§ 2.47 p.m.
§ Order of the Day for the Second Reading read.
My Lords, I beg to move the Second Reading of this Bill. Let me get to the point at once. Unless we do something to help "dear old uncle" he will rapidly go out of business altogether. How would your Lordships like to be remunerated on the same basis as you were remunerated in 1872? Let me give your Lordships an example of what is happening in the business of pawnbroking. Take the case of a pawnbroker using a capital of £5,000. The average gross receipts are probably about 25 per cent. in a year—that is to say, cross receipts of £1,250 per annum. He will have to employ a manager, an assistant and a junior assistant. In addition to the wages of those persons, the pawnbroker has to pay out of his £1,250 the rent, rates, insurance, lighting, heating, printing and all the rest of the shop and overhead expenses. If your Lordships think that that leaves him with any profit, then you are more optimistic than I am.
73 The present Bill seeks to remedy the situation in two ways: in the first place, what may be described as the jurisdiction of the pawnbroker is increased; and secondly, his profits and charges are increased. The actual machinery is by amending the Pawnbrokers Acts of 1872 and 1922. At the present time—this is not unimportant—there are four categories of loan: first, those not exceeding 10s.; secondly, those which exceed 10s. but do not exceed £2; thirdly, those exceeding £2 but not £10, and lastly those which are outside the Act—namely, loans exceeding £10. Clause 1 of the Bill reduces the categories of loan to three—namely, first, those not exceeding £5; secondly, those exceeding £5 but not exceeding £50; and thirdly, those exceeding £50, which do not come within the Bill.
Paragraph (a) of Clause 1 brings in Section 6 of the 1872 Act which relates to shops which do pawnbroking but do not call themselves pawnbrokers. Paragraph (b) of Clause 1 relates to Section 24 of the 1872 Act, which applies to special contracts. The area of special contracts under the 1872 Act is loans between £2 and £10. Under the Bill the area of special contracts will be from £5 to £50. Paragraph (c) of Clause 1 deals with the Fourth Schedule to the 1872 Act. That Schedule sets out the profits and charges which a pawnbroker is allowed to make and charge, and those differ with the category of the loan. The new categories which I have just mentioned will therefore have to be substituted in this Bill.
Clause 2 of the Bill deals with Section 16 of the 1872 Act which concerns the time within which one can redeem a pledge. As the law stands at present, a pledge can be redeemed within twelve months. Clause 2 of the Bill reduces the time to six months. It has been found that 90 per cent. of pledges are redeemed within six months and that those which are not redeemed within that period are generally not redeemed at all. If the pawnbroker has to retain a pledge for twelve months it means that he has a certain amount of capital locked up, and it seems reasonable to reduce the redemption period to six months. That reminds me of a rather intimate matter. My own watch has been absent for nine months, so I had better go along and see this gentleman 74 very shortly, unless I want to be caught by this provision in the Bill.
Clause 3 of the Bill deals with Sections 17 and 18 of the 1872 Act, which cover the sale of pledges for over 10s. and this clause merely applies the new category to these old sections of that Act. A similar substitution of new categories is made in sections 19, 21, 22 and 23 of the 1872 Act which contain provisions relating to the sale of pledges for above 10s. I now come to Clause 4 (and I may say that I am not referring to Clause 4 in another sacred, holy and unmentionable matter in another sphere but to Clause 4 of this present Bill), which deals with charges which in future will be permitted to pawnbrokers. Under the present law a pawn ticket costs ½d. if the loan does not exceed 10s. and 1d. for a loan above that amount. I hope your Lordships will not all be ruined because the new charge under the Bill is 2d. Under the 1922 Act the valuation fee was ½d. if 5s. was lent: the Bill makes that charge 2d. for every 5s. lent. The third item in the Schedule to the Bill increases the old charge of 1d. to 6d.
After a pledge has been sold the pledger is entitled to look at the pawnbroker's books and see exactly what were the proceeds of sale, and what surplus is due to him. It takes a little time for a pawnbroker to keep his books and produce them for inspection. A charge of 1d, for that service is a very small reward, and it appears reasonable to increase it to 6d.
Clause 5 of the Bill may be explained in this way. At present, when a person who has pawned something loses his pawn ticket he is required by the 1872 Act to make a declaration. Not only must he himself make a declaration before a justice of the peace, but he must take someone to identify him. It seems unfortunate that a person who has pawned something and lost his ticket should be obliged to tell his neighbours or relatives and disclose the fact of that pawning. Clause 5 of the Bill greatly simplifies the process by eliminating the necessity for a person to identify the applicant and for the applicant to make a declaration.
Clause 6 of the Bill contains a number of consequential amendments which really put into effect changes that I have already mentioned. Clause 7 deals with 75 the commencement of the Act. I have here a number of pawn tickets which it would be out of order to hand round—moreover, they might be of some use to someone. All these will have to be reprinted, and I hope that one month will be sufficient for that purpose. I see that my old friend Angus McKay, of Aberdeen and Jermyn Street, has printed a great deal of matter on his pawn ticket. I only hope that the Bill will not overtake him. Subsection (2) of Clause 7 says that the new clause relating to declarations should operate at once. Subsection (3) of that clause does not alter the existing contract.
I only hope, in conclusion, that no one has any prejudice against pawnbrokers as individuals or as a craft. In fact, they are not only honest people but sometimes very religious, and I hope the right reverend Prelate who sits opposite me will not mind if I say that on one occasion I asked my old friend Angus McKay, of Jermyn Street, whether he preferred the New Testament to the Old Testament. He told me that he preferred the Old Testament and I asked him why. He said, "I prefer the Old Testament because there are more prophets in it." If your Lordships are satisfied that this Bill does justice I commend it to you for Second Reading.
§ Moved, That the Bill be now read 2a.—(Lord Meston.)
§ 2.55 p.m.
My Lords, the noble Lord, Lord Meston, has explained to the House the purpose of this Bill; and as your Lordships may have gathered, his measures are very complicated. I can only say that on this Bill Her Majesty's Government are neutral. I think it may be said that a benevolent neutrality is shown in that the Government draftsman put his hand to the complicated task of framing the Bill for the noble Lord and for his friend in another place.
Perhaps a word on the effect of this Bill upon the ordinary person who uses the services of the pawnshop might be useful to your Lordships. I am informed that the average loan that is taken out at a pawnshop is between 16s. 10d. and 21s. But if we say that it is £1, that would cost approximately 8d. for one month. The effect of the 76 measure which the noble Lord has put before the House will mean that the charge will now be 1s. 3d. for borrowing £1 for a month. If we look at the matter in terms of goods and services that does not seem to be an undue amount for a pawnbroker to charge. If his wholesale price for an article is £1 and he sells it, as it were, retail, the following month his present price is £1 0s. 8d., and the new price will be £1 1s. 3d. I cannot say whether your Lordships believe it is right that the pawnbroking business should be regulated by Statute, but the noble Lord has told us of the Acts of 1872 and 1922. Incidentally, pawnbroking was regulated by Statute much earlier—right back in the Middle Ages, when it was started on the Continent and carried on as an industry by the Pope. It was not greatly thought of in this country by the predecessors of the right reverend Prelates on the Bishops' Bench. Gradually, however, pawnbroking came into more favour in this country. In fact, it has been regulated by Statute in this country since 1669. If it is desirable for pawnbroking to be regulated by Statute then there is a case for putting forward these provisions.
The National Association of Pawnbrokers submitted a scheme to my right honourable friend in 1957. That scheme, which was broadly the same a, the Bill now outlined by the noble Lord was scrutinised in an independent and confidential examination by the Accountants' Division of the Board of Trade. I have a copy of that Report and I will put it in the Library for the information of your Lordships. The Report concluded that the profit on capital at present used by the pawnbroking industry was something in the region of 2½ per cent. The effect of the noble Lord's Bill would be to increase that profit margin to the 10 per cent. mentioned by the noble Lord, and in the light of present-day costs and values that would seem to be fair.
§ 3.0 p.m.
My Lords, I thank the noble Earl, Lord Bathurst, for his kind remarks and general blessing. I hope I am not out of order, but I should like to express my appreciation to Mr. Graham Page for what he has done in another place. In point of fact, he introduced the Bill, piloted it through another 77 place, and I think to a large extent did something which few people can do successfully: that is, he drafted the Bill or part of the Bill. I do not propose to say any more, because to-day is a very busy day. There are three very important Bills to be dealt with: the Pawnbrokers Bill, then a Scottish Bill and then the Charities Bill; "and the greatest of these is charity". I thank the noble Earl, Lord Bathurst, once again for what he has said, and I beg to commend this Bill to your Lordships' House.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.