HL Deb 31 January 1961 vol 228 cc91-3

2.43 p.m.

LORD STONHAM

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper, and at the same time to declare an interest.

[The Question was as follows:

To ask Her Majesty's Government whether they will abolish the restriction which prohibits retail furnishers from allowing customers who have already paid an initial deposit and established their credit-worthiness by maintaining payment of instalments due under the original agreement, to buy additional goods without payment of a further deposit.]

THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE)

My Lords, the answer is, No. When the recent relaxation of the terms of the Hire Purchase and Credit Sale Agreements (Control) Order, 1960, was being considered, my right honourable friend had also before him the proposals of the furniture industry for a relaxation of the kind suggested by the noble Lord. The essence of this kind of proposal is that a single initial payment can serve as the deposit for several successive transactions on hire-purchase terms. It would thus necessarily involve the creation of additional credit, and so frustrate the purpose of Her Majesty's Government in maintaining the existing controls on hire-purchase. As your Lordships will remember, the period of repayment of sums due on hire-purchase contracts was extended from two years to three years on the 20th of this month. For furniture, the deposit is at the lowest rate required under the present restrictions—namely, 10 per cent.

LORD STONHAM

My Lords, is the noble Earl aware that the extension to three years was unwanted in the furniture industry, and is of very little help? Is he also aware that this particular prohibition, whilst it applies to all hire-purchase transactions, in fact affects only the furniture industry materially and is largely responsible for the fact that hundreds of firms have closed down and thousands of workers are partly or wholly unemployed? In view of the fact that no one wants to extend the total credit, would the noble Earl ask his right honourable friend whether he would consider removing this prohibition provided that the initial amount of credit was not increased?

THE EARL OF DUNDEE

My Lords, I do not see how it would be possible, under this "add-to" system, the whole purpose of which is to increase the initial amount of credit without making a further deposit, to avoid a further extension of credit money, which it is the purpose of the Government. to check in order to prevent inflation.

LORD STONHAM

My Lords, it is very simple. If someone has £200 worth of hire-purchase credit—

SEVERAL, NOBLE LORDS

Order, Order!

LORD STONHAM

Is the noble Earl aware that it is quite a simple matter? If someone has £200 worth of hire-purchase credit and pays off £100, he can then have another £100 worth of goods without a further initial deposit. It would not increase the total amount of credit.

THE EARL OF DUNDEE

I am sorry, hut it seems to me that that is exactly and precisely what it would be doing.