Adrian Bailey
Main Page: Adrian Bailey (Labour (Co-op) - West Bromwich West)(12 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I beg to move,
That this House believes that the Department for Business, Innovation and Skills’ proposals for reform of the pub industry fall short of the undertaking given to the Business, Innovation and Skills Committee in July 2010 and that only a statutory code of practice which includes a free-of-tie option with an open market rent review and an independent adjudicator will resolve the contractual problems between the pub companies and their lessees; and calls on the Government to commission a review of self-regulation of the pub industry in the Autumn of 2012 to be conducted by an independent body approved by the Business, Innovation and Skills Committee.
I thank the Backbench Business Committee for agreeing to allocate time for this very important debate. It might not be immediately obvious, but the motion addresses issues that are vital to some of the poorest people in our community—publicans, many of whom work very long hours and earn less than £15,000 a year. It is hardly surprising that many of them just give up and go elsewhere, and the consequences are visible up and down the country as pubs close day after day. The consequences hit not just publicans but the local communities they serve. Increasingly, rural villages are without a village pub and without the social hub and activity concentrated in that pub. That adds to the sense of alienation.
Even in my local area, where 10 years ago there were four pubs within a mile, only one is left. I know that experience is shared by Members up and down the country. There is obviously something profoundly wrong in the industry. Some of it is about social changes, but, to go to the heart of the problem, a huge volume of evidence now shows that the business model governing the relationship between pub licensees and the pub companies that own the pubs is crucial. The code of practice that governs the relationship between them is heavily weighted in favour of the pub company. I and others will be addressing some of the issues that arise from that.
Mr James Gray (North Wiltshire) (Con)
I would be grateful if the hon. Gentleman clarified one small point that is missing from the motion: namely, that he is referring to large pub companies that own large numbers of pubs and that family-owned brewing companies that own fewer than 500 pubs, such as Wadworth and Arkells in my constituency, are specifically excluded from the statutory regulation for which he is calling.
Mr Bailey
Yes. Let me make it clear that I am basically speaking about the Select Committee reports, which were about pub companies, but I recognise that there is an issue with breweries and their tenancies that in some cases might be relevant to this discussion. I know that individual Members will draw the necessary distinctions in the debate and I hope to allay any fears they might have.
Kevin Brennan
Towards the latter end of the previous Parliament, when I, as a Minister, and my right hon. Friend the Member for Wentworth and Dearne (John Healey) did a lot of work on this subject, there seemed to be a great deal of consensus between the then Select Committee and the then Opposition parties that such a measure was necessary. Is my hon. Friend surprised that we have reached a stage in this Parliament where we have to debate this matter because action has not been taken?
Mr Bailey
I need to make a little progress, as I am conscious that many people want to speak. If I have time, I shall take further interventions.
For the reasons I have outlined, the BIS Committee and its predecessor have held no fewer than four inquiries into the issues surrounding the trade. The previous report in 2010 under the chairmanship of the hon. Member for Mid Worcestershire (Peter Luff) gave the industry a year to get its house in order or have statutory legislation. That was agreed by the Labour Minister in 2010. Subsequently, after the general election, when the Secretary of State for Business, Innovation and Skills was asked whether he would uphold the previous Government’s position, he confirmed he would.
The current BIS Committee held an inquiry in 2011 and came to the unanimous conclusion that pub companies had not met the requirements of the previous Committee’s recommendations and that a statutory code with an independent adjudicator should be introduced. It also recommended that any code should have within it the option for a publican either to be tied to the pub company or to be free of such a tie and instead pay a rent to the pub company, which would be determined by a general open market review by a suitably qualified assessor.
The Government’s response to the Committee’s recommendations has been totally inadequate. The Minister’s pledge fails to meet the aspirations of virtually all sections of the industry apart from those of the pub companies and reneges on the pledge given previously by a Minister. In the time available, I cannot deal with every point of variance between the recommendations of the Government and those of the Committee, but I know that many of the issues will be teased out in subsequent speeches.
Greg Mulholland
I thank the hon. Gentleman for giving way and I pay tribute to his work and that of the Committee. He mentions the clear commitments given by Ministers. Is he aware of the e-mail from the office of the right hon. Member for Witney (Mr Cameron) to Justice for Licensees on 13 April 2010, saying:
“The Conservative Party support the idea that should the industry fail to deliver self-regulation by June 2011, the Government . . . should end up consulting on putting the Code of Practice on a statutory basis”?
Mr Bailey
No, I was not aware of that e-mail, but I am sure it will illuminate subsequent discussions.
I cannot deal with every issue that has arisen, but it is possible to summarise some of the key issues, the first of which is the statutory code of conduct and an adjudicator. Instead of doing as the Select Committee recommended and introducing a statutory code, determined after consultation with all sections of the industry, the Government have said they will make the existing codes between pub companies and their licensees legally binding. That might sound like a very subtle distinction, but most pub companies believe that their existing contracts with their licensees are legally binding anyway. This approach simply legalises and regularises a situation that is the source of the problem in the first place, and makes very little change.
The second key issue concerns the legal advice that the Government seem to have obtained in reaching their conclusion on the best way forward. On pressing this issue, it became clear to the Committee that the legal advice taken by Government was actually that given to the British Beer and Pub Association—the trade association of the pub companies. They do not seem to have taken any independent legal advice whatever.
Ann McKechin
My hon. Friend is very generous in allowing me to intervene. Does he share my concern that the key difference between a statutory code and a self-regulated one is that under a self-regulated code if a pub should be sold by the landlord to another company that was not a member of the said trade association, the tenant would have no rights, as currently provided under the code, whereas under a statutory code they would have rights?
Dr Murrison
The hon. Gentleman is being very generous. How does he believe the motion might be improved or amended to dispel the concerns expressed by family brewers of the sort referred to by my hon. Friend the Member for North Wiltshire (Mr Gray) that they would be affected by a statutory code when that is not the case?
Mr Bailey
I am not amending the motion, but I assure the hon. Gentleman that in the Select Committee’s consideration of any panel to assess the workings of the voluntary code the Committee would make the panel well aware of this issue.
The third issue is the weakness of the framework code. It is fair to say that the Government acknowledge that the existing framework code is weak, even though they are making it legally binding, but to date all the proposals for strengthening it seem to have come—surprise, surprise—from the British Beer and Pub Association. I cannot think of anything more likely to destroy confidence within the wider industry and among publicans than a code that has been supposedly strengthened on the advice of the BBPA.
John Healey (Wentworth and Dearne) (Lab)
I am very grateful to my hon. Friend for giving way and I congratulate him and the Committee on the report. Does he think that the code will help Mr Wild, who runs a very popular pub in Rotherham, whose business is being throttled by the terms of his tenancy? He tried to arrange with Enterprise Inns to buy his cask ales free of tie. He was told it would be £10,000 to £15,000 negotiable but was then told, three days later, it would be £20,000 non-negotiable. He asked for that to be put in writing but was refused. He was then told that the agreement would be for each one of his cask ales, not all five, and that it would be not a one-off payment but an annual payment.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. A lot of Members want to get in, so we need shorter interventions.
Mr Bailey
Thank you, Mr Deputy Speaker. The short answer is that the motion is designed to provide a way forward that will end that sort of abuse. Like other Members up and down the country, I am sure, I have several equally unjust examples.
A fourth and crucial problem is the concern within the wider industry that the proposals do not reflect the interests of all relevant sectors. Given that there is effectively a dispute between the pub companies and the licensees, it would be reasonable for all their interests to be considered equally, but this does not seem to have happened. I thank the hon. Member for Leeds North West (Greg Mulholland) for the work he has done, through freedom of information requests, which has clearly highlighted that the Government always intended to have a voluntary code, rather than a statutory one, and above all that in their response to the Committee they have reproduced almost word for word sections of submissions made by the British Beer and Pub Association. That completely undermines the confidence that the wider industry had in the Government’s impartiality and commitment to finding an even-handed solution. That is one of my motives for wanting to put what I hope will be a fail-safe device in the motion to gain some sort of purchase on the process.
The fifth issue that I want to address is the Government’s refusal to accept the BIS Committee’s recommendations regarding the free-of-tie option with open market rent review, which I have mentioned. The Select Committee’s position is not that there should be one option or other, but we do say consistently in all our reports that that option should be available for new and existing publicans so that they can, on the best professional advice, make a decision about what most clearly meets the needs in their business plan. Unfortunately, that is not included in the Government reply.
It is fair to ask why the motion does not call for immediate statutory legislation. The original recommendations of the Select Committee were predicated on the assumption that any such statutory intervention would arise from genuine and inclusive consultation, but the overwhelming evidence—I again thank the hon. Member for Leeds North West for the information he has obtained through FOI requests—is that the process is being driven by the BBPA. It is for that reason that I included in the motion a requirement that an independent panel be set up, with membership approved by the Select Committee, to ensure that any assessment of the processes that the Government undertake to deliver their proposals is monitored, and that recommendations can subsequently be made.
It is important for Parliament not only to state clearly today the need in principle for a statutory code, but to retain control of the process to ensure that the code genuinely reflects the interests of all sides of the industry. That is why I changed the motion in that respect.
Richard Fuller (Bedford) (Con)
My point is about the timing of the review. A reasonable person looking at the motion would see that it mentions changes that are currently being implemented, but the hon. Gentleman is now calling for a review just a few months after they have been put in place. Will he explain the reason behind holding a review so soon after the changes?
Mr Bailey
The reason is that the Government started to implement their proposals for changes in the industry a month before Christmas, so it is reasonable to assume that by autumn 2012 we shall have some idea of how they are working. By setting up an independent panel of professionally qualified and suitably experienced people to assess the changes, we will be able to make a judgment about pursuing further statutory intervention.
Mr Bailey
No, I am sorry. I am coming to a conclusion and other people want to speak.
Concerns are reflected in a submission from the Association of Licensed Multiple Retailers, which comments on the Government’s existing proposals:
“We have seen no action plan or agreed procedure to ensure open consultation in accordance with Government standards of best practice. There are also no agreed criteria or timetable against which progress may be judged or successful outcomes determined. Finally, there is no process for ongoing monitoring of Government to ensure that these commitments are delivered or sanctions available if they are not.”
The proposals for an independent panel are designed to deal with that concern in the industry. My real fear is that if we pursue a statutory code without a mechanism for ensuring that it is based on the interests of all sectors of the industry, we could end up with the worst of all worlds—a statutory code based only on the interests of the BBPA.
The motion is not about more regulation; it is about liberating licensees, not regulating them. They are already heavily regulated in their contractual relationships with the pubcos. Our proposals for a statutory code would enable them to be free of some of those regulations. A properly constructed code of practice would provide a basis for some of our most entrepreneurial small business men to free up their talents and demonstrate how well they can serve the community.
I remind everybody in the Chamber that thousands of publicans up and down the country will be listening to and watching our debate, because they know that its outcome could be vital in determining their future. At the moment, they feel overwhelmingly let down. It is up to Parliament to pass the motion and to demonstrate today that we are on their side and that we will not rest until they get a fair deal.
Andrew Griffiths (Burton) (Con)
I pay tribute to the work of the Business, Innovation and Skills Committee, which has been diligent and dogged in taking this issue forward and looking at the pressures and problems that publicans and pub owners face throughout the country. I also thank the Backbench Business Committee for allowing this debate, as it demonstrates the real commitment on both sides of the House to ensuring that the Government do something to support pubs and brewers and get our pub industry back on its feet.
It is a pleasure to follow, in particular, my hon. Friend the Member for Northampton South (Mr Binley), who has immersed himself in pubs more, and has more experience of pubs, than any other Member. I have no doubt that everybody taking part in today’s debate has read the Science and Technology Committee’s report and abstained for at least two days this week in order to contribute this afternoon.
I should also declare an interest as the chairman of the all-party beer group, and because in my constituency I have Punch Taverns, Spirit Group and Marston’s, a family brewer that also owns pubs.
I think we all agree on the need to clean up the pub companies’ act and the way in which tenants are treated. None of us disagrees on that, and we all want to see healthy and vibrant brewing and pub industries. I do not defend the actions of some pub companies, as uncovered by the Business, Innovation and Skills Committee, but although the hon. Member for West Bromwich West (Mr Bailey) said earlier that he was concerned that pubs are over-regulated, his solution was to increase the regulation on pubs.
Andrew Griffiths
I think we both agree that pubs are highly regulated, but I assert that introducing a statutory code would increase regulation. We want to allow anybody taking on a pub to have access to information, we want transparency, and we want them to understand what they are taking on when they take on their pub.
Mr Bailey
A lot of points have been raised in the debate, and I will try to respond to them in a very brief time.
First, a number of Members have raised the issue of regulation. I wish to make it quite clear that the Select Committee put the ball in the industry’s court to find an appropriate level of regulation to address the problems that we highlighted. It has had any number of opportunities to do that and failed.
The Committee is not instinctively a body of regulators. It has a coalition majority, and at the time of the report it included a former publican, a former pub company owner and, I believe, a former brewery regional manager. There was a level of expertise and historic involvement in the industry that meant the Committee would not favour excessive regulation.
There are issues to consider about the brewers and their tenants and about the pub companies and their licensees. An adequate consultation with all sectors of the industry would have enabled those issues to be teased out and the introduction of an appropriate regulatory regime that would have addressed them sufficiently. Now, the question is whether the Government will conduct such an inclusive consultation to ensure that that takes place.
Another issue that has been raised on many occasions in the debate is the OFT verdict, which is a red herring. The OFT did not give the pub companies clearance in their contractual relationships. It said that the matter did not come within its remit. The Government have used that as a basis for saying that we should not interfere. I find that rather strange, given the fact that Governments have historically introduced many statutes to deal with injustices and imbalances in contractual advantage.
The Government's response is therefore not sufficient, and I find the Minister’s approach to be somewhat incoherent. On the one hand, he says he cannot interfere, but on the other he argues in the House that he is taking action. Either he can interfere or he cannot, and he is either taking action or not taking action, but he cannot marry the two.
At the end of the day, the Government’s approach will be judged by the industry as whole, and not just by the BBPA. We will be able to judge the success of their approach by changes in the relative balance of income on the two sides of the dispute, which has implications for the rate of closure within the industry. In effect, the proof of the pudding will be in the eating.
The motion provides a mechanism for a professional, comprehensive and inclusive judgment of whether those changes happen. If that mechanism does not work, the Minister, whether he likes it or not, will have no alternative but to introduce a statutory code that will be inclusive and representative of all bodies within the industry.
Question put and agreed to.
Resolved,
That this House believes that the Department for Business, Innovation and Skills’ proposals for reform of the pub industry fall short of the undertaking given to the Business, Innovation and Skills Committee in July 2010 and that only a statutory code of practice which includes a free-of-tie option with an open market rent review and an independent adjudicator will resolve the contractual problems between the pub companies and their lessees; and calls on the Government to commission a review of self-regulation of the pub industry in the Autumn of 2012 to be conducted by an independent body approved by the Business, Innovation and Skills Committee.
Mr Andy Slaughter (Hammersmith) (Lab)
On a point of order, Mr Speaker, of which I have given you and the hon. Member for Brentford and Isleworth (Mary Macleod) notice. Hammersmith flyover in my constituency has been closed for three weeks. Although we hope for good news as early as today about the reopening, it is clearly a serious matter for my constituents. The hon. Lady has convened a public meeting—nothing wrong with that—to discuss the matter, but she has advertised and convened it in my constituency. She has invited various public bodies, but not me, to the meeting to discuss these matters—she has not invited me to be on the panel.
This goes beyond the ordinary trespassing that Members sometimes commit. I have never heard of an event of this kind. In reality, it means that the public bodies may not attend, because the meeting is now party political. I ask for your guidance, Mr Speaker. The hon. Lady is a new Member and might not know the protocols of the House as well as others do.