§ 4.38 p.m.
§ Order of the Day for the Second Reading read.
§ VISCOUNT FURNESSMy Lords, I rise to move that this Bill be now read a second time. Your Lordships have listened to a most interesting Starred Question and to the Third Reading of a most interesting but, to a layman, abstruse and perhaps controversial Bill. I hope that this little Bill which I am moving will not meet with such controversy. I will not trouble your Lordships with the reasons for the development of the practice of hire purchase, which we all know is expanding personal consumption, increasing home ownership and the like. Between 1918 and 1939 there were many reputable firms transacting business scrupulously fairly but there were, unfortunately, a few who brought this type of trade into bad repute and indulged in a form of legalised robbery—what I believe is called "the snatch-back." The late Miss Ellen Wilkinson introduced a Private Member's Bill which gave protection to hire purchase buyers. That Bill was supported by all Parties both in this House and in another place. Two noble Lords, my noble friend Lord Waleran and my noble friend Lord Bridgeman. spoke in 1938 in this House when the Act of that year was debated, and the noble Lord, Lord Milner of Leeds, also took an active part as a Member of another place.
Experience has shown that the 1938 Act has fulfilled the purpose for which it was intended. As your Lordships are no doubt aware, there is a steady increase in hire purchase trade, and there is also a much greater variety of goods now being sold on this plan—which, in the bad old days, used to be called by many the "Never-never." Why, then, has this amending Bill been brought before Parliament? Its purpose is to raise the money limits to bring 1938 money values into line with their 1954 counterparts, and at the same time to carry out certain other amendments considered, as a result of the working of the Act, to be desirable. Your Lordships will note that this Private Member's Bill, which has already passed through another place, and which, like the 1938 Act, was supported by members of all Parties, amends the Hire Purchase 1165 Act, 1938, which is applicable only to England and Wales, and the Hire Purchase and Small Debt (Scotland) Act, 1932, which applies to Scotland. The Hire Purchase Act, 1938, applies to certain hire purchase and credit sales agreements, and the Hire Purchase and Small Debt (Scotland) Act, 1932, applies to certain hire purchase and conditional sale agreements. Credit sale agreements are agreements for the sale of goods on credit where the property in the goods passes to the buyer immediately, while conditional sale agreements are similar agreements except that the property in the goods does not pass until the whole of the purchase price has been paid. I apologise for interrupting with these technicalities, but they were not clear to me and I venture to think that they might not be clear to some of your Lordships.
The Act of 1938 and the Scottish Act of 1932 are both limited in scope by reference to the amount payable under the relevant agreements. In the Act of 1938, the limit is £100, except in the case of motor vehicles and railway rolling stock, where it is £50, and of livestock, where it is £500. In the Scottish Act of 1932, the limit is £20 for all classes of goods. The principal object of this Bill is to extend the application of the Act of 1938 arid the Scottish Act of 1932 by raising the money limits, and thus increasing the number of agreements required to comply with the provisions of the Acts. The usefulness of the Acts has been materially affected by the fall in the value of money. The Bill will bring monetary limits in the Act of 1938 more into line with current prices and will remove the special lower limits for motor vehicles et cetera, which are no longer thought to be necessary. The adoption of the same limits in the Scottish Act will bring that Act into line with the Act of 1938.
Clause 1 of the Bill refers only to England and Wales and does not affect Scotland. Subsection (1) of that clause abolishes the separate limit of £50 provided in the 1938 Act for motor vehicles and railway rolling stock, raises the limit for livestock from £500 to £1,000 and the £100 for other goods to £300. Regarding railway wagons, the position, in my submission, is obvious: the nationalisation of the railways has rendered any special provisions which may have been considered necessary in the 1938 Act entirely unnecessary in 1954. Regarding livestock, 1166 the reason for a separate limit for livestock is that, apart from livestock, no other goods sold on hire purchase are likely to appreciate in value during the course of the agreement; seizure of livestock for default in payment by the hirer could mean that the hirer lost goods of a greater value than the original hire purchase price, and on this group it was thought reasonable that a wider limit should be fixed. In 1938, the £500 limit covered virtually all hire purchase agreements for livestock; the increase in prices since 1938 fully justifies the increase to £1,000, and I understand that the Ministry of Agriculture have agreed that £1,000 is an appropriate figure. As I have already said, the main effect of this subsection will be to raise the limit for other goods from £100 to £300—I will deal with the question of the proposed abolition of the separate limit for motor cars in a moment or two.
First of all, I want to deal with the general position. The general idea of the Bill is to raise the limits to the appropriate actual price level. Taking the figure for 1938 as 100, the index number of wholesale prices for 1953 is 323.5. The Board of Trade Statistics Division has calculated that the price level of durable household goods—the principal but, I admit, not the only items sold on hire purchase—was 286 last December, the latest month for which figures are available. I apologise again for introducing statistics provided by economists, among whom I cannot count myself, but I feel that they are material. We who support this Bill have also taken into account, in deciding on our figure of £300, the recommendation of the Evershed Committee that the limit of county court jurisdiction should be raised from £100 to £300. It has been suggested that prices might be falling and that £300 is too high a limit, but I submit to your Lordships that any limits fixed in Parliament should be based on current price levels and not on suppositions as to what may happen in the future.
The principal reasons put forward for the retention of the special limit for motor vehicles are rapid depreciation and the incidence of purchase tax. It is suggested that the rapid rate of depreciation of motor vehicles should exclude them from the Bill entirely, or at least that the separate category should be retained. 1167 Without wearying your Lordships with figures, I believe that I can say that the fall in values of radio and television sets is much more rapid than that of motor vehicles. If I may now deal with purchase tax, this argument could be used about almost all articles, other than livestock, and in all probability would apply more strongly to articles such as television sets or refrigerators where the effect of a tax reduction would be more direct. Subsection (2) of Clause 1 provides that certain provisions of this Bill should apply to hire purchase agreements entered into before the Bill comes into force. The 1938 Act contained, in Section 20, a similar provision, so we are merely following precedent there.
Clause 2 amends the provisions of the Act of 1938 which relates to actions for the recovery of possession by the owner of goods subject to hire purchase agreements within the Act. These minor amendments are such as experience has shown to be necessary. Under the Act of 1938, where one-third of the hire purchase price has been paid by the hirer the owner cannot enforce his right to recover possession of the goods except by bringing an action in the county court against the hirer. Any guarantor who has guaranteed that the hirer will comply with his obligations under the agreement must also be made a party to the action. Subsection (1) gives the court power to vary a "postponed order" or substitute a "transfer of title" order at any time before the goods are actually returned to the owner in accordance with the delivery warrant. As the law now stands, once the hirer has failed to comply with the conditions of the postponed order and the owner has obtained a delivery warrant, the court has no further power to vary its original order. Many cases have come to the knowledge of the proposers of this Bill of hirers who have fallen behind on payments because of illness or other valid reasons, and it may not be practicable—in fact, they may even have a fear of the law and lawyers and therefore would not apply—for them to apply to the court for a variation of the order before defaulting. Apart from that, the hirer may have paid off so much of his debt that it would be quite inequitable for him to lose all his goods.
Subsection (2) gives the hirer the right, which he does not at present possess, to 1168 pay the outstanding balance of the hire purchase price instead of handing over the goods in compliance with a delivery warrant issued under the court's order. Corresponding provision in relation to reservists called up for active service with the Forces is contained in the Reserve and Auxiliary Forces (Protection of Civil Interests) Act, 1951, and a similar provision in the Courts (Emergency Powers), 1943, was found most valuable.
Subsection (3) is intended to give effect to a recommendation by the Committee on County Court Practice and Procedure. In an ordinary county court action, if the defendant admits the plaintiff's claim and makes an offer of payment which the plaintiff accepts, judgment is entered in the court office without any hearing and without attendance of the parties. This cannot be done under the 1938 Act, which provides that a "postponed order" may be made only at the hearing of the action after the court has had regard to the means of the hirer and any guarantor, and has satisfied itself that the goods are still in the possession or control of the hirer. Where the owner has accepted the hirer's offer of payment these precautions are not needed, and this subsection empowers the court to enter judgment forthwith. The position of any guarantor is safeguarded by the proviso to the subsection, which provides that, where a guarantor is involved, no order may be made before he has had an opportunity of appearing before the court and of being heard. This should speed up procedure and reduce expense, to the benefit of both hirer and owner.
Clause 3 increases the money limit in the Hire Purchase and Small Debt (Scotland) Act, 1932, from £20 to £300. That may seem to be a pretty large jump, but I will not weary your Lordships with the reasons, which I have already given for the raising of the limit in England from £100 to £300. These reasons apply equally to Scotland and it is further considered desirable that the limits should be the same in both kingdoms. Clause 4 is the clause under which it is specified that the Act comes into operation within one month after it has passed. In my submission, this provides a reasonable time for traders to adjust themselves to the changes made by the Bill. I will say only one more thing—I have already wearied your Lordships much too long on this small, Private Member's Bill. I propose 1169 to introduce at the Committee stage an Amendment which will for the purposes of the Act of 1938 and this Bill, redefine the term "hire purchase price." The noble and learned Lord, the Lord Chief Justice, has cast considerable doubt as to whether the deposit paid to a dealer is part of the hire purchase price. He has been good enough to inform me privately that he remembers the case which was heard in 1941, and he is quite satisfied that the Amendment which I propose to introduce at a later stage, covers the point. In conclusion, I should like to thank my noble friend Lord Mancroft, and his advisers at the Board of Trade, for their help and advice. I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(Viscount Furness.)
§ 4.52 p.m.
§ LORD MANCROFTMy Lords, I think it might be for the convenience of the House if I were to intervene at this stage, just to let your Lordships know what the attitude of Her Majesty's Government is towards this Bill. Before I do so I am certain that your Lordships would wish me, on behalf of noble Lords who sit in all quarters of the House, to congratulate my noble friend Lord Furness upon the extremely practical and businesslike way in which he has put forward this Private Member's Bill—and, indeed, upon the fact that he has brought it forward at all. It is for me a particularly pleasant task to congratulate him, because by happy coincidence it was I who followed directly after him when he made his maiden speech in this House. I had the honour of congratulating him upon his maiden speech and of expressing the hope that he would speak frequently and in the not too distant future. I think it is nearly four years since the noble Viscount, Lord Furness, last addressed your Lordships' House, and it is a bare hour and twenty minutes since I last addressed your Lordships; so I will keep my remarks as brief as I possibly can. Another matter of coincidence, however, that I cannot help noticing, is that the first Private Bill on the Order Paper to-day is the London County Council (Money) Bill, which has received its Second Reading, and on the Order Paper in 1938, when your Lordships last considered hire-purchase and the Second Reading of Miss Ellen Wilkinson's Bill, 1170 the first Private Bill was also a London County Council (Money) Bill which then received its Second Reading. Whether there is any link between the finances of our great county council and the hire-purchase system I do not know; but it is at least a happy coincidence.
The Government's attitude towards this Bill, is, quite shortly, one of wholehearted approval. It seems to us to be a necessary and useful measure. There was no need for the noble Viscount, Lord Furness, to apologise for having gone into detail. This is a complex measure, although it covers a simple point, and it is one which, through circumstances with which we are not concerned did not receive a full discussion in another place. It appears to us to fulfil a badly needed social want. Your Lordships will, of course, take advice in this matter from the noble Viscount, Lord Furness, and I very much hope that the House will see fit to give him the Second Reading which he asks for his Bill.
It is not without interest to go back to the 1938 debates on Miss Ellen Wilkinson's Bill. There has been a considerable change of outlook since those days, as well as a considerable change in the value of money. In those days doubt used to be cast upon the whole propriety of hire purchase, although I should have thought that even then it had become a familiar part of our social structure. Hire purchase was not invented yesterday; it even occurs in the Bible. Jacob attempted to acquire Rachel on hire purchase terms, under a contract which I think would not have met with approval by Lard Furness and those who support him. But in 1938 people still suggested that it was encouraging inflation, a reckless expenditure of capital, and that it encouraged thriftlessness. That view may still be held, but I think the opinion most probably held now is that it is better to pay for something gradually out of income—in that way to pay for things which, by modern standards of life, have become accepted as part of the ordinary home needs of every family, but which must of necessity be beyond the means of any family to purchase in the early clays of married life. Hire purchase has now become not only thoroughly respectable but an increasing part of our social fabric. We have only to look at some of the more discreet 1171 advertisements in the papers to-day to see how the hire purchase system is increasing, not only in the range of goods but in the type of manufacturer and retailer who encourages it. That being so, if it is accepted as part of our social fabric, then surely the law appertaining to hire purchase should be brought into line with what we feel to-day is right and proper; and that is what the noble Viscount's Bill seeks to do. In some ways it is a consumers' protection Bill, but it is also, of course, a suppliers' protection Bill. It is a protection to those who regard this part of our social set-up as increasing, and likely to increase still further. In those terms I commend it to your Lordships' House.
I remember a story by the late Edgar Wallace. I think it occurs either in Keepers of the King's Peace or in Sanders of the River. I forget which book it is, and I am not able to check it because, unfortunately, the only novels we have in the House of Lords Library are novels by Prime Ministers. The story concerns a West African gentleman who purchased a bride on the hire purchase system, for so many bags of salt down and a regular payment of so many bags of salt per month. After a short time it became clear that the goods were not giving satisfaction and the purchaser desired to rescind the contract and to restore the status quo. Unfortunately, when the court tried to do it it was discovered that white ants had eaten the salt and the bride's in-laws had eaten the bride. I think it would be unfair to ask the noble Viscount, Lord Furness, to tell us how his present Bill would cope with that situation, but it copes, I think, with most situations which are liable to arise with us as he has told us in his explicit and careful introduction to the Bill to which I very much hope your Lordships will see your way to give a Second Reading.
§ 4.59 p.m.
THE EARL OF LIMERICKMy Lords, I hope not to detain your Lordships long. First, may I declare an interest; I am a director of a public company which arranges to finance machinery. Next, may I say that I speak in support of the Bill. In that context I was glad to learn from the noble Lord, Lord Mancroft, that later on, at an appropriate stage, 1172 certain amendments might be possible. Again, the noble Lord, Lord Mancroft, remarked that when this matter was before another place there was not much opportunity for a general discussion, and following those words I should be glad if your Lordships would bear with me for a minute or two while I sketch some of the background of this story. As I see it (and in this I agree fully with the noble Lord, Lord Mancroft, and, indeed, with the noble Viscount, Lord Furness), matters have progressed considerably since the 1938 Bill, and the public appreciation of the proper or improper use of hire-purchase is much greater than it used to be. However, I think many of us are aware that there still persists too little appreciation of certain facets of hire purchase finance which should, perhaps, be even more closely related in the national interests, and other circumstances in which existing controls, although well meant, have not panned out in the public interest or as the framers of those controls obviously intended they should.
First, to pick up this question of the place of hire purchase in our national activities, may I take very roughly the time-sequence of financing operations, starting with bill operations, through acceptance houses and the discount market, for movement of goods, going on to banking advances, moving on to short-term obligations and ending up, of course, with fixed capital. I have omitted in that category the place which I suggest it is proper to assign to hire purchase, which is intermediate between banking advances (which, historically, as noble Lords who are bankers will agree, are supposed to be limited to, say, six months) and the next step. Here, then, is a flexible control which, in my submission, should be used almost entirely, perhaps entirely, for the financing of those goods which lead to greater production in the widest sense—but certainly not to consumable goods. I would suggest that the use of credit for consumer goods sales is bad socially and is a wrong use of credit. I suggest, therefore, that in a proper use of credit for the purchase of capital goods, what we are really doing is not to put a hirer in a wrong position in any way but to allow a hirer to anticipate his earning capacity. It may be that a young engineer with a good idea, with drive, with capacity, with character, but without 1173 capital, can start a business; and that, I would submit, is a proper case where hire purchase could be invoked to provide him with the tools of his trade and increase the nation's productivity. I think that this Bill will help in its realistic approach to the new values arising from changes in currency, to bring the law into line with reality; and I welcome it in that way.
I welcome it also as giving us an opportunity to consider this wider field for the proper use of hire purchase and to suggest that there are certain aspects which might well be reconsidered. We know that it was thought right to limit by Treasury directive those public companies which are doing this work in the amounts of credit which they might properly obtain from the banks. It was thought right to limit them in two stages: first, to their pre-war limit, despite the change in currency, thereby limiting the volume of goods which could be so moved by these credits; and secondly, by a 10 per cent. cut even in that permitted volume. The effect of this was unfortunate. As many of your Lordships know, when restrictions become onerous people set about to see if they can get round the law. Now a number of companies have been formed within the Capital Issues Committee's limit of £50,000. These companies are not known to me, but 150 of them are known to have registered with the appropriate trade organisation. A well informed article in the public Press a few days back give it as the opinion of the writer that the number of such companies exceeded 600. That, of itself, does not signify anything, but what I think is significant is this: that it is known that some of these companies are formed as subsidiary companies of greater organisations and that those greater organisations use the general body of their credit to help their own wholly-owned hire purchase company. That, I suggest, is an undesirable facet of the present restrictions and of their effects.
Although to my knowledge representations have been made to the Treasury but have not received their approval yet, I hope that the time is not far distant when they may consider restriction by category of goods rather than by volume of credit. I think that would allow those large, well-known companies who, through their own trade organisation with which I am also concerned, are in constant touch with the 1174 Treasury, to introduce, where required, and maintain where it exists, a much better control in the public interest than exists at this day. Your Lordships will forgive me if I have ranged a little widely in this matter, but there was not such an opportunity for consideration in the other place, and I am concerned very much that the good, helpful financing of productive goods should be better known by the public than it has been in the past, so that it may take a proper and useful part in the financial structure of the activities of the nation.
§ 5.7 p.m.
LORD WALERANMy Lords, I rise this afternoon to support this Bill in the main, but with one or two reservations. There is, I think, a real danger if we consider the term "hire purchase" as relating only to furniture, television and domestic articles of that kind. I think that is the way a great many people—one might almost say everybody—think of the words "hire purchase." I fear that we shall be wrong if we fail to recognise the very great increase in the hire purchase of industrial, commercial and agricultural equipment that has taken place in the last ten years. I go so far as to believe quite firmly that the rata at which this category of hire purchase to-day is running is of the order of something like £70 million a year; and I do not believe that this kind of legislation, this limit, is good for commercial and industrial equipment.
After all, as the noble Earl, Lord Limerick, has said, it may be a young engineer who requires the tools of his trade; it may be a small shopkeeper who wants a bacon slicer in order gradually to expand his business; or a small manufacturer who wishes to acquire two extra lathes but does not want to upset his equity in his small company and probably cannot get a loan from the bank. I suggest that those engaged in commercial transactions are usually outside the classes for whom protection was intended, and quite rightly intended, by the 1938 Act. I think that statutory protection should not be extended so as to operate in restraint of freely negotiated commercial trading transactions. I should like to discuss with the noble Viscount, Lord Furness, and with the noble Lord, Lord Mancroft, who spoke on behalf of Her 1175 Majesty's Government, some Amendment for creating a separate category for hire purchase agreements relating to commercial transactions. I know that it may be extremely difficult to define precisely what is a commercial transaction, but I have in mind the definition that has already been used, apparently with success, in the Hire Purchase and Credit Sales Agreement (Control) Order, 1952.
The second point I wish to make is that I question the wisdom of doing away with a separate category for motor vehicles, such as exists under the 1938 Act. What were the reasons why motor vehicles were placed in a separate category in the 1938 Act? They were, I think, three. First, a motor vehicle suffers exceptionally from neglect and bad maintenance; secondly, even with proper maintenance a motor vehicle could suffer heavy depreciation by reason of periodic changes of design or styling; and, thirdly, being a dated article, and subject to rapid depreciation unless properly protected, it is wholly unsuitable for purely arbitrary depreciation, and could not stand the impact of what became Section 4 of the Hire Purchase Act, 1948, which, in effect, says that a person acquiring a motor vehicle on hire purchase under an agreement subject to the Act secures limitation of depreciation, although a buyer for cash has to face the full measure of depreciation. A fourth reason, I think, is that a motor vehicle is more liable to wear and tear and physical deterioration than a stationary article, and by its very mobility the difficulties of enforcing rights of owners are materially increased, making tracing of the article, as well as the hirer, more difficult and subject to undue delay.
These factors still exist, and there is a new factor which can cause unforeseeable depreciation and which did not arise in 1938—namely, purchase tax. The effect of a downward change in the purchase tax must be to render all cars on hire purchase worth less. A hire purchaser could find that he owed more on a car than it was worth, and if the agreement was covered by the Act he would be within his rights in taking advantage of Section 4. I do not think that is right. In so far as any comparison can be made between pre-war and post-war prices—and I think it is almost impossible to 1176 make an exact comparison—taking purchase tax into account, 1954 prices for new cars are about three times what they were in 1938; or, if purchase tax is ignored, about two and a half times. I believe that the proper criterion of values is not a comparison of 1938 second-hand values—if you prefer that word to prices—with to-day's second-hand values, but rather with respective values of new motor vehicles of to-day.
So far as second-hand values themselves are concerned, they are falling, and a serious fall could take place overnight. Acts of Parliament are apt to last a very long time, but it may not be long before used vehicle values will drop very considerably, and they may soon bear a similar relationship to new vehicle values to that which existed before the war. I think that hire purchase facilities will be needed more and more to absorb the larger numbers of new motor vehicles which are expected to be available and any fettering of that facility might have most unfortunate consequences. In particular, I think that a flourishing secondhand market in motor vehicles is necessary to support the manufacture and the buying of new motor vehicles, and one should remember that numerically there are more hire purchase agreements in relation to second-hand vehicles than there are in relation to new ones. I do not say that in relation to total value there are more, but there are certainly more in relation to the numbers of transactions. For these reasons I think that there is a very good case for retaining a separate category for motor vehicles. I conclude by saying that, with these few reservations, I support the Bill.
§ 5.18 p.m.
VISCOUNT ALEXANDER OF HILL-SBOROUGHMy Lords, I should like to take the opportunity of thanking the noble Viscount, Lord Furness, for introducing this Bill, and of saying that, so far as we, on this side of the House, are concerned, the main provisions of the measure are quite acceptable to us. We know that they passed through another place without very much criticism. That may have been a pity, because it is possible that some wider questions might have been raised. There is no doubt about the extent to which the use of hire purchase has grown in this country, or about the great necessity for bringing the 1177 provisions of the 1938 Act and subsequent measures up to date so as to bring them into relation with the facts of prices and markets to-day. From that point of view we welcome the Bill warmly.
The general extension of hire purchase is something which makes me feel that whilst, no doubt, these facilities are in a great way a stimulus to trade we ought to keep a careful watch lest the market is oversold, whether the commodity concerned is one like the motor car, to which the noble Lord, Lord Waleran, referred just now, or more expensive types of furniture than some people can afford, or even articles of absolute luxury. My experience in government in 1929 and 1931, and the recognition of what the crash in Wall Street meant to us from a financial point of view, led me to study the real mainsprings of the financial crisis in the United States. There is not the slightest doubt that the internal market was very largely oversold in relation to that section which was covered by hire purchase. So it is something which wants careful watching. The Bill introduced by Miss Wilkinson before the war was a great safeguard and brought a good deal more confidence to the minds of the people. My own experience in the movement from which I have now retired, the Co-operative movement, showed clearly that the very large business they do through mutuality clubs and the hire purchase system greatly facilitates the ability of many poorer paid workers to buy and enjoy earlier than they would otherwise do some of the amenities they desire.
On the other hand, we feel strongly that it is a pity that a Bill of this kind, desirable though it is, has not introduced some amendment which will secure better control of the charges which are made. The noble Lord, Lord Waleran, mentioned the case of expensive second-hand motor cars which in the course of two or three years might depreciate so rapidly as to leave in the hands of the borrower an article of much lower value than the price he still has to pay. A good deal of that, of course, is contributed by the rate of interest charged. While sitting on the Bench with the noble Lord, I have seen illustrations of how heavy some of these charges are. I do not know how far the noble Earl, Lord Limerick, can give us further enlightenment from his knowledge of mutual finance. It means 1178 that if one buys an article of, say, £68 in value, over two years one might be charged another £33 to £34 by the time it is paid. Even if the £68 were always outstanding during the whole of that period, that would be an interest rate of over I5 per cent. If it were a loan, perhaps 15 per cent. might not be regarded as too high, particularly in the case of an article sold under hire purchase which has a quick rate of depreciation. But when we consider that the person making the contract is paying money towards the £68 the whole time, then the average rate of interest is much higher than 15 per cent. I think the time has come when that aspect of the case requires some further examination.
THE EARL OF LIMERICKMy Lords, will the noble Viscount forgive me? I cannot follow him in a hypothetical case which I am afraid means nothing to me. I would only remark that among those companies which conduct this business the competition is extremely keen, and I would not for a moment accept the suggestion that in that atmosphere of keen competition undue rates exist. I cannot speak for the smaller companies, of which I have no knowledge.
VISCOUNT ALEXANDER OF HILLS-BOROUGHI do not know what the exact rates are in particular companies, but I have heard of one or two rates which run from 6 to 7 per cent., or more. That seems to me a fairly heavy rate of interest if the money is being advanced to sound trading concerns. Of course, it depends on the borrower, but it seems to me to be a high rate of interest—much higher than one could get through a building society. I think the time is rapidly corning, with the enormous increase in the number of hire purchase contracts, when this factor has to be taken into account, particularly in regard to the disturbing effect which might occur on the market in the case of a slump. Such an effect would be much worse if the actual cost to the consumer were so high that he was more likely to break down quickly in his repayments and involve those with capital in the business in greater loss. It cuts both ways: first of all, it is too heavy a charge upon the buyer by hire purchase and, secondly, in the long run it means a greater risk for the people who capitalise the financing of these purchases. While we shall raise no 1179 objection to the Second Reading of the Bill as it is, we shall not lose sight of the fact that further amendments to the law relating to hire purchase contracts are urgently needed.
§ 5.26 p.m.
§ VISCOUNT FURNESSMy Lords, I should like to thank most sincerely the noble Lords, Lord Mancroft and Lord Alexander of Hillsborough, for their kind remarks on the way in which I moved the Second Reading of this Bill. I should like to say to my noble friend Lord Mancroft, in regard to his quotation from Edgar Wallace, that I sat in fear and trembling that it was going to be a quotation from The Frog, but it was not. As regards his West African example, he is right; I cannot answer the question regarding the bag of salt or the hire purchase of wives, and I have to give him the answer which we have heard so many times from the Bench on which he sits, "I must have advance notice of the question." To my noble friend Lord Waleran, and to the noble Viscount, Lord Alexander of Hillsborough, who dealt with points regarding motor vehicles, I would say that I am aware that this matter has been raised, and I will give it further consideration. I hope that we can have consultations between now and the next stage. Regarding Lord Waleran's point on commercial transactions. I would say briefly that I think it is as important to protect small business men, farmers and professional men as it is to protect home buyers. There again we can consider the matter between now and the Committee stage. I need detain your Lordships for only ten seconds more, to thank noble Lords on both sides of the House who have supported this Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.