Statutory Pubs Code and Pubs Code Adjudicator

Adrian Bailey Excerpts

Thursday 26th January 2017 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I congratulate the hon. Member for Leeds North West (Greg Mulholland) on securing this debate and compliment him on his tenacious commitment to this cause, which I know goes back over many years. That we are having a debate now, on the application of the pubs code, rather than its introduction, is some consolation and a reflection of the progress made.

I feel a sense of déjà vu standing here and once again debating this issue. In 2009, I was on the Business, Innovation and Skills Committee, chaired by Sir Peter Luff, that did an inquiry into pubcos—the third such inquiry, two predecessor Committees having held similar inquiries—and as the Committee Chair, I chaired another such inquiry in 2014. I had hoped, after the Government eventually accepted the Committee’s recommendation to introduce the code, that it would be the last time we would feel the need to debate it. I thank my hon. Friend the Member for Hartlepool (Mr Wright) for chairing the successor Committee, which has been prepared to look at the issues arising from the appointment of the adjudicator and to carry the torch carried so long by different manifestations of the Committee.

I think it fair to say that the history of this issue has been characterised by obstructiveness and an unwillingness on the part of the pub companies to recognise the reality of the injustices done to their tenants and licensees, and the flawed business model of which they are part. Their failure to act on the often quite moderate recommendations of successive Select Committees has reflected their obstructiveness when it comes to any legislation that challenges their business model; and, in fact, we have legislation because of that obstructiveness. The pub companies have exploited every opportunity to thwart the will of Parliament, and I am afraid that it was always likely, even following the implementation of legislation, that they would continue to do so. Current experience and, indeed, this debate are a reflection of the culture that prevails in the industry.

The pub companies proclaim publicly that they accept —indeed, embrace—the legislation, and are anxious to make it work, but the evidence submitted by the hon. Members for Leeds North West and for Tewkesbury (Mr Robertson) demonstrates overwhelmingly that their private actions completely contradict their public posturing. The most common approach seems to be to make rent demands which in themselves reflect the level of profitability that would come from a tied tenancy—perhaps just for negotiating purposes, perhaps not—and then to add a number of other conditions which have the potential to make the agreement even more uncompetitive.

It is not surprising that in the first five months of his appointment, the adjudicator has received some 376 calls. I believe that there are currently 77 referrals before him, most of which relate to the market rent only option. That in itself, given the obstructiveness of the pub companies and the lack of clarity in the information conveyed to many licensees—in effect, to obscure their rights to take such action—reflects profound dissatisfaction with the process so far.

As several hon. Members have said, the role of the adjudicator is crucial to the successful outcome of the legislation, and to the implementation of successive Select Committee recommendations. Generations—almost —of parliamentarians have committed themselves to making this system work, and if we do not get it right, a great deal of effort on the part of many Members of Parliament and a great deal of parliamentary time will have been wasted.

The role and financial interests of Paul Newby have been subjected to considerable scrutiny, and I commend the Select Committee for the forensic way in which it interviewed him. I am always reticent about criticising people before they have had a chance to demonstrate their ability to do their job, and when Paul Newby was appointed my instinct was to say, “Let us just see how he gets on before we make a judgment.” However, given the key nature of the adjudicator’s job, the culture that he is there to change and the role that he has in changing it, I think that certain issues have to be resolved.

My hon. Friend the Member for Chesterfield (Toby Perkins), among others, referred to Paul Newby’s financial involvement with Fleurets. As the old adage has it, perception is reality. When an adjudicator has a financial interest in a body that is associated with one side of the arbitration procedure, there will always be a perception that he or she cannot act impartially. We heard from, I think, my hon. Friend the Member for Hartlepool that when interviewed by the Select Committee, the pub companies declared total confidence in Paul Newby, but the representatives of the tenants said the opposite. It is very difficult to secure confidence in a process when one of the two sides that will be affected by that process has absolutely no confidence in the person who is carrying it out. My hon. Friend used the metaphor of a football referee.

It concerns me greatly that many tenants who need that adjudication, and whose livelihood it might preserve in the long term, will be unwilling to use the processes that are available, and which Parliament has fought to secure over the years. If they feel that going to the adjudicator means that they will not have an impartial hearing, and indeed that by doing so they could prejudice their own business position, they will be reluctant to take such action. Built into the adjudicator’s appointment is the implication that the potential benefits of the legislation will be undermined from the start.

I think there is a way forward. My hon. Friend the Member for Chesterfield said that Paul Newby should divest himself of his financial interest, and certainly, if Paul Newby is really committed to making his role a success, it should not be beyond his ability to find some way of doing so. If he refuses to act on that recommendation, I think that the House should propose that further action be taken to ensure that he is removed, or the problem should be dealt with in some other way.

This Parliament and Members within it have worked for many years to get this far. It is crucial to the livelihood of thousands of publicans up and down the country, and essential to the future success of the business model, that the system works. We cannot have someone at the heart of the process who potentially undermines the working of that process. The adjudicator should divest himself of his interest, or Parliament should act.