Pubs Code and the Adjudicator

Christian Matheson Excerpts

Thursday 14th April 2016 Westminster Hall

[Christian Matheson (City of Chester) (Lab)]

It is a pleasure to see you in the Chair, Mr McCabe. It is also a pleasure to follow my hon. Friend the Member for York Central (Rachael Maskell). I confess that I once went with a group of friends to York to sample the delights of the pub trade there, on the basis that we had been informed it had the highest number of pubs per square mile in the country. I can tell my hon. Friend that I was not disappointed. At least, I think I remember that I was not disappointed; my memory was slightly affected that day.

I join in the tributes to the hon. Member for Leeds North West (Greg Mulholland) not only for securing this debate but, as other hon. Members have suggested, for the constant and never-failing campaign that he has led and for the way that he has maintained this issue at the forefront of hon. Members’ minds. I largely support the position that he has advanced today. I could talk about the appointment of the Pubs Code Adjudicator, but the hon. Gentleman’s case was so compelling, so comprehensive and so forceful and forensic that there is little point in my repeating it. Suffice it to say that my concern is that the credibility of the pubs code and its implementation will be damaged if the appointment continues. Like other hon. Members, I do not know the gentleman concerned personally. To the best of my knowledge, I have never come across him previously, but it would damage the credibility of the operation of the pubs code itself if the appointment continues.

If I may caution the Minister, there is a danger that the lack of credibility and the damage to credibility might also contaminate to an extent the credibility of the Department and Ministers who made the appointment. For the sake of the Ministers’ credibility, they might want to consider that. Somebody might wish to take Mr Newby out for a pint in one of the nice pubs and say to him, “Paul, it is not going to work. Think about perhaps withdrawing your name from the process and handing in your resignation. It’s not you but the circumstances.” That might be one way forward.

The hon. Member for Leeds North West mentioned two glaring loopholes. I absolutely support him on this. From what the hon. Member for Peterborough (Mr Jackson) and others have said—they obviously know quite a lot about the process—I suspect there were simply errors of drafting, but I am particularly concerned about the idea of the waiver of the right to market rent-only options. My hon. Friend the Member for York Central alluded to this. When there is an imbalance in power in a relationship, the organisation with the greater power has the potential for abuse. To force waivers on to tenants in this way distorts what I believe was the original intention of the code and of Parliament. It reminds me of when the working time directive was introduced. Jobs were offered to job applicants on the basis that when they signed their contract, they also signed a waiver to the working time directive. So what was intended to protect people was easily evaded and got around by unscrupulous employers. It has happened and will happen again, so I back the hon. Member for Leeds North West absolutely.

If the hon. Gentleman, who I support, will permit me, I want to give a perspective from the pubcos’ point of view. Admiral Taverns, which he mentioned in his speech, is based in my constituency where it is a large employer. Although the issues and problems that the hon. Gentleman has had with pubcos might extend to all those he has mentioned, he will not necessarily have Admiral in his sights for all his criticisms. I make that point because I was pleased that that company in my constituency, which I am therefore proud to support, has recently been crowned best leased/tenanted pub company of the year. It won the accolade from an independent survey of tenants, so it has a little more credibility than others.

[Greg Mulholland]

I am enjoying the hon. Gentleman’s speech. I want to respond directly to him because I had a meeting recently with Kevin Georgel from Admiral Taverns. Kevin said that the difference that he perceives between Admiral and Punch and Enterprise is that Admiral does not have the catastrophic levels of debt that Punch and Enterprise do, on which basis Punch and Enterprise are continually overcharging and exploiting tenants on an industrial basis. That is what Kevin told me in a meeting, and I am happy to meet other people.

[Christian Matheson]

I am grateful for that intervention. Of course, the catastrophic debt built up by some of the larger pubcos as they built their empires based on debt is now being passed on to the tenants. The financial planning of the pubcos was catastrophically wrong. That completely wrong financial planning was not the fault of the tenants and landlords and it should not be passed on to them now in the way that my hon. Friend the Member for York Central described.

However, looking at it from Admiral’s point of view—from a pubco’s point of view—because I have sought advice from the other side, Admiral is concerned about the implementation of the pubs code, which it absolutely supports and wants to happen, but, in its words,

“the lack of any transitional arrangements is wholly unreasonable and will cause total chaos for pub companies, tenants and indeed the adjudicator”,

whoever they may eventually be, assuming that the Minister has listened to hon. Members today.

Admiral points out that at the moment there are no transitional arrangements relating to the implementation of the pubs code. It had hoped there would be a minimum of six months from the implementation date to the market rent-only agreement, simply because that would allow time for negotiations with tenants and landlords. Negotiations can be quite complex and can last several months before the new arrangements are signed off. If the market rent agreement is to be signed off and handled fairly, that will require training, and full information available to both sides. However, at the moment, as things stand with the pubs code, I do not believe it will come in until May, and pubcos are still not actually aware of what the final arrangements will be. Nor, therefore, I suspect, are the tenants and the landlords. There is the potential for a lack of transitional arrangements, and for upheaval without the time being built in for making the complicated arrangements; those involved are very keen for that to happen.

There is associated guidance from the adjudicator to consider, as well as the fact that tenants will have only a short window in which to get up to speed with the new legislation and apply for the market rent-only option. Such transition might also apply to other key aspects of the code, such as business development manager training obligations, code compliance officer appointments, and systems to deal with due diligence and the very substantial information requirements. I am pleased that the hon. Member for Leeds North West spoke to the chief executive, Mr Georgel, my constituent. He believes that it is in everyone’s interests to ensure that the much-awaited legislation is implemented effectively, rather than on the hoof with the resultant chaos that he predicts. I remind the House of what the hon. Member for Peterborough said about getting things right first of all rather than having to review the legislation later. The same applies to the implementation of the code. We need to get it right and give due attention to what is being asked of landlords and pubcos before it is implemented. My constituents’ plea would be to encourage the Minister to have proper transitional arrangements put in place to ensure the minimum of disruption.

The main point of my speech is to endorse the powerful and compelling case made by my hon. Friends and, indeed, the hon. Member for Leeds North West. There is still time for the Minister and her Department to consider how the credibility of the appointment in question might affect the operation of the pubs code and, indeed, their own departmental credibility. I hope that they will take the time to do that, because, as hon. Members from across the House have said, the importance of pubs to communities and society should not be underestimated. It is a hard job running a pub. The hours are long, often for little return, and the pressure is constant. The hon. Member for Peterborough described pubs as important parts of our communities’ social fabric, and we need to make it as easy as possible for them to carry out their role and make our communities cohesive. I support the case made by the hon. Member for Leeds North West and I hope that his campaign will flourish and hit its goals.

--- Later in debate ---

[Bill Esterson]

Will the Minister give way?

[Christian Matheson]

Will the Minister give way?

[Anna Soubry]

I will in a minute. There has been a very positive response to the appointment of Paul Newby as the Pubs Code Adjudicator. I am grateful for the briefing supplied by the House of Commons Library and the comments on 16 March from the Royal Institution of Chartered Surveyors, which we have heard a lot about and heard some quotes from. Its statement regarding the appointment of Paul Newby as Pubs Code Adjudicator went as follows:

“By the very nature of the role, the adjudicator’s office will need someone with past experience in this field of valuation and Paul’s professional history has seen him represent both pubcos and tenants at various junctures in his career. As Paul Newby will no longer continue in his role with Fleurets, there should not be a risk of this posing a conflict of interest in his execution of his new post.

An RICS spokesman has said: ‘Chartered Surveyors are expected to demonstrate the highest professional standards and act within the RICS Code of Conduct at all times. We have no reason to believe that Paul Newby is failing to meet these standards. On the evidence that we have seen to date, this does not appear to be an issue of conflict.’”