CHATTEL MORTGAGES (Hansard, 2 February 1966)

§ Dr. Reginald Bennett (Gosport and Fareham)

I beg to move, That leave be given to bring in a Bill to make provision for the granting of mortgages upon personal chattels; and for purposes connected therewith. I have enjoyed greatly the way in which the House seems to have struck hwyl tonight. A debate on Luton seems to have taken place almost entirely on Wales and almost entirely in Welsh. I have enjoyed the Joint Under-Secretary of State's virtuosity: this has been one of even his finest performances. It has given me great pleasure to see you, Mr. Deputy-Speaker in the Chair. Yon are a compatriot of his and thus your presence has been much in keeping with a debate on Welsh affairs. No doubt the Whips will say that there is no need for a Welsh debate this year, after this one.

I wish to ask leave to bring in a Bill on quite a different subject, a Bill similar to one which I sought to introduce in the last Session. In doing so, I should like to declare an interest. I hope that this interest has given rise to an amount of study of the subject which has made me more or less competent to bring in the Bill. This is a subject of considerable complexity, and I would find it difficult indeed to discover how the Bill would affect my personal interests.

1249 I am very sorry for myself in one way: That I should be asking leave lo introduce the Bill, by long prearrangement, on a day when the Governor of the Bank of England has issued very stern words about credit: and my Bill would deal with credit. The last time I introduced a similar Bill was on 27th July in the last Session, and I followed immediately on the Chancellor of the Exchequer, who had been cutting to shreds what remaining credit was being advanced. So my attempts to improve the granting of credit seem fated to always to clash with the Government's reduction thereof.

The Bill's intention is to introduce a new system for the obtaining of credit. We are all familiar with the system of mortgages, by which money can be advanced against the security of property—real property, that is, property which is immovable and which acts as security against the money advanced. In this country, movable property, or chattels, cannot be made a security against an advance of money, although in many other countries it can be so made.

In this country, the advancing of credit for movable property is prevented by very old Acts of Parliament—the Bills of Sale Acts and the Moneylenders Acts, all dating from about 1878 to 1882, which were devised in the last century to protect the citizen against the need to have to sell his household goods in order to raise a loan. It was never contemplated in that legislation that solvent citizens in receipt of good incomes would need to raise credit for buying objects.

Because of this, in 1937, the late Ellen Wilkinson, with great ingenuity, overcame this disability by bringing in the Hire Purchase Bill, which became the Hire Purchase Act, whereby she invented the convenient fiction by which hire purchase came into existence. Instead of helping the purchaser to buy the goods, the bank or finance house has to buy the goods itself and "hire" them out nominally to the person wishing to obtain them. The bank or finance house has to own the goods.

It is a fiction—a complicated fiction, and more complicated than ever now that the latest Hire-Purchase Act has piled Pelion upon Ossa in the way of compli- 1250 cations and difficulties. Now banks advance on no security at all except the character of the person asking for the advance, rather than go through the great complications of advancing money for the purchase of goods through the hire-purchase system.

I believe that the time has come for us to advance from the mid-Victorian era and to recognise that solvent, respectable people of good character and good circumstances may want to borrow money to buy goods. My Bill would seek to make that possible. The idea is new here, but it is very familiar elsewhere, notably in the United States.

The Bill which I would like to commend to the House has this simple objective, even though the details have been surprisingly complex to draft. It would make credit simpler although no less carefully controlled than it is now. It would allow a person buying, say, a car to own it while it remains security for part of the purchase price. It would allow the principles of common law to operate and to supersede the artificialities of hire-purchase law. It would apply only to newly-purchased goods. By simple straight-forwardness of practice it would reduce costs to the customer who would be paying only for the interest—and this may be of interest in another sense in connection to his entitlement to relief of tax. The Bill would undoubtedly step up competition among banks and finance houses, and most people would consider that salutary.

I hope that my Motion will meet with the approval of the House. I believe that the Government may be well disposed towards it. Indeed, members of the present Government were well disposed towards it in the last Parliament when our rôles were reversed. If the Government cannot support the Bill actively, I hope that they will consider it sympathetically. I therefore ask the House to give the Bill a fair wind with a good deal of weight behind it.