§ 3.23 p.m.
§ Order of the Day for the Second Reading read.
§ LORD PEDDIE
My Lords, I beg to move the Second Reading of the Hire-Purchase Bill, but before proceeding with my arguments, I would say that I am delighted to take this opportunity of extending my congratulations to my noble Leader upon an honour so well deserved.
The purpose of this Bill is to provide urgently needed safeguards in the field of hire-purchase and credit-trading and to correct the abuses which are universally condemned by reputable hire-purchase organisations and social service organisations alike, and which, furthermore, have been high-lighted by the Molony Report. Neither the Bill nor any of my arguments expresses universal condemnation of hire-purchase. Within limits, and operated with discretion, hire-purchase can render a useful service to the community. It is growing, and to-day hire-purchase amounts to nearly £900 million. To-day, 50 per cent. of household goods and two-thirds of motor-cycles and motor cars are sold on the "never-never".
Used sensibly, hire-purchase can be a boon and bring worthwhile goods within the reach of people who would not otherwise possess them. It is interesting to note that four out of five young working-class married couples depend upon hire-purchase for the equipping of their first homes. The social effects of earlier marriage is, of course, anybody's guess, but since, for good or ill, hire-purchase has become part of our economy, it becomes our responsibility to see that it is not made the happy hunting ground for jackals. So long as we tolerate the appalling abuse, to which I shall refer and which Parliament could correct, the whole field of hire-purchase falls into disrepute.
Since the Molony Report of last July, the noble Lord, Lord Derwent, on behalf of the Government, said, on November 14 last, that hire-purchase law as it affects the consumer is a first priority. But he went on to state [OFFICIAL REPORT, Vol. 244 (No. 8), col. 711]:There will not be an opportunity this Session for a Government Bill on hire-purchase, but this is traditionally a field in which private Bills often take over.423 Judging by past experience, there is little chance of the Government's presenting a Bill on all aspects of hire-purchase. I need only quote the experience of the Weights and Measures Bill in relation to the Hodgson Committee's Report of twelve years ago. I believe that it is wrong at this stage, in face of the abuses which exist at present, to wait for comprehensive legislation and fail to remedy an awful abuse which demands immediate attention.
The original Hire-Purchase Act of 1938 sprang out of the initiative of a private Member of the House of Commons, the late Miss Ellen Wilkinson. It followed 50 years of agitation, not only on behalf of private individuals but also on behalf of reputable organisations. The abuse to which the original Act was directed was the "snatch-back" of goods in respect of which the hirer had fallen into arrear. This could be done when payments were almost completed. With one payment to go, the goods could be snatched hack. The Act gave protection to hirers and purchasers. It laid down that the hirer should be given full information on important terms of the agreement. It imposed certain implied conditions and warranties in regard to the goods; and, more important, it restricted the power of the trader or hire-purchase house to repossess, after one-third of the price was paid, except by a court order. In addition, it gave the hirer the right to return the goods and terminate the agreement after 50 per cent. of the total hire-purchase price had been paid.
I would remind your Lordships that the original Act covered only agreements under which the total price did not exceed £100, £500 for livestock and only £50 in the case of motor vehicles. In 1954, a further Private Member's Bill amended the 1938 Act and raised the ceiling of the operation of hire-purchase. With minor exceptions, all credit sale agreements were raised to £300, while in respect of livestock the limit was raised to £1,000. I would draw attention to the fact that for motor vehicles it was raised from £50 to £300.
Now I turn to the Bill that is before the House. The Bill has two major objectives—first, to extend the range of protection offered by the Hire-Purchase 424 Acts, by raising the money limit, and, secondly (and this, to my mind, is probably the more important part of the Bill), to restrict the activities of door-to-door hire-purchase salesmen, many of whom bludgeon or cajole housewives into hire purchase agreements for goods they often do not want at prices they frequently cannot afford. Clause 1 of the Bill extends the financial limit from £300 to £1,000. In this regard, I would quote from the Molony Report, which says in paragraph 542:In cases outside the present money limit, the rights of the hirer are permissibly set at a lower level than where the Act applies.In other words, those who have hire purchase agreements for amounts beyond the scope of the Act are frequently exposed to serious disabilities, and they have no protection. The Report goes on to state that thecase for extending the range of application of the Act of 1938 is overwhelming.I can assure your Lordships that there is every justification for making such a statement.
There are almost 6,000 people committed to prison each year for debt and, according to the Prison Commissioners, a high proportion is in connection with hire-purchase. Recently a judge contemptuously gave a judgment which allowed 297 years for the settlement of a debt in respect of a car on the "never-never" basis because he was not satisfied with the manner in which the transaction had been conducted. In this regard (I hope your Lordships will forgive the quotation) I should like to quote from a recent issue of the Financial Times, which stated:So long as Parliament declines to act in reforming hire-purchase law, the courts seem quite prepared to hammer out in piecemeal fashion ways and means of giving the hirer protection which the Judges believe legislation has failed to give him.That is not a satisfactory situation. The Molony Report says that an advance to £375, which would be approximately commensurate with the change in the value of money, would not amount to a progressive step. Even motor cars to-day are no longer a luxury, and hire-purchase, in many cases, is the only way in which people can secure their motor car.
In hire-purchase agreements, for amounts above the present limit of the 425 Act the dice is loaded too heavily infavour of the hire-purchase organisations and against the hirer. That again is the view of the Molony Committee. There is little or no protection for the unfortunate who fall into the clutches of unscrupulous organisations. I would hasten to add that not all hire-purchase organisations are unscrupulous; but such do exist. The hirer seldom has knowledge of hire-purchase agreements; and believe me, my Lords, in some cases, apart from the necessity of having good eyesight to read the document, it needs the wit of a Solomon and the cunning of a Philadelphia lawyer to understand some of the clauses. I agree that the Molony Report favours no limits and proposes that protective legislation should apply to all hire-purchase and credit-sale agreements comparable in character to consumer sale, irrespective of price. There may be some advantage in this. But there are difficulties. There are difficulties of definition of "a consumer", and even the definition of the Molony Committee, which they say is not perfect, admits the prospect of litigation.
I would draw the attention of your Lordships to one particular aspect of this problem of no limit or of the limit of £1,000. It is questionable whether protection could be confined exclusively to domestic consumers. There are many small traders and farmers who buy for business reasons, or joint business and personal consumption, who would be outside the scope of the Act if the proposal of the Molony Committee were accepted. One of the features of the previous Act is that the farmer has a higher limit and, in consequence, in connection with livestock, has a higher protection.
It is suggested that the figure of £1,000 would carry a disability, as, of course, any money figure carries a disability in an inflationary age. But we have always had a money expression, and I would point out that the operation of no limit is itself not without anomalies. Even the hire-purchase trading organisations themselves suggest the lifting of the limit, and £1,000 would cover the overwhelming proportion of hire-purchase transactions. It is reliably stated that anything from 95 per cent. to 97 per cent. would be covered by the acceptance of the £1,000 limit. Furthermore, it is suggested that, by and large, the person capable of entering into a hire- 426 purchase contract beyond £1,000 should be reasonably well able to secure the right sort of advice.
Clause 2 of the Bill merely raises all the limits of purchase price below which the credit sales agreements are freed from the requirements of the Hire-Purchase Act, 1938 by increasing the limit specified in Section 3 from £5 to £20. This was inserted in the original Act to cover simple credit transactions without formal documents; and I might point out that that Amendment is simply to deal with the depreciation in the value of money since 1938.
I now turn to Clause 3, which is to my mind, by far the more important in the Bill. This also gives effect to vital recommendations expressed in the Molony Report. The Molony Committee drew attention to awful abuses that frequently result from hire-purchase transactions entered into as a result of high-pressure unscrupulous door-to-door salesmen. These are men who work on a commission, and once the agreement is signed, they have no further interest in the unfortunate hirer. In this clause (it is quite a simple clause, supported by all the reputable organisations and every one of the social service organisations) it is provided that where agreements are signed other than on the premises of a retailer there shall be included in any memorandum of a hire-purchase or credit-sale agreement a statement that for a period of three days from the day on which the agreement is signed the hirer or buyer shall be able to give notice in writing to terminate the agreement. There are other countries which have such a law, including Switzerland, who introduced it as recently as January 1 this year. Where such notice was given, the agreement so terminated would be deemed to have been rescinded by mutual consent. In this clause there is no restriction and no penalty upon the ordinary trader. But it would provide a cooling-off period which would allow the housewife to give calm consideration to her own family's finances before entering into an agreement for a contract that she could not fulfil.
I would urge your Lordships to pay regard to what I and many others believe to be the desperate need for the protection of the public against many unscrupulous door-to-door salesmen. There is overwhelming evidence to indicate that this problem is widespread. There are 427 universal demands from social organisations to eliminate this evil. Every week there are literally thousands of housewives subjected to the menace of these door-to-door operators, using all the tricks of the trade—slick individuals who can cajole, bully or browbeat the housewife. These men are not normal regular credit traders. They are commissioned men, whose sole objective is to get an agreement signed, draw the commission and leave the customer to wallow in the debt; and the only help they will give to the housewife is to lend her a pen to sign the agreement.
There are thousands of cases brought annually before the Citizens' Advice Bureaux and other social service organisations, relating to people who have been enmeshed in a net of debt by the persuasiveness of people of this sort. The Citizens' Advice Bureaux cases on hire-purchase have more than trebled in the past five years. Cases concerning shoddy goods and hire-purchase troubles have risen from 23,000 in 1958, to 74,000 in 1962. The Citizens' Advice Bureaux are not the only organisation. The Marriage Guidance Council and the Soldiers', Sailors' and Airmen's Families Association have drawn attention to this important problem. The National Council of Women's Institutes and the Women's Guild at recent conferences unanimously demanded this period of calm reflection that I suggest after signing agreements.
I can assure your Lordships, without getting unduly worked up about it, that this problem leaves a ghastly trail of worry, broken marriages and mental anxiety which has more than once ended in suicide. I could quote many cases. I could show your Lordships newspaper cuttings which tell an awful tale of the misery created by this sort of operation. I could show your Lordships letters that have come to me within the past few days, and I will quote merely one, which I have had an opportunity of checking and which gives some indication of the sort of thing which is going on—and it is typical of hundreds. This case concerns a woman, a widow, on whom two hire-purchase salesmen called when she was alone in her home at Finchley. This is what happened.
The men said that they were doing a 428 survey for a housekeeping organisation. They tried to sell her a vacuum cleaner which they insisted on demonstrating. They stayed in her house for three hours in spite of her protests that she was a widow, had no spare money, had been out of work, and that she already had a perfectly good vacuum cleaner. They examined her cleaner and said it was faulty. Exhausted, she finally let them take it as a £15 deposit on an agreement to buy their demonstration model. Because she could not find a guarantor, one of the salesmen later forged the signature of her dead husband on the indemnity form, and then witnessed the signature himself. The finance company, after protest, have agreed to cancel the agreement with the people who sold the vacuum cleaner, now they know that the signature of the guarantor was the forged signature of a dead man. When the firm for whom the agents operated were approached, their only retort was, "He is a good chap who has been with us for three years, and this is the only bad thing he has done." I do not suppose it was a had thing so far as they were concerned.
I might indicate the other side of the coin. I agree that not all the welshers are on the street side of the doorstep. Sometimes there is a case of the biter being bit. The housewife takes the idea of "never-never" too literally, with no intention of paying. This three-day waiting period would cramp the style of those who too quickly succumb to the blandishments of salesmen, and who later make a plea to the courts that they were bulldozed into signing. That plea would have little strength if a three-day waiting period were introduced.
I know it may be argued that people should be able to say, "No", but just consider the uneven combat between the harassed housewife, with children to attend, suddenly confronted with the blandishments of persuasive salesmen who are trained never to accept "No" for an answer. I have here a copy of a circular sent out recently by the British Standards Institution Consumer Advisory Service, who gave a warning—the third one in recent months—against the misleading practices of door-to-door salesmen. Those are the wrongs that are being perpetrated with legal 429 sanction, because the law at the present moment can do little or nothing to stop it.
I know it might be argued that there is a case for a comprehensive Bill, including consolidation of the various Acts since 1938, and integration of the law of Scotland and England. But I believe that it would be wrong to delay dealing with this appalling abuse which no doubt continues, and which social services organisations jointly condemn. In conclusion, I may say that I was gratified to receive only yesterday—and I am sure Members of your Lordships' House have also received it—a circular from the Automobile Association, the R.A.C. and the Scottish R.A.C. without any approach on my part or on my behalf. They themselves have indicated, after their own calm reflection, that… the motoring associations welcome the introduction of the Hire-Purchase Bill by Lord Peddie.Therefore, I would beg your Lordships to accept this opportunity which is presented to the House to-day to do something immediately, with little difficulty, to remedy what so many people and so many organisations have indicated as being a terrible abuse. I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Peddie.)
§ 3.47 p.m.
§ LORD SHEPHERD
My Lords, may I first compliment my noble friend Lord Peddie on two counts: first, on the speech that he has made this afternoon, which I think will rank as one of his finest performances—no doubt due to his sincerity and his deep feeling in this matter. I should like also to thank my noble friend for the considerable time and expense involved on the part of himself and his friends in producing this Bill. Before proceeding to the Bill, may I join with my noble friend Lord Peddie in expressing our very great congratulations to our noble Leader. I hope that he may wield lustily, and with effect for many years to come, the sword of honour that he has been given this afternoon.
This is not a political Bill; there is no political motive in it. Both the 1938 and the 1954 Acts received support from all parts of your Lordships' House and in another place. The Bill which was 430 discussed last year in another place again received support from all parts of that House. Unfortunately, it was not possible to put that Bill to a vote, in that a Member rose at the last minute to continue the debate, with the result that the Bill was talked out and no decision was possible.
I must express some regret, when I look at the list of speakers, that noble Lords opposite have not decided to speak, because looking at the list it would appear to be slightly lopsided. I hope that perhaps in the course of this debate some noble Lords opposite might feel that they should rise and give this Bill some support. Equally, may I express some disappointment that no Law Lord has agreed to speak, because, as my noble friend Lord Peddie has said, it was not only the Molony Committee, the automobile associations and the welfare organisations throughout the country that expressed deep concern at the present state of our hire-purchase legislation, but our courts are repeatedly drawing the attention of the public to many aspects of legislation that require very rapid treatment.
My noble friend read an extract from the Financial Times. I would that he had gone on, because the Financial Times makes clear that, until we deal with a limit under which protection can be given, the courts are to a great extent unable to give the protection that they feel is warranted from the evidence in cases brought before them.
This is not a political Bill. My noble friend referred to the 1938 Act of Miss Ellen Wilkinson. I think it is right to say that that Bill not only received the support of all Members from all sides but in fact received the overwhelming support of the hire-purchase companies themselves. They wished to protect their own interests and their own names by not dealing with those companies which brought their business into ill repute. And I understand that the hire-purchase companies support this Bill although they would, I believe, prefer no limit to the £1,000 proposed.
Therefore, my Lords, I believe that we have a Bill that can be welcomed and supported by all political Parties, and I believe by the industry itself, or the respectable part of it; and I hope that we shall hear this afternoon that the 431 Government themselves will give their support. We require Government support because, even if this House should approve the Bill, as I believe they will approve it on the facts that will be laid before them, we shall need time in another place; because I believe that if the issue were to be put in the other place there would be overwhelming support for this Bill.
There may be some who say that this Bill is limited, that it merely covers the two main proposals of the Molony Report. We should all welcome a comprehensive Bill, but it would not be possible for a private Member to introduce and pilot through a comprehensive hire-purchase Bill. It would require all the skill and all the resources of Government Parliamentary draftsmen to produce such a Bill. We should welcome a comprehensive Bill but the noble Lord, Lord Derwent, has already made it clear that we cannot expect such a Bill this Session. I doubt whether we should see it next Session. In fact, I would strongly suspect that, at the very best, we should see it in 1965 or 1966. Therefore we should have to wait many years in order to give protection to many people. And I wonder whether this House is content, knowing of the abuses that are taking place and the hardships that are being borne, that we shall say we will not move this one small step to give protection, but will wait for a comprehensive Bill. I believe that the overwhelming desire of every Member in this House, if protection can be given, is to give it now and not to delay.
It may be said as another objection to the Bill that it covers only England and Wales. Unfortunately, that is true, but the major problem has been Scottish and Northern Ireland law. But I would suggest that if we today as a House could give protection to England and Wales, that would be a challenge to the Government, with all their resources, to produce corresponding legislation to cover Scotland and Northern Ireland. I think this House can give a spur to the Government, and I think the Government, in fact, really would be willing to bring in legislation not only for England and Wales but also for Scotland and Northern Ireland.
It has also been said, in regard to the 432 £1,000 limit as proposed in Clause 1, that this would add to the present cost of hire-purchase. I wonder whether that is true. The hire-purchase companies belong to an association. To-day they can, if they wish, raise their rates and alter their terms. They are at present earning very substantial profits and if there were to be a rise in cost it would obviously stem from some malpractice by a large number of individual hirers. But I think it is correct to say that the experience of the hire-purchase companies and mail-order houses is that the amount of malpractice and deliberate fraud or default among the individual hirers is relatively small. In fact, I would suggest that if one looks at the mail-order houses—mail-order is a form of hire-purchase—there is a very marginal difference between their prices in the mail-order books and prices charged in shops.
I thought there was a very valid point in the comments of the Automobile Association, that, in fact, by increasing the limit to £1,000, it might well make the hire-purchase companies far more discriminating in the type of business they accept. I know that in 1961 the hire-purchase companies sustained substantial losses, but that was not due to the small individual hirer; it resulted from malpractice by fairly big secondhand car traders. Therefore, I do not think there is a great deal of strength in the argument that if this limit were brought in it would result in a big increase in the cost to the consumer. If there is some Amendment required to give protection to the hire-purchase companies against possible malpractice, that will be possible on the Committee stage.
There are some who would wish the limit to be taken away completely, but I do understand that. I have had long talks with my noble friend Lord Peddie and his advisers and I am quite satisfied that, while that might be Utopian, it would not in fact be very practicable because it would bring into the whole range of hire-purchase business many transactions which should not be there. The setting of the figure at £1,000, which has the support of the automobile associations, is to embrace practically all the motor business. It may well be that the House might not agree to £1,000; they might wish it to be £1,500, or it may be they would wish it to be less. The present limit of £300 was set in 1954. We should 433 have a case which could not be disputed that the figure to-day should be £375 or £400, merely to correspond in money terms. Therefore, I would say, whatever may be the feelings in any quarter on the question of the figure of £1,000, that that matter should be debated in Committee, when we can look at the figure and the other problems and endeavour to reach a satisfactory conclusion. But I would beg the House this afternoon not to support any criticism of this Bill merely on the detail of £1,000 or otherwise.
To my noble friend Clause 3 is perhaps the most important, because that is the one that will deal with the ever increasing problem of house-to-house selling. The house-to-house business is, I would hardly say the oldest profession, but at least the oldest honourable trade. It has been going on for centuries. In the main, however, it has been on smaller items: brushes, polish, the smaller house-to-house items. Certainly for many, the house-to-house salesman of that type was a blessing. But the trend has changed. There are now high-powered, well-trained, persistent, aggressive salesmen knocking on the door, entering the house to sell merchandise of very considerable value, and I suspect on many occasions not so much concerned with the article they sell but the credit they will be able to sell to the occupant of the house.
There is a vast difference between the sale of articles and the sale of credit. It is true the housewife has to put her signature to the hire-purchase agreement. Before coming to this House I had a look at a number of these hire-purchase agreements. As a businessman, if such a contract came on my table for my signature I should send it to my solicitor, which most businessmen to-day in fact do. One of these documents, from a well-known motor company, I gave to my wife and two married ladies I know, and asked them to read it in the peace and quiet of their homes and to tell me how long it took them to read it and broadly understand it. On average it was about 45 minutes. When I asked one or two questions—admittedly with the terms in front of me—their knowledge of it was not very clear. These are the agreements that a housewife, harassed and perhaps not very well educated, is expected to sign with the persistent, aggressive salesman looking over her shoulder. I think 434 that is wrong and that protection should be given to the family. That is the sole purpose of Clause 3.
I will now express one regret for what is not in the Bill. In fact I have told my noble friend that if this House were to give the Bill a Second Reading to-day I should move an Amendment on Committee. I will tell your Lordships what I propose, if only because you may think it an added reason why we should give this Bill a Second Reading. Under a hire-purchase agreement the contract, as I understand it, is between the hirer and the company. In most families the agreement would be signed by the husband. It might cover merchandise of very considerable value. There might be a number of hire-purchase agreements covering perhaps most of the chattels, the furniture, in the house; they might well cover the car. There may be a joint account, a joint effort and in many ways a joint sacrifice. And then the hirer, the husband, dies. The unscrupulous hire-purchase company can then move in, within the terms of the hire-purchase agreement, and take everything, irrespective of the extent to which payment has been made. It may be that 90 per cent. has been paid towards buying the furniture, 50 per cent. towards their car; but the hirer dies and all could be gone. I do not think that is understood by the majority of the people in this country. In fact, I believe that there are a number in your Lordships' House who were not aware of that position. I think that is utterly wrong.
Therefore, if this Bill were given a Second Reading, I should put down an Amendment to give some protection, to give some time for those who are left in the family to make arrangements to take over the commitments to the hire-purchase company. And may I say in this respect that the responsible, first-class finance houses are in agreement with it. It is only the problem of getting some of the smaller, less scrupulous hire-purchase companies to agree that has so far prevented it. I believe by law we should give protection to the family.
This could be another momentous day on which Parliament says, "We will now take one more step forward to give protection to the consumer". I think the time is ripe. We have the expression of 435 the Molony Report, to which the Government attach so much importance. It is a fact that the Government and the Conservative Party have recently laid great stress on protection for the consumer. That has been our path in this House and in our Party. It is shared also by the Liberals. I therefore hope that, united on all sides of this House, we shall go forward and give this Bill the Second Reading it deserves.
§ 4.10 p.m.
§ LORD AIREDALE
My Lords, I feel certain that this Bill would gladden the heart of the learned judge who complained rather wearily one afternoon that too much of the time of his court was being taken up by people entering into contracts which they did not understand, with people they did not know, to buy goods they did not need with money they had not got. The Bill is, of course, narrow in its scope. I think the noble Lord who introduced it has explained why.
The only matter which I propose to speak about, and that for only a few minutes, is the paragraph under Clause 3 of the Bill which provides what the Molony Committee called the "cooling-off period" to be made available to the customer within which to escape from the hire-purchase contract in the case of a door-to-door hire-purchase transaction. This escape is, under the Bill, to be made available to the customer only. I am not sure whether this is really right. As a humble member of the legal profession—and I am a little emboldened to pursue this course by the knowledge that no Law Lord's name is down on the list of speakers this afternoon—I should have thought that, where a Statute is providing a special means of escape from a particular class of contract entered into by two contracting parties, the escape route should ordinarily be available equally to both sides. It would certainly seem fairer if that were so.
I am encouraged in this view by the Molony Committee Report, paragraph 520 of which says:the idea … that a bargain having been made, one party should be at liberty to cancel it, is novel and not inherently attractive.One knows, of course, that it is the customer who, in almost every case, is likely to need the protection, but per- 436 haps not in every single case. The noble Lord, Lord Peddie, himself said that sometimes the biter gets bitten; and, just as the customer may be rushed into an unwise bargain by high-pressure salesmen, so, I would submit to your Lordships, in some cases may the honest salesman be misled by the apparently affluent surroundings of the home in which he is preparing to enter into a contract with his customer. It might well be that in the three days during which, under this Bill, the customer has a "cooling off period", the salesman or his principal, on reconsidering the credit-worthiness of the customer, decides it is wisest in the interests of both parties not to go on with the contract. So I should have thought that by Amendment this Bill should provide for the "cooling off period" of three days not only for the customer but also for the salesman or his principal as well.
That is the only constructive suggestion that I feel able to put forward on this short Bill. Of the Bill as a whole I would say "So far, so good"; but I would hope that further hire-purchase reforms not contemplated in this Bill would follow in due course, because certainly the Molony Committee were of the opinion that many more far-reaching reforms were required than are included in the limited scope of this Bill.
§ 4.15 p.m.
§ BARONESS BURTON OF COVENTRY
My Lords, I find myself to-day in some difficulty, indeed in some distress, because I do not agree with my noble friends. That is a difficulty in regard to which I am sure I shall have the sympathy of the House, and even the patience of my own colleagues. The more I look at this vast subject of hire-purchase, the more am I convinced in my own mind that it is not suitable for a Private Member's Bill. I have thought about this for some considerable time, and I really do believe that a subject such as hire-purchase needs comprehensive legislation by the Government of the day.
To go back to our debate on the Molony Report on November 14 last, the Minister of State said [OFFICIAL REPORT, Vol. 244 (No. 8), col. 711]:The Molony Committee considered the Committee's recommendation relating to hire-purchase deserved first priority after the Consumer Council is set up, and after that should 437 follow an amendment of the Merchandise Marks Acts, and next amendment of the Sale of Goods Act. That was the order they recommended.The Minister went on:The Government accept in general this assessment of the relative order of priorities, and are accordingly giving particularly close attention to the Committee's recommendation on hire-purchase law as it affects the consumer. That, from the legislative angle, is the first thing that Her Majesty's Government are considering. There will not be an opportunity this Session for a Government Bill on hire-purchase, but this is traditionally a field in which Private Bills often take over. In view of the programme this Session there is no possibility of a Government Bill to introduce this matter. A good many inquiries have still to be made.At Column 717, the Minister told us on November 14 that:… the necessary studies for hire-purchase legislation have already started".When the Minister comes to reply to-night, I wonder whether, first of all, we can have an answer to the basic inquiry as to whether the Government intend to deal with this vast field by piecemeal legislation from time to time. Secondly, will he tell the House, if that is the case, what use the Government intend to make of the necessary studies already referred to? Just over a year ago, in another place, the Private Bill of Mr. W. T. Williams was talked out on the grounds that it anticipated the Report of the Molony Committee. We are now told that the Government accept the recommendation of the Committee, that hire-purchase law should be a first priority following the establishment of the Consumer Council, and, as I just said, we know that studies on this started some three months ago at least. But a bland invitation is thrown out by the Minister on November 14 for Private Members to take up this matter. In my humble opinion, not only is this wrong, but I think it is a blatant abdication of responsibility on the part of the Government, whose job it is to deal with a social problem like this. I say "abdication of responsibility" because there are doubts about the solutions proposed, and I think the House would agree that there is not the same measure of agreement as there was in the case of the late Miss Ellen Wilkinson's Bill some years ago.
Therefore, I would suggest that the Government themselves should bring in a comprehensive measure. If they plead, as they have done, that the time is lack- 438 ing this Session, then I think they should have given an undertaking to Parliament that a comprehensive Bill would be included in the next Queen's Speech if, of course, they were here to frame it. I appreciate that they could not do more than that.
During the past five weeks I have tried to find out what people who have a peculiar experience of this matter think about the Bill that we are discussing to-day. I did not presume to go to these people and say what I thought, but I have tried really honestly to find out their feelings. I refer to the National Citizens' Advice Bureaux Committee, to the Hire-Purchase Trade Association and to the Consumer Advisory Council, and I should think there would not be any dissent in this House that in those three groups must exist about the best cross-section of informed opinion on hire-purchase cases in the country today. I find among those three associations strong support for the point of view that I am about to take.
We are here to-day discussing the Private Member's Bill put forward by my noble friend Lord Peddie, and, if he would not take it amiss, I should like to say what a very fine speech I thought he made. He knows I disagree, and I am sure he will take it in good part, but my noble friend put forward his Bill in response to the very definite invitation issued by the Minister on November 14 last. I remember the noble Lord, Lord Shepherd, getting up and stressing that the Minister was making this offer.
I should like to come straight away to an outstanding factor, the existing money limit, which is the most important single problem in relation to hire-purchase law. The Act of 1938 originally applied only to transactions not exceeding £100, or £50 in the case of motor cars. Railway rolling-stock and livestock were also expressly provided for, but I think that these might be said to lack consumer interest for our discussions to-day. In 1954 the Hire-Purchase Act substituted a figure of £300 for all goods other than livestock. This is now the limit in which the consumer is interested. Strong representations were made to Molony on two points; one that the limit of £300 should be raised; and the other that the limit should be abolished. The Bill we are 439 discussing to-day proposes the raising of this limit to £1,000.
My Lords, I think before we examine exact amounts of money the most helpful thing to do would be to see what classes of goods are excluded by the present limit of £300, and the extent to which the consumer is adversely affected by not enjoying statutory protection in these cases. It seems to me, and to the people to whom I have talked about this matter, that apart from rare cases where furniture valued at more than £300 is included in a single agreement, consumer transactions in excess of £300 almost exclusively—and I would underline "almost exclusively"—relate to cars, including the better second-hand cars, and caravans. In fact, the National Citizens' Advice Bureaux Committee, with vast experience in this field, is worried at the considerable amount of hire-purchase cases dealing with cars excluded from the Act as it exists to-day.
Your Lordships will know from the Molony Report that transactions in cars exceed 900,000 in a year, four-fifths of these being second-hand. Therefore I submit that we have the problem: should cars and caravans be brought within the Act? If it is thought desirable to do this, should we better achieve it by bringing in the majority of such deals, as the noble Lord, Lord Peddie, said we should, by raising the limit to £1,000 as this Bill proposes, or should the limit be rescinded altogether for all consumer transactions, irrespective of value? I agree, as my noble friend said, that in this latter case it would have to be decided what is a consumer deal. If we were merely to lift the ceiling commercial and industrial hire-purchase transactions would be covered, and I agree with Molony that at the moment we have no concern with those aspects.
My Lords, I discussed with the Hire-Purchase Trade Association the suggestions put forward in the Molony Report for reaching a definition on this particular point. I will not re-quote that part of the Molony Report, but the definition is to be found on page 154, paragraphs 469 and 470. The Hire-Purchase Trade Association, while agreeing with what Molony was trying to do, considered the suggestions in regard to definition put forward in the Report cumbersome and awkward. In a sug- 440 gested draft Bill drawn up by that Association they have put forward a definition on the following lines, which I should like to quote so that it is on the record:Nothing in this Act shall apply to agreements relating solely to equipment and machinery of all descriptions designed specifically for industrial, scientific or commercial use, nor to mechanically-propelled road vehicles rated by the manufacturer to have a payload capacity of not less than 30 cwt. of goods or constructed to carry not less than twelve passengers.I certainly should not be competent to argue the legal deductions from such a suggested definition, but I think it is important that it should be on the record, even though this is a Second Reading rather than a Committee stage.
In the Molony Report on page 116, paragraph 507, are listed the four main respects in which the 1938 Act set out to relieve the hirer. If I may state the obvious, none of these exists if the hire-purchase price exceeds £300; and, indeed, as Molony said in paragraph 542, few of them are conceded by the forms of agreement customarily used. Every person and every organisation with whom I have discussed the matter agrees that the case is overwhelming for extending the range of application of the 1938 Act; in fact, I have not heard any voice against it. Again, public opinion and informed opinion believes that it should be a substantial extension of the Act. In fact, as Molony said, motor cars are no longer a luxury, and caravans are sometimes a home: hire-purchase is the only way in which many consumers can afford to buy such possessions.
We should all agree that the bulk of consumer hire-purchase must be covered by legal safeguards. Equally we should all agree that at the moment many transactions are too heavily loaded in favour of the owner. I agree with the Molony Report that it is unsound and unacceptable that so high a proportion of consumer trade now falls outside the ambit of the Act. Many people with whom I have discussed this matter, apart from the organisations I have mentioned, argue that the only justification for a limit lies in the possible contention that it is only in the field of furniture and domestic equipment in which regulation is required. They go on to say that the argument then would seem to follow that a limit of, say, £400 will produce the same 441 limit as the Act of 1938 in terms of real purchasing power and that such a limit should be put forward. Once it is granted, however, that the scope of the Act should be widened so as to include the hire-purchase of motor vehicles, as does today's Bill with a suggested increase to £1,000, I submit that the other argument falls to the ground. In these circumstances it is hard to see what case exists for any particular limit to be placed in the Act. I myself take this view and I agree with the Report of the Molony Committee in their rejection of this £1,000 limit. I very much hope that later on in today's debate, unless I am a lone voice, perhaps my noble friend will feel able to look at this particular point again.
My Lords, in the Molony Report (this is the only actual quotation I wish to give your Lordships, but I think it is important) on page 182, paragraph 551, there are four short points that I should like to bring to your Lordships' attention. First:In favour of raising the limit to, say, £1,000 is the argument that such a figure would bring within the Act a high proportion of car and caravan transactions and would only leave uncovered business entered into by the more affluent, and presumably more knowledgeable and experienced consumers, who might he expected to turn to a solicitor if they needed adviceSecond:The figure of £1,000 has been considerably favouredThird:It must be emphasised that this is the suggested hire-purchase price—and outside of the quotations I should like to underline that to your Lordships. We are to-day discussing a suggested hire-purchase price limit of £1,000. Then, fourth:The cash price represented by a £1,000 hire-purchase price depends on the amount of the deposit (or 'trade in'), the period of the agreement—both of these being at present subject to statutory control—and the amount of the service chargeMy Lords, Molony goes on to take two examples, and says that in one case a cash price of £839 for a motor car would bring it outside this £1,000 limit. Then, I suppose to be perfectly fair the Report takes a figure of £926 in another case. Molony says,For example the incidence of a £1,000 limit might depend on whether the hirer got £200 or £205 for his previous car; on whether he ordered a heater as an extra; or on an 442 event beyond the control of the parties, a variation in purchase taxMolony concludes,We do not think the impact of the law ought to depend on such inconsequential factors".My Lords, neither do I, and that is the burden of what I am trying to say to-day. From the evidence that went to the Molony Committee, and as I myself know from my many years of experience in Coventry, an appreciable number of cars not in the luxury class do exceed the critical figure of £839. Furthermore, the Molony Committee stated,that a considerable amount of business in new popular cars is conducted at a hire-purchase price in excess of £1,000The other point I should like to make to your Lordships—I think we shall all accept this—is that money ceilings become out of date; and we all know, whether as Members of this House or of another place, that money ceilings are arbitrary and indiscriminate in their working. I agree with the Report when it says that many people are fearful that a removal of the money limit would be injurious to the consumer, because the loss on repossession of new cars hitherto outside the Act would force the hire-purchase companies to increase their charges. My Lords, I do not think that this would be the result, and certainly not to the extent that is feared. But, obviously, that is looking into the future, and is not something which I could decide now.
Among those with whom I have discussed these points, and to whom I have already referred, are the Hire-Purchase Trade Association, and although I would not wish to be rude to them I think I should say that, when I told one of my noble friends that I had done this, he said: "Why on earth did you go to them?" I went to them for two reasons: first of all, they obviously have a wide knowledge of the hire-purchase business, and, secondly, I went to them—and I should like to pay this tribute—because during the ten years when I was a Member in another place I took to this Association all sorts of cases, and I was very heartened, and I am sure my constituents were, by the help which the Association gave throughout. Whether or not I always agree with what they say, their advice is helpful and it is fair. I should like to pay this tribute to their Secretary, 443 Mr. Greig, who has given me that help for some time past.
My Lords, it was never anticipated that the arbitrary rules laid down in the Act of 1938 should be applied en bloc to motor vehicles; and the Hire-Purchase Trade Association said they believed that the facts of the situation to-day demand that they should not—and I agree. I therefore wish to put forward the suggestion that it is well worth the consideration of your Lordships' House, in the interests of hirers quite as much as in the interests of owners, that the special position of motor vehicle transactions should be taken care of by special regulations. This is one of the reasons for which I would prefer comprehensive Government legislation when all these matters can be considered.
Points of detail are obviously for a Committee stage and would be out of place to-day. So I will say merely that I think there is considerable force in an argument which was given to me by the Purchase Trade Association. It was to the effect that where the price is small—perhaps a television set costing £60—the rate of depreciation is nearly always very high, and thus a 50 per cent. depreciation clause is usually to the advantage of the hirer, even at a very early stage of the contract. Where, however, the transaction relates to a motor vehicle of, say, £700, the position is quite otherwise. A fixed depreciation clause can weigh very heavily upon the hirer, especially in the early stages of the agreement, and equally heavily on the owner, especially towards the end of the contract or if the hirer fails to maintain the vehicle properly.
Having talked to various people on this particular matter it seemed to me correct to say, from what they had told me, that with small sums the disadvantages of small inequities are accepted in favour of simplicity. But with larger sums a more accurate assessment is needed or grave injustice will result; and I believe that somehow we must find an answer to this question of vehicle transactions. Perhaps the noble Lord, when he comes to reply, will tell us whether the studies referred to are already looking at this detailed aspect in the field of hire-purchase.
Might I suggest that perhaps he would add to that consideration of something which is favoured strongly by both the National Citizens' Advice Bureaux Com- 444 mittee and the Hire-Purchase Trade Association—and I think that this is a most formidable combination on hire-purchase matters. They believe that motor vehicles should be dealt with by special regulations; that a true measure of damage clause must be included in these, and that a true measure of damage clause, coupled with a two-thirds repossession clause, would provide a proper, acceptable and practical solution to an undoubtedly very difficult problem. I could give the noble Lord a great deal more detail, I have it here, but I will spare him because I know that other noble Lords wish to speak.
Considerable sums of money are, however, involved in this matter, and I think that we as laymen might try to find an answer to this tricky point, so that (though I am sure this is not in legal language) on the one hand the hirer should be bound to pay no more than the actual measure of the owner's loss, and, on the other, the owner should be bound to repay to the hirer any monies which he may receive over and above his proper price. A legal friend tells me (I do not know if the Minister shares that viewpoint) that this should not be too difficult. But to be quite honest, I must add that this legal friend also told me that he would like to see a comprehensive Bill embodying the two precepts of no limit and no exception, and this is the view of the Consumers' Advisory Council, who would prefer to see no exceptions to such a Bill.
My Lords, I believe that only the Government, with the necessary resources available to them, can deal with problems like this, and I am wondering if the Minister, when he comes to reply, will say whether he is in favour of dealing with motor vehicles by special regulations or by a comprehensive Bill. If he accepts this Bill—and obviously I have no knowledge what he intends to do to-day—does he agree that the impact of the law will depend on such inconsequential factors as whether the hirer got £200 or £205 for his previous car, or whether he ordered the heater as an extra? Because, if the Government do accept this £1,000 limit as phrased to-day, they are accepting these inconsequential factors, and in my opinion are making a mockery of real consumer protection.
§ LORD SHACKLETON
My Lords, before the noble Lady leaves the question of a motor vehicle, has she no other reasons than the one she has given? She said that these were Committee matters, but the House will have to decide to-day whether to give this Bill a Second Reading, and I should have liked to know whether she has any more convincing arguments.
§ BARONESS BURTON OF COVENTRY
My Lords, I gather from what my noble friend has said that he is not impressed or convinced by what I have already put forward. I am not giving any further examples. I believe that cars should be dealt with by special Regulations; I think there should be no limit in the Bill; and I do not think it is a fit subject for a Private Member's Bill. I think that expresses my own viewpoint quite adequately.
So far as Clause 3, the 72-hour pause, is concerned, I agree entirely, of course, with what my noble friend is trying to do here; and I think the whole House does. But I should like to bring to the attention of the Minister and of my noble friend a point which was made to me. I have no knowledge of it, but I am informed that the actual wording of Clause 3, as its stands, would mean that a pause would also be imposed on mail order instalment trading. I do not believe that this was the intention of my noble friend, arid I am wondering whether he and the Minister, if they think this criticism a valid one, would consider a wording that was suggested to me by the Hire-Purchase Trade Association—and I quote:In the case of agreements signed in the presence of a salesman otherwise than on business premises there would be a 72-hour 'pause', in which the customer could withdraw. Agreements signed on shop premises or agreements sent through the post for signature by the customer would be quite unaffectedI myself have no strong feedings on the exact wording, but I felt that the point was one which should be brought to the attention of the House.
In conclusion, I should like to see my noble friend withdraw this Bill, upon a guarantee by the Government to introduce a comprehensive measure in the next Session. Parliament is falling into disrepute because of its refusal to deal with this matter of hire-purchase laws. This field is a vast social problem. My noble friend Lord Peddie has 446 said this, and I am sure the House agrees. I should like to add that the National Citizens' Advice Bureaux Committee have stressed this above anything else; and if the Government themselves do not realise that this is so, then any organisation with hard-gained experience would underline it to them with case after case. None of us, with this realisation and this experience, wants to see a facade of piecemeal legislation from time to time—not a facade on the part of private Members anxious to help, but a facade sponsored by the Government to cover up their abdication of responsibility. If this Bill goes to a vote to-day, I shall have to abstain, because while I agree with my noble friend on the 72-hour pause I do not agree with the £1,000 limit. But I do deprecate most strongly the invitation of the Government to private Members to cover up their own deficiencies.
§ LORD AIREDALE
My Lords, before the noble Lady sits down, may I ask her a question? Notwithstanding the Molony Committee's specific rejection of the £1,000 limit, to which the noble Lady drew so much attention, does she not think that, nevertheless, the Molony Committee must inevitably be delighted with his Bill? Their only possible complaint could be that it did not go as far along the road as the Committee themselves would have liked it to go.
§ BARONESS BURTON OF COVENTRY
My Lords, I could not answer that point because I have not asked the Molony Committee.
§ 4.45 p.m.
§ EARL ALEXANDER OF HILLSBOROUGH
My Lords, it is not usual for the Leader of the Opposition to intervene in a debate of this kind, but this is a Bill promoted by my noble friend Lord Peddie, and I feel that he made an excellent case for it this afternoon. I could not possibly imagine a case for a Bill better demonstrated than he demonstrated his in his speech. The point just raised by the noble Lord above the Gangway emphasises the point that the Molony Committee would obviously be delighted to see legislation immediately in order to remove some of the grievances that exist now with the limitation at £300. When we come to the general argument of my noble friend Lady Burton of Coventry with regard to 447 all the consultations she had with the Hire-Purchase Association and people in the motor trade, all I can say is that her case sounded to me like a case for their protection and not for the protection of the consumer.
For example, I must point out that most of the arguments she used would not alter the position for one moment under the present limits with regard to all the users of motor-cycles. Most motor-cycles to-day, certainly the single ones, can be purchased for less than £300. As to the figure which is included with regard to cars in the £1,000 class, to-day one of the variations has already been referred to by my noble friend—a heavy reduction in purchase tax. Therefore there seems to be a growing anxiety on the part of the motor trade itself, on the producers' and salesmen's side, as to how far they might be affected if there were protection for the consumer—the user and the owner of a car—if these new limits were put into the legislation.
The other thing I want to say to the House and to my noble friend Lady Burton of Coventry is that I have a tremendously long Parliamentary experience—perhaps not as long as anybody in the House, but it is something like 42 years in both Houses—and I have never known any great social measure of this kind to become effective in law unless there had previously been a continuous stream of pressure by private Members through Private Members' Bills. There has never been any legislation for the protection of the consumer in respect of hire-purchase in the history of this House, or of the other House, except by Private Member's Bill. If it has been so convenient to Governments and Government Departments to abstain altogether from the introduction of Government legislation for this purpose, why should it be thought to be wrong now to thrust something urgent upon both Houses of Parliament for the protection of the consumer? With regard to the use of the £1,000 limit and to the noble Lady's anxiety that there should be no top limit—that is to say, that it should at any rate be raised above the figure which is given—
§ EARL ALEXANDER OF HILLSBOROUGH
Then that gives me my case. I understand that the noble Lady wants to go up to that extent. How much more is it, except in its difference in class of business? The present £1,000 limit, as I understand it, would cover 95 to 97 per cent. of the whole of the hire-purchase business to-day, and there is therefore, with respect, little point in the argument which she has made. I have experience of motor-car ownership over something like 40 years. I have had my own cars, and I have hired them sometimes. I have usually paid tax for them. I have also had experience of buying under the hire-purchase system. I find that, generally speaking, there is no real hardship to the ordinary person to have a straight deal. I am sure that is right. He is in a position often to overdraw at his bank on a varying balance, and in the long run may pay less in interest charges than he would through a steady repayment system on hire-purchase.
That may well be so; but nowadays things are different. Not only are incomes now paid to different classes of the community in a great degree varying from my older experience, but the desires of the people in our so-called affluent society are going in the direction that in working-class homes it is common not merely to have television and wireless and similar amenities but to have a car. They may buy it second-hand, but they often have to buy it on hire-purchase at prices exceeding £300. If they are to have the reasonable hire-purchase protection that has been accorded in the previous Private Members' legislation which has been passed as the law of the country, this is the way in which to give it.
I hope the noble Lady will take this advice from me on consumer questions in general. There is a great deal of good scientific research being done to-day—the Consumers' Council are doing a lot of good work. On the other hand, there are those of us who have been engaged entirely in consumer work the whole of our business lives and with the objective not merely of getting rid of this and that little point, one after the other, in favour of the consumer, but of inducing gradually a mutual principle in the community which would not merely grant the consumer general protection against the exploiter but make him, as a consumer, 449 a part-owner of the business. You cannot do much better than that.
I feel that the manner in which the noble Lord, Lord Peddie, has put the case to-day ought to justify the Bill's being given a Second Reading. I understand that the Government intend to resist the Bill. I understand it. has gone forth as a fiat from the President of the Board of Trade that his Bill should be resisted. Well, I am not astonished, as an old Parliamentary Secretary to the Cooperative Consumer Movement, that that should happen. I have had great experience of refusals like that. One of the first things I ever did forty years ago was to introduce under the Ten-minute Rule a Bill with regard to trusts and monopolies. We had to wait a long time for a Labour Government before we got anti-monopoly legislation from the Government. I am not surprised that that fiat should come from the Board of Trade. But what is the case going to be from the Government tonight as to why there should be delay in meeting the actual grievances which will be met by this Bill? That is the point.
Let us look at the previous debates. In the other place, by the same sort of back-door arrangement of Government Departments, the Bill was talked out. Yet the invitation was practically given by the Government to people desiring to promote still further Private legislation on this matter. How long are we going on like that? Let us look at the history of this particular Bill, as introduced by the noble Lord, Lord Peddie. The noble Lord, Lord Peddie, was informed that the Government were not against the principles of the Bill. He was also assured that if we did not bring it in before Christmas the Government would look at the Bill arid would even be able, perhaps, to make some additional redresses for the consumer in it and then take it over. As the noble Lord, Lord Derwent, knows, he saw the noble Lord, Lord Peddie, and myself on this matter. Subsequently we received this other communication from him which says that Mr. Erroll, who is, I think, the present President of the Board of Trade, is going to make no future progress with the Bill.
§ LORD DERWENT
My Lords, it was not quite in those terms. I said that if the Bill was delayed until after Christmas we should have had time to look 450 at it to see if we liked it. If it was introduced for Second Reading before Christmas we should not have considered it properly and could hold out no hope of then supporting it.
§ EARL ALEXANDER OF HILLSBOROUGH
Why you should not have considered it, I do not know. It is not a proper line to take. If a Member of this House introduces a Bill it deserves to be looked at by a Government Department.
§ EARL ALEXANDER OF HILLSBOROUGH
I accept that. But I do not like the attitude of the Board of Trade on this matter. I am not unaware of the organisation of the Board of Trade where I was once Parliamentary Secretary. We can go on year after year like this, putting off reforms that might easily he brought in for saving a great deal of personal suffering, hardship and injustice. If the Government do not introduce it, a Private Member must move it. This has been moved in this House to-day. I think that any of your Lordships who listened to the noble Lords, Lord Peddie and Lord Shepherd, to-day on the general grievances to be met will agree that this matter is not merely justified, it is urgent and should be dealt with. And I hope you will vote for the Second Reading.
§ 4.56 p.m.
§ LORD CHAMPION
My Lords, I must congratulate the noble Lord, Lord Peddie, on the introduction of his Bill and especially on his speech this afternoon. It seems to me that this small Bill is well suited, having regard to the times, to the Private Members' Bill procedure; and especially having regard to the history of our legislation on this matter of hire-purchase. There is, too, the fact that there are undoubtedly grievances which ought to be remedied, and if we have to wait for the Government to bring in a comprehensive measure this is bound to add further to the delays in the remedying of those grievances. We know that the Government are pretty well on their last legs; we know that they have not much more time in which to introduce legislation; we know that their present programme is very full. It is unlikely that, even if they stay there for some time, we shaft see any legislation on this 451 subject coming from the Government for quite a long time.
I have been brought up on the principle that if you cannot get a whole loaf you make do with half a loaf: that some bread is better than no bread. In this regard I regard this Bill as some bread. I should like to see a comprehensive Bill covering the whole subject, bringing the whole legislation up to date and consolidating all the measures; but clearly this is not an immediate prospect. I do not pretend to have an extensive knowledge either of the sale of goods by hire-purchase or of buying them in this way. I must admit that I have never bought an article on hire-purchase in the whole of my life—not, I would hasten to add, because I am a wealthy man. I married in the inter-war years on a railway signalman's wage of £3 a week. But I have always had a hatred of spending my future. I always thought it imprudent to embark upon a project when sickness or unemployment, or some other cause, might prevent me from carrying through the purchase of some article that I desired. I always had a deep-rooted objection to paying the interest and administrative charges that are inevitable in any hire-purchase transaction. I have always forgone the immediate pleasure of the use of an article until I had saved enough money to buy it outright. I have always felt that Mr. Micawber was pretty well right. He said something to this effect: income, 20s.; expenditure, 21s.—result, misery; income, 20s.; expenditure, 19s. 6d.—result, happiness.
Perhaps my approach to this problem is a little old-fashioned and perhaps a little puritanical. But although I have not had any personal experience of this, I have had experience, as a Member of another place, of the misery that was caused in many homes in the constituency I then represented because people had signed agreements unwisely. A great many people came to me and asked if there was any way in which they could get out of the agreement they had signed. Many of them had clearly signed the agreement, and had the article, without sufficiently considering the fact that they did not have a sufficient income to enable them to meet the expenditure reasonably well.
452 My experience could be multiplied by all the Members in another place who meet their constituents regularly. Often we might be able to do something for them. The noble Baroness said that in many cases she was able to help them, perhaps as a result of her personal charm. I must say that I, too, managed to get a few of these agreements set on one side. But not all. So often these purcases by hire-purchase are made as a result of a stupid desire to "keep up with the Joneses" It has been said that we in Wales do not suffer from this because we are "the Joneses" I would say that the Welsh people suffer from this in precisely the same way, though in their case they are keeping up with the Smiths, or somebody else. It is ingrained in all of us, this desire to keep up with the rest, or, if possible, to outstrip them. This feeling is very much exploited by the salesman who appears on our doorsteps. He is something of a psychologist and takes some pains to find out what is the local situation before he knocks on the door.
An instance of this occurred at my home last week. This is not one of those comedian's stories about "A funny thing happened when I was on my way to the theatre tonight." This actually happened last week. There was a knock at the door and a presentable and very persuasive young man launched into his story, when my wife answered the knock. He said that he was calling on some few people of standing in the area. He had been advised that we were just the sort of people who would be interested in the type of high-class goods he was selling—and so on. It was a very clever appeal to the ego, from which, I am glad to say, my wife is immune. But many women are not so immune; and in their case the salesman is in through the door and into the parlour, and the bit of paper is signed, committing the family to a purchase to which the husband might well object when he comes home from work at night, and which might land the family in considerable difficulty. Therefore, I regard Clause 3 as one of the greatest importance, for it ensures a time for reflection to a family who may wish to repudiate an agreement unwisely entered into.
It has been said that unscrupulous and "slick" doorstep salesmen can monkey about with the dates, because the unwise 453 signer of agreements is not likely to be careful about examining the date that appears on the piece of paper. It seems to me, however, that this is a risk that must be taken in this attempt to protect the innocent purchaser from the results of his or her folly. It is true that if the need arose neighbours could, perhaps, testify to the date on which the man actually called. There is some force in the old doctrine of caveat emptor: "Let the buyer beware!"; but much of our legislation is designed to protect the purchaser. There is a whole body of Acts of Parliament designed to that end, and I think that we should add this small Bill to that body. I sincerely hope that the House to-day will give this Bill a Second Reading, so that it can be examined further in Committee.
§ 5.6 p.m.
§ LORD CHORLEY
My Lords, I should like to say a few words in support of this Bill and to add my congratulations to my noble friend Lord Peddie on the admirable way in which he moved the Second Reading. I am sorry if I have not noticed that some other noble Lord wished to address your Lordships. I particularly wanted to say a few words this afternoon because I was personally concerned with the first Hire-Purchase Act, which will always be associated with the name of Ellen Wilkinson, a remarkable and courageous little woman. She came to the Haldane Society, on the committee of which I was at the time, and asked us to help her with the legal side of the Bill. Indeed, the Bill was very much a co-operative effort between Miss Wilkinson and the Haldane Society. Naturally, I have watched with a good deal of attention the progress of this particular branch of the law ever since that time.
Undoubtedly the Wilkinson Bill, as everybody this afternoon has agreed, met a very urgent social need, one which ought to have been met long before, and might have been, had not what one might call purely political questions absorbed so much of the time of Parliament. It has been left to private Members to deal with this important social problem, and up to a point they have succeeded admirably in doing so. I think that most county court judges, who have the greatest experience of the administration of this branch of the law, 454 would undoubtedly agree that the 1938 Act has been one of the finest pieces of legislation which they administer in connection with the real hardships of the people who come into their courts.
Everybody must sympathise a good deal with the noble Baroness, who gallantly put a point of view which is a very understandable one and, in many ways, one with which I have a great deal of sympathy. I only wish that I could support her, because I do not like to see a lot of "brutal males" bear down on her in this way. Fortunately, she is very capable of looking after herself. But this is one of those cases of the better being the enemy of the good. It is clear that a comprehensive Bill of the kind she wants will not get on to the Statute Book in a reasonable period of time. Meanwhile, Lord Peddie's Bill could get on to the Statute Book quickly and prevent a great deal of hardship. There is no reason why, when a comprehensive Bill eventually comes along, the clauses of this Bill should not be incorporated in it. That has happened frequently in connection with other branches of legislation. The Companies Act is an outstanding example. Bills dealing with the immediate necessities of business were passed through Parliament, and later included in an Act which incorporated all the earlier laws. In this way the whole matter was brought into proper perspective. Therefore, I hope the noble Lady will feel that she ought not to continue to allow the better to be the enemy of the good any longer.
There are two clauses in this Bill. The "cooling off" clause has received support from everybody, and I do not think there is any need to say much else about it. However, my noble friend Lord Peddle talked of the period during which the housewife would have time for reflection. I think that perhaps a more practical and accurate way to look at it is that the husband would have time, when he got back home, to find out what had happened and put his foot down about it. That is when rows take place time and time again: when the husband gets back home and finds that his wife has been cajoled in this way. The great advantage of this clause would be that it would give the husband time to get on the scene and deal with the situation in 455 the way in which husbands do deal with these situations.
I want to say a few words on the question of the £1,000 limit. I have carefully read the Molony argument about this, and I must say that I do not find it at all convincing. As it happened, during the autumn I was taking part with some colleagues in the writing of a book about law reform in which hire-purchase figures fairly prominently, and, after discussion, we came to the conclusion that the £1,000 limit is a more effective way of dealing with the situation than the removal of any limit, as proposed by the Molony Committee. I do not want to argue this point in any detail now, because it is, in a sense, principally a Committee point. But the whole of the argument of the Molony Committee against it is pretty well based on motor vehicles. They do not seem to realise that. although the proportion of some types of transaction in which hire-purchase is used is a minute proportion of the total number of hire-purchase transactions, there are a small number of important transactions to which the provisions of the Act are really not appropriate in any way, in which the partners are businessmen in a fairly big way, as a rule, and should be left to hammer out their own terms and not brought within the rather cramping provisions of the Hire-Purchase Act.
The Hire-Purchase Act, which was drawn up to protect small people, and has done so admirably, is not contrived, so to speak, to deal with the big industrial transactions. It is quite true that the Molony Committee say that we confine it to consumer goods. But that raises the difficult problem, which has been touched upon both by my noble friend Lord Peddie and by the noble Lady, of defining consumer goods in such a way as to take out these important transactions to which the ordinary rules of contract and the Common Law ought to apply. It seems to me, therefore, that it is much simpler—and the argument in this direction is very cogent—that we should take this limit of £1,000, which covers the vast bulk of the transactions and, I should think, practically every one of the transactions of the sort we need to protect by means of social legislation of this kind. This argument about a case which is a few pounds over the mark 456 can be used on any occasion when a limit is fixed by any Act of Parliament, and really, with respect to the noble Lady, it does not cut much ice. Therefore, I hope the Government will see their way to accept the principles of this Bill and agree to its having a Second Reading.
§ 5.14 p.m.
My Lords I wish to intervene in this debate for only a few moments. I did not put my name down on the list of speakers, but I am easily encouraged by a challenge. We have had the challenge that no one was speaking from this side of the House, and I wish to take it up. One reason why I want to take up the challenge is that it gives me the opportunity of congratulating the noble Earl the Leader of the Opposition on his recent honour. It gives me much pleasure to do that on this occasion.
So far as the question of a Private Member's Bill or a comprehensive Government Bill is concerned, I cannot help recollecting that only a short time ago I fathered a Bill in your Lordships' House on shipping limitations, and that matter had been argued about for a period, if I remember rightly, of 80 years. It then came up as a Private Member's Bill from another place. When I agreed to father the Bill in your Lordships' House it was a small piece of paper containing one clause, and I did not mind doing that. However, before it left your Lordships' House it comprised, I believe, six pages of close print and was utterly incomprehensible to me: I did not understand a word of it. Nevertheless, your Lordships were good enough to guide it through for me. I think one must consider that, while "jam yesterday and jam to-morrow, but never jam to-day" may be an aspect of this case, if we have a reply that everything is well—we must admit that it must be a complicated question—and that the preparation of a comprehensive Bill is in an advanced stage, as we are told to-day, then I should think that that is satisfactory; but that is a matter of opinion.
On the Bill itself, I should like to make two points. Several people have made the point (only one noble Lord has mentioned it to-day) about the small print on the back of agreements. Surely we can legislate as to the minimum size of print in any agreement by specifying it in the Bill. I should have thought that that was 457 an easy way to cope with that problem. I am not going into the argument of limit or no limit, but I do like the "cooling off" period, and I think it should apply to both sides without question. However, I should like to go further and suggest that a husband and wife must sign the agreement. The salesman comes round during the daytime, and the husband does not get back home until night time. I think there should be a "cooling off" period when the husband and wife can talk it over together, and that the husband and wife should both sign the agreement. That is as much as we can hope to do in guarding people against their own folly.
A large proportion of the older people in Scotland take great pride in paying their way, and, although the "never-never" system is coming in increasingly and rapidly, there is a body of opinion in Scotland, anyway, that is dead against the whole thing. I cannot claim that I have never had anything to do with the "never-never", because when I was a young married man I had to pay by instalments the doctor who delivered our first child. I suppose it could be said that that was hire-purchase. However, apart from that unfortunate circumstance, I have not indulged in hire-purchase, and I would agree with what was said by the noble Lord, Lord Champion.
§ 5.19 p.m.
My Lords, I think the noble Lord, Lord Peddie, is to be congratulated upon having introduced this Bill and on the clear way in which he has explained its provisions. I am one of those people who believe that hire-purchase, if properly worked, is a most desirable institution. A great deal of trouble has arisen in the past, and arises to-day, owing to the fact that hire-purchase companies—that is to say, the owners of the chattels in question—do not make sufficient inquiries into the status of the hirer. I expect that many of your Lordships, like myself, are concerned with building societies. As you know, the first thing a building society does is to make a careful valuation of the property upon which it is to lend money. Then, having decided how much money it can lend, it proceeds to inquire into the financial status of the borrower. If hire-purchase companies, the owners of hire- 458 purchase goods, were to do the same sort of thing in every case, I believe that a great deal of trouble would be averted.
I think that Clause 1 of the Bill should be supported; indeed, every other clause is merely what one might call a statutory recognition of the desirability of extending hire-purchase. I entirely agree with Clause 3. As your Lordships know, the majority of people who go from door to door trying to sell goods on behalf of their principals on the hire-purchase system are paid probably more on the commission basis than by way of fixed salary. I am not suggesting for a moment that they are a dishonest collection of people. On the contrary, for the greater part, they are probably perfectly honest. But, human nature being what it is, as they are usually paid on a commission basis, they must have an urge to dispose of the goods almost in any event.
I regard it as most desirable to have this period of three days in which the agreement may be terminated by the hirer. During this time the housewife who has originally signed the document can see her husband, who no doubt can have time to explode if he wants to, and she can also see her solicitor. As your Lordships know, the finest thing that anybody can do in this country is to see his solicitor. I think many of your Lordships will agree with that proposition. There are many solicitors in your Lordships' House, and one has only to observe them to see undiluted wisdom written on their physiognomies. At all events, it is desirable that the housewife who signs these documents should have an opportunity to see either her husband or her solicitor, or both. That is a very good reason why Clause 3 should be supported.
§ 5.22 p.m.
§ LORD SHACKLETON
My Lords, I hope that when the Minister comes to reply he will note that only one of your Lordships has opposed this Bill—my noble friend Lady Burton of Coventry. I shall have a few words to say about her linter in my brief remarks. But perhaps initially I should declare an interest, in that I am an executive and a director in a large group of department stores who, it might be argued—though of course they could not be affected by the Bill—stand to benefit from it. My 459 interest in this Bill is due to the fact that my firm, like many others, is engaged in hire-purchase activities, and we are well aware of the abuses which occur daily in large numbers. I have examples here of no fewer than eleven cases which have occurred to members of my own firm in the course of the last two years. This figure of 70,000 cases which were referred to the Citizens' Advice Bureaux is an indication, and possibly an underestimate, of the number of people who are in trouble in some way or another over hire-purchase in this country.
A great deal of this trouble springs from certain types of transaction which this Bill will correct, and it will at least go some considerable way to reducing the dangers. I should like first of all to deal with the question of the motor car. This is one question about which the noble Baroness, Lady Burton of Coventry, was concerned. I have here a case which affected somebody in my firm last year. He came to the management for advice, and we sought to help him. He had purchased a car for £400. The loan, with interest repayable over four years, amounted to about £600. The agreement was not an ordinary hire-purchase agreement—and I may say that it was with one of the best-known people in the business, possibly the best known in the country. He could not keep up the payments, and he returned the car in December to the firm from whom he had purchased it, and they have since sold it for £245. I could go on giving figures.
The effect of all this was that, with his payments, the value of the car which he had handed in and the amount of money which was subsequently claimed (because he was liable to pay two-thirds of the hire-purchase price) he had to pay something approaching £500; and at the end he had no car. This case would be brought within the ambit of the Bill. If I understood the noble Baroness aright, she suggested that a 50 per cent. obligatory repayment was perhaps too large in this type of transaction—and she may well be right. But at least it is a great deal better than the obligation which was contained under the termination clause to pay two-thirds of the hire-purchase price.
§ BARONESS BURTON OF COVENTRY
My Lords, as the noble Lord interrupted 460 me, may I interrupt him? I do not remember mentioning 50 per cent., but I should like to take up this point. I think the noble Lord will find on reflection—my papers are upstairs—that I suggested it was up to us as laymen (and I couched it in layman's terms) to see that the hirer of a motor car was not held liable to any undue extent; nor, indeed, the owner of the car. The example which the noble Lord quoted could obviously not have arisen if such a solution as I have proposed were possible.
§ LORD SHACKLETON
The only trouble is that the noble Lady has not proposed any solution at all. She is merely proposing that we throw out this Bill. I am fully aware, as are all your Lordships, that this Bill is not enough as it stands. But there are important things with which it deals. I will come back to the noble Lady in a moment.
I want to stress the urgency of this matter. Let me quote a case which occurred to my personal knowledge in the last year or two. An elderly woman, who continued to work after normal retirement age, was earning a comparatively small salary which came to about £8 because she was past ordinary working age. One day a door-to-door salesman called and persuaded her to sign an agreement to buy a set of Chamber's Encyclopœdia at a price of 79 guineas. She paid six guineas with the order and agreed to pay three guineas a month to cover the balance. Her husband was present in the room (this will interest the noble Viscount, Lord Stonehaven) while the salesman was talking to her. He said he did not wish her to enter into the agreement, nor did he authorise his wife to enter into the transaction. He mentioned to the salesman that he could not possibly afford these books, and the salesman knew that he was against the purchase.
The old lady's explanation for undertaking so heavy a commitment was, "Well, I was very tired that evening, and the man did keep on so." Then followed a series of arguments and correspondence, in which she wrote almost the next day and said that she did not want to proceed with the transaction. The only reply she received was an apology that the books had not been delivered. This went on until finally a senior member of my firm 461 intervened with a member of the board of the company concerned and persuaded them—very decently, I admit—not to proceed with the matter. There is no doubt that many firms, as in this case, are unaware of some of the practices of salesmen who may not be operating directly in their employ.
I have another example of a woman who answered an advertisement for a cheap reconditioned sewing machine and was persuaded by a slick salesman, when he called later, to purchase a new one at a much higher price. This is known as "switch selling", and a good deal of it goes on. Here, again, the attempt was made to get rid of it. She was talked into it on the spot, and again it was only after tremendous pressure, when somebody came to her support, that the firm in question agreed not to enforce the agreement. My Lords, this, to my mind, is the first and most important argument for giving this Bill its Second Reading to-day.
I should like to turn briefly to what I might almost call the political arguments of the noble Baroness, Lady Burton of Coventry. She is an eloquent, logical and clear-minded Member of our House, and we all listen with great respect to what she says; but unfortunately clear-minded logic does not always make good politics, and the essence of good politics, as all noble Lords know, is to achieve what is possible. Indeed, I think it was the noble Viscount, Lord Hailsham—or it may have been the Prime Minister—who denied the proposition that if you could not do everything at once you must not do something at some time.
Here is a Bill which, like the great majority of Private Members' Bills dealing with important subjects, is obviously open to criticism on the grounds that it is not comprehensive and that there may be better ways of doing it. But I am sure that if your Lordships look back over the history of Private Members' legislation over the last few years, you will remember many such Bills which are now Acts, to the great benefit of the community. The fact that the Government were finally prodded into producing a Shops and Offices Bill was the result of the passing in an earlier Parliament of a Bill which they thought was unsatisfactory but which, none the less, was passed. Incidentally, I do not think that the Govern- 462 ment's new Bill is much of an improvement. But that is by the way.
Frankly, my Lords, if we wait for comprehensive satisfactory legislation on this subject I suspect we shall have to wait for a very long time. It may be that the noble Lord who is to speak for the Government will reassure my noble friend Lord Peddie so well and will be so forthcoming in terms of promises for the Government that it would be churlish of my noble friend to refuse to withdraw his Bill. I think that is pretty unlikely, and I would urge upon your Lordships in all sections of the House that this is one of the occasions when it is imperative to grasp this particular problem. The Bill is not entirely satisfactory as it stands, and the examples the noble Lady gave of defects are perfectly true; nevertheless, it does represent an improvement. I do not believe for one moment that the giving of a Second Reading to this Bill will inhibit the Government from dealing with this matter more fundamentally. Indeed, I think there is a very good chance that it might ultimately stimulate them to action.
§ 5.35 p.m.
§ THE MINISTER OF STATE, BOARD OF TRADE (LORD DERWENT)
My Lords, may I congratulate the noble Lord, Lord Peddie, for being so prompt in introducing this Bill after November 14. That was the occasion when I said that hire-purchase was traditionally a field for Private Members' Bills, and the noble Lord jumped in almost at once. I should perhaps add, in view of the rather ungenerous remarks of the noble Earl, the Leader of the Opposition, concerning a meeting we had, that it was never suggested at any moment that we would support a Bill of which we disapproved. I fear, however, that my congratulations to the noble Lord, Lord Peddie, must stop there. But before I deal with the very strong case which he made in support of his Bill, may I just deal with some other of the matters which were raised by noble Lords and the noble Baroness, and then I will get straight on to why we do not like this Bill.
I was grateful to noble Lords who put forward suggestions. The points made by the noble Lord, Lord Airedale, are noted and will be considered; and the 463 more points we have when the Government are considering the whole question of hire-purchase the better. A point was raised by the noble Lord, Lord Peddie, himself, and I think was referred to by the noble Lord, Lord Shackleton, concerning the number of cases that are in the county courts as a result of hire-purchase. I think we ought to get the record straight on this matter. The noble Lord, Lord Peddie, at any rate, repeated the rather familiar assertion that large numbers of county court debtors are being sent to prison for defaulting on hire-purchase agreements. I made such inquiries as I could, and it would appear that about 15 per cent. only of the total judgments in county courts deal with hire-purchase, and in some courts very much less. I would suggest perhaps that in arriving at his figures the noble Lord may have mixed up or added together the hire-purchase debtors and the ordinary credit sales debtors.
§ LORD PEDDIE
My Lords, may I point out that my quotation was from the Prison Commissioners' Report, in which the Prison Commissioners themselves made the definite statement that a large proportion—not a substantial proportion, but a large proportion—sprang out of hire-purchase transactions.
§ LORD DERWENT
Then we disagree as to a "large proportion". So far as we can find out it is about 15 per cent., which, of course, in some views is a large proportion. But I do not want any misunderstanding about it.
As regards the speech of the noble Baroness, I am really rather sorry for her, because she did not know when she spoke at that time that she was supporting the case I am going to make. But she is one of the most knowledgeable people in this field of consumer protection—and this is a part of consumer protection. I thank her for her speech and the amount of substance which was in it. It will certainly help us. She deployed her arguments very fully and they will be fully considered.
I come to the Bill itself and to the position to-day. Parliament has had the benefit of a detailed and comprehensive review of the present laws on hire-purchase by the Molony Committee, who have recommended wide and sweeping reform of hire-purchase. The Committee 464 made no fewer than thirteen recommendations for changes in the law, including changes in the Advertisements (Hire-Purchase) Act, 1957. Moreover, since the Molony Committee reported, the Law Reform Committee, in their Tenth Report dealing with the law relating to "innocent misrepresentation", as it is called, made the important recommendation that in hire-purchase agreements the dealer should be deemed to be the agent of the finance company in respect of the goods which are the subject matter of the agreement. That also has to be considered.
But in spite of this volume of constructive advice, we are to-day presented with a Bill which deals with only two of these recommendations, and, at that, not even in the way recommended, nor in a way which I hope to show is really defensible. It has been argued, I think by the noble Lord, Lord Champion, that half a loaf is better than none; but we are getting probably a seventh of a loaf here, and it is not a very appetising one. If we were to proceed in this way we should never get the hire-purchase law into the state in which we should all, on both sides of the House, want to see it. Nor do I think that even if the limited clauses in this Bill were in themselves perfect it would be fair to the public and the hire-purchase interests to take more than one bite at this cherry and have piecemeal legislation—I entirely agree with the noble Baroness in that and I shall have something further to say about it. In fact, I go further and say that to have a series of partial measures would be a disservice to the public. They are entitled to know, once and for all, where they stand, and I can find no justification for the public in Scotland continuing to be differently treated from those in England and Wales. The noble Lord's Bill as it stands would increase this difference, and that is one thing we, as a Government, do not want to see. In fact, we want to do away with the difference.
As has been said in another place, the Government are in general agreement with the intention underlying the Molony Committee's recommendations on hire-purchase which would go a long way in dealing with cases of hardship arising under the existing legislation. But some of the problems involve very 465 complex issues, and it is absolutely necessary not only to obtain the views of the various interests but also to consider them in detail, particularly where they conflict, as they frequently do, before reaching decisions on all the individual recommendations.
Furthermore, we need to study with care the relevant part of the Report of the Law Reform Committee to which I have already referred. I think it is only fair to say to the noble Lord, Lord Peddie, that since he produced his Bill, and to some extent because he has produced his Bill and we have had a look at it, we have had another think—that is, since November 14. We now think that the right course would be to have a comprehensive Government Bill covering all hire-purchase matters, and we do not believe it could be done—and now that we have had another look at it I agree with the noble Baroness—by Private Members' legislation. We think, too—and we believe this to be important—that a little more time for reflection on some of these difficult issues would be no bad thing. But I can assure the House we shall be preparing and promoting Government legislation as soon as possible. I have told your Lordships it cannot be this Session. I may be a new Minister, but I am not rising to the fly of what will come in the next Queen's Speech or the one after it; but we do intend to prepare this legislation and promote it.
§ LORD SHACKLETON
My Lords, before the noble Lord leaves that point, may I say that he will clearly be going to have discussions with the trade interests over this Bill? Does he think it likely the draft he prepares will come under discussion with the interested parties before the end of this Session? This would give us some indication as to how serious is his undertaking.
§ LORD DERWENT
My Lords, discussions of a certain kind—I will not be more explicit—are already going on. The necessary discussions will continue to go on during this Session, arid obviously I cannot tell the noble Lord at the moment when they will come to an end. But this matter is under discussion with the interested parties.
466 Those are the general grounds on which we oppose the Bill. It may be helpful, I think, to noble Lords, and particularly the noble Lord, Lord Peddie, if I now turn to the reasons why we find most of the clauses in this short Bill unsatisfactory in themselves. The present Act applies only to hire-purchase or credit-sale transactions where the hire-purchase or total purchase price does not exceed £300 for all goods, other than livestock for which the figure is £1,000. The Bill proposes to raise the limit to £1,000 for all goods. The figure proposed was rejected absolutely by the Molony Committee, who were only considering consumer sales, on the grounds that it would be unsuitable and eccentric in its application to motor cars. And we now get this knotty problem which is not yet solved (and I am going to say no more about it this evening) as to whether in fact motor hire-purchase should be treated differently from other hire-purchase.
The sections of the Molony Report which clearly state the argument against £1,000 are sections 551, 552 and 553. They point out that the incidence of this limit might depend (this has already been mentioned by the noble Baroness) on the amount received for a traded-in car—that might determine whether the sale came within the limit or not—and on what extras (radios, heaters) were ordered, and that a considerable amount of business in new cars not in the luxury class is conducted at a hire-purchase price in excess of £1,000. I think that, even taking into account the reduction in purchase tax which has been made since the Report was published, there is considerable force in their arguments against this figure. But quite frankly the matter requires a good deal of thought, and in my view more thought than it has apparently yet been given. Before deciding that a provision of this kind is desirable, we should want to have the views on it of the interested bodies, and we have not got them.
The aim of the third clause appears to be to impose restrictions on high-pressure door-to-door salesmanship by giving the customer 72 hours in which to change his mind; it provides that every agreement should include a notice to the effect that the customer may terminate the agreement within three days of his signing it. The Molony Committee devoted considerable thought 467 to this question and their recommendation, though similar in spirit, was different and, so it seems at first sight anyhow, more practical in detail. The Committee's recommendation was that, bearing in mind that the agreement is not made until the owner has accepted the hirer's offer, conveyed by his signature to a completed form, the copy of the agreement sent to the hirer must be headed by a notice informing the hirer that he is entitled to cancel the agreement by giving notice to the owner in writing within 72 hours of its receipt. In other words, the 72 hours starts not when the hirer puts his name to the proposal, as laid down in this Bill before your Lordships, but when he receives the copy of the completed agreement from the owner. There might be no practical difference in cases where the salesman has the power to sign on behalf of the owner, but in other cases there might be a difference of several days.
Further, while the Bill accords with the Molony Committee's recommendation in providing that failure to include such a notice should render the agreement unenforceable, the Molony Committee specifically recommended that there should be no possibility of dispensation by the court. That was a very strong recommendation of the Molony Committee. This Bill allows for dispensation by the court. Also, the Molony Committee recommended that failure to comply with these provisions should be a criminal offence on the part of the owner of the goods and of the salesman, whereas this Bill contains no such provision at all.
There is also the point, and I think an important point—certainly it is considered important by Her Majesty's Government—that Lord Peddie's Bill applies only to England and Wales and not to Scotland. While it would not be difficult, as the noble Lord, Lord Shepherd, said, to extend Clauses 1 and 2 to Scotland, the same does not apply to Clause 3, especially in its relation to hire-purchase agreements. Subsection (1) of Clause 3 requires the inclusion of certain additional material in the memorandum of agreement which is required to be made in respect of hire-purchase agreements under Section 2 (2) of the 1938 Act. The requirement to include additional material in the memorandum 468 of a hire-purchase agreement cannot be applied to Scotland as it now stands because the Hire-Purchase and Small Debt (Scotland) Act, 1932, does not define hire-purchase; and also because, although this Act applies to contracts covering certain types of transactions which we should now describe as hire-purchase, it does not require the preparation of a note or memorandum of agreement. I am going into some detail because I hope your Lordships who are interested in the legal side as regards Scotland will take note of what I say.
Clause (3) again encounters the difficulty that Section 2 (2) of the 1938 Act does not apply to Scotland. There would have to be a separate provision and this would be difficult since the 1932 Act does not empower the court to dispense with statutory requirements as does the proviso to Section 2 (2) of the 1938 Act. In addition, Clause 3 (4) would fail since Section 5 of the 1938 Act does not extend to Scotland. If, therefore, the provisions of Clause 3 of the Bill are to be made applicable to Scotland, considerable amendment, which would not be in the least easy to draft, would be required of the 1932 Act. I am sure the House will agree with me that in this matter of a "cooling off" period the basic law in Scotland ought to be the same as the basic law in England and Wales. This last point, this difficulty about Scotland—and Her Majesty's Government are determined that alterations in this law shall apply to Scotland if they can make them do so—is a good illustration of the complexities involved in producing sound legislation on hire-purchase. It reinforces my point that the right course is for the Government themselves to promote comprehensive legislation, and I am sure that in the long run this will be welcomed by the country as a whole.
My Lords, may I again give the undertaking to the House that Her Majesty's Government will be preparing and promoting Government legislation as soon as possible? I therefore recommend to the House a little patience. I hope that what I have said will perhaps persuade the noble Lord, Lord Peddle, not to press for a Second Reading. If he does press for a Second Reading, I would ask your Lordships, in view of the unsatisfactory nature of the details of this Bill, not to give it.
§ 5.51 p.m.
§ THE LORD CHANCELLOR (LORD DILHORNE)
My Lords, I wonder whether I might just mention one matter, to try to get the Record straight. The noble Lord, Lord Peddie, referred to the Report of the Prison Commissioners in relation to the number of judgment debtors on hire-purchase transactions. There are, of course, cases where there are criminal prosecutions in relation to hire-purchase, and that leads to an increase of population in the prisons. So far as committals on hire-purchase judgment summonses are concerned, I understand that the committal warrants, which are the documents the Prison Commissioners see, do not distinguish between hire-purchase transactions and credit-sales. My Department is, of course, sometimes responsible for what happens in the county court. I can tell the noble Lord that inquiries I have made show that only some 15 per cent. of all judgment summonses concern hire-purchase transactions; and it is only a proportion, and not a large proportion, of that 15 per cent. which results in a committal to prison in relation to such transactions.
§ 5.52 p.m.
§ LORD PEDDIE
My Lords, I would thank the noble and learned Lord who sits on the Woolsack for his intervention on the particular matter that I raised concerning committal to prison. There was the suggestion that the proportion was 15 per cent. According to my calculations, 15 per cent. of 6,000 people is about 900. So that would indicate that at least 900 people are brought before the courts and run the risk of committal to prison in consequence of hire-purchase agreements. I would again remind the House of the reference that I made to the Prison Commissioners' Report.
There is at least one aspect of this debate which would indicate that this Bill has no political prompting. I would take this opportunity of thanking noble Lords who joined in the debate and who have given me some support. With regard to my noble friend Lady Burton of Coventry, it is exceedingly difficult, she being my friend, for me to find the precise language to deal with the points that she raised. I should have been in a far better and more comfortable position at this moment if I were looking her straight in the eye rather than with a sideways glance. My noble friend 470 says that she does not like a Private Member's Bill. It would indeed be a sorry day if Members of either House were to accept the principle that lies behind that statement.
§ BARONESS BURTON OF COVENTRY
My Lords, I must interrupt my noble friend. I said no such thing. I said that I did not accept that this vast social field of hire-purchase was suitable for a Private Member's Bill. I never enlarged on it any further.
§ LORD PEDDIE
No; I did the enlargement. I would remind the noble Baroness that this particular field of hire-purchase to which she makes reference owes everything to the Private Member's Bill. Had there been no Private Member's Bill, legislation in this field would have been delayed. The noble Baroness states it was just a facade of legislation. I do not know what is the particular objection with regard to a facade; but I do know that any opposition to this particular Bill means a continuation of certain abuses which the noble Baroness herself recognises in her speech.
We have listened to extensive quotations and much detailed and involved argument as to the merits and demerits of a limit or no limit. I made it quite clear, with some similar quotations which indicated the point of view of Molony. In every respect, even expressed by hire-purchase organisations, there is universal acknowledgment of the need for a raising of the limit. There could be no limit; there could be the £1,000 limit. The £1,000 limit covers at least 95 per cent. of the total number of hire-purchase transactions, as was indicated by my noble Leader. But because we do not go beyond the 95 per cent. or 97 per cent., to the extra 3 per cent. the noble Baroness would presumably discard the claims of the consumer, to which so many of my noble friends, as well as noble Lords on the other side, made reference, where abuses undoubtedly exist.
It is suggested that we wait for a comprehensive Bill. There is as much logic in that point of view as in the action of a doctor who refuses to mend the broken leg of a tuberculosis patient until there is a complete cure for the major complaint. Here is an opportunity to deal with an abuse which is recognised 471 by all the organisations to which the noble Lady made reference. It is recognised, and there has been persistent demand over the years for something to be done. But, are we, because of involved arguments as to how it would affect motor cars and the like, how it would affect people who are undertaking hire-purchase agreements above £1,000, to jettison all the people who, as every noble Lord will recognise, need a measure of protection? I would re-echo the point that was made by the noble Earl my Leader when he pointed out that, though there may be difficulties, it is possible to do something. We all agree that the person who is taking out a hire-purchase agreement for a motor cycle is, by and large, not more responsible than the person who would be taking out a hire-purchase agreement for a motor car. I have here details (I do not want to weary the House) which give an indication of the extent of hire-purchase in new and second-hand cars. Where the cost price of the new car is over £1,000, there are 10,000 cars. The total of new cars is 176,403. Second-hand cars, of which the overwhelming majority cost less than £1,000, total 682,000. These figures are right up-to-date—to December, 1962.
We hear involved arguments as to what would be the effect of placing a heater in a car, and the possibility of extending beyond £1,000. The noble Lord, Lord Airedale, made the correct reply when he asked, what would be the attitude of those members of the Molony Committee presenting this Bill and recognising that it deals with an abuse to be underlined and highlighted? Would one reject it merely because of the intricacies of some involved argument as to what effect it would have upon motor car interests of the limited kind that I have just described?
Lord Derwent emphasises in his comments the difference between England and Scotland, and quite rightly mentions the fact that Scotland has her own Act of 1932. But I would remind the noble Lord that in Scotland we have a mass of legislation, even legislation dealing with consumer matters. The Shops Act, the Food and Drugs Act, are all matters specifically related to Scotland, which has its own legislation. Are we now to have the principle in the presentation 472 of legislation that we in England and Wales cannot deal with a particular abuse unless we are presented with legislation that Scotland would desire? I am quite sure Members of both Houses would look askance at such a principle, which would mean that everything that applied to England and Wales must automatically apply to Scotland. If that is so, I should be glad to hear what Scottish Peers have to say about it.
The noble Lord referred to Clause 2, and said that he had not the views of the credit traders. Well, at least he has the views of Molony. In view of the fact that we are told that much consideration has been given to this question of hire purchase, I am amazed that the Government have not had sufficient consultation with the credit traders to enable them to find the answer to that particular point. As to the other matters which were mentioned, every single one of them is of a legal character and is a proper subject for discussion at Committee stage. My Lords, I should have welcomed the opportunity of speaking longer, but I realise that time is passing. I would emphasise that I recognise the points of view for and against the limit of £1,000. But £1,000 covers the overwhelming majority of cases, cases which every speaker has agreed demand some attention. Clause 3 of the Bill—
§ LORD DERWENT
My Lords, I am sorry to interrupt the noble Lord, but, for the purpose of the Record, I would point out that in regard to Clause 2, to which the noble Lord referred, this provision was not recommended at all by the Molony Committee.
§ LORD PEDDIE
I am sorry I have not the exact quotation, but if the noble Lord reads the Molony Report he will find reference to the credit trader. It also makes reference in very specific terms to the fact that the credit trade, which is responsible for the money debt, is very careful in regard to the creditworthiness of the people with whom it has contact. Therefore the lifting from £5 to £20 would be merely in accord with the change in the value of money and would give some assistance to this particular type of trader, to whom a tribute is paid in Molony. That is the point I am endeavouring to make.
My Lords, I would end by saying that 473 sufficient has been said in this debate to justify the Bill's going to Committee stage. Every noble Lord who has spoken has agreed with the basic proposition in this Bill that there are injustices which demand attention. I know that a comprehensive Bill might be better: but would one accept the principle that the whole penal code should be examined if the House recognised a certain wrong and attempted to correct it? We are dealing with a specific problem which can easily be dealt with by Parliament. If we neglect it, the only people who will be saying "Hurrah!" to-night are those who to-morrow morning will again be on the doorstep inveigling people into commitments which they cannot afford. It lies within the power of this House