Lord Whitty
Main Page: Lord Whitty (Labour - Life peer)Small Business, Enterprise and Employment Bill
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Lord Whitty (Lab)
My Lords, I too have some amendments in this group. The House may be surprised, but I agree with the first remarks of the noble Lord, Lord Hodgson, that we have seen a clear response from the Government to the anxieties on this section. While there was some concern that the Government had come up with a whole new clause to the Bill rather than the one that was passed in the Commons, and a fear that the Government were under some pressure to dilute the effectiveness of the amendment carried in the Commons, the Minister and her officials, in the amendments they are proposing, have seriously recognised that danger and have responded admirably in general to fulfilling the intent of the Commons’ Motion while making it less subject to doubt or indirect unforeseen consequences.
It is quite a complicated amendment in the first place, and the additional amendments which, under pressure, the Government have added today make it more complicated. Nevertheless, it is a basis on which we can all move forward. Certainly most of the campaigning groups in the area recognise that this is a huge step. There are, however, three anxieties which these and my later amendments address in part.
The first is that by leaving quite a lot of this to secondary legislation, it is probably inevitable that the actual right to the MRO will not come into force until about a year later. That is a disappointment. Nevertheless, I understand the reasons for it. I also have some problems about the threshold, which I shall come to in a later group. In this group, my main anxiety and that of other noble Lords and those who have met the Minister is that one of the triggers for the MRO, which was clearly required under the Greg Mulholland proposition and relates to the point of the MRO still being available after sale, is greatly reduced as a result of the government amendments. I agree with some of the amendments tabled in this area by the noble Lord, Lord Stoneham, as I do with some of the others.
I am sorry about the complication here, but my Amendments 33AW, 33AX and 33AY are themselves amendments to the fairly long government Amendment 33AV. They deal with a situation where the pub is sold in the course of a rent agreement to an owner who is not covered by the code. All the protections in the lease seem to move over, but the right to the MRO does not. The Government have addressed this in part by ensuring that the restructuring of companies will not be a way around the provision. In other words, the large pub companies cannot break themselves up so that they fall under the threshold. However, it is still the case that if a non-large brewer or pubco takes on a tied pub, while all the other protections in the code will apply the MRO option will not.
The Government have said that the option will apply for the duration of the lease, but that is not much comfort to those who are nearing the end of their lease. My first two amendments therefore deal with giving a bit more certainty to people who are faced with the sale of their pub, generally speaking over their heads, when they are not at the end of their lease. In other words, they suggest that there should be a 10-year period. I am not absolutely wedded to 10 years, but there should be a period during which whoever is the new owner, this one aspect of the rights of the tenant should be carried over with the lease in the same way as all other rights are carried over. The two amendments assume a period of 10 years. As I say, if the Government want to come up with a slightly different formulation, I will be happy to consider it.
The final amendment, Amendment 33AY, relates to the drafting of government Amendment 33AV, which seems to drive a coach and horses through the interaction of proposed new subsections (2A) and (2E). They would both restrict the availability of the MRO post sale to a non-qualifying company and dilute the role of the adjudicator in relation to the new circumstances. There may be a more subtle way of doing this, and the Government may say that there already is one, but I cannot see it in their amendment. A tenant who has the lease and by the clear will of the House of Commons now has the right to an MRO ought to continue to have that right under a new owner for a period of time and to have the right to enforce the MRO option by right of access to the adjudicator. Taken together, my three amendments would do that.
The Government may have a better way of doing this, and if they do we would like to hear about it either now or at Third Reading. Indeed, I remind the Minister that the point of sale issue was one of the great many contentions put forward by Greg Mulholland in the Commons and was clearly one of the triggers which the House of Commons voted for. If that is pulled away, the will of the Commons will not be fully represented in that respect. I repeat that I pay tribute to the Minister and her officials for respecting the other aspects of the Commons amendment. I would be interested in what the Minister has to say on this point, but I think that my amendments would actually help the situation.
Lord Stoneham of Droxford (LD)
My Lords, I congratulate the Government on making significant moves with these amendments to deal with some of the problems that we identified in Committee. Obviously, one of our major concerns is that a lot is still to be decided by secondary legislation. We have to make sure that as far as possible we are precise at this stage about what that legislation is going to seek to do.
I accept all the points that the noble Lord, Lord Whitty, made about the point of sale issue. I would like to see stronger safeguards, but I also recognise the move that the Government have made, which I give them credit for, in ensuring that even though sale is not a full trigger point, the amendment will enable certain protections to still be in place, particularly that of the code.
I would also like to hear my noble friend spell out the timescale, because I share some of the concerns of the noble Lord, Lord Whitty, that we need some clarity on the timescale, although I suspect that 10 years is probably a little optimistic. I support the government amendments and ask for clarification on the point of sale issue.
Lord Whitty
Lord Whitty
My Lords, the two amendments in this group deal with the issue of the threshold. I will be as brief as I can.
The discussion earlier today and in Committee has shown that there is an awful lot of movement within the pub world: there is buying and selling of pubs between large pubcos, breweries and other companies, and there is a lot of change in the status of pubs between being managed and tenanted and between different forms of tenancy, such as from tenancy to franchise and vice versa.
The definition of the threshold here is rather static in that it relates only to tied pubs. The Minister has made it clear that the definition of tied pubs includes franchised pubs, and I hope that she will repeat that assurance here today. I had also hoped that she would be slightly more favourable to the earlier amendment in the name of the noble Lord, Lord Stoneham, which related to pubs that are tied other than by beer and cider provision, because there are other forms of tie than the purely alcohol tie. Because pubs move from one status to another, and indeed from one company to another, it is surely a lot easier to define the threshold by the total number of pubs. Otherwise, there could be some gaming to avoid the threshold, or indeed changes in the structure of the industry that alter the way in which the code and the MRO option would apply.
The Government have said that if we did that we would run the risk of completely inappropriate pub owners falling within the area of the Bill. First, as of now, it makes a difference of one company, so it is not a comprehensive reassessment; it is just an easier way that will stand the test of time for longer. In any case, as was referred to in the debate on the previous amendment, if any company is caught inappropriately by this provision, either because of the threshold or for any other reason, the Government have the power under Clause 71 to exempt that company or companies.
It would therefore be a lot easier were the Government to accept the rationale of what I am saying. It would make the operation of the code a lot easier and clearer. It would not make a lot of immediate difference, but it would, as I say, stand the test of time, given the volatility of the patterns of ownership with the buying, selling and changing of status within this sector. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, it will not surprise the noble Lord, Lord Whitty, that I urge the Government not to accept the amendment. The issue of the change in the MRO and its introduction is about tenants: that is to say, self-employed business men and women and the imbalance of bargaining power between the individual tenant and the brewery, in particular because of the issue of the rent charged and the charge for products and services supplied. That is the heart of the problem.
Managed pubs—the other big category—are run by people who are employed by the brewery, who run it like a branch office. The noble Lord, Lord Snape, referred earlier to how Wetherspoon runs its pubs. It has managers in every pub who are employees. They are paid a salary and a bonus, with all the other aspects that go with corporate existence. To include those in a Pubs Code would be wrong, first because there is no rent to pay and no question of any aspect of the Pubs Code applying to pubs like that. These are completely different vehicles and corporate structures, and the application of the Pubs Code can have focus and effect only where you are dealing with independent businessmen, whether they are tied, franchised, or whatever.
Lord Whitty
I thank the Minister for that response, and particularly for her reassurance on the record on the inclusion of franchisees in the definition of the 500. The point here is that this is all about the balance of power, as she said herself: the power of very large companies that have pubs of different status to shift them from being tenanted and tied to tenanted and not tied, and vice versa, and from tenanted to managed, which applies as a result of their size. The code, of course, will relate only to their relationship with tenants of tied premises. So, in a sense, the noble Lord, Lord Hodgson, and to some extent the Minister, miss the point—it is defining who by size and influence on the market would be most likely to present a problem for their tenants in this respect.
I do not think that I will get anywhere with the Minister tonight. I hope that the Government will bear this in mind, but at the moment clearly it makes very little difference—the difference of only one company. I hope that the Minister will not get the lawyers on to her for having named that company. Nevertheless, it is important that the vast majority of tied pubs are covered, and her definition of the threshold would ensure that. But down the line, again, there may be a problem with pub codes if large breweries began to change their status on a large scale of the pubs under their control. But for the moment, I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, I shall not move the amendment, but I want to say a quick word on Amendment 33AY. I was very disappointed when the Minister, who obviously thought that it was already chucking out time on the pubs section of the Bill, said in replying to my noble friend Lord Mendelsohn that she would not look again at the question raised by Amendment 33AY: in other words, that she was not prepared to look at what, from my perspective, is a disproportionate infringement of the rights of the tenant. While there is a change of owner, all other aspects of the code and of the lease will apply to terms and relations between them and the new owner, except the very one on which Parliament has insisted. I find that a bizarre position and one that may be politically difficult for the Government.
I urge the Minister, even at this late stage—and the noble Lord, Lord Popat, is looking at it very assiduously just now—to say that she will have another look at this before Third Reading and come forward with her own proposition, or at least have some further consultation on the matter before Third Reading. If they do not do so, as this was central to the concerns of the House of Commons, I fear that they will find themselves in some difficulty when the matter goes back there. Given that we all want to get this Bill finished with, although it is not very evident that we do today, there is a possibility of the Government running into trouble if they do not have another look at what is covered by Amendment 33AY. I ask the noble Lord, Lord Popat, to reflect on that on behalf of the Minister.