Pub Companies

Andrew Griffiths Excerpts

Wednesday 9th January 2013 Commons Chamber

[Toby Perkins]

I am grateful to my right hon. Friend for those comments, and he is entirely right. The potential exists for this to be a really significant moment, but I do not think we can go any further than that yet.

The Secretary of State’s call for evidence was certainly enthusiastically answered. He wrote to seven different organisations to ask for their views on how self-regulation was working, and he received 19 responses. That is a return rate of 271%, which is the sort of extraordinary and implausible statistical feat that we generally expect to see in a Liberal Democrat “Focus” leaflet, but there we have it, right at the heart of Government.

Before I get into the detail of how we can ensure that the Government’s announcement makes a meaningful difference, I will reflect briefly on why the debate is so important to so many Members, their constituencies and constituents and the economic and social fabric of our great country. Pubs are synonymous with our great island story, from fictional boozers brought to life, like the Rovers Return in “Coronation Street”, to pubs that have gone down in history such as Ye Olde Cheshire Cheese, famously frequented by Samuel Johnson and where Mrs Perkins and I had a very pleasant lunch just a few weeks ago.

In almost every village, town or city in the land, and indeed in every Member’s constituency, there will be pubs that make us proud of our localities and say much about our areas, and which our constituents wish to see thrive. Britain’s pubs are not only important as key hubs in the community, they are economically vital. Last year, beer and pubs contributed £21 billion to UK GDP, and the Campaign for Real Ale has estimated that the average pub employs 11 people and contributes £80,000 to the local economy.

However, CAMRA recently revealed that around 18 pubs are closing every week, and countless more are fighting for their lives. As we know, when pubs close the cost of failure is felt not just in social terms but in economic terms, at a time when our faltering economy can afford it least. There are now 2,582 fewer pubs than in 2010, equating to 200 jobs lost for each week of the year.

[Andrew Griffiths (Burton) (Con)]

I agree with the hon. Gentleman that 18 pubs closing a week is too many. He will know, however, that under the previous Labour Government pubs were closing at a rate of 54 a week—four times as many. Will he apologise for the Labour party having let down pubs so badly?

[Toby Perkins]

That is a frankly disappointing contribution from the hon. Gentleman. One key point that people may reflect on is that there are now 2,582 fewer pubs than in 2010.

[Andrew Griffiths]

Will the hon. Gentleman give way?

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[Sir Peter Bottomley (Worthing West) (Con)]

rose—

[Andrew Griffiths]

rose—

[Toby Perkins]

I will give way to the hon. Member for Worthing West (Sir Peter Bottomley), and then I will give the hon. Member for Burton (Andrew Griffiths) another stab.

[Toby Perkins]

We absolutely can agree on that. I hope Ministers hear that message—it is precisely the principle of the motion on which we will vote shortly, and I welcome the opportunity to see the hon. Gentleman in the Division Lobby. He makes the point very well.

[Andrew Griffiths]

I recognise what the hon. Gentleman says—that the Business, Innovation and Skills Committee did not call for statutory regulation in its reports—but does he not think that the Labour Government needed to have done something in their 13 years in government, when more than 9,000 pubs closed?

[Toby Perkins]

Many challenges, to which I have alluded, faced the industry during the previous Government’s term. In the last two or three years of the Government, we had the recession and people were stretched, and in times before the recession, people’s habits were changing. Pubcos were operating in the way I have described, but the Labour Government attempted to give them the opportunity to put their house in order. I believe that the hon. Gentleman is of the view—I apologise if I am wrong—that the pubcos should have been given longer. That was his view when we debated pubcos about a year ago. Members on both sides of the House accept that pubcos were part of the problem and that the previous Government attempted to give them the chance to do things right, so it is difficult for him to criticise the previous Government for doing so.

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[Vince Cable]

We want to get on with this as quickly as possible. We have to launch a consultation, receive the results and then act on them, hopefully over the spring. That is the time horizon we are looking at.

[Andrew Griffiths]

I am mindful of your remarks, Madam Deputy Speaker, but I want to ask a simple question. The press release says that this will apply to companies with more than 500 tied pubs. There are 52,000 pubs in the country and hundreds of companies, brewers and businesses that own pubs. Out of all of those, to the nearest two, will the Secretary of State tell me how many companies this legislation will affect?

[Vince Cable]

I am not going to guess, but it is a rather small number.

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[Andrew Griffiths (Burton) (Con)]

This is the second occasion in just a few months on which the House has discussed the plight of the brewing and pub industries, and as on the first occasion, some interesting and important contributions have been made.

When I spoke in the debate organised by the Backbench Business Committee, I argued strongly in favour of self-regulation. I wanted to give the industry more time in which to put its house in order and get its act together. Clearly my argument did not win the day, but I advanced it for a particular reason. I felt not only that certain strides were being made and that at least some pub companies were beginning to get their act together, but that the self-regulation that had been proposed previously would protect all tenants—everyone in the industry who was running a pub. I fear that we are proposing legislation to tackle the actions of one or two companies, and I think that that is dangerous.

I urge caution for two reasons. One is the fact that we are considering the creation of first-class and second-class pubs. We are considering intervening in the business model. We are proposing, through statutory regulation, to force tied-lease companies with more than 400 pubs to offer a fair deal. We are proposing to regulate the way in which their rents are set within their estates. However, another company with 380 or 450 pubs will not be regulated. I am not sure that the Government have thought this through in the context of competition and free markets. There are serious questions to be asked. If we want fair dealing for tenants, should we not offer fair dealing to all companies that own pubs? As I said earlier, there are 52,000 pubs in the country, and we are intending to introduce legislation that affects only some of them.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

The hon. Gentleman is expressing a principled and, perhaps, a minority view. Is he now suggesting that the threshold should be lowered from 500, as opposed to our not introducing statutory regulation at all?

[Andrew Griffiths]

The House is anxious not to overburden smaller pub companies, particularly family brewers, and I would caution against that. However, I do not think that we have fully thought through the consequences of what is being proposed.

[Mr Bailey]

Do not the issues raised by the hon. Gentleman apply equally to the legislation on the groceries code adjudicator? Did he support that legislation? If so, why can he not support the legislation that is being proposed now?

[Andrew Griffiths]

I do not think that family supermarkets are an issue in this context.

My second point relates to the self-regulatory code. What the Government are proposing is a two-tier system, with the big boys in the first tier. There is some confusion over what they mean by tied leases. The British Beer and Pub Association, for instance, thinks that this applies to two companies, Punch Taverns and Enterprise Inns. If the Government are talking about tied and tenanted leases, that is not what they set out in their press release yesterday, and it is not what the industry thinks that they are talking about. There is a need for the Minister to clarify what the Government are talking about.

All tenants can now go to arbitration, but the arbitration system is funded by the industry as a whole, and large companies such as Punch Taverns and Enterprise Inns are paying the lion’s share of the cost of that self-regulatory body. Those companies will not be prepared to pay to be regulated twice: they will pay either for statutory regulation or for self-arbitration, but not for both, so I wonder what will happen to the self-regulation system. Have the Government talked to the industry about the implications of the big two or big six pulling out of funding the self-regulatory body? I also wonder how much pressure the industry will put on the smaller companies to sign up. I acknowledge that that is not such a big issue, but everybody has signed up to the self-regulatory code, and that pressure will dissipate if the Government’s new system is introduced. Legislation is being proposed in order to tackle one or two problem companies, but have the implications for the rest of the industry been fully thought through? I urge the Minister to address those concerns.

There is another problem that our pubs and landlords face: the beer duty escalator. The amount of duty that brewers and publicans are paying is killing pubs and breweries. The biggest single thing we could do to help the industry is scrap the beer duty escalator. We have had a bit of a love-in with Opposition Front Benchers this afternoon, but it would be remiss of me not to point out the record of 13 years under a Labour Government. They increased beer duty by 60%.

[Toby Perkins]

I have in front of me a document from the House of Commons Library which shows the amount of duty as a percentage of retail price for each of the last 12 years. In 2000, 14.5% of the retail price of a pint of beer was duty, whereas the proportion is now 15.4%, so it has hardly gone up at all.

[Andrew Griffiths]

The hon. Gentleman must be the only person who does not think that the last Labour Government increased beer duty and introduced the beer duty escalator, and crippled pubs and the brewing industry as a result.

My time is almost up, but I urge the Minister to think about what I have said.

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[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I thank all Members who have contributed to this afternoon’s debate. We have heard speeches from 18 Members and interventions from many more.

I particularly thank the Chair of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey), and his predecessor, the hon. Member for Mid Worcestershire (Peter Luff), for the work they have done on this issue over many years, which is a good example of the effectiveness of Select Committees working in a persistent, constructive and responsible way. Many other Members have campaigned on this issue for many years, including the hon. Members for Northampton South (Mr Binley) and for Easington (Grahame M. Morris), my hon. Friend the Member for Leeds North West (Greg Mulholland), who made a typically powerful contribution to today’s debate and has done so much with the all-party save the pub group, and my hon. Friend the Member for Cheltenham (Martin Horwood), who introduced a private Member’s Bill a couple of years ago. I also thank the many thousands of constituents up and down the country who have taken an interest in this issue, whether as landlords or, as the hon. Member for Bradford South (Mr Sutcliffe) put it, “practitioners” of pubs.

In what was a generally consensual debate, the hon. Member for Chesterfield (Toby Perkins) proposed potential court action. I can reassure him that it is not necessary, because the Morning Advertiser corrected the article that had incorrectly attributed quotations to me. I can confirm to the House that I did not say that the self-regulatory approach was working.

Today we have heard stories from Members in all sorts of constituencies of publicans who have faced real injustice and unfairness—horror stories about rent hikes out of kilter with the market, about extra charges and add-ons that they did not know about when they signed up and about people who have been driven out of business. For me, one of the most shocking figures is the comparison between the incomes of tied lessees and of those publicans who are in non-tied leases. Almost half of tied lessees earn less than £15,000 a year. That is an astonishing figure, when we consider the long hours that people put into running their pubs, and the fact that that income is often shared by a couple. The figure for non-tied lessees earning less than £15,000 a year is 22%, or one in five. The Government will be acting on this, and I welcome the broad cross-party support for what we are doing.

We have heard some horror stories this afternoon, but there have also been some lighter notes in the debate. We have heard about pubs being the scene of a range of events. The hon. Member for Rochdale (Simon Danczuk) mentioned the “dragon”, Hilary Devey, working undercover in a pub. My hon. Friend the Member for South East Cornwall (Sheryll Murray) talked about being the first Cornish MP to pull a pint in her local pub. My hon. Friend the Member for Pendle (Andrew Stephenson) talked about the three shifts that he had done as a barman in his local pubs, and told the House about the Pendle beer festival. I understand that you also have a pub as a neighbour, Mr Deputy Speaker. We heard from the hon. Member for Clwyd South (Susan Elan Jones) about the triumph of the Bridge End winning CAMRA pub of the year, and the hon. Member for Chesterfield told us about his drinking mineral water in his local pubs. Perhaps the most touching story was that of the romance and engagement of the hon. Member for Ashfield (Gloria De Piero).

The Chair of the Select Committee rightly said that what we are doing will not be a panacea, but it will help. Members raised a range of other issues, including the beer duty escalator, on which we had a debate in the House recently. That is a matter for the Chancellor, and I am sure that Treasury colleagues will be following this debate closely through Hansard.

[Andrew Griffiths]

rose—

[Jo Swinson]

I am sorry. Owing to the lack of time, I must press ahead with my summation.

A differential beer duty was suggested, but it would not be possible to introduce such a scheme on the basis of where alcohol was being sold. However, the Government have already acted on a differential duty in relation to the strength of beer. In October 2011, the duty on high-strength beer rose and the duty on low-strength beer fell. My hon. Friend the Member for Pendle made an important point about minimum pricing, which could help pubs to regain an advantage when competing against low-priced supermarket booze.

My hon. Friend the Member for Burton (Andrew Griffiths) said that regulation might not be needed. That might not be a popular argument today, but I understand what he is saying. It is right that the Government should regulate only as a last resort, and that we should seek alternative solutions first. We have sought solutions, however. The industry was put on notice last year and, sadly, it has not delivered. My hon. Friend also mentioned his concern about a two-tier system. It is right that we should focus regulation on those with the greatest market power. That is proportionate because the evidence shows that the greatest problems are in that part of the industry.

As my right hon. Friend the Secretary of State mentioned, the consultation sets out that that regulation would relate to the six largest pub companies, with a threshold of 500 tied or tenanted properties. Those companies would be Punch, Enterprise, Marston’s, Greene King, Admiral and Star. Our consultation will listen to views on what the right definition and the threshold should be. I hear the point made by my hon. Friend the Member for Sherwood (Mr Spencer) that the threshold should be lower than 500. I encourage hon. Members who have a view on those issues to contribute to the consultation.

There has been much debate on the free-of-tie option this afternoon, and there are arguments on both sides. The hon. Member for York Central (Hugh Bayley) said that the tie must go, but I believe that the beer tie can be important, especially for small family breweries such as those mentioned by my hon. Friend the Member for South Derbyshire (Heather Wheeler). Indeed, in January 2011, CAMRA stated:

“Without the right to tie pubs, the Family Brewers wouldn’t bring their beers to the bar. Closures amongst the smaller brewers would be inevitable. The tie is a viable way for them to run their pubs.”

The problem is not the tie, as such, but the abuse of the tie.