HL Deb 07 February 1966 vol 272 cc601-4

3.40 p.m.


My Lords, with the permission of the House I should like to make a Statement which has been made by my right honourable friend the President of the Board of Trade on hire purchase and rental agreements, and, if your Lordships will permit it, I should like to use his own words:

"I have made two orders which come into operation to-morrow. One of these will increase the minimum deposit, and reduce the maximum period for repayment, required for most goods at present subject to control under the Hire Purchase and Credit Sale Agreements (Control) Order. Where the minimum deposit on an item is 15 per cent. it will become 25 per cent. In the case of furniture and mattresses the minimum deposit is being raised from 10 per cent. to 15 per cent. I have decided to make no change in the minimum deposit required for cars, but the maximum period for repayment of the balance will be reduced from 30 months to 27 months.

"For other items where the maximum period for repayment is at present 30 months, the period will be reduced to 24 months. For furniture and mattresses the maximum period will be reduced from 36 months to 30 months. I have decided to make no change in either the minimum deposit or the maximum repayment for cookers and water heaters. The other order will increase the minimum rental which has to be paid in advance under a hiring agreement, for all goods now subject to control, from 20 to 32 weeks.

"The Government have made clear on many occasions that we are determined to eliminate the balance-of-payments deficit this year, following the substantial improvement that was made in 1965. To achieve this it is necessary to watch carefully the pressures on the economy. Industrial investment continues at a high level; and exports have been rising strongly. In these circumstances we must continue to ensure that consumption does not make undue demands upon our resources."


My Lords, the Statement that the noble Lord has just read is, indeed, an important one and one with serious implications, particularly for young married couples and those who are wanting to furnish homes, and so on. I am grateful to the noble Lord, Lord Champion, for apologising for not having announced that this Statement was to be made; and your Lordships will apreciate that I have had little opportunity to consider it in detail. Am I right in thinking that, so far as hire purchase agreements are concerned, there are not only very substantial increases in the deposits but also very substantial reductions in the hiring period, which would mean that the rentals during that hiring period would also be substantially increased? Secondly, with regard to hiring, the minimum rental having to be paid in advance increases from 20 to 32 weeks. Does that correspond with the general change made in the hire purchase agreements? Is it in line with it; and could the noble Lord say how great a percentage that is likely to mean—I have not worked it out—in the increase of the minimal rental charges which have to be paid in advance?


My Lords, in answer to the last question, may I say that the increase in the minimum rental to be paid in advance—from 20 to 32 weeks—reflects the general increase in hire purchase deposits to 25 per cent. I have not got what the actual percentage is. The goods mainly hired are radios and television sets and, in some instances, cars. I would not say that the increase in the length of time that is laid down in this regard is tremendous. In the case of motor cars, to quote an example, previously the amounts and time were 25 per cent. and 30 months; now they are 25 per cent. and 27 months. In the case of furniture and mattresses they were previously 10 per cent. and 36 months; they are now 15 per cent. and 30 months. There is not a tremendous change.


My Lords, what were the general items where minimum deposits have been increased from 15 per cent. to 25 per cent? The noble Lord dealt only with those which were increased less than the general items.


My Lords, I can deal with that point. The deposits for other consumer durables, including radio, television sets, record players, washing machines, refrigerators, vacuum cleaners and carpets increase from 15 to 25 per cent. and the time reduces from 30 to 24 months. With regard to the remarks the noble and learned Viscount made about young married couples, I may say that the last time an alteration was made in the percentages and the time for repayment such articles as furniture were not included. But the Government think that in the circumstances there should be a slight modification now in regard to furniture.


My Lords, while I agree that the present state of the economy makes these further credit restrictions necessary—and it is unfortunate that this should be so—may I ask the noble Lord for some further enlightenment on the last part of the Statement, in which he said that we must continue to ensure that consumption does not make undue demands upon our resources"? Would he not agree that the main problem is to achieve the right balance between earnings and productivity; and that until we have done so there is bound to be pressure on our resources?


Yes, my Lords, certainly. To save the time of the House I may mention that there will be quite a lot of opportunity to go into this question on Wednesday.


My Lords, does not my noble friend think it is penal upon young married couples in the working class stratum who, in the main, set up their homes on hire purchase?


My Lords, I think I made it quite clear that the changes made this time have been made because nothing was put on these items of furniture last time. I agree that the young people who are setting up homes are exceedingly important; but so is the economy, and the Government have taken steps to strengthen it.


My Lords, does the noble Lord agree that while hire purchase is, in principle, desirable, it has to be very carefully watched? While agreeing with the noble and learned Viscount that the young people who are at present dealing with current hire purchase are rather disturbed, I would point out that these changes also affect the wholesalers, who never know from one year to the next what hire purchase terms are going to be. Could the Government take this matter more in hand, take the longer view, realise that you cannot have hire purchase "ad lib." realise that there must be limits to deposits and periods and, at the same time, remember the interests of the young people who depend on this method of purchase?


Thank you very much, my Lords. I will certainly see that these matters are brought to the notice of my right honourable friend.