Pub Companies

Debate between Brian Binley and Damian Hinds

Thursday 12th January 2012 Commons Chamber

[Damian Hinds]

The Minister is correct, and that is indeed in the Government response. Unfortunately, the BIS Committee report, which is a fantastic report and to which we are to some extent referring, does not make that distinction quite so clearly.

What should we do if the tie is not the answer? Let me start with what we should not do. The Government response puts it rather well:

“Government should not intervene in setting the terms of commercial contractual relationships”

where, according to the OFT, there are no competition issues that significantly affect consumers; and

“whether or not a lease or tenancy includes a tie is a commercial decision on the part of both parties.”

[Mr Binley]

Will my hon. Friend give way?

[Damian Hinds]

I am afraid not.

We do need to make sure that there is fairness and transparency and that properly informed people come into this business. On fairness, I welcome the commitment in the new framework code to having no more upward-only rent reviews in full repairing and insuring leases. On transparency, I welcome the commitment to publish national wholesale price lists, although I am not quite clear how that would work. In this business, where pricing is a complex art, wholesale prices are not necessarily that much use unless the actual prices charged and tariffs are known. My hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi)—he is not with us today—suggested to the Select Committee that, through the medium of the internet and the wisdom of crowds, it might be possible to use these data in ways hitherto not possible.

I also welcome the industry’s commitment to look again at common formats for shadow profit and loss accounts to make it easier to compare different pub owners. I agree with the predecessor Select Committee’s finding in 2009 that all the information on a pub’s trading history should be available to the potential licensee. However, it is also important that we understand the limits of that. Pub companies will say that they would love to know a lot more about the trading history of various sites, often having limited sight of that information. We need properly to inform people who are going into the business. I welcome the pre-entry awareness training, but I also agree very much with the Committee’s judgment that we need deep vigilance on its quality. None of that invalidates the tie.

If we want to be totally focused on keeping pubs open, as I believe all hon. Members do, we have to address two fundamental things. The first is pubs competing on price, partly against the supermarkets, but also, as some hon. Members have said, against managed houses, particularly urban “vertical drinking establishments”, as they are known in the trade, which often severely undercut the traditional tenanted trade. The second is alternative usage value, as one way of keeping pubs open is to make it harder and more expensive to secure a change of use for these premises. That will focus minds on making sure that companies are supporting sustainable businesses.