Pub Companies

Duncan Hames Excerpts

Thursday 12th January 2012 Commons Chamber

[Stephen Lloyd (Eastbourne) (LD)]

Pubs are a significant feature in all our constituencies. In Eastbourne, when people ask where I live, I say, “Just up the road from the Lamb”, and everyone knows where I mean. That is just a small way of illustrating how valuable pubs are across the UK.

I pay tribute to the hon. Member for West Bromwich West (Mr Bailey) for securing this debate, and to my hon. Friend the Member for Leeds North West (Greg Mulholland), who has been leading on this issue for a number of years.

Before becoming an MP, I had observed over the past 10 years or so a rapid decrease in the number of pubs. Since coming to the House, I have received representations from publicans and constituents in Eastbourne, and I have carried out some research. Much of what I was going to say has already been said, and I shall not repeat it, but I want to mention some research by the Institute for Public Policy Research. My hon. Friend the Member for Leeds North West and many others today have expressed with passion the fact that we have visited this issue on numerous occasions, under the previous Government and this one. The same issue keeps coming up, and the Select Committee keeps working away at it, focusing on what needs to be done. The Government of the day listen, say that they will do something about it, and then do nothing. The reason that we have to keep coming back to it is that the major players behave deplorably; there is no other way of putting it.

The more I researched the matter over the past few months, having spoken to my hon. Friend the Member for Leeds North West, the more I kept asking myself, “What is going on? What other industry would keep saying that it was going to do something, yet keep breaking its word?” Then I thought, “I’ve got it! It’s investment banking!” I am very much a business-wing Liberal, and, like my hon. Friend the Member for Pendle (Andrew Stephenson), who is not in his place, a great believer in light-touch regulation. There are exceptions to every rule, however. I do not like light-touch regulation for investment banks, because that is what got us into the mess we are now in. Nor do I think that the argument not to regulate the pubcos stacks up.

[Duncan Hames (Chippenham) (LD)]

It sounds as though my hon. Friend, like me, hopes that the motion will be successful today. He has had a great deal of experience working with the Federation of Small Businesses. If he were giving business advice, would he ever advise someone to become the tenant of a pubco?

[Stephen Lloyd]

My hon. Friend is so right: a lot of the work that I did for the FSB before coming to the House involved meetings with landlords who had pubco tenancies. Some of the meetings were among the most desperate I have ever had, because those people were getting absolutely nailed by the pub companies. So, to be perfectly honest, I would not advise anyone to become a tenant under the present criteria. That is absurd, because I am massively pro-small business; it is precisely that sector that is going to get us out of this economic mess. At the moment, however, the playing field is much too uneven, and something really has to be done.

Let me cite the recent research by the IPPR, which was called “Tied Down”. It talked to 550 publicans, and some of the resulting figures are quite startling. It found that 57% of those subject to the ties that oblige tenants of the big pub groups to buy beer from them were struggling financially, compared with 43% of non-tied landlords. That is a difference of almost 20%. The IPPR’s associate director, Rick Muir, said:

“Thousands of publicans across Britain are being put under significant financial pressure by the ‘beer tie’. Our survey of publicans shows that they have suffered worse through the recession because of this tie. A recent select committee report shows that the higher prices tied publicans have to pay for their beer are not adequately compensated for by lower rents.”

That is why we need regulation. The original theory was that the publican would pay a lower rent because of the tie, but some of those absolutely deplorable companies got themselves into such a mess financially because they were so heavily leveraged in debt that they leant on their tenants to a quite disgraceful degree, and lifted the rents hugely.

The time has come for the Government seriously to look at regulation. I could, just possibly, be persuaded to give the companies nine months and review the situation in the autumn, but this has been going on for years, and I would urge the Minister to agree to a review. Furthermore, he should publicly state on behalf of the Government, in the Chamber, that if the pub companies do not come up to speed this time—and, my God, they have had so many opportunities in the last chance saloon—we will regulate.

It was noted earlier that pubcos have a lot on their mind at the moment, and we were asked whether we really needed to put them under this pressure. Well, yes we do. How many times are we going to allow them to say that they are going to do something, only for them not to do it? I urge the Government to tell them that if they have not come up with voluntary proposals within nine months, there will be statutory regulation. That is the compromise that I am prepared to accept. I know that the Minister has worked hard in this area, but if the companies do not change, to the extent that we have to regulate, they will have brought that upon themselves. I urge the Minister to take action.