point out some of the disinterested bodies which have expressed themselves on this subject, and they have usually done so fairly strongly. Before doing that, I should, perhaps, draw attention, as the hon. and learned Member for Edge Hill has done, to the provisions at present in force under the 1938 Act, as modified in 1954, that on the termination of a contract by the hirer the sum payable to discharge the whole obligation shall be 50 per cent. of the total charge.

There are many other hon. Members who will be able to confirm this with far more active knowledge of the running of the industry in detail than I can do, but I would say that this is, in the words of the Molony Committee, "rough justice". The 1938 Act has outgrown its strength. The scope of the industry has outgrown the scope ever envisaged in the 1938 Act, which, we know, as a Private Member's Measure and was undertaken in the diffident way that we private Members have to undertake these things in order not to cut across the entrenched legislation of the country too grossly.

The settlement of 50 per cent. could bring the grossest injustice to a hirer, especially if there is a termination in the earlier part of a contract when the hirer has paid a deposit and only a few instalments. It will, no doubt, be said that the reputable hire-purchase companies would never seek to press for the full 50 per cent. charge, because it must be remembered that when the first Act originally became law, the maximum charge under that Act was £50.

I thank my right hon. Friend the Secretary of State for having arrived.

In 1954, that figure was raised to £300, which is a multiplication by a simple factor of 6. In the Bill, it is sought to put it up to £2,000, which is a multiplication by something like 40. Surely, what is rough justice in a sum of £50 becomes savagery in a sum of £2,000. That is why I believe that the attempt to preserve this undoubtedly worthy legislation in its present form is misguided.

It is also inevitable—and this is where a sectional interest may be pleaded—that owners can be let in for some serious losses under the sort of guidance which the courts at present receive. One might get judgments which allow the hire-purchase companies to suffer some really heavy losses which they cannot be said to deserve. There is usually a great deal of impatience with hire-purchase companies, but I have two examples of judgments which illustrate the sort of thing I mean.

One case involved a washing machine and fittings at a hire-purchase price of £114. The loan began in February, 1960. By January, 1962, £66 had accrued due and £28 had been paid, so £38 were in arrear, the unpaid balance of the hire-purchase price being £76. Termination took place in January. No offer was made by the hirer. A summons was issued and in July, 1962, an order was obtained for the return of the goods but was suspended on payment of the unpaid balance plus costs by instalments of £2 10s. a month. No payment whatever was made. The goods were repossessed in November, 1963, and handed to the plaintiffs, who were able to realise only £6 10s. on the goods. The company therefore sustained a loss of £70. I will not go into other cases. Other hon. Members can reproduce many.

It is true to say that these companies are well able to afford these losses. Perhaps they are, but is it right that they should? By leaving this legislation in its present form, we are allowing injustice, admittedly to people who are not quite so much in need of protection as the hirer, but we are still allowing injustice to occur. I do not think that this House wishes that to happen.

Nowadays, with the prolongation of this legislation, we have to acknowledge that the people who undertake hire purchase have no protection against the man who signs an agreement, puts down a deposit and thereafter pays no instalments and does not intend to do so. The answer which is usually given is that the hire-purchase companies should select their customers better. Any form of fraud could be brought home to the person who has been swindled with the remark, "Why did you trust the man?" We would not need a police force if that were a valid comment. My view, therefore, is that this 50 per cent. legislation is not the answer, and that is why I have put down my new Clause.

I have said that other disinterested bodies have expressed themselves strongly on the matter. It was in paragraph 531 of its Report that the Molony Committee mentioned for the first time that the 50 per cent. was "rough justice" under the legislation as we know it today. I should, perhaps, read in detail and in full paragraph 548, in which the Molony Committee reached its conclusions on this matter. It stated: In theory, a more equitable result would be achieved by restricting the owner's right of recovery to the hire-purchase price less money received from the hirer and the value of the goods retaken or returned. Such a provision would inevitably lead to disputes as to whether the true value had been obtained on realisation, with subsidiary issues as to the necessity to spend money on repairs etc. We prefer the simpler restriction to be found in Sections 4 and 5(c) of the Act That is the full record. I direct the attention of the House to the Molony Committee's statement that In theory, a more equitable result would be achieved … Surely, it is for the House to attempt to translate theory into practice. I say, as I have said before, that I do not believe it to be entirely beyond the wit of Parliament to devise a way in which that theory could be properly carried out and translated into practice.

4.15 p.m.

The disinterested bodies, other than the Molony Committe, included the Law Society, which said that it was in favour of this step. It argued this with legal validity and came to the following conclusions: Where termination takes place under the agreement itself the owner's damages should be confined to the unpaid balance of the hire-purchase price less:

1. (i) the value of any goods repossessed,
2. (ii) any fee payable for the exercise of the option to purchase,
3. (iii) a discount for acceleration of payment."

This is broadly parallel with what I have attempted to move in the new Clause.

The Economist, which is not generally biassed in these matters, published on 1st February an article on this subject of hire-purchase reform. The first sentence of this article reads: Relentlessly, Britain is moving nearer the wrong sort of hire-purchase reform. It argues the point closely and refers to a decision under the present legislation. Towards the end the article reads: This decision does pinpoint the need not merely to amend the Bill to incorporate the principle of true damages—which is still the fairest balance between hirer and company—but also to provide machinery to make sure that principle works. An amendment might, therefore, be accompanied by an obligation on the part of the finance house to show—in court if necessary—that a reasonable price was obtained. From the few quotations which I have brought to the House it will be seen that neutral and uncommitted opinion feels strongly on this subject. There has been no doubt about the feeling in Parliament. In another place, Baroness Elliot, who, as we all know, represents the feelings of the Consumer Council, spoke firmly in favour of this principle, and Lord Chelmer, who knows the subject, did so from the Government benches. There were many speeches. These speeches were made on an Opposition back bench Amendment. The hon. and learned Member for Edge Hill, in Standing Committee on the Bill, without any personal approaches having been made, apart from the speeches of my hon. Friends, abstained from voting for the status quo when a group of Amendments similar to these new Clauses was before the Committee.

I do not want to go on too long, although this is a long and complex subject. My own attempts to champion this principle started by my doing what the Economist so firmly recommended in its article—attempting to produce the machinery by which this should take place. I moved a new Clause in Standing Committee which was, I agree, most compendious, but which had an automatic scheme by which, with equity between the parties and agreement by both, a car, or whatever it may be, could be valued at the time of repossession and the value of the goods taken into account.

The argument was that if one had a motor car which had been burnished every day by a proud owner who had since come on evil days and who had been unable to complete, it would be worth far more than a car which had been taken by a rascal who had never intended to pay for it, had been kicked around and run into the ground, never cleaned, and allowed to rust. Surely there should be some reward for virtue on the part of the hirer. We should take notice of the hirer's own efforts.

In Standing Committee I moved that new Clause, and it included the machinery by which this should be brought about. As those who were present know, this was turned down, and I withdrew the new Clause in order that perhaps at a later stage, this afternoon, the principle could be discussed without being shut out by having already been discussed upstairs.

To try to meet the Government's reluctance to adopt this principle, I have abandoned position after position. Not only does the new Clause which I have here today fail—and I am only too well aware of the fact—to contain the machinery by which the automatic and just appraisal of values between the parties could be arranged, but I have accepted automatically, therefore, that the matter must go to court. It was thought very desirable that litigation on this subject should be minimised, and that therefore we should attempt to keep these cases from constantly being taken to court, by making an equitable settlement by this arbitration.

Under the new Clause the cases would go to court, but there is not an absolutely stringent presumption on the court, for it is agreed that the court, if it thinks equitable, should estimate the measure of loss. I prefer that phrase "measure of loss" to the phrase "measure of damages", which has a dual meaning. The assessment of the measure of loss would be at the judge's discretion.

I have done all this progressively to try to meet the Government, and on this sort of thing I am always prepared to compromise although not to abandon the principle. I hope that it is not too late to ask my right hon. Friend to accept the new Clause. I know that he has not felt inclined to do so in the past. But I hope that it is not too late to ask him to accept it, because if he does not, I shall deplore his decision exceedingly, and I shall repeat that we have made a wrong decision.

Mr. David Weitzman (Stoke Newington and Hackney, North)

Frankly, if any of the three new Clauses were accepted I think that the position in law would be greatly improved, but I support the new Clause moved by my hon. Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine). As he pointed out, an Amendment has already been made, which is Clause 1 (5), which deals with the position of the hirer, and I think that the amendment contained in that Clause results, to a certain extent anyway, in the acceptance of the principle that the true measure of damages is the test.

Now we have the case in the new Clause in which the owner recovers possession other than under Clause 4. The question is, to what sum should he be entitled because of the hirer's default? The new Clause says that if there is a provision in the hire-purchase agreement setting out the amount or method of arriving at the amount, that provision is enforceable only if the court thinks it reasonable, having regard to the matters set out in paragraphs (a), (b), (c) and (d). That seems to me to be right. Faragraph (a) is the hire purchase price of the goods". Paragraph (b) is the sums already paid by the hirer to the owner pursuant to or in connection with the agreement". Paragraph (c) is The value of the goods at the date of recovering possession". Paragraph (d) is The expenses incurred by the owner in connection with the recovery of the goods and their storage or disposal". In effect, that lays down the factors which matter in assessing the damages, and it puts in legislative form what I think are the material factors which go to show what is the true measure of damages. On Second Reading, I put forward a plea for the adoption of this principle. Why is it right to do so? Why is it right to adopt the principle of the true measure of damages? I am sure that the House appreciates the difficulty which exists today in that, clearly, the decisions in this branch of the law appear to be manifestly unfair.

Lord Denning, in the case of Financings Ltd. v. Baldock, set out that difficulty very clearly, and I hope that the House will forgive me if I quote from part of his judgment because it illustrates the difficulty. As reported in The Law Reports, 2 Queen's Bench, 1963, on page 113, he said: But while those cases can be distinguished on the ground that they were cases of repudiation, I must say I am disturbed about the assessment of damages in them. Take the present case. A hirer does not pay two instalments, whereupon the owners retake the vehicle. There is no repudiation. The damages are limited to the unpaid instalments with interest. But take another case. If he had been more courteous and had written: ' I cannot pay any more instalments ', that would have been a repudiation and the damages would be multiplied ten-fold. It seems that in the ' repudiation ' cases the damages were calculated on the basis that the hirer had bound himself by a firm contract to pay all instalments up to the very end—indeed, as if he had made a firm contract to purchase—and had repudiated it. No regard seems to have been paid to the fact that the hirer had the right to terminate the hiring at any time and thus bring to an end his obligation to pay any more instalments. The Master of the Rolls went on: I should have thought that, on this account, he would not be liable for any more damages than if he had himself given a notice to terminate, and that if he had given notice himself, the damages would be limited to the breaches up to the date of termination and no more: unless, of course the owners could rely on the 'minimum payment' clause. As a matter of principle, I should have thought that the damages should be the same in either case, whoever terminated the hiring. I say no more on this point, however, because it does not arise for decision today. There we have set out, in the language of the Master of the Rolls, the real difficulty which exists today, and unless some alteration is made in the Bill about the law, that difficulty will continue. Personally, I feel that in all cases the proper way to deal with a breach is by the court being asked to assess the damages on a common law basis. That would get rid of any assessment on any artificial basis, and it is because I think that the new Clause moved by my hon. and learned Friend the Member for Edge Hill sets out that principle that I support it.

I put down two Amendments. I recognise that I cannot deal with them, but I want to say something about the matter in them in criticising these Clauses. As the new Clause stands—and this applies equally to new Clause 12—one objection appears to me to be that new Clause 9, moved by my hon. and learned Friend, clearly says that if there is a provision in the agreement setting out a sum of money to be claimed or the method by which it shall be claimed, that provision shall be enforceable if the court thinks it reasonable.

But that leaves a gap—in this way, that if the court does not think is reasonable, it is left to the law as it stands today. I think, frankly, that some provision ought to be made by which the court has power to award a reasonable sum. This is not a point which I want to elaborate. The argument has been gone into again and again. It is strictly limited in this way: clearly an injustice exists today, as is shown by the decided cases. I am sure that the Government will take the view that this is not a party matter and that if it is a real injustice, it ought to be cured. The way to cure it is to accept the great weight of opinion which says that on a principle of common law the true measure of damage ought to be ascertained in that way.

I hope that the Government will accept the Clause which has been moved by my hon. and learned Friend.

4.30 p.m.

Mr. Iain Macleod (Enfield, West)

I am not a director of a hire-purchase company, but I am of a bank which has one of the most important finance houses in the country amongst its subsidiaries. I am glad that my right hon. Friend the Secretary of State for Industry and Trade has come to listen to, and I hope to take part in, this debate, for this is perhaps the most important issue left to decide on the Bill.

Although I was not a member, I followed very carefully the proceedings in Committee upstairs. It genuinely was an all-party Committee in the best sense of the word. But the House is now in a dilemma, and the dilemma was put very clearly by the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine), although he threw a couple of minutes' worth of party bricks at the end. But who am I to complain about ending a speech with partisan observations?

I believe that in general the good firms have little, except a lot of paper work, to fear from the Bill. This is always so. The standards for which we can legislate are never the standards of the best. If we take the Factories Acts, for example the standards of safety that we demand are miles below those which the best fact Dries would themselves carry out, and, equally, they are miles above the standards of the worst. In practice, I do not think that any reputable company would pursue up to the 50 per cent. if, in fact, its loss was less.

Although I have declared an interest, I am more concerned about this matter as a Parliamentarian than in any other capacity. Part of the difficulty, I am bound to say with regret, arises from the suspicious attitude—and I use the most amiable term that I can—of the Parliamentary Secretary, during the Committee stage, towards the finance houses. One sentence from the beginning of his very first speech illustrates that. He said: Naturally, in looking to the protection of the consumer we must see that we are not grossly unfair to the other party."—[OFFICIAL REPORT, Standing Committee F, 27th February, 1964; c. 36.] That is a poor aim for the House of Commons. I cannot believe that we should aim at anything less than being fair to all parties if we can when we legislate. His is an opinion which is shared by legal luminaries, and in a recent case concerning the subsidiary to which I lave referred judgment was given on a car at a rate of 1s. a month, which would mean that it would take 279 years to repossess that car on the capital loss alone—a length of time which I think most people would regard as excessive.

I know, because I have heard my right hon. Friend speaking at the Finance Houses Association dinner, that he regards the work which the finance houses do in this field as very important indeed. I think, therefore, that we should look at this concept of rough justice—this is the real problem behind these new Clauses—with the intention, if we can, of producing something that is fair to everybody. If that can be done, it should be done.

We—when I say "we" I mean the bank of which I am a director—have interests in this field in Australia, Canada, New Zealand, Cyprus, the Lebanon, and Switzerland. In every one of those six countries there are clauses either as to the true measure of damage, or a similar provision, and in many other countries, of which I have no particular knowledge, but I know that the United States is one, this is also the case.

The method that we have in this country, far from being normal, is, anyway within the limits of my knowledge, abnormal, and, I am sure, unfair, because what might be rough justice where perhaps shillings were concerned under the 1938 Act, is certainly very difficult to accept when hundreds of pounds can be involved, as they are under the Bill. It is also true, as my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) said, that many bodies not conceivably connected with this industry, such as the Law Society and the Consumer Council, have expressed the view that if possible machinery should be devised.

The point that I particularly want to put to my right hon. Friend is that if we reject all these new Clauses—and this is why I said that I am concerned more than anything else as a Parliamentarian—we shall thwart the intentions of the Committee upstairs, because it is clear that on the relevant Amendment moved by the hon. Member for Sheffield, Hillsborough (Mr. Darling) a majority of Tory back benchers abstained, having heard the arguments of the Parliamentary Secretary, and having heard the debate. Throughout the long discussion upstairs, I think that not one hon. Member on either side of what I have described as an all-party Committee spoke in support of the point of view of the Parliamentary Secretary, and so far at least no one has done so in the House this afternoon.

The expectation and belief of both sides in Committee upstairs—I agree that there was no pledge; I am not suggesting that for a moment, and I see that the Opposition Front Bench agree with me—was that this matter would be put right on Report, and that having brought off, as it were, one leg of the double upstairs, at least the other leg would come home this afternoon. It may be necessary—indeed, it has been—to reword here and there, but that always happens. At the moment, we are left with one foot on the ground and the other in the air. It is only the Secretary of State for Industry and Trade who can rescue us from that awkward position.

I agree with the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) that any one of these new Clauses will improve the Bill, and, therefore, the law as it stands. I say, in passing, that I hope that in due course we can bring together all the law on this subject which is getting extremely confused; but that does not immediately arise. For myself, unlike the hon. and learned Member for Stoke Newington and Hackney, North, I prefer new Clause 12 to new Clause 9, but I agree that either would improve the Bill.

I hope that my right hon. Friend will agree that I have spoken as moderately as I can on this subject, which is one on which I feel very strongly. I hope that he will rescue the House—and I mean both sides of the House, or anyway several Members of it—from what is an embarrassing position—a position which could have been avoided if he had devised and tabled an adequate new Clause on true measure of damage; and I have shown how simple many other countries in the world find this to be—by accepting one or other of the Clauses under discussion. I hope very much that he will do so.

Mr. John Robertson (Paisley)

My dislike of the new Clause is exceeded only by my dislike of the Bill, but I should like to point out that the provisions in Scotland in respect of hire-purchase are superior both to the Bill and to the new Clauses.

I think that some of the difficulty is due to the confusion which arises from the two questions involved in the Bill and in the new Clauses. The right of termination is one, and, having dealt with the right of termination, we go on to consider what would be a proper settlement on termination. Unfortunately, the Bill deals with the two questions in the same way. It says that when 50 per cent. has been paid the hirer has the right of termination, or if he terminates he must pay 50 per cent. One does not follow from the other.

In the Scottish Act of 1932 the right of termination is granted when one-third of the hire-purchase price is paid. But this does not mean that having paid one-third the hirer is completely absolved. The courts can judge whether or not the damage to the article exceeds "reasonable wear and tear". That meets the point made by the hon. Member for Gosport and Fareham (Dr. Bennett).

This is an important point. It was said in Committee that Scotland will suffer in any case from the passing of the Bill. We think that the present law of Scotland is superior to that of the 1938 Act or to the new Bill. That being so, if we must accept the 1938 Act and the 50 per cent. payment provision as a right of termination, we would prefer to see new Clause 9 accepted. There is not much difference between its provisions and the provisions of new Clause 12, but it gives a little more protection to the consumer. The other new Clause looks at the question from the point of view of the finance houses.

The instances referred to this afternoon concerning the losses incurred by finance houses could not occur in Scotland because there the hirer would be sued for arrears of instalments. A binding order could be made, and this could be repeated time and time again, so that the hirer would never clear the debt. Finance houses in Scotland therefore have certain advantages in that respect, although there is no imprisonment for debt there. This is a sort of quid pro quo.

What displeases me about our whole discussion is that Scottish practice has been completely disregarded. No one has thought fit even to discover what it is. Hon. Members opposite have merely brushed it aside without a second's thought. I take a poor view of this, and at a later stage I shall have something to say about it. We could have used the experience of Scottish law and the practice of the Scottish courts in this matter to evolve better provisions than are contained in either of the new Clauses.

The right hon. Member for Enfield, West (Mr. Iain Macleod) referred to an order being made for the payment of 1s. a month in respect of a motor car. This is a measure of the ability of the hirer to pay, and such a situation arises only through the fault of the finance company. Finance companies stand back from these transactions and allow their agents and dealers to sell indiscriminately That is the real evil of the system They make no effort to discover the credit-worthiness of hirers. They are not interested. They have people and agents all over the country pushing goods on people who obviously cannot afford to meet their hire-purchase commitments. The fact that courts give judgments of the kind referred to is proof of my point. We should not offer too much protection to the finance houses.

They have far too much power in court as it is. I would like to see them compelled to test the credit-worthiness of the people with whom hire-purchase contracts are made. They should check the agents and dealers who are selling goods and making contracts on their behalf. At present they do not do this to a sufficient extent.

As I have said, I do not like any part of the Bill, but if we have to accept the existing English legislation as laid down in the 1938 Act in place of Scottish legislation, I would prefer to see new Clause 9 added to the Bill. Then courts would at least be able to make some measure of judgment which would not be unfair cither to the owner or to the hirer.

4.45 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

This is not a branch of the law about which I know as much as I should. Certainly, I do not know the law of Scotland on the subject. My concern is to ask my right hon. Friend two questions about the Bill as at present printed. I was disturbed by the example given by my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) relating to the motor car. That leads me to my first question.

Let us suppose that there is a hire-purchase agreement for the sale of an expensive motor car—because a £2,000 motor car is an expensive one—and that after one or two instalments have been paid the hirer, who is a person of no responsibility, having driven the car wildly and damaged it considerably, if not wrecked it, does no more about paying instalments, and eventually the owner treats the vehicle as recoverable, as he would normally be entitled to do.

Under the terms of the Bill, is it the case that in normal circumstances he will be able to recover a maximum of only £1,000, even though the agreement was in respect of a £2,000 car which may now be worth only £100 as scrap? Is that the case even though the hirer is a person of substance and is quite well able to afford the full measure of damages as we know them under common law?

My second question is this: would it make any difference if, instead of being an irresponsible person, the hirer had shown some vestige of responsibility by writing to the owner or the finance house and formally repudiating the contract, saying that he was not interested in going on with it and that he wished to return what was left of the motor car and regard the contract as at an end—that is, legally to repudiate the contract?

From the observations of the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine), I understood that as a result of an Amendment in Committee the position would be quite different in the latter case. In that case, although the hirer would have gone through the hoop of repudiating, and would have behaved rather better than the man in the first instance, his liability would be considerably greater. If that is so, it is a paradox of such a nature that it puts a premium on bad behaviour. I cannot believe that that can be right.

It is for that reason that I ask my right hon. Friend to deal with the two questions that I have asked. His answers will very much determine my attitude to the situation.

Mr. John Silkin (Deptford)

It is with some diffidence that I endeavour to follow the remarks of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). The answer to his problem lies in Section 4(2) of the principal Act, which provides that Where a hire-purchase agreement has been determined under this section, the hirer shall, if he has failed to take reasonable care of the goods, be liable to pay damages for the failure. I agree with my hon. Friend the Member for Paisley (Mr. J. Robertson) about the cases where finance houses find themselves receiving only a few shillings a week or a month in respect of a hire-purchase debt. That situation arises from an imperfect use of hire-purchase information, and if they suffer in this way they have only themselves to blame. At the same time, there is merit in the argument of the finance houses that the balance under the Bill is not fair to both sides. If the hirer terminates the agreement, Clause 1(5) will help him, because it will do two things.

It will enable him to tell the court, "The exact measure of damage which has been suffered"—or the loss; one hon. Gentleman preferred the word "loss" to "damage"—"is all that can be demanded of me." At the same time, it limits this exact measure of loss to 50 per cent. I do not disagree with that. It imposes a maximum which I think is right and was the original intention of the 1938 Act.

In our judgment of the Parliamentary Secretary we ought to remember that he reminded us over and over again during the Committee stage that this was a consumers' Measure and was not intended purely to benefit the finance houses. I think it just and proper that the other side of the equation should also be agreed, particularly as during the Committee stage many hon. Gentlemen abstained from voting on the basis that a full and adequate consideration of the whole problem of true measure of damage would be given by the Board of Trade and—if I may put it in this way—the Board of Trade would do the homework for us when it came to Report stage. In fact, hon. Members on both sides of the House appear to be doing the homework for the Board of Trade and I regret that. We have to remedy this situation and balance the equation.

As I see it, the alternatives suggested are those in new Clause 9 and in new Clause 12. What is the basic difference between them? New Clause 9 gives the finance houses the right to the true measure of damage where a finance house terminates the agreement. It will be terminated only when there has been a fault on the part of the hirer and this seems to be reasonable justice. New Clause 12 goes further. Perhaps I am wrong, but if I read it correctly it makes complete nonsense of the concession in Clause 1(5). For this reason, although I think that new Clause 12 is better than nothing, I prefer new Clause 9.

The Parliamentary Secretary to the Board of Trade (Mr. David Price)

It may be convenient for the House if I intervene now. These new Clauses raise the question of what should be the liability of the hirer if a hire-purchase agreement is terminated. This question was considered by the Molony Committee and widely discussed after that Committee had presented its Report. It has been debated in another place; during the Second Reading of this Bill; during the Committee stage of the Bill and it is now being debated again on Report.

I wish, first, to remind the House of the broad approaches to this matter which have formed the subject of debate and have been the continuing theme. On the one hand, there are the existing provisions of the 1938 Act. Section 4(1) provides that the hirer may terminate an agreement at any time and must then pay any amount necessary to bring what he has already paid up to one-half of the hire-purchase price or to the amount of the instalments due under the agreement, if that is more than half the hire-purchase price.

Section 5(c) prevents the inclusion in an agreement of provisions which would impose a greater liability on the hirer in the event of the agreement being terminated by the owner.

Under these provisions, the maximum liability of the hirer is both predetermined and easy to ascertain. The Schedule to the 1938 Act contains a notice, to be included in the agreement, which in the first paragraph 2 tells the hirer just where he stands.

May I here interpose, in reply to my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke), that in relation to the first of the two instances which he cited, when he said that it would be very unfair if in the circumstances he envisaged the owner could not recover more than 50 per cent., Section 4(2) of the 1938 Act applies, and states: Where a Hire-purchase agreement has been determined under this section, the hirer shall, if he has failed to take reasonable care of the goods, be liable to pay damages for the failure. I think that that covers the first instance quoted by try hon. and learned Friend. I will deal with the second one in due course.

The alternative which has been urged and is being urged in the new Clauses is the so-called "true measure of damage" principle. Under this, on termination of the agreement certain factors, and particularly the residual value of the goods, would be taken into account and the hirer's liability assessed. This proposal was put to and carefully considered by, the Molony Committee. Since the Committee's conclusion has at times been misrepresented, I wish to emphasise what it was.

As my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) reminded us, the Committee said that this alternative would, in theory, achieve a more equitable result. But the conclusion of the Committee was that it would inevitably lead to disputes about the value of the recovered goods, the cost of repairing them and so on. The Molony Committee, therefore, came done, on grounds of practical protection of the consumer, in favour of maintaining the existing provisions of the 1938 Act, and against substituting this alternative of true measure of damages for them.

I assure the House, and particularly my right lion. Friend the Member for Enfield, West (Mr. Iain Macleod), that we did not simply accept the conclusions of the Molony Committee without considering the matter extremely carefully. Like the Molony Committee, we favour of the alternative—primarily, let received powerful pleas from those in it be admitted, and properly, from finance houses. But we reached the conclusion that with practice the existing provisions would protect the consumer better. I think that it would be helpful for the House to look separately at the cases of termination by the hirer and of termination by the owner. First, termination by the hirer.

New Clause 12 applies the "true measure" principle and repeals the existing provisions. In the case of termination by the hirer we have to make the direct choice between two approaches. We must make this choice on practical considerations rather than on the theory. On the one hand, there are the existing provisions under which a hirer knows at all times where he stands; he knows what his liability will be if he terminates and there is neither delay nor dispute in determining it.

On the "true measure" principle the hirer's liability cannot be assessed in advance; it would depend on the assessment of a number of factors all, in the nature of things, not easy to determine to mutual satisfaction and, even more, things about which it is very difficult for the man-in-the-street to maintain his opinion against that of the trade; not least the value of the goods at the date of recovery of possession. During the passage of the Bill several proposals for giving statutory effect to the so-called "true measure" approach have been discussed. In my view, these discussions have served to bring out how great the practical difficulties would be. Two ways of introducing the principle have been discussed.

First, there have been attempts to enact a self-operating system by making provision for every factor and how it must be taken into account. I pay tribute to the ingenuity of my hon. Friend the Member for Gosport and Fareham and his efforts to try to frame a Clause along these lines. These Clauses, although they still had gaps, were un-workably complicated and could never have been comprehended by the generality of those who may obtain goods on hire-purchase. In effect, they would have put the finance house in a very strong position where it could confront the hirer with a detailed account and demand payment. His only remedy would be to go to court and contest the finance house and trade evidence on matters such as the value of repossessed goods and the cost of recovery, storage and repairs.

5.0 p.m.

Secondly, Clauses were considered, rather like those we are now considering, which expressed the principle in more general terms. They left the decision in each case to the courts. In our view this approach evades the difficulties of setting out the details and saying what, in practice, is to be done to resolve them, but there is no effective protection for the hirer since he has no remedy which he can exercise without the formidable risks of going to court against powerful interests.

I cannot accept that, in practice, these provisions would operate equitably. The finance house and the motor trade—and it is of course, primarily with cars that we are concerned—would make their assertion of matters such as the residual value of the repossessed car. The hirer would not normally have the technical means to contradict them, or the resources to oppose them at law. This is not to be dismissed as a matter of possible chicanery by a minority of unscrupulous finance houses or motor dealers.

The general legal provision on this point will determine the practices of all finance houses, and we have to consider the question in terms of the pressure which is brought to bear on an inexpert member of the public by a large company quoting the terms of a legal agreement. In practice, the hirer would normally have to pay what the finance house demanded. He would have no way of knowing in advance how much his liability would be if he terminated the agreement. The present situation—the widespread suspicion, by some at least, of the finance houses—would continue, and that is surely not to be desired.

So much for termination by the hirer. I turn now to termination by the owner. This case is covered by this new Clause 9, as well as by new Clause 12. In this case I do not accept that it can even be maintained theoretically that the hirer's liability should in all cases be assessed on the so-called true measure of damage basis. Termination by the owner can take place in a wide range of circumstances. At one extreme the hirer's conduct may have shown that he has no intention of going through with the agreement—amounting to repudiation; but then, at the other extreme, the hirer may have committed only a minor breach.

Finance houses normally reserve the right to terminate the agreement in the event of any breach of its terms by the hirer. I have looked today at the terms of agreement of some of our most respectable finance houses, and this is quite clearly there. They are, of course, entitled to make this provision and enforce it where they see fit, but some breaches are more serious than others, and some are only trivial. A breach by the hirer may be due to oversight or misfortune. Such a breach certainly should not entitle the finance house to step in and claim damages as if the hirer were quite unable or unwilling to go through with the contract.

The common law at present protects the hirer against this. In the recent case of Financings Ltd. v. Baldock, to which the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) made reference—a case, incidentally, which lay outside the scope of the 1938 Act—the finance house had terminated the agreement on account of a breach by the hirer, but the hirer's conduct did not amount, in the court's view, to repudiation of the contract.

The court held that the finance house was not entitled to common law damages on the true measure basis and that the damage flowing from the breach by the hirer was the failure of the owner to receive the instalments in arrear and that, therefore, the amount of these instalments was the amount of damages to which the owner was entitled.

There is, I think, a further and possibly more important case of Anglo Auto Finance Company Limited v. James. Here there was in the contract, again a contract beyond the scope of the 1938 Act, a clause which provided for the true measure of damage to be paid on termination by the owner as a result of a breach by the hirer. The owner in this case terminated the agreement because the hirer was in arrear with his instalments to the sum of £17 11s. 6d., and sued for a sum calculated on the true measure of damage clause. The court held that this clause was a penalty clause which did not contain a true pre-estimate of damage and, consequently, was unenforceable. The result was that the owner recovered only arrears of instalments, together with a small amount of the costs of repossession.

The new Clauses we are now considering would allow the owner to provide in the agreement for the recovery of damages on the "true measure" basis in any case where the owner had terminated the agreement as a result of a breach by the hirer. The court is not given any discretion, under these Clauses, in determining whether the provision is reasonable, to have regard to the seriousness or triviality of the hirer's breach of the agreement. These Clauses would thus allow the finance house to obtain damages which might be very much greater than those which they can now recover under the common law.

The new Clauses go a great deal further than the common law approach which was proposed by the hon. and learned Member for Stoke Newington and Hackney, North.

Mr. A. J. Irvine

We are at a rather difficult point here, perhaps, but is it the Government's view of this matter that the concept of exemplary damages should apply to breaches of contract? In this sort of transaction I am somewhat concerned by the emphasis which the Parliamentary Secretary is laying upon the point that the amount of damages payable should, in some way, depend upon the obliquity of the wrongdoing or mischief of the breach. Is that the position that the hon. Gentleman is taking up?

Mr. Price

The point is surely this, that under the 1938 Act, where one-third has been paid and the owner has to go to court for repossession on failure to pay, the court does take a number of factors into consideration which are not spelt out in detail. General circumstances are taken into account, as in some of those judgments which, as hon. Members have suggested, have been to some extent penal on the finance house. The point I am making here is that, so I am advised, these new Clauses provide that on a technical breach of a hire-purchase agreement the court would have to assess damages on the true measure principle, and these other circumstances would not be taken into account—such as being only 10 days late.

I have here an agreement which says that if a hirer is 10 days late in paying then the owner would have the right to terminate. I am putting to the House that this is surely not good consumer protection. I thought, at earlier stages of the Bill, that the intention was certainly not that we should so introduce the true measure principle that it would in all cases be more onerous on the hirer than even the common law.

What I have said applies to new Clause 13. That Clause also deals with the hirer's liability on termination by the owner. It does not bring in the "true measure" principle, but it does oblige the hirer to make his payments up to one-half of the hire purchase price as if he himself had terminated the agreement. It is true that since this particular proposal was debated and withdrawn in Committee, in another place, the situation has changed a little in that Clause 1(5) has been added to the Bill and there is now more scope for flexibility about liability in the event of termination by the hirer.

I still feel that what is proposed here would have results which the House would not wish. It would be possible, under the proposed Clause, for the finance house to terminate the agreement in the initial stages on grounds of the most trivial breach by the hirer, repossess the goods and demand that he make his payments up to one-half of the hire-purchase price.

Dr. Bennett

Surely my hon. Friend is castigating these new Clauses for making it necessary for the courts to come to a judgment unduly harsh and onerous to the hirer, but as I read my own new Clause 12 the court can make an order requiring the hirer to pay that amount if it is satisfied that the amount or …the method by which it is to be calculated is reasonable… having regard to the facts. Surely my hon. Friend's argument does not stand up in the face of that?

Mr. Price

With respect to my hon. Friend, its wording is reasonable having regard to the hire-purchase price etc. It in no way mentions the difference between a trivial or technical breach and complete repudiation. I am sure my hon. Friend will agree that there is a whole range in between. I have no doubt that my hon. Friend might wish it were different but, in fact, the wording is reasonable having regard to the hire-purchase price and does not refer to the reasonableness or otherwise of the breach.

I would like now to turn to a point which has, perhaps, already received more attention than its practical significance justifies. During the passage of the Bill attention has several times been drawn to a possible anomally under the 1938 Act as it stands. A hirer who recognises in the early stages that he cannot go through with the agreement becomes liable to make his payments up to one-half of the hire-purchase price if he terminates. The argument is that he might get off more cheaply if, instead of terminating, he defaulted and left the initiative to the finance house.

This is the second of my hon. Friend's points. The hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) also referred to the fact that an Amendment was passed in Committee to insert what is now Clause 1(5) into the Bill, adding a proviso to Section 4(1) of the 1938 Act. This provides a remedy for this very point by empowering the court, in a case where the hirer has terminated the agreement in the early stages, nevertheless to assess his liability at less than the amount necessary to make his payments up to one-half of the hire-purchase price.

In debate, I advised the Committee against this Amendment because I saw that it could be represented as one-sided and could only benefit the hirer. I foresaw that there would be suggestions that the benefit should be open to both sides, and I knew that this, involving a breach of the basic safeguard about the hirer's maximum liability, was something that we would not be able to accept.

The Amendment was carried by a majority vote of the Committee and the Government have felt that they should not seek to reverse this decision. The new proviso of Section 4(1) is an added measure of consumer protection, if not one which we think likely often to be invoked. It is, as it were, a long-stop for the aggrieved hirer. We are not entirely happy with the drafting, which we think does not achieve unambiguously the intention of the hon. Members who voted for the Amendment. We have, therefore, tabled Amendments to change the wording, but we are not changing the intended effect.

This new proviso to Section 4 will dispose, in the way which hon. Members opposite advocated in Committee, of the point about early termination and about possible detriment to the hirer because he behaved in a straightforward manner. I hope that hon. Members opposite realise that we have shown on this point that our minds are not closed to ideas for improving the Bill.

So much for the interests of the consumer. There is, of course, another side. The "true measure" principle has been strongly urged on behalf of finance house interests, and I can see that it is very attractive and an improvement from their point of view. I have seen it suggested that this is only reasonable, in that as with a loan of money, it simply allows the finance house to recover the amount it expected. This seems to me to be a slightly fallacious and one-sided view. But, in particular, it takes no account of the customer, or of his need, as the weaker party, to know where he stands and to be protected. If finance houses want to do business on terms which will entitle them to get their money in full, let them dispose of the goods—cars or anything else—on credit-sale terms rather than on hire purchase.

In the hire-purchase field, I think that the difficulties arising for finance houses from the application of Section 4(1) of the 1938 Act to agreements covering motor cars have been exaggerated. I have seen it suggested that finance houses will be imposed upon by hirers, who will so time the termination of the agreement that the finance houses will lose I doubt whether this is overall a serious risk, particularly if finance houses tighten up in some respects on the way they do business, if they do not accept hirers without proper scrutiny and do not take business from dealers who make cars out to be worth more than they are. I think that this is also the answer to those who suggest that the Bill will involve finance houses in bigger risks and so compel them to put up their charges. Looking at the Bill as a whole, I believe that the changes in commercial practice which will flow from it will mean that they will have fewer bad hirers and fewer bad debts.

5.15 p.m.

In the end, in framing legislation of this kind, a balance has to be assessed between the various parties—the consumer, the dealer, the finance house. We have had to do that on various matters in the Bill, and it is, of course, not an easy balance to strike. The parties are not of equal strength, and, in the past, the consumer has all too often been imposed upon because of his lack of expertise. Motor dealers and finance houses, on the other hand, handle this type of business every day and I think that they can guard against being exploited by their customers.

My hon. Friend the Member for Gosport and Fareham (Dr. Bennett) and others have drawn attention to the views of the Consumer Council. I would point out to them that in its statement the Council did recognise that there were considerable practical difficulties, though I believe that it did not think that they were insurmountable. But neither in its statement or since has it given any indication as to how they could be surmounted. It is also interesting that the noble Lord, Lord Peddie, who led for the Opposition in another place on this matter, and who is a member of the Consumer Council, has taken the view that the attitude of the Government in this matter is both logical and excellent.

I should be interested to hear from the hon. Member for Sheffield, Hillsborough (Mr. Darling) why the Opposition, during the passage of the Bill, have changed their attitude to this from that expressed in another place.

Mr. Iain Macleod

I can understand my hon. Friend's argument if that is what he wishes to put forward, that the balance of the Bill, including the Amendment carried upstairs, is now right. I do not have to agree with it, but I can understand it. What I cannot understand is the argument about the difficulties of drafting or enforcement of a Measure of this nature when we know perfectly well that many, if not most, foreign countries and countries in the Commonwealth have achieved exactly this purpose.

Mr. Price

This was looked at by Molony in great detail and also by the Government, and they are of the opinion that the difficulties which I have outlined seem to them to be substantial. If we adopted the true measure of damage principle there would be less protection for the hirer than there is at present.

Dr. Bennett

Surely we have to see this in perspective. Molony's remit was so colossal that the amount of attention given to this was very small. No wonder the Molony Committee felt that this was a little much when we consider the vast volume of other matters considered. It was mentioned only ten times or so in a book of hundreds of pages.

May I remind my hon. Friend, though in no sense am I ever likely to be a supporter of the Labour Party, that in another place I understood that the problem was that the Amendment there under discussion was too long and also a bad one, and that, perhaps, explained the difference between the attitude of certain noble Lords towards that Amendment and the one I am claiming to be of a totally different order of merit.

Mrs. Harriet Slater (Stoke-on-Trent, North)

Is the hon. Gentleman arguing that because Molony is recommending this we ought to accept it? If he is, he should revise some of the statements he made on the Weights and Measures Bill.

Mr. Price

I am saying that it was made clear on Second Reading that the primary purpose of the Bill was to implement in the main the Molony recommendations on hire purchase. It is surprising that the hon. Lady should intervene on this matter, because she has always been a very great defender of the rights of the consumer, and I would have thought that the arguments that I have been outlining would appeal to her.

As to the point made by my hon. Friend the Member for Gosport and Fareham on what went on in another place, I believe that our rules of order preclude my answering him in detail, and quoting in extenso the speech of Lord Peddie, which makes it perfectly clear that his objections were not just to that particular Amendment but to the basic "true measure of damage" principle. I was quoting the noble Lord not so much as a member of the Labour Party, but as a member of the Consumer Council.

I remain convinced that we must not delete the safeguards that Sections 4 and 5 of the 1938 Act provide for the consumer. In terms of protecting the consumers' interests, I believe that new Clauses 9, 12 and 13 would be retrograde, so I have to advise the House to reject them all.

Mr. George Darling (Sheffield, Hillsborough)

I am rather surprised, and very disappointed, that the Parliamentary Secretary, in spite of all the arguments put forward in the Standing Committee and today, and the representations made to him by various bodies, should still be obstinately against the acceptance of the principle of the true measure of damage in regard to terminated contracts. As far as I could tell, the hon. Gentleman built up his case on trivial breaches which he suggested would, if the new Clauses were accepted, work harshly against the hirers.

I do not want to argue the legal complexities—I am not in a position to do so. As the Committee knew, and as this House will know before we finish our business today, I have to rely very heavily on the expert legal advice of my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine), and other of my hon. and learned Friends. Nevertheless, I should have thought that to rely on a small number of cases, as did the Parliamentary Secretary, is an altogether wrong approach to this problem.

The new Clauses we are now discussing did not suddenly appear on the Notice Paper. We sent new Clause 9 to the Board of Trade a very long time before it appeared on the Notice Paper, and I understand that the hon. Member for Gosport and Fareham (Dr. Bennett) acted similarly. Hon. Members on both sides wanted the help of the Board of Trade in solving the very difficult problem with which the House now has to contend. I deeply regret to say that we received no help whatever.

To suggest now, in view of all the representations that have been made, that the Board of Trade must stick to the principle, which it enunciated right from the beginning of these proceedings in another place and in Committee, that the 1938 provisions for dealing with damages in a case of breach of contract or the ending of a contract should remain in this Bill, and that the true-measure-of-damages idea we put forward should be rejected, seems to be a peculiar way of dealing with a very difficult problem.

The Parliamentary Secretary has put himself and the Secretary of State in an almost indefensible position. Despite all the arguments, the hon. Gentleman stands almost alone—I do not know whether the Secretary of State is still with him, but I suppose he is—against everyone who has a real interest in this problem, including the Consumer Council. He has no support from any quarter that I would call responsible in this business, and this short debate has shown that.

We want new Clause 9. Every hon. Member opposite who has spoken—and this was the case also in Committee, as the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) has pointed out—wants something like new Clause 9, 12 or 13. The finance companies want something on these lines, as do the industrial bankers, the Law Society, the co-operative societies, and the financial journalists who have studied the problem. Everyone wants it except the Secretary of State and the Parliamentary Secretary, who stand alone on the burning deck whence all but they have fled—

Mr. R. M. Bingham (Liverpool, Garston)

The Opposition must not take silence on these benches as assent to their proposition. For my part, I stand—as I am sure do many of my hon. Friends—firmly behind the Government. I do so for the reason that new Clauses 9 and 12, which seek to provide a so-called true measure of damage, both depend on the ascertainment of the value of the goods. If one takes the value of a car that has been repossessed and is sold as a repossessed car, its value as such very often stands at little above its scrap value, but its value to the hirer before repossession would bevery much more than that figure. Because of this difference, the so-called true measure of damage often works in practice to the detriment of the hirer, and necessarily leads to disputes in court, in which the hirer finds himself at a disadvantage.

Mr. Darling

We have discussed all these problems that the hon. and learned Member has just raised. I do not think that there is any great substance in what he instances but, if there is, it is one of the technical issues which the Board of Trade should have helped us to sort out. It had plenty of time to do so, but gave us no help at all.

The Parliamentary Secretary came to what was to me a very surprising conclusion when he said that rather than try to get fairness in this matter under this Bill the finance houses should resort to credit trading instead of continuing with their hire-purchase contracts. I do not want to go over the whole Bill again, but I should have thought we would have to make substantial alterations in it to allow for this so as to get the fairness of which we talk.

The Parliamentary Secretary knows very well that we on this side—and, I suspect, hon. Members opposite, too—want a complete recasting of our hire-purchase legislation. None of us are satisfied with it. I should very much prefer to see the introduction of the chattel mortgage system on the basis of personal loans—but it is rather late now to make suggestions like that—as a solution of these problems. I assure the Parliamentary Secretary that when he tried to quote the noble Lord against us, the conversion of Lord Peddie to the principle of the true measure of damage has not been entirely unsuccessful.

I am sure that practically everyone concerned with the problem supports our approach, if not the actual wording we have used. I have mentioned the finance companies. I know very well that part of the propaganda, if I can put it like that, that has been directed against us is that by carrying the Amendment to Clause 1, in the Standing Committee, we in some way sold out the finance companies.

I said some very harsh things about the finance companies on Second Reading, I have said them outside, and I will say some other very harsh things about them, but n all fairness I must say that after discussion on the Bill started, the reputable finance companies and the Finance Houses Association have given us a great deal of help. They have accepted our view that we cannot get absolute fairness in this Bill and that, therefore, if there is to be any balance of advantage on one side or the other it should go on the side of the hirer, who is always the weaker partner in the contract.

I must give the Finance Houses Assotion credit for helping us after it had accepted that principle. In all fairness, we must see that its point of view that the Bill as it now stands is in some respects unfair to finance houses should be properly considered, and we should do something about it.

5.30 p.m.

I should like to go over one or two points again to make absolutely clear where we stand on this issue. As the hon. Member for Gosport and Fareham (Dr. Bennett) has said, we have agreed that the 50 per cent. rule in the 1938 Act was a rough-and-ready rule, but it was generally accepted. It was not based on a finely drawn legal principle of equity which apparently the Parliamentary Secretary now wants, but it gave a measure of justice and it was accepted because there was no ambiguity. People knew where they stood. It was also accepted because nobody was involved in great sums of money. The most that they could be caught for was £25 less the instalments already paid. Later, when the limit was raised to £300, the most they could be caught for was £150, minus the instalments paid up to the point when the contract was terminated.

Now we come to great sums of money. The limit has been raised to £2,000, and when the Parliamentary Secretary quoted the Molony Report as saying that the difficulties of working a true measure of damages principle were too great to be accepted I should have thought that this was one of the views expressed in the Report that could not be accepted, because the Molony Committee did not want to put any legal limit on the transactions. Therefore, if the 50 per cent. rule had applied, the damage which people who ended their contracts would be liable to pay would be excessive indeed, far more than the £1,000 which we are now talking about. The only distinction between the contracts which the Molony Committee wanted in a new hire-purchase Bill and the contracts outside the provisions of that Bill, was through a definition of consumer sales. Consumer sales could have gone well beyond the £2,000 and, therefore, I do not think that this is a view which should be taken on the basis of recommendations in the Molony Report.

The issue with which we are now faced arises from the fact that, in Committee, we persuaded hon. Members opposite to abstain so that we could get this issue raised on Report. As a result, we inserted in the Bill Clause 1(5), which throws all the advantage now on the side of the hirer. We did this deliberately so that we could raise the issue here. The Parliamentary Secretary opposed that Amendment, now inserted in the Clause. He opposed it very vigorously and he has said that it would lead to unfairness. Of course it would be unfair. We were trying to make it unfair in order to have the whole issue raised. In accepting it now as a measure of unfairness the Parliamentary Secretary is not being as responsible on this issue as he should be.

The Government accept an unfairness now, as they accepted the old unfairness under the 50 per cent. rule and as they wanted to go on accepting that old unfairness. We ought not to be legislating here for a continuation of an unbalanced and unfair Statute of that kind. We realise, as the Parliamentary Secretary has pointed out, that one result of the inclusion of Clause 1(5) will be that finance companies will have to draw up their contracts a great deal more clearly and carefully than they have in the past, but in any case they would have had to do that under other provisions in the Bill.

We also compel them to look carefully at the customers for whom they provide hire-purchase facilities. I am glad that this is happening and that this is one of the results which will flow from the unfair measure which we put into Clause 1(5). But, in return, the finance houses are entitled to ask for the protection which they need against the defaulting customer and our new Clause, as has been clearly explained, does that. It is more than a quid pro quo for the acceptance by the finance houses of the favoured position which we have now given to the customer.

I do not want to discuss again the legal differences between the three new Clauses. I personally deeply regret that the Secretary of State and the Parliamentary Secretary in the course of our discussions have made no effort to help us to draft what would have been an acceptable new Clause to deal with this situation. I repeat that before any of these new Clauses appeared on the Notice Paper, and they have been there for a long time, they were all submitted to the Board of Trade for the views of the Department on them because, as the right hon. Member for Enfield, West has said, we treated these issues, as indeed most others in Committee, on a purely nonparty basis, and we tried to have a workable Bill.

The Bill has a limited scope from the point of view of a consolidation Measure, which obviously must come before long, but we tried to treat it as a non-party Measure, and I regret that in our efforts to secure understanding and help from the Board of Trade to make the Bill fair and equitable we absolutely failed. The only thing that we can do now is by supporting the new Clause in the Division Lobby to register our protest at the way in which the Secretary of State and the Parliamentary Secretary have treated the matter.

The Secretary of State for Industry, Trade and Regional Development and President of the Board of Trade (Mr. Edward Heath)

Naturally, as I have been asked to intervene I am glad to do so, but more particularly in view of the closing remarks of the hon. Member for Sheffield, Hillsborough (Mr. Darling). I cannot accept that the Board of Trade or the Parliamentary Secretary or myself have been in any way obstructive in trying to make the best possible provisions in the Bill. On Second Reading, I explained clearly that this was a consumer protection Bill and that we were anxious to do everything possible to make it a good Bill. It had very little party content in it and it was a Bill to which the whole House could devote its attention and on which we would greatly value the advice of the House.

Again, the hon. Member for Hillsborough has said that because we have not accepted this proposed principle, and because we do not intend to accept the Opposition's new Clause, we have shown remarkable obstinacy, and he has said that this is a peculiar way of dealing with a difficult problem. But we have given continual, careful thought to this problem and the ways of meeting it. We have come to our conclusion, which we have reviewed constantly in the process of the Bill, in what we believe to be the best interests of the consumer.

It may be that the hon. Member thinks that we are not protecting the interests of the consumer. I do not want to go into technical matters which have been dealt with fully by my hon. Friend the Parliamentary Secretary, but I hope to show that the attitude which we have taken on this matter is sincere because we feel that there is a balance of power involved in the relationship between the finance house and the consumer and that fundamentally we must consider the interests of the consumer.

My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) hoped that we would be fair. I said on Second Reading that I had the utmost desire to be fair to all the parties involved in this transaction. I repeated this at a dinner of the Finance Houses Association at which my right hon. Friend and also the hon. Member for Hillsborough were present, and in our attitude towards Part III of the Bill we showed how seriously we wanted to find the best possible solution. We admitted weaknesses in our own proposals at that time. We said that if anyone could come forward with better ones, and particularly the finance houses, who will be responsible for working the provisions of the Bill, we would be glad to embody them. Some proposals were brought forward and they were embodied in the Bill. This shows that we have every desire to secure a just solution and make the Bill as good a Bill as we can make it in the circumstances of the time.

I say "circumstances of the time" because the hon. Member for Hillsborough has never concealed his view that the whole Bill is misconceived. He wishes to change over to a system of chattel mortgage, broadly speaking, and, to be fair to him, he has done his best, in Committee, to get as near to that as he can.

Mr. Darling

No.

Mr. Heath

Well, broadly speaking, and the hon. Gentleman has done his best in Committee to get this as near to that system as he can.

Mr. Darling

No.

Mr. Heath

I do not mind the hon. Gentleman doing that, because those are his objectives; whether they are the objectives of his right hon. Friends and his party, I do not know.

I said on Second Reading that there was absolutely no doubt that this is one of the major issues so far as consumers are concerned. The Molony Committee, in dealing with it, rejected the idea of moving over to chattel mortgage and thought that the present system could have been embodied in one Bill for the protection of the consumer.

I said on Second Reading that we had produced the best Bill we could in the circumstances of the time, but I was absolutely willing thoroughly to examine this question—and the Department was already at work on it—to see whether there ought to be a change in the general arrangements for credit sales or hire-purchase and whether we ought to move on to some other system.

At the time I invited the views of the finance houses and of those journalists who_ have been writing about this so that we could take them into full consideration when we looked at the whole of this problem. We are dealing with hire-purchase and I gave the undertaking to the House that we will, of course, go into the whole of the larger issue, as soon as we are able to do so, to see whether we ought to change over to some other system of consumer protection.

Mr. Darling

The right hon. Gentleman has seized upon the point that I made about chattel mortgage, which was irrelevant to our general discussion, in order to bring forward this red herring. In Committee, I never discussed chattel mortgage and I did not put forward any suggestions for bringing chattel mortgage into the Bill, and the only Amendments that we discussed were well within the terms of the Bill. They had nothing to do with chattel mortgage at all.

Mr. Heath

I am not saying that the hon. Gentleman tried to change this Bill into a chattel mortgage Bill. This is not a red herring. I am saying to the House that if one wants to adopt another system I am quite prepared to examine it. This, I think, is in some people's minds. My hon. Friend the Member for Gosport and Fareham (Dr. Bennett) quoted the Economist as saying that we are moving into a wrong form of hire-purchase. This is another expression of the same view—that we ought to move away from this form and into a different system, to use a neutral phrase.

Dr. Bennett

I referred to the Economist, as saying that Relentlessly, Britain is moving nearer the wrong sort of hire-purchase reform… After two paragraphs of discussion it said: This decision does pinpoint the need not merely to amend the bill but to incorporate the principle of true damages… but also to provide machinery to make sure that principle works.

Mr. Heath

I am not querying that at all. This is the view of other writers besides the Economist.

My right hon. Friend the Member for Enfield, West said that it had been possible to find solutions in other countries. These solutions have to be looked at in the context of the common law of the countries and the system which they are using—and some of them are using chattel mortgage—and the general arrangements which they have. We have not found a means of dealing with the practical difficulties.

I believe that this fundamental problem, to which my hon. Friend the Member for Gosport and Fareham drew attention, lies at the root of the whole matter. We have had various examples of possible cases of fraud, of court decisions on these matters, and of the views of the Master of the Rolls that this is a very real problem. Indeed it is.

I agree that members of the finance houses can feel in some respects that the burden on them is heavier than it is on the hirer. What has weighed with me from the time that I looked at this matter when the Bill was being formulated, on Second Reading, and again during Committee and before the Report stage, when the Amendments were put down, was that to adopt the procedure suggested would mean that a hire-purchase company would make a decision about the value of a car, for instance, about any repairs that were made to it, the cost of holding it during disposal, and so on. I believe that in the face of this the ordinary hirer—the ordinary man in the street—would have no power at all unless he was prepared to take the matter to the court.

5.45 p.m.

I say in all fairness to the hon. Gentleman that what has surprised me throughout all this is that he and his hon. Friends are among the most assiduous of all Members in keeping in touch with the ordinary problems of persons who are faced with this kind of situation. People come to a Member of Parliament, and they come to me in my constituency, and say, "What do we do here?" The only thing one can advise them to do is to take the case to the court. We know all the difficulties of taking a case to court, even with legal aid, the amount of time which it will take, and what can happen to the article if it is being held during that time.

I tell the House frankly that, leaving aside all the legal complexities, and all the questions of particular cases and of balance, the one thing which weighed with me is the position of the ordinary man who is getting a car on hire purchase and who finds himself faced, as he would be under these proposals, with an assessment from a powerful firm as to what his position is. It is true that he will not know what it will be beforehand, which he would know under the provisions of the Bill. I think that that is important, but to me it is not the most important thing. The most important thing is what his position is when he is faced with this situation.

In fact, he knows perfectly well that his position does not amount to anything. This is my anxiety and fear about moving over to this system. One may then say, "Is there no practical way of dealing with it?" My hon. Friend tried to find a practical way. I do not believe that any of the practical ways which have been put forward meet the case. I am told that in Australia there is a system of prolonged negotiation between the parties and that, even in that situation, it is very difficult to maintain a balance between a man in that position negotiating with a finance house or a company of that kind.

It is this fundamental problem of how to protect the consumer who is faced with this situation which has made me believe, very sincerely and very firmly, that, although one may say that it is rough justice, that there are these unfairnesses and that the finance houses will have difficulty in certain cases, nevertheless, taken over the broad field of hire purchase, the consumer is best protected in this way.

Mr. Darling

Before the right hon. Gentleman leaves the point about court procedure—und I agree with him, generally speaking, that the people we are concerned with do not want to get into the county court—I think that he will appreciate that by accepting Clause 1(5) we are calling upon the county courts to arbitrate on what the true figure should be for the hirer. What, then, is the objection to allowing the courts to arbitrate on the true figure for the finance company?

Mr. Heath

There may be arbitration; I do not disagree with that at all, and I agree that the Committee has shifted the balance further in favour of the hirer. But I think that the problem of the hirer going to the court in these circumstances is very real. I confess that I have been greatly influenced by the persona] experience of people who have been confronted with these difficulties. I believe that, fundamentally, the balance on this point ought to come down on the side of the consumer.

I fully appreciate my hon. Friend's problem about unfairness and the feeling of the finance houses, but, at the same time, there are two points which are important. The number of cases, such as those cited, in which a person buys a very expensive car and deliberately runs it into the ground in two months, will, I think, by the nature of things, be very few. It is true that a company is in a position to spread incidents of this sort over the whole field of its business and in organising its business takes this into account. I believe that the finance houses are in a position to deal with this problem.

Mr. A. J. Irvine

The right hon. Gentleman can take it from me that I am as concerned as he is about the position of the hirer, particularly the hirer of relatively modest means. Will he have regard to one factor which has weighed with us?

The new Clause which we have moved proposes that an estimate of the amount of damage, in certain events, shall be incorporated as a term of the contract. I acknowledge that in many cases the hirer will not readily understand all the complications and ramifications of the form of contract, but will the right hon. Gentleman appreciate that if this kind of practice were to become general and sustained the overall consequence would be that as time passed fair and reasonable sums would tend increasingly to be incorporated as the relevant sums in these contracts? The cases which went to court to be decided on their merits as to reasonableness would make their influence felt on the sums contained in the forms of contract.

We think that the overall effect of our proposal would, after a short time, be in that important respect favourable to the hirer.

Mr. Heath

If I understand the hon. and learned Gentleman correctly, it would be favourable to the hirer on the occasion of a court case. This brings us back to the fundamental question of how ordinary people deal with problems of this kind.

Mr. Irvine

I am sorry to interrupt the right hon. Gentleman again, but I do not want there to be any misunderstanding about this. We say more than the right hon. Gentleman has indicated. We claim that our proposal would tend to lead to fair amounts being entered in the contracts. We do not think that the satisfactory effect to which I have referred will take place only when each case goes to court. We think that the results will flow as a matter of commercial practice affecting the contents of the contracts themselves after a few test cases.

Mr. Heath

That may be so. I should not like to offer a judgment on it. But I was making the point that I think that the hire-purchase companies can spread the risk of these difficult incidents.

The second point that I wish to make is the one that I made on Second Reading. I have been absolutely plain about this from the beginning, and I emphasised it to the finance houses at their dinner. The Bill means that they will have to become much more selective in their choice of clients. Most people in the trade agree that this would be a good thing. I believe that it will deal with many of the problems about which there are anxieties and some of which have been expressed by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke).

Therefore, having thought about this matter very carefully—and I ask the House to accept that—and recognising the powerful arguments which have been put forward about the intellectual clarity of the situation and to the effect that there should be a true measure of damages, and in view of the practical difficulties of getting this in the situation of what I might describe as the man in the street who is a hirer in relation to the finance house, I came to the conclusion that it was right to maintain our present system and not to change over to that proposed by the new Clause. I have explained frankly why I came to that conclusion. I believe it to be in the best interests of the consumer, and I ask the House to accept that view.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 150, Noes 196.

Division No. 114.]	AYES	[5.54 p.m.
Ainsley, William	Braddock, Mrs. E. M.	Duffy, A. E. P. (Colne Valley)
Albu, Austen	Bradley, Tom	Ede, Rt. Hon. C.
Allaun, Frank (Salford, E.)	Butler, Herbert (Hackney, C.)	Edwards, Rt. Hon. Ness (Caerphilly)
Allen, Scholefleld (Crewe)	Callaghan, James	Edwards, Robert (Bilston)
Awbery, Stan (Bristol, Central)	Castle, Mrs. Barbara	Edwards, Walter (Stepney)
Bacon, Miss Alice	Collick, Percy	Evans, Albert
Bence, Cyril	Corbet, Mrs. Freda	Finch, Harold
Bennett, J. (Glasgow, Bridgeton)	Craddock, George (Bradford, S.)	Foot, Dingle (Ipswich)
Benson, Sir George	Crosland, Anthony	Foot, Michael (Ebbw Vale)
Blackburn, F.	Cullen, Mrs. Alice	Forman, J. C.
Boardman, H.	Dalyell, Tam	Galpern, Sir Myer
Bottomley, Rt. Hon. A. G.	Darling, George	George, LadyMeganLloyd (Crmrthn)
Bowden, Rt. Hn. H. W. (Leies, S. W.)	Davies, S. O. (Merthyr)	Ginsburg, David
Bowen, Roderle (Cardigan)	Dempsey, James	Gordon Walker, Rt. Hon. P. C.
Bowles, Frank	Diamond, John	Gourlay, Harry
Boyden, James	Doig, Peter	Grey, Charles
Griffiths, Rt. Hon. James (Llanelly)	Loughlin, Charles	Rogers, C. H. R. (Kensington, N.)
Griffiths, W. (Exchange)	Lubbook, Eric	Ross, William
Grimond, Rt. Hon. J.	MacColl, James	Shinwell, Rt. Hon. E.
Gunter, Ray	McInnes, James	Short, Edward
Hale, Leslie (Oldham, W.)	Mackenzie, Gregor	Silkin, John
Hamilton, William (West Fife)	MoLeavy, Frank	Silverman, Julius (Aston)
Harper, Joseph	Mallalieu, E. L. (Brigg)	Slater, Mrs. Harriet (Stoke, N.)
Hart, Mrs. Judith	Mapp, Charles	Slater, Joseph (Sedgefield)
Hayman, F. H.	Mason, Roy	Small, William
Healey, Denis	Mendelson, J. J.	Smith, Ellis (Stoke, S.)
Henderson, Rt. Hn. Arthur (Rwly Regis)	Millan, Bruce	Snow, Julian
Herbison, Miss Margaret	Milne, Edward	Sorensen, R. W.
Hilton, A. V.	Mitchison, G. R.	Soskice, Rt. Hon. Sir Frank
Holman, Percy	Monslow, Walter	Steele, Thomas
Holt, Arthur	Moody, A. S.	Stewart, Michael (Fulham)
Houghton, Douglas	Moyle, Arthur	Stones, William
Hoy, James H.	Mulley, Frederick	Swain, Thomas
Hughes, Cledwyn (Anglesey)	Noel-Baker, Francis (Swindon)	Symonds, J. B.
Hughes, Emrys (S. Ayrshire)	Oswald, Thomas	Taverne, D.
Hunter, A. E.	Owen, Will	Thomas, Iorwerth (Rhondda W.)
Hynd, H. (Accrington)	Pannell, Charles (Leeds, W.)	Thompson, Dr. Alan (Dunfermline)
Hynd, John (Attercliffe)	Pargiter, G. A.	Thornton, Ernest
Irvine, A. J, (Edge Hill)	Pavitt, Laurence	Thorpe, Jeremy
Janner, Sir Barnett	Pearson, Arthur (Pontypridd)	Warbey, William
Jay, Rt. Hon. Douglas	Peart, Frederick	Weitzman, David
Jeger, George	Pentland, Norman	Willis, E. G. (Edinburgh, E.)
Jones, Elwyn (West Ham, S.)	Prentice, R. E.	Wilson, Rt. Hon. Harold (Huyton)
Jones, J. Idwal (Wrexham)	Probert, Arthur	Winterbottom, R. E.
Jones, T. W. (Merioneth)	Redhead, E. C.	Woodburn, Rt. Hon. A.
Kenyon, Clifford	Rees, Merlyn (Leeds, S.)	Woof, Robert
Key, Rt. Hon. C. W.	Reynolds, G. W.	Yates, Victor (Ladywood)
King, Dr. Horace	Roberts, Albert (Normanton)
Lawson, George	Roberts, Goronwy (Caernarvon)	TELLERS FOR THE AYES:
Lee, Frederick (Newton)	Robertson, John (Paisley)	Dr. Broughton and Mr. McCann.
Lewis, Arthur (West Ham, N.)	Rodgers, W. T. (Stockton)
NOES
Agnew, Sir Peter	Farey-Jones, F. W.	Kershaw, Anthony
Arbuthnot, Sir John	Farr, John	Kirk, peter
Atkins, Humphrey	Fell, Anthony	Langford-Holt, Sir John
Awdry, Daniel (Chippenham)	Finlay, Graeme	Leather, Sir Edwin
Barber, Rt. Hon. Anthony	Fletcher-Cooke, Charles	Leavey, J. A.
Barlow, Sir John	Fraser, Ian (Plymouth, Sutton)	Legge-Bourke, Sir Harry
Barter, John	Freeth, Denzil	Lewis, Kenneth (Rutland)
Batsford, Brian	Galbraith, Hon. T. G. D.	Lilley, F. J. P.
Bell, Ronald	Gammans, Lady	Lindsay, Sir Martin
Bennett, F. M. (Torquay)	George, Sir John (Pollok)	Litchfield, Capt. John
Bevins, Rt. Hon. Reginald	Gibson-Watt, David	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Biggs-Davison, John	Giles, Rear-Admiral Morgan	Lloyd, Rt. Hon. Selwyn (Wirral)
Bingham, R. M.	Gilmour, Sir John (East Fife)	Longbottom, Charles
Birch, Rt. Hon. Nigel	Glyn, Dr. Alan (Clapham)	Longden, Gilbert
Bishop, Sir Patrick	Glyn, Sir Richard (Dorset, N.)	Luoas, Sir Jocelyn
Black, Sir Cyril	Goodhew, Victor	Lucas-Tooth, Sir Hugh
Bossom, Hon. Clive	Cower, Raymond	McAdden, Sir Stephen
Bourne-Arton, A.	Griffiths, Eldon (Bury St. Edmunds)	McMaster, Stanley R.
Box, Donald	Grosvenor, Lord Robert	Maddan, Martin
Brewis, John	Gurden, Harold	Maitland, Sir John
Bromley-Davenport, Lt.-Col. Sir Walter	Hamilton, Michael (Wellingborough)	Marlowe, Anthony
Brown, Alan (Tottenham)	Harris, Reader (Heston)	Marshall, Sir Douglas
Bryan, Paul	Harrison, Col. Sir Harwood (Eye)	Mathew, Robert (Honiton)
Buck, Antony	Harvey, John (Walthamstow, E.)	Maude, Angus (Stratford-on-Avon)
Burden, F. A.	Harvie Anderson, Miss	Mawby, Ray
Butcher, Sir Herbert	Hastings, Stephen	Maxwell-Hyslop, R. J.
Carr, Rt. Hon. Robert (Mitcham)	Heath, Rt. Hon. Edward	Maydon, Lt.-Cmdr. S. L. C.
Channon, H. P. G.	Henderson, Sir John (Cathcart)	Mills, Stratton
Chichester-Clark, R.	Hiley, Joseph	Miscampbell, Norman
Cleaver, Leonard	Hill, Mrs. Eveline (Wythenshawe)	Montgomery, Fergus
Cooke, Robert	Hill, J. E. B. (S. Norfolk)	More, Jasper (Ludlow)
Cooper, A. E.	Hirst, Geoffrey.	Morrison, Charles (Devizes)
Cooper-Key, Sir Neill	Hobson, Rt. Hon. Sir John	Morrison, John (Salisbury)
Cordle, John	Holland, Philip	Mott-Radclyffe, Sir Charles
Costain, A. P.	Howard, Hon. G. R. (St. Ives)	Neave, Airey
Coulson, Michael	Howard, John (Southampton, Test)	Nicholson, Sir Godfrey
Craddock, Sir Beresford (Spelthorne)	Hughes Hallett, Vice-Admiral John	Nugent, Rt. Hon. Sir Richard
Cunningham, Sir Knox	Hughes-Young, Michael	Orr, Capt. L. P. S.
Curran, Charles	Hutchison, Michael Clark	Orr-Ewing, Sir Ian (Hendon, North)
Currie, G. B. H.	Iremonger, T. L.	Osborn, John (Hallam)
d'Avigdor-Goldsmid, Sir Henry	Irvine, Bryant Godman (Rye)	Osborne, Sir Cyril (Louth)
Doughty, Charles	James, David	Page, John (Harrow, West)
Drayson, G. B.	Jennings, J. C.	Partridge, E.
Elliot, Capt. Walter (Carshalton)	Johnson, Eric (Blackley)	Percival, Ian
Elliott, R. W. (Newc'tle-upon-Tyne, N.)	Jones, Arthur (Northants, S.)	Pickthorn, Sir Kenneth
Emmet, Hon. Mrs. Evelyn	Kerby, Capt. Henry	Pitman, Sir James

Pitt, Dame Edith	Skeet, T. H. H.	Turton, Rt. Hon. R. H.
Pounder, Rafton	Smith, Dudley (Br'ntf'd & Chiswick)	Tweedsmuir, Lady
Powell, Rt. Hon. J. Enoch	Speir, Rupert	van Straubenzee, W. R.
Price, David (Eastleigh)	Stainton, Keith	Vaughan-Morgan, Rt. Hon. Sir John
Price, H. A. (Lewisham, W.)	Stanley, Hon. Richard	Vickers, Miss Joan
Prior-Palmer, Brig. Sir Otho	Stevens, Geoffrey	Walker, Peter
Proudfoot, Wilfred	Stodart, J. A.	Walker-Smith, Rt. Hon. Sir Derek
Pym, Francis	Stoddart-Scott, Col. Sir Malcolm	Wall, Patrick
Quennell, Miss J. M.	Storey, Sir Samuel	Ward, Dame Irene
Redmayne, Rt. Hon. Martin	Studholme, Sir Henry	Whitelaw, William
Rees, Hugh (Swansea, W.)	Summers, Sir Spencer	Williams, Sir Rolf Dudley
Rees-Davies, W. R. (Isle of Thanet)	Tapsell, Peter	Wills, Sir Gerald (Bridgwater)
Renton, Rt. Hon. David	Taylor, Sir Charles (Eastbourne)	Wilson, Geoffrey (Truro)
Roberts, Sir Peter (Heeley)	Taylor, Edwin (Bolton, E.)	Wise, A. R.
Robson Brown, Sir William	Taylor, Sir William (Bradford, N.)	Wolrige-Gordon, Patrick
Roots, William	Thatcher, Mrs. Margaret	Wood, Rt. Hon. Richard
Ropner, Col. Sir Leonard	Thompson, Sir Kenneth (Walton)	Woodnutt, Mark
Scott-Hopkins, James	Thompson, Sir Richard (Croydon, S.)	Woollam, John
Sharples, Richard	Thornton-Kemsley, Sir Colin
Shepherd, William	Touche, Rt. Hon. Sir Gordon	TELLERS FOR THE NOES:
		Mr. McLaren and Mr. MacArthur.