HL Deb 12 April 1983 vol 441 cc175-6

7.50 p.m.

Lord Lyell rose to move, That the draft order laid before the House on 28th February be approved.

The noble Lord said: My Lords, this is a simple order which introduces no new provision. Its purpose is to raise the financial limits in the Hire-Purchase Acts to take account of that with which we are all acquainted—inflation. If approved, the order will raise the upper limit in the Acts—that is, the level at which the protection afforded by the Acts ceases to apply—from £5,000 to £7,500. The order has been considered by the Joint Committee on Statutory Instruments, who made no comment.

When the Hire-Purchase Acts received Royal Assent in the mid-sixties, the upper limit was £2,000. At that time £2,000 was sufficient to cover most of the goods that private consumers were likely to buy and all but the most expensive cars. By 1978, as a result of inflation, that was no longer the case and the limit was raised to £5,000. Now, despite the fall in the rate of inflation over the past two years, £5,000 is too low. The hire purchase price of many typical family cars is likely to be above the limit, and the consumer is deprived of the protection which the Hire-Purchase Acts were designed to give him. The figure of £7,500 is high enough to bring the hire-purchase price of most small and medium-sized family cars back within the scope of the Acts, but it is not so high as to impose an intolerable burden on the finance industry.

I should stress that the order is an interim measure. My honourable friend the Minister for Consumer Affairs hopes shortly to make regulations under the Consumer Credit Act 1974 governing, among other things, the form and context of credit agreements, cancellation rights and rebates on early settlement. These regulations, and the related provisions of the Act, will come into force some 18 months later. Thereafter, consumers will enjoy comprehensive protection under the Consumer Credit Act in relation to all forms of credit agreement, and the Hire-Purchase Acts will be repealed.

At the same time as the regulations are laid, my honourable friend will lay draft orders to increase the monetary limit on credit agreements protected by the Consumer Credit Act to £15,000. That figure will take effect immediately after the regulations and related provisions come into force. The present order is therefore a stepping stone to increase the protection provided by the Hire-Purchase Acts until the much wider protection offered by the Consumer Credit Act comes into force. I hope your Lordships will consider that a reasonable explanation. I beg to move.

Moved, That the draft order laid before the House on 28th February be approved.—(Lord Lyell.)

Lord Ponsonby of Shulbrede

My Lords, I thank the Minister for explaining the purpose of the order. In referring to the increased amount (from £5,000 to £7,500), which would be protected under the Acts, the noble Lord said that that was designed to take account of inflation. I was surprised that he did not mention that since the previous limit was fixed, the minimum hire-purchase deposit amount had been abolished. It could be, therefore, that people were tending, when buying family motor cars, to borrow a larger amount than they would previously have borrowed. In the circumstances, I wondered whether the Minister was convinced that the proposed increase would be sufficiently large, bearing in mind that, regrettably perhaps, a normal family car can cost more than £7,500.

Lord Lyell

My Lords, I am grateful to the noble Lord, Lord Ponsonby, for his welcome to this simple order. He raised an interesting and valid point in terms of the removal of controls, possibly tempting the innocent consumer pell-mell into the high streets to spend what he otherwise would not spend. I hope that is not entirely the case. He wondered whether the upper limit we have suggested of £7,500 would be sufficient. I stressed that it was an interim arrangement and that when the Hire-Purchase Acts were finally repealed, the top figure of £15,000—which we hope will be approved in due course under the Consumer Credit Act, which will be an envelope measure covering all forms of consumer credit—would apply.

I understand that family motor cars of the types that are likely to be bought by the consumer on hire purchase depend very much on the terms the consumer can negotiate with the dealer, on the type of motor car the consumer prefers and the finance company. That is a feature of the competitive markets for both finance and motor cars existing in the United Kingdom today.

I will try to make a rough generalisation on the prices of family motor vehicles. We expect the increase now being proposed to cover most cars with a cash price of from just under £4,500 to just over £6,000. I am advised that those parameters would range from some of the dearer (more heavily decorated, if I may so describe them; more powerful and sporty) models of the admirable Metro up to the slightly larger Ford Escorts and Vauxhall Astras; and, I am given to understand, most versions of the new British Leyland Maestro up to the middle of the range versions of the Ford Sierra and Vauxhall Cavalier.

I regret that I do not have the price lists with me so that I might detail to the noble Lord what options he could have on his motor car—sliding roof, reclining seats and so on—but we suggest that £7,500 will relieve some of the problems which have caused aggravation to consumers who wish to purchase the normal family motor car. I hope that the noble Lord will accept that this is an interim figure and that before long the limit under the Consumer Credit Act will, we hope, be twice what is proposed this evening. With that little journey through the interesting market in the United Kingdom for motor cars, I hope the House will approve the order.

On Question, Motion agreed to.

House adjourned at one minute before eight o'clock.