Mr John Denham (Southampton, Itchen) (Lab)
I am grateful to have the opportunity to open the debate, and I pleased to speak for the first time under your chairmanship, Madam Deputy Speaker.
I should perhaps explain to any bemused constituents who might be watching that Adjournment debates are applied for in advance, without any knowledge of the day’s news. Some of my constituents might wonder why I am talking about a pub and not about the loss of 1,000 jobs in Portsmouth, which affects many of my constituents. None the less, I hope people will see the importance of this local issue.
At one level, the debate is about one pub and one community, and about their struggle to keep their pub open. In fact, they do not want to just keep it open. They want to go one stage further: they want to buy it for the community and run it as a community pub. That pub is The Bittern on Thornhill park road in Southampton, but what has happened at The Bittern has an echo in pub campaigns across the country. In brief, the point I wish to put to the Minister is that legal loopholes mean that the intentions of Parliament, which are supported on all sides of the House, are being thwarted. I will put three practical proposals to the Minister for the action he could and should take to rectify the problems.
The Bittern is a popular community pub on a busy road between two council estates, in Southampton—Thornhill and Harefield. The next nearest pub is two thirds of a mile away; and most other pubs are well over a mile away and serve very different communities. Let me be clear that The Bittern is not a picturesque country pub; nor is it a bijou eatery with a bar hoping for its first Michelin star.
Architecturally, it is an attractive building, which was built in 1933 to an original art deco design. Both its interior and exterior are in need of refurbishment, but it remains largely as it was when it was built. The distinctive and original Crittall windows are still in place and functioning, but there are not quite enough of the original features in place for it to be listed. Yes, the pub could do with a lick of paint and some sprucing up, and it might not be the pub of choice of all my constituents, but it is a pub that many local people use and like. Some pubs which serve local communities become closed, unfriendly, and unwelcoming, but not The Bittern. It feels like pubs used to feel: warm, friendly and welcoming.
Earlier this year, rumours began that the owner, the giant pubco Punch Taverns, was not going to renew the landlord’s lease and wanted to sell to McDonald’s. It was no surprise to me that the community wanted to do everything it could to hang on to its pub. Taking advantage of new legislation, it decided to get its pub listed as an “asset of community value”. As the Minister will know, under the Localism Act 2011, the community would then have the right to exercise the new community right to bid to try to buy the pub if and when it came on the market. As he might also know, the idea of the community right to bid was first put forward when I was Secretary of State for Communities and Local Government, so I am quite attached to the idea of communities being able to buy and run their own pubs. I was delighted, therefore, when the new Government took those ideas forward and developed them more fully in legislation.
Earlier this year, the community bid was put together, submitted and supported by the necessary 21 local residents and with a great deal of support from local councillor Mary Lloyd. It was submitted to Southampton city council on 22 May. To be listed as an “asset of community value”, a pub needs to be more than a boozer, and the application stressed the pub’s consistent fundraising for charities—this is largely a community with more warmth and generosity than money, but still it regularly raises money for bereavement charities, cancer research and others—and the fact that it was a popular and inexpensive venue for christening parties, wakes and wedding receptions, and had the support of the vicar of St Christopher’s church.
After considering the application, and when deciding to list The Bittern, Southampton city council said that the application
“demonstrates a high level of community support for an asset with mixed use, combining both a pub and a community and cultural focussed facility considered to be of significant value to the local community. The community-based activities that take place at The Bittern, and have taken place for several years, could not easily be replaced elsewhere in the locality, and could not provide the central community hub provided by The Bittern”.
That was a good judgment, and The Bittern was listed on 24 July.
The intention of the community right to bid is that, once listed, the community has the chance to raise the money to bid for the pub when it is placed on the open market. The process does not guarantee success—it does not force the pub to be sold to a particular buyer—but it gives people a fair chance to bid and to bring a new community-owned pub business into play. The reason for this debate is that that might never happen for The Bittern. The listing process is rightly public and owners have to be consulted. As the city council told me, the process has to meet good standards of transparency, audit and reasonableness and meet the necessary legal requirements. From the outset, the council’s officers took a positive view both of the principle of the legislation and of the application they were being asked to consider. They had to consider it objectively, but this was not a situation, like those I have heard of, where the local authority was resistant to the idea of listing assets or wanted to make it as difficult as possible. I will come back to that in a moment.
The problem is that in order to evade the right to bid, Punch Taverns entered into an agreement to sell to McDonald’s on 19 June, less than a month after the listing process began. Even if the council had been able to move faster—this was the first application it had received under the Localism Act—it would have had to move with unrealistic speed to list the pub in the short period between its receiving the application and an agreement being reached to sell the pub. Unfortunately, the law is clear about the position created by Punch Taverns and McDonald’s. There is an exemption from the community right to bid in the case of
“an option to buy...entered into before the land was listed”.
Once the sale had been agreed, McDonald’s placed a unilateral notice on the land title. That effectively prevents the sale of the pub to any third party, including the Save the Bittern campaign and the community. In other words, the whole intent of the community right to bid has been thwarted.
Emerging evidence up and down the country shows that there is a string of pubs—including the Tumbledown Dick in Farnborough, which is also being sold to McDonald’s, and the Golden Harp at Maidenhead, where Tesco is involved—for which communities have achieved listing status but cannot bid because of prior agreements to sell. There are examples of sales to developers who then offer to sell back to the community at a far higher price.
The Plunkett Foundation, which the Government have commissioned to provide support to community groups, tells me that about 60% of community groups seeking the listing of assets of community value are dealing with an unwilling seller. I want to put on record my thanks, and those of the community, to the Plunkett Foundation for the advice and support that it has given us throughout this process. It is very helpful to have an independent organisation that is able to steer community groups—and, indeed, Members of Parliament—through the complexities of the legislation.
This situation, in which members of the community are able to get their pub listed as a community asset but are then unable to bid, is a real disappointment, because there is no doubt that the listing of community assets has been a real success, and I do not want to take anything away from that tonight. The Campaign for Real Ale tells me that more than 200 pubs have been listed. The Plunkett Foundation says that more pubs have been listed than any other class of community asset. This shows that there is a huge demand out there for making a real success of the legislation and the intentions of Parliament.
Those organisations also point to problems, however. Some councils have, unlike Southampton, tried to gold-plate the requirements, imposing a level of formal and legal status for community bids that is not required by the legislation. Other cases, such as that of the Albert Inn in Wyke Regis, have been rejected on the erroneous ground that there is another pub 700 metres away. CAMRA is also concerned that the right to bid can be evaded if a pub is sold as a going concern, even if the purchaser has no real intention of retaining the pub. There is no ability to freeze the legal status of a pub when the listing process begins; nor is there any requirement to sell to the community. There could not be any such requirement to sell to a particular bidder. Those provisions do not exist in the law at the moment. Councils may use listing status as a relevant planning consideration, but many do not do so. Other loopholes are also becoming widely known, including the leasing of a pub for a period of time in order to evade the provisions of the law on the community right to bid.
Almost inevitably, many attempts to get a pub listed as a community asset begin only when it is realised that a pub is under threat, and the process gives too wide a window for owners to evade the intentions of the law. It is not a fair fight when a community such as mine in Southampton finds itself up against Punch Taverns and McDonald’s, and something needs to be done to even things up. Even where a council is as supportive as Southampton was, the onus is on the community group to get everything right. The owners have the right to see due process from the council, but they can use the listing time to evade the intentions of Parliament.
I hope the Minister will agree to an urgent review of the working of the Localism Act to see whether there are practical ways of closing this loophole. Perhaps it would be possible, when there is a particular threat, to place a freeze on the legal status of the pub for a few weeks, to enable the listing to be considered and to avoid a sale agreement being entered into. There might be other ways of solving the problem as well. I have been in Government, and I know that the temptation is often to wait until the evidence is overwhelming before stepping in, but the Minister would be well advised to have a look at this matter now; otherwise, too many community groups will put their efforts into campaigns that are ultimately fruitless.
The sale of The Bittern has not yet been completed. We cannot be sure, but a reasonable assumption is that McDonald’s has agreed to buy, subject to the building or site getting the necessary planning permission. This actually leaves the one hope that the Save the Bittern campaign can hang on to. No planning application has yet been made, although McDonald’s told the Southern Daily Echo in August that it had submitted a pre-planning application. Perhaps there will be legitimate grounds for planning permission to be rejected. If that happened, perhaps McDonalds would withdraw, and if it did, it would presumably open the door to the community bid once again. At this stage, we can only speculate and hope.
That brings me to the second issue. One thing is certain: the change of use itself—from pub to fast-food restaurant—does not need planning permission. That issue has been raised repeatedly by MPs in debates over the years and by the all-party save the pub group, whose chair, the hon. Member for Leeds North West (Greg Mulholland) is unfortunately abroad—otherwise, he would have been in his place this evening. The inability of local authorities to block a change of use is the biggest single factor encouraging the sort of links between major companies such as Punch Taverns and McDonald’s, or between the pubcos, including Enterprise Inns and Tesco, Sainsbury’s and other supermarkets, which have cost the country so many pubs in recent years. I urge the Minister to consider again changing the planning laws so that local authorities can determine a change of use.
I know Ministers have suggested that councils should use article 4 directions, which effectively require all use changes to have planning permission. I believe Ministers have promised simple guidance on the use of article 4 directions, but will the Minister clarify whether that has been produced or will be produced? Will he confirm whether an article 4 direction can be used for an individual pub? Will he confirm that the local authority would need to give a year’s notice of its intention to use article 4 powers, thus creating another huge window to evade the community right to bid? Will he confirm, too, that the use of article 4 exposes a local authority to significant costs—for example, paying the planning application costs for the developer—and risks of compensation?
I am an open-minded person, and if there were ways of dealing with this issue other than changing the planning legislation, I would always consider them, but it seems to me that the overwhelming evidence suggests that a change in planning laws on the use-class issue is necessary to support pubs such as The Bittern.
Finally, I turn briefly to the relationship between Punch Taverns and McDonald’s, and similar relationships between pubcos and major developers. As I have said, the listing process for assets of community value is open and public, so the community group at The Bittern had nothing to hide. Indeed, when the listing proposal was put together, it was agreed that I should write on its behalf to Punch Taverns asking to open direct negotiations. Punch politely, but firmly, declined, saying:
“In the case of the Bittern we carefully considered all opportunities but came to the decision that a sale was most appropriate”.
The interesting point about that is that that is what the community wanted—to buy the pub—so why did Punch insist on going ahead with a sale to McDonald’s when it had the opportunity to get a market price from the local community organisation?
Punch tried to tell me that whatever happened would be an “asset to the community”, but not many of my constituents would regard yet another McDonald’s as such an asset. Building a fat-inducing takeaway on the main walking route to the local secondary school is anything but, although McDonald’s has tried to tell me how wonderful it would be. It pointed out in a letter that if it opened a fast-food restaurant, it would then be able to work with the local community to organise litter picks! I suppose that is true, but it is not quite what people are looking for.
Most odd, then, is why Punch simply declined the chance to sell the pub at a proper market price to the local community. By definition, Punch and its shareholders would not lose out, yet it declined the offer. I think the only sensible interpretation is that Punch is working strategically with major developers on the disposal of pubs and that individual sales to local community organisations would disrupt that cosy relationship and cause it some unnecessary hassle. With over 200 pubs converted into supermarkets over the past two years, it is pretty clear that something similar, even larger in scale, is going on between the pubcos and the major supermarkets. I was struck by the words of the chairman of all-party save the pub group when he described Punch Tavern and Enterprise Inns as
“zombie companies that do not pay dividends, and they have no growth plan or export potential”,
going on to say that these companies
“just about pay the cost of their debt by selling off their assets.”—[Official Report, 14 October 2013; Vol. 568, c. 573.]
That is what is happening now.
If big companies are getting to together to close the market and deny opportunities to new independent businesses owned by local communities, they are acting both against the public interest and in an uncompetitive manner. That should be investigated, and I hope that the Minister agrees that an inquiry by the Competition Commission would be appropriate.
The supporters of The Bittern have not given up. We may have been thwarted for the time being, but who knows what will happen? Perhaps there will be valid planning grounds for opposing the change of use. Perhaps McDonald’s will realise that there are only so many occasions on which they can ride roughshod over a local community. For now, the pub is still trading, months after it was expected to shut. Perhaps Punch Taverns will respond to this evening’s debate by opening negotiations. It is certainly far too early to admit defeat.
The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)
I congratulate the right hon. Member for Southampton, Itchen (Mr Denham) on securing the debate. I also congratulate him on the constructive way in which he has spoken this evening, and the constructive way in which he engaged with us on an informal basis beforehand. I fully understand both his own frustration and the frustration that he has expressed on behalf of his constituents, and I can say to him, as one constituency Member of Parliament to another, that I understand that frustration for a very good reason. A similar issue arose six years ago in my constituency involving the Ashley Court hotel in St Andrews. Although the local Member of Parliament, both the local councillors and the entire local community did not want the pub to close, they were powerless to prevent it from being sold to a property developer. It was subsequently demolished, and is now a block of flats.
I want to describe some of the work that the Government are doing in recognition of the important role that pubs play in the community, to which the right hon. Gentleman referred several times, but let me first echo his thanks to my hon. Friends the Members for Leeds North West (Greg Mulholland) and for Burton (Andrew Griffiths), both of whom do a great deal of good work with Members on both sides of the House in raising the issue of pubs in the community—and, indeed, the price of beer. As always, that subject featured on Budget day, when the Chancellor scrapped the beer duty escalator as well as cutting beer duty, shaving 4p off the average pint. The right hon. Gentleman will know how difficult negotiations with the Treasury can be, but on this occasion even the Treasury was helpful to pubs.
The Government have also made it easier for pubs to host live music performances, so that they can provide the entertainment which, the right hon. Gentleman told us, takes place in The Bittern, and have extended the doubling of small business rate relief from October 2010 to March 2014.
The main issues raised by the right hon. Gentleman concerned the rights conferred by the Localism Act 2011. I am grateful to him for paying tribute to the Government for implementing ideas which I understand that he may have supported when he was Secretary of State for Communities and Local Government three or four years ago. These are early days: the Act is still very new, and the community rights conferred by it have existed only since September last year. However, as I told the House on another occasion when dealing with a similar issue relating to high streets, more than 550 assets have so far been listed by communities across England as assets of community value, and I know that the list is growing daily. I do not know whether the right hon. Gentleman follows his former Department on Twitter, but if he were to do so, he would see that nearly every day another asset is added to the local register. The Department is pleased to acknowledge the work that is being done by communities throughout the country.
The Campaign for Real Ale, to which the right hon. Gentleman referred, has been very active in this regard. Yesterday I met representatives of CAMRA and other organisations with which the Department wants to work in order to promote community rights such as this. CAMRA has produced its own leaflet explaining how to help communities that want to promote their local pubs as an asset of community value, and I commend it for doing so. Many pubs have exercised these community rights. The first asset to be listed was The Ivy House pub in Nunhead, which is in the constituency of the right hon. and learned Member for Camberwell and Peckham (Ms Harman). There are many other examples. There is a long list on the CAMRA website. The Rose and Crown in Slaley in Hexham has now been purchased by the community. Not only was it registered as an asset, but it has gone on to be purchased. The Anglers Rest in Bamford in the Peak district is now a community-owned pub. Across the country communities have been able to take advantage of this legislation, not only to preserve the pub in their community but to take on the ownership and management.
The Government have given real practical support to bring this about. There is not just legislation. We have put £19 million on the table to support partners such as Pub is the Hub and the Plunkett Foundation, so they can engage with communities and make sure they know what these rights are and how to exercise them.
This right has to balance the rights of the community with those of the owners of the property. Getting something on to the register does not automatically give communities the assets they want. Indeed, this was never the Government’s intention. Judging by the right hon. Gentleman’s remarks, he understands that in a free society we cannot completely fetter the property rights of someone who owns the pub, however objectionable we might think their business practices are. The community rights bid does give communities a better chance to bid for an asset they value in their local community, however. The scheme does not restrict what the owner can do with their property even if it has been listed.
The right hon. Gentleman talked about planning policy, and he mentioned change of use. The Government have set out a clear and consistent set of objectives for planning reform. We want local communities to exercise power and to promote sustainable development, but permitted development rights have existed in the planning system for a long time. As a councillor in Bristol for the city centre district in the mid-1990s, I campaigned for a reform in the planning use classes at that time, when pubs and restaurant were together in the A3 use class. Fortunately, later on that use class was divided into A3 and A4, and pubs sit in the A4 use class. That means that under permitted development rights pubs can go up from A4 to A3—and I believe McDonald’s would be classified as a restaurant—although planning permission may be required for associated building works.
The right hon. Gentleman referred several times to article 4. Local planning authorities can achieve objectives outside the use class system by bringing forward an article 4 direction, and this can be used to protect community assets such as public houses. In the last year three planning authorities have made directions under article 4 specifically to control the development of public houses. Two of these directions have been used to prevent demolition, and the third is in regard to a change of use.
The right hon. Gentleman asked about the geographical extent of an article 4 direction. It can be as specific as a single piece of land and a single building, or it can be across the entire local authority area—Southampton in his case. He also asked about costs that might be visited upon the planning authority. Because an article 4 direction reduces the normal planning rights of a property owner, if they subsequently have to apply for planning permission because of an article 4 directive, they do not have to pay a planning fee. To that extent, there is indeed a cost to the local authority.
Thirdly, the right hon. Gentleman asked me whether compensation would be payable. The advice I have for him is that that possibility can be mitigated if a planning authority gives sufficient notice. Indeed, Bristol has recently brought in an article 4 direction to control the spread of houses in multiple occupation and it gave 12 months’ notice. Over the past two years, 270 article 4 directions have taken place. He also asked about guidance on article 4, and the Department has been moving on that. A review of guidance was undertaken by Lord Taylor of Goss Moor and that has been published online for comments. The period for those closed in October and the Department is considering what more to do.
I entirely sympathise with the points that the right hon. Gentleman was making. I was glad that he paid tribute to the community rights that have been put in place, and I am sorry that on this occasion they were not able to help his constituents. However, the Government do want to work with organisations such as CAMRA and others that want to protect the use of the pub and other community assets. Our message is not to wait for a threat but to move now. That is what CAMRA is advising its members up and down the country to do. We are saying, “Do not wait for a threat. Move now to list your asset of community value.” That will provide the protection that the Localism Act affords.
Question put and agreed to.