Orders of the Day — Hire Purchase and Credit Sales

Part of the debate – in the House of Commons at 12:00 am on 12th March 1956.

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Photo of Mr Arthur Bottomley Mr Arthur Bottomley , Rochester and Chatham 12:00 am, 12th March 1956

I beg to move, That an humble Address be presented to Her Majesty, praying that the Hire-Purchase and Credit Sale Agreements (Control) Order, 1956 (SI., 1956, No. 180), dated 17th February, 1956, a copy of which was laid before this House on 17th February, be annulled. This Order arises from the Chancellor's statement made in the House on 17th February. It increases the minimum deposit required upon a wide range of consumer goods. In most cases it increases the rate from 331 per cent. to 50 per cent., but in a few cases the rate is raised from 15 per cent. to 20 per cent. In the last twenty months there have been several changes in the hire-purchase orders. The Government do not seem to be guided by any facts; they indulge in what might be called a "hit or miss" policy.

On 12th July last my hon. Friend the Member for Stechford (Mr. Roy Jenkins) asked the President of the Board of Trade if he had any plans for compiling hire-purchase statistics. The President said that consultations were taking place with retailers and finance houses, and that he hoped to collect the information with a view to getting those statistics. Subsequently, the hon. Member for Orkney and Shetland (Mr. Grimond) asked the President whether he had any further information, and the President said that he could not tell because he had not got sufficient facts to guide him. Perhaps the Parliamentary Secretary will be able to tell us whether those facts have been compiled, and what evidence there is to support the present action of the Government.

In his statement, the Chancellor of the Exchequer appealed to his political opponents to give the new measures a chance, and to give the public the opportunity of judging their actual effect for themselves in the coming months. I think that came ill from the spokesman of a party which made things so extremely difficult for the then Chancellor, Sir Stafford Cripps, during a time of economic crisis. He gave his life in his service to this country. I believe that if there had been a sufficient response to his appeals we might not be suffering such an acute crisis now. But I would forget all that if I thought that the present policy of the Government would help to overcome our difficulties. In that case I should urge my colleagues to give the Government their support.

But I believe that this Order, like the other hire purchase Orders, has been directly aimed at the less fortunate sections of the community. During its term of office from 1945–1951 the Labour Government did nothing to bring about direct controls on hire-purchase deposits. It is true that there were wartime controls and these were retained in the case of price-controlled goods, but the terms were nothing like so harsh as those being imposed today. The requirement for hire purchase was 12½ per cent. deposit and a period of two years in which to pay.

One has to acknowledge that in a time of difficulty such as the present some restrictions are necessary, but the Labour Government used different methods and we think that this Government should try them too. For instance, in 1947 a directive was issued to the Bank of England that the clearing banks and acceptance houses should not provide additional funds for domestic hire purchase above the 1946 level. A directive was also given to the Capital Issues Committee not to sanction new issues for hire purchase finance. Our reason for doing that was that we. too. wanted to put the emphasis on the export trade, and I am sure that one of the reasons for this new Order is that the Government themselves want to influence the export trade.

Quite frankly, I do not think that this hire-purchase control will do that. The Government have brought it in because they will not face the need for physical controls. If we are really to help the export trade, we must recognise that that means the allocation of raw materials to the manufacturers according to their export performance. The Government profess to believe in free enterprise, yet they are using these hire-purchase controls as planning instruments. In my judgment, they are doing it in a most stupid way, without any facts, and certainly with no decided policy.

Since the Conservatives have been in power they have introduced four Orders. In February, 1952, they introduced the first, which imposed a down payment of 33⅓ per cent. and limited repayment to 18 months. That applied to the hire purchase of many consumer goods—motor cars, commercial vehicles, office furniture, water heaters, washing machines, vacuum cleaners, sewing machines, refrigerators and other goods, but, sensibly, domestic furniture, bedding and cookers were then excluded.

In July, 1954, the then Chancellor referred to Tory prosperity and, because of that, all hire-purchase restrictions were abolished. Traders were left to make their own arrangements. At the same time, the Chancellor wrote to the Capital Issues Committee saying that it would be inappropriate to impose a rigid ban on all new finance for hire purpose. What was the result? Many of the leading finance companies—notably United Dominions Trust Ltd.—were able for the first time since the way to raise new finance for the hire-purchase business, and that has added further to our difficulties.