§ 3.13 p.m.
§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(Viscount Furness.)
§ On Question, Motion agreed to.
§ House in Committee accordingly:
§ [The EARL OF DROGHEDA in the Chair]
§ Clause 1:
§ Extension of application of Hire-Purchase Act, 1938, 1 & 2 Geo. 6. c. 53.
- (a) an agreement relating to livestock under which the hire-purchase price or total purchase price, as the case may be, does not exceed one thousand pounds;
- (b) any other agreement under which the said price does not exceed three hundred pounds.
LORD WALERAN moved, in subsection (1), after paragraph (a) to insert:
(b) an agreement relating to a motor vehicle where the hire-purchase price or total purchase price, as the case may be, does not exceed one hundred and fifty pounds:",
The noble Lord said: I bee to move the first Amendment standing in my name. I gave a number of arguments in favour of this Amendment on Second Reading, and I wish to add only a few further points. First of all, I think it will be agreed that one of the main objects of the Bill is to maintain the principles of the 1938 Act, and merely to extend them. I am worried, because one of the first things to be done is to remove one of the principles of the 1938 Act by deleting the separate category for motor vehicles. I do not believe that the position of motor vehicles has changed at all, except in value. I do not like having to put in a figure, but I have inserted the figure of £150, instead of £50. That figure seems to follow the principles of this Bill in relation to the last—namely, that I have trebled the figure included in the 1938 Act.
I am rather surprised that the honourable Member who was in charge of the Bill in the other place said on the Committee stage there:
The Committee ought to know that I contacted the Hire Purchase Traders' Association who in turn contacted more than twenty national associations. With the exception of the Society of Motor Manufacturers and Traders all these associations gave full approval to the principles of the Bill.
I must challenge that statement, because the Society of Motor Manufacturers and Traders sent to Sir Wavell Wakefield a statement saying that they resisted this, and one of the signatories to the statement was the Hire Purchase Traders' Association. We have in the motor trade an industry which is one of our greatest dollar earners, and they are against the deletion of the separate category for the motor car. I believe, too, that a great many of the hire purchase associations are against it. No one has produced any argument against what I said on Second Reading—namely, that the status of the motor car has not changed; no one suggests that it is no longer subjected to quick depreciation by virtue of ravages by weather. Moreover, no one has answered the point that if purchase tax comes off, then the value goes
straight down, and so does the value of the second-hand motor car. Surely, it must be the first principle that the greater the risk, the higher the rate. I do not believe that we want to make things more expensive for people who wish to purchase by hire purchase, but that we want to do our best to keep the terms down. Section 4 of the Act says that when a purchaser has paid half of what he sets out to pay under hire purchase terms he can just throw the thing back. If that is going to happen, then to protect himself on something which may depreciate quickly, because purchase tax may come off, the seller on hire purchase terms will increase his rate.
§ I feel that this matter should be reconsidered, if possible. I should like to see this Amendment passed, or at least to receive some assurance that the matter will be looked into again, because the trade concerned is worried about it. I know that this is a Private Member's Bill, but I think my noble friend Lord Furness and my noble friend Lord Mancroft will agree with me that it is largely sponsored by the Board of Trade. I do not wish to say anything against the Board of Trade, but it will be within your Lordships' recollection that we recently had an example of a Bill coming from that Department which had to be withdrawn on Second Reading. Both the motor industry and the hire purchase people are against the removal of the separate category, and I feel that this matter should receive further consideration, even though this Amendment is not accepted to-day. I beg to move.
Page 1, line 10, at end insert the said paragraph.—(Lord Waleran.)
§ VISCOUNT FURNESS
I am sure we are all grateful to my noble friend Lord Waleran for raising this point, because those of your Lordships who followed the passage of the Bill through another place will probably agree that it did not have the full debate there that it might have had. However, I am afraid that I cannot hold out on my own behalf much hope for this Amendment. My noble friend mentioned depreciation as being one of the main reasons for the retention of the separate category. The rate of depreciation of other articles bought on hire purchase, such as radio and television sets, 438 is in some cases, possibly even higher. I dislike arguing with my friend on such subjects, as he knows much more about them than I do, but many types of goods other than motor cars will suffer from neglect, bad maintenance and the effects of changes in design and styling. So will radiograms. I have a recollection that I myself at one time bought a 78 r.p.m. turntable. I wanted to sell it a little time ago, and I found that because 33⅓ r.p.m and 45 r.p.m long-playing records had come in since then, my 78 r.p.m. was worth next to nothing. There had certainly beer a high rate of depreciation there, as with all articles which have not the latest gadgets on them, and I do not think this can be applied only to cars.
My noble friend mentioned purchase tax. Even assuming that a beneficent Chancellor were willing to scrap purchase tax to-morrow, the only new car which would come in—and by that I mean a four-wheeled car, and not the three-wheeled Bond Minicar—would be the Ford Popular, and I understand that that comes in by only £18 2s. 4½d. Many people talk as if there were no goods subject to purchase tax other than cars. Any cut in purchase tax would affect many types of goods commonly sold by hire purchase, and I do not think I could suggest to your Lordships that motor car dealers be put in that privileged position. Admittedly cars are left outside where you would not leave your radiogram. My noble friend, Lord Waleran, mentioned the price of second-hand cars. My information is that the price of second-hand cars is about six to eight times that of pre-war. My noble friend would like me to accept three times the pre-war figure. If my figure of six to eight times is correct, then surely our figure in the Bill of £300, as against £50, is equally correct. The noble Lord shakes his head—perhaps he can controvert that. However, for the reasons have given. I am sorry that I cannot accept his Amendment.
THE EARL OF LIMERICK
I was sorry to hear some of the words which fell from the noble Viscount, Lord Furness. I apologise to my noble friend Lord Waleran that I could not be here within a minute of his remarks, but I have had an opportunity of talking with him on this subject before. From my slight knowledge of the trade, I would suggest that the figure of six to eight times is too high 439 a figure upon which to base a ratio in the matter of second-hand car prices. May I also make the point that in the case which the noble Viscount, Lord Furness quoted—a record player—that would fall within the £150 limit anyway; so that, as an illustration, perhaps that is not very telling. Following the suggestion of my noble friend Lord Waleran, what I am concerned about is that nothing in this Bill should act in restraint of the best reasonable rates for financing those goods in industry which are useful to industry. I am afraid that unless this Amendment is accepted we shall get a restraint of that trade.
THE MARQUESS OF WILLINGDON
Before the noble Lord, Lord Mancroft, speaks, may I ask him whether he could give us a complete definition of "hire purchase price" under the 1938 Act? I believe that the point is not very clear and has been subject to discussion in the courts. Does it include the total cash price, including finance charges? As regards the figure of my noble friend Lord Furness of from six to eight times pre-war price. I am afraid that in that argument I must declare myself on the side of Lord Waleran.
§ LORD MANCROFT
This, of course, is a Private Member's Bill, but your Lordships may perhaps be interested in the Board of Trade's view in this matter. I feel that I am in duty bound to speak to this Amendment, in view of the remarks with which the noble Lord, Lord Waleran, closed his speech, placing over me a very large fly, which he knew, from the terms he used, could not be resisted. I have listened carefully to what the noble Lord and those who support him have said. I am certain that my noble friend Lord Furness will look again at their remarks and will not close the door finally upon their Amendment, although I must confess that I myself do not like it at all. I should he surprised if, even after the reconsideration which the noble Viscount will doubtless give it, he sees his way to change his mind.
I have listened carefully to the arguments which have been put forward so far to-day, and which were put forward in another place, in favour of a separate lower value limit for motor vehicles. None of those arguments seems to me to answer this question: why should less 440 protection be given to hirers of motor vehicles than to hirers of other goods? That, I think, is the real point we have to consider. After all, both Miss Wilkinson's Act and this Bill are intended to protect people buying goods on hire purchase. Your Lordships may not be aware just how many hire purchase agreements are made in respect of motor vehicles. If your Lordships will bear with me for a moment, I should like to throw some light on that subject. Dealing only with second-hand cars—since the £300 limit proposed in the Bill will not affect new cars—and motor cycles, in March of this year nearly 21,000 hire purchase agreements were made for second-hand cars, and almost 15,000 for motor cycles, both new and second-hand. These are large figures, and I should not be surprised if they increase as time goes by.
If we were to accept the Amendment of the noble Lord, Lord Waleran, I think it is fair to assume that only a small percentage of the agreements for second-hand cars would come within the scope of the Bill. Your Lordships will probably know that very few secondhand cars can be bought under hire purchase to-day for a price that would bring them inside the £150 limit. The first car I owned, in which I had a quarter-share, was a bull-nosed Morris Cowley. We paid £17 for it, and I have come to the conclusion that we were robbed, even at that price. Those days, and those prices, have gone. The effect of this Amendment would be to deprive almost every hirer of a second-hand car of the protection which it has been thought reasonable to give to hirers of other goods. I do not think we can assume that this protection is not needed —indeed, the information available to me is that it is very much needed in a number of cases. That appears to be the main principle involved. For that reason, and that reason only. I would strongly advise the Committee to follow the advice of the noble Viscount, Lord Furness, and reject the noble Lord's Amendment. I am certain, as I have said, that the noble Viscount, Lord Furness, will look at it again. If we are wrong we must make amends, but I do not think we are.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I am obliged for the remarks of the noble Lord, Lord Mancroft. 441 I do not want to discuss this matter in detail, but I revealed last time that I was interested in this Bill, not because I am any longer in active connection with the Co-operative Movement, but because I was so connected for some time in the past. We are anxious to have this Bill as it stands. It is a reasonable Bill, but we could not honestly support any wide amendment of it which would have the effect desired by the noble Lord who sponsored these particular Amendments. If they were accepted, they would convert at least myself, and, I dare say, some other of my colleagues, into opponents of the Bill, instead of supporters. I hope, therefore, that this Amendment will not be accepted.
There was one remark made by the noble Lord, Lord Mancroft, when he referred to the motor-car trade, to which I wish to refer. His information was that protection was very much needed. It is the custom to declare one's interest, and though I have no present interest I was at one time the chairman of the S.M.M.T. Motor Hire Purchase section, and from my experience these I feel that the motor trade has brought this particular industry up to a high level of integrity and organisation. I hope that the noble Lord is not deliberately casting any slur upon that particular industry.
§ LORD MANCROFT
If I may have permission to speak again, I should like to correct that impression at once. I was careful to choose my words: I said "in a number of cases." I was speaking specifically from personal knowledge of five cases. "Five" is a number. "Five" is certainly not a slur upon a whole industry. If I gave the noble Lord that impression, I will certainly withdraw it. I had in mind only the cases of which I had personal knowledge.
If, as the noble Lord, Lord Mancroft, has said, we can have a further talk on this matter, I am prepared to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ 3.31 p.m.
LORD WALERAN moved, in subsection (1), after paragraph (b) to insert:
(c) an agreement relating to a commercial transaction (that is to say a transaction relating
to goods of a kind not designed nor suitable; for domestic use) where the hire-purchase price or total purchase price, as the case may be, does not exceed one hundred and fifty pounds;
The noble Lord said: In this Amendment, I seek to show that it is necessary to help a large, growing section of industry. In 1938, the hire purchase of tools of trade, lathes and things of that sort for a small business was virtually nil. To-day, it runs into many millions of pounds. Thus, hire-purchase in this sense is a useful form of credit for a small company which does not wish to disturb its equity, which cannot get a bank loan over a long term for some goods and can hire-purchase an instrument or a machine that will pay for itself by its production. Even large businesses find it convenient to use this form of credit. Further, I think that very often a machine, having been used for some time, has a good deal less value than many other articles if it is suddenly thrown back. Therefore, as I have stated before, the rates have to go up, with the result that the cost of production is bigger, the cost of the article is greater and so it is less competitive in an expert field.
The noble Viscount, Lord Furness, seemed to find a little difficulty on the Second Reading with a possible definition of "commercial" under the Control Order, 1952, and I have a feeling (I know that he will correct me if I am wrong) that he was confusing goods classified as "commercial" for purchase tax purposes with the definition contained in the Control Order, 1952. There, the words are, if I may read them:
Appliances and apparatus, whether mechanically operated or not, being appliances or apparatus of a kind designed or suitable for domestic use …
Then follows a list of machines—washing machines, dish washers and so on. I submit that this wording means clearly that, while those articles are made for both domestic purposes and commercial purposes, the domestic come within the ambit of the Order and the commercially designed do not. This definition has proved workable in a hire purchase statutory instrument, and I do not see any reason why it should not do so in the future.
§ The noble Viscount, Lord Alexander of Hillsborough (I did not realise that he had left the Chamber) had something to 443 say on Second Reading about hire purchase rates and building societies. I think it must be agreed by everybody that the greater the risk, the greater the rate. A long-term scheme of a mortgage on a house of, presumably, over £300 is fairly good security. Anyway, it cannot be thrown back. Section 4 of the 1938 Act says merely that if you are a hire purchaser the law allows you to turn a thing back at half price, but that if you buy for cash you cannot do so. That does not seem to me to be right. I think the noble Viscount, Lord Alexander of Hillsborough, said that the building society rate of interest was something of the order of 4½ per cent. I would submit, with great respect, that he does not realise that this 4½ per cent. is charged on the total outstanding every year and at the beginning of each year, and not at the figure as it is reduced every month by the mortgage. If you look at it in that way, I believe the building society rate works out at something of the order of 6.2 per cent. I do make this plea for industry to be able to use this useful form of credit without the restrictions imposed by this Bill, which I am absolutely certain will lead to higher rates. I beg to move.
Page 1, line 10, at end insert the said paragraph.—(Lord Waleran.)
§ VISCOUNT FURNESS
My noble friend Lord Waleran has said that the intention of this Bill is to preserve the principle of the 1938 Act, and we are all agreed that that is so. However, in the 1938 Act no distinction was made as between those engaged in commercial transactions and those with private consumers.
May I interrupt the noble Viscount? I have said that there was virtually no commercial transaction in 1938 but that now the amount involved runs into many millions. The occasion did not arise then.
§ VISCOUNT FURNESS
I thank my noble friend for his intervention, but I still say that it was originally within the scope of the 1938 Act. However, we can let that pass. My noble friend stated his definition of these goods as being those not designed for or suitable for domestic use. Is it possible, however, to define them in a Bill which we all hope will become an Act of Parliament for the benefit of posterity? In the Order, surely the 444 definition applies only to a limited range of goods such as refrigerators and sewing machines. We have already discussed motor cars. Would the noble Lord include a second-hand estate wagon as being a commercial article? To apply this Amendment to a whole range of goods likely to sell by hire purchase would restrict the protection now provided, which I hope this Bill will continue to provide to the general public. There are many goods, such as cameras and greenhouses, which are not domestic, in that they are not used in the house and yet are purchased for private use, as opposed to strictly commercial use.
§ LORD MANCROFT
Once again, I am sorry to tell the noble Lord, Lord Waleran, that I must range myself on the side of the noble Viscount, Lord Furness. As I said in our previous discussion, an important matter of principle is at stake in this Amendment and in the kindred Amendments. After all, the Hire Purchase Act, 1938, was intended to protect certain people buying goods on hire purchase. It set value limits outside which it should not apply. So far as I know, having read with care the discussions that went on then, it was not within the spirit of that Act to distinguish between people, because, for example, one man buys a cash register, and another a suite of furniture. Although I have listened carefully to the noble Lord, Lord Waleran, I have not heard him put forward any valid answer to this point. If the same person buys both articles, are we going to say that in one instance he should have the benefit of the protection given by the Act and contemplated in this Bill, but not in the other? Is he really in less need of protection in his capacity as a shopkeeper than he is in his capacity as a householder? I think it is true to say that the need to increase the £100 limit to £300 has been generally accepted, and the Government do not consider that there are any grounds which would justify the establishment now of what is after all an artificial distinction between hire purchase agreements based on the purpose for which the goods are being bought. Both types need protection. That is the point. I think it is an artificial distinction, and in view of what my noble friend Lord Furness has said, I hope that the noble Lord, Lord Waleran, will reconsider this matter and, in the meantime, will not press his Amendment.
In reply to my noble friend Lord Mancroft, I would emphasise that it is because I recognised the need for the shopkeeper to be protected, as well as the housewife or householder, that I sought to insert the figure of £150, much as I hate figures having to come into freely negotiated trading arrangements. The only difference between us is, so far as I can see, in regard to the figures of £150 and £300. However, in view of the little support I have in this matter I will withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 1 agreed to.
§ Clause 2 agreed to.
§ 3.42 p.m.
§ VISCOUNT FURNESS moved, after Clause 2 to insert the following new clause:
§ Amendment of Definition of Hire-Purchase Price
§ "3.—(1) For the purposes of the Hire-Purchase Act, 1938, any sum payable by the hirer under a hire-purchase agreement by way of a deposit or other initial payment, or credited or to be credited to him under such an agreement on account of any such deposit or payment, whether that sum is to be or has been paid to the owner or to any other person or is to be or has been discharged by a payment of money or by the transfer or delivery of goods or by any other means, shall form part of the hire-purchase price.
§ (2) This section shall apply for the purposes of the said Act of 1938 in its application to agreements made before the commencement of this Act, except in relation to any note or memorandum of such an agreement made for the purposes of section two of the said Act of 1938."
§ The noble Viscount said: This Amendment, and the succeeding Amendment which stands in my name clarify, I hope, the meaning of the definition of "hire-purchase price" in Section 21 of the Hire Purchase Act, 1938, and the Scottish Act of 1932. I hope these two Amendments meet the wishes of your Lordships.
THE MARQUESS OF WILLINGDON
I am still not quite clear. I have read the Act. Does it really mean that the total cash price has to be considered? Would the noble Viscount make that clear?
§ VISCOUNT FURNESS
Of course, I shall have to consult others about this particular point—but I hope that in any case the principle of these Amendments is acceptable to my noble friend. Your Lordships may recall that on Second Reading I said that the noble and learned Lord the Lord Chief Justice had cast some doubt as to whether or not the deposit paid to a dealer is, in fact, part of the hire purchase. He has been good enough to inform me that these two Amendments, the first of which applies to the English Act of 1938, and the second, No. 7 on the Marshalled List, to the Scottish Act of 1932, do in fact meet his point. I beg to move.
After Clause 2 insert the said new clause.—(Viscount Farness.)
§ On Question, Amendment agreed to.
§ Clause 3 [Extension of application of Hire Purchase and Small Debt (Scotland) Act, 1932]:
VISCOUNT FURNESS moved, after subsection (1) to insert:
(2) For the purposes of the said Act of 1932, the expression 'instalment' includes (without prejudice to the provisions of subsection (1) of section ten of that Act) any sum credited or to be credited to the hirer or the purchaser on account of any deposit or premium payable by him, whether that sum is to be or has been paid to the owner or to any other person or is to be or has been discharged by a payment of money or by the transfer or delivery of goods or by any other means.
In this subsection the expression 'hirer', 'purchaser' and 'owner' have the like meanings as in the said Act of 1932.
The noble Viscount said: This Amendment I have already discussed in connection with the previous Amendment; it is relevant to the Scottish Act of 1932. I beg to move.
Page 3, line 7, at end insert the said subsection.—(Viscount Furness.)
§ On Question, Amendment agreed to.
§ Clause 3, as amended, agreed to.
§ Remaining clause agreed to.
§ House resumed.