Draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018

Debate between Lord Harrington of Watford and Toby Perkins

Monday 11th February 2019 General Committees

[Richard Harrington]

May I clarify that I should probably not have used that expression? I really meant a hard Brexit or leaving without a deal, but I used a euphemism. I find that Opposition Members—and indeed Government Members—need a little raciness and excitement when debating statutory instruments, so I felt that the expression might have been appropriate. However, it clearly was not, so I apologise to the Chair and the Committee. It was like saying “a rollercoaster” or something like that. Now that I think I have clarified that point, may I finish the point about consultation?

[Toby Perkins (Chesterfield) (Lab)]

I am not so interested in the Minister’s terminology, but I am very interested in the consultation. In asking us to support the draft regulations, he is asking us to take quite a lot on faith. We all remember being told that the Government’s documentation was excruciatingly detailed, but it was subsequently exposed that there was very little detail at all. Opposition Members therefore want a little reassurance about the consultation with the industry, which we recognise is a very important one. On reflection, does the Minister think it would be useful to give us a bit more information about the feedback from the Government’s roundtable discussions, given the huge upheavals in their EU negotiations?

[Richard Harrington]

I think we have covered the consultation. The hon. Gentleman’s point is that we should have published the response as if it were a formal consultation, but I have accepted that it was not.

I reiterate that the Department hosted a whole series of industry roundtables to discuss no-deal planning generally with publishers, collection management organisations, broadcasters, technology firms, museum archives and educational institutions. During the drafting of the regulations, we listened to the concerns of stake- holders that published their views on the issues and opportunities for IP arising from Brexit, such as the Alliance for Intellectual Property and the British Copyright Council, which are representative bodies that cover a broad range of copyright interests. We also published the technical notices with detailed guidance on what no deal might mean for copyright and regulated rights.

Pubs Code 2016

Debate between Lord Harrington of Watford and Toby Perkins

Wednesday 24th January 2018 Westminster Hall

[Toby Perkins (Chesterfield) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey), who has been an incredibly important contributor to us getting as far as we have towards justice for pub tenants and a fully functioning, fair market in our pubs industry. My hon. Friend made his case in a typically impressive fashion and laid out many of the issues that face all those who want the pubs code to work in the way that Parliament originally intended.

I do not propose to repeat all the history that my hon. Friend laid out, but it is important to remember that Parliament, and subsequently the Government, took the fairly unprecedented step of intervening in a market—and despite the rhetoric, that has not been the Government’s modus operandi over the last few years—because of historic market failure. There was recognition that pub companies had failed to get their house in order, despite numerous opportunities to do so, and that there was an unfair imbalance in the relationship between powerful pub companies and tenants, who were individual small business people.

For that reason, hon. Members in all parts of the House voted to support the introduction of a market rent only option in the pubs code as part of the Small Business, Enterprise and Employment Act 2015. The support of Conservative and Liberal Democrat Members meant that the Government were defeated, and the market rent only option was put in. It is important for us all that that works, and that we deliver on the principles intended by the 2010 to 2015 Parliament.

I would like the Minister to clarify that he is responsible for the pubs code. I was under the impression that the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Burton (Andrew Griffiths), had taken over the role.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)]

I confirm that I have that portfolio. That has happened only in the last few days, but I am and will be responsible for pubs. I am listening eagerly to what the hon. Gentleman and other hon. Members are saying.

[Toby Perkins]

I thank the Minister. If that was not press released, he has just released it. I congratulate him on that important role. He may well know the history, but others may not.

One of the founding principles of the pubs code’s introduction, as laid out by the right hon. Member for Twickenham (Sir Vince Cable) when he was Secretary of State for Business, Innovation and Skills, was that there should be a rebalancing of the level of reward between pub companies and tenants. The Government’s intention was specifically that tenants should be better off as a result of the pubs code’s introduction.

My hon. Friend the Member for West Bromwich West referred to two key principles: that the market rent only option should be on a fair and reasonable basis, and that tenants who were tied should not be worse off than those who were free-of-tie. I will come back to that point.

Perverse and bizarre as it may sound, the introduction of the pubs code was simultaneously late to arrive and rushed. It had a short period of implementation and took a long time after the legislation was passed to be delivered. As a result, sufficient preparation was not done by Government, or by some companies, to get ready for its introduction.

The appointment of the Pubs Code Adjudicator was surrounded by controversy. My hon. Friend referenced the inordinate delays and some of the methods used to prevent landlords fulfilling their rights to go market rent only. It is important to remember that many tenants are in a perilous financial position when they seek to go free-of-tie. They are not in a position where inordinate delays, very substantial outlays of cash or huge legal costs are attainable.

If we want to deliver the opportunity—the right—for the tenant to assess an independent market rent and decide whether they want to have a landlord-tenant relationship, or whether they want to receive all the services from a pub company, it is important that the delays are not inordinate and that false additional charges are not put in to prevent them from being able to take up that right. That is one of the strategies that seem to be being used very deliberately.

Most tenants have a five-year contract period. If they come to the end of a contract and attempt to get a free-of-tie rent assessment, the clock is ticking on their next five-year contract. That delay is being put in there, but if they subsequently go free-of-tie or get an arbitration or adjudication award in their favour, there is no opportunity to backdate that to the start of their five years—all the more reason why the principle should be that the adjudicator carries out their role in the most timely fashion possible. Any tenant who manages to get an independent assessment and decides to take that up does not get that rent backdated. The code should be amended so that rent is backdated to the point of application. I ask the adjudicator to adjudicate on that and the Minister to clarify that in his remarks.

For many tenants, there is a narrow window in which they can take up the right to get an independent assessment. At the end of their contract, they have to let their pub company know. They are often waiting for a new assessment and under the impression that they are still part of a negotiation by the time that they realise that they have missed out on their opportunity to take advantage of it.

My hon. Friend referred to the conflict of interest that many people feel Mr Newby had when he took on this role. There are two important elements of that for tenants’ confidence in the process. We should be clear that many tenants would like the opportunity to take up their right, but have lost confidence in the process. They believe that if they try to take up that right, they will only take on additional cost, so they are not taking advantage of this. I am sure that that disturbs all hon. Members who wanted the legislation to be introduced.

There is a financial conflict. Mr Newby continues to hold shares and to be owed money by Fleurets, which has many leading pub companies as its customers. Whatever the questions about his history, it is absolutely wrong that he did not divest himself of that interest when he took on this role. We are talking about a relatively small sum—although significant for an individual —so given the importance of the industry and the legislation, it would have been far better for him to have divested himself of that.

The point about the Chartered Institute of Arbitrators ruling against the PCA’s arbitrating on four different cases is significant. The Chartered Institute of Arbitrators’ spokesman said that when a challenge was upheld, an arbitrator’s appointment in that dispute is “immediately terminated”, and they should not be involved in that case again. In response to that, a spokesperson on behalf of the Pubs Code Adjudicator said that because his responsibilities were established by an Act of Parliament, the PCA did

“not accept that the Chartered Institute of Arbitrators has any jurisdiction to appoint or remove an individual from the role of arbitrator in a pubs code arbitration.”

That is an important matter of law for the Government, and also a matter of direction.

I believe that as a matter of law, the PCA should have listened to the Chartered Institute of Arbitrators. Even if it is true that the institute does not have the power to remove him, a sensible arbitrator would say, “Given that an independent body says that I have a conflict of interest, it surely makes sense for me to stand down and appoint a truly independent arbitrator.” The question of the extent to which the Pubs Code Adjudicator is both an adjudicator and an arbitrator is significant, because arbitrations happen in private and adjudications happen in public.

What we have seen from the Pubs Code Adjudicator so far is that he is much more of an arbitrator than an adjudicator. Might the Government consider separating those roles? The role I envisage for the PCA as a spokesman for the code is undermined by the fact that so much of his dealings are done in private, so he has not taken on nearly enough of a forceful role, which is what I would like him to play. If he criticises some of the pub companies, as he does, that perhaps makes it more difficult for him to arbitrate in private with them, so there are real difficulties in all of that.

My hon. Friend the Member for West Bromwich West referred to the section 40 powers of the Small Business, Enterprise and Employment Act 2015, which impose a duty on the Pubs Code Adjudicator to notify the Secretary of State if he believes the code is being breached and not followed. It is clear from his public pronouncements that he believes the code is being breached, but I am under the impression that there has never been a section 40 notice given to the Secretary of State. If that is the case, will the Minister or the Secretary of State pursue that with the Pubs Code Adjudicator? If he is publicly saying that there is wrongdoing, why has he not written to the Secretary of State with suggestions about altering the code to clarify and strengthen his case, or made the report that he has a duty to make?

There are two or three key questions in the pubs code that it is important to clarify. One of them concerns market rent only. The right to market rent only is laid out in the Act, and that should not need any arbitration. It is a fact that if someone reaches one of the trigger points, they are entitled to ask for a market rent only option. The pub company has a right to make an offer, but if the tenant believes the offer is not fair, they have the right to go to an independent arbitrator. For some reason, the Pubs Code Adjudicator considers all the different applications to be arbitrations, but an independent assessment should not be a matter of arbitration. That is absolutely the principle of the clause in the Bill that we all approved.

On the market rent only option, the fact that someone would pay rent for the pub and not be tied on the drinks that are sold is absolutely accepted by the tenants and the pub companies. The question then arises: which of the other terms in the contract should also be a part of the contract? The pub companies would say a market rent only option means market rent only, and that is the basis of the entire relationship, whereas the tenants say that anything that is common in the industry that was part of the original contract should be part of the subsequent contract. Will the Minister clarify that?

Finally, to be positive, the appointment of the Deputy Pubs Code Adjudicator is welcome. We have seen a real difference since she was appointed. I would like to see her take an ever greater role. Some tenants are getting a better tied deal as a result of the threat of going free of tie. However, the question of deeds of variation is important. Will the Minister set out his view on that?

In conclusion, how many times, if at all, has the Pubs Code Adjudicator written to the Secretary of State to report failure to adhere to the spirit of the code? What is the Government’s view on whether terms that were in a previous tied contract should remain in free-of-tie contracts? Do the Government agree that Mr Newby should accept the verdict of the Chartered Institute of Arbitrators, and do they believe that the Chartered Institute of Arbitrators has a right to a view on those questions? It is important. The pubs code is a vital opportunity for the industry. It is important that we all make it work.