Small Business, Enterprise and Employment Bill

Greg Mulholland Excerpts

Tuesday 18th November 2014 Commons Chamber

[Jo Swinson]

The definition is as set out in the Bill. Where a pub is directly managed, it does not meet the definition of a tied pub. I hope that gives the hon. Lady the reassurance she seeks.

As I have said, the Government have listened and recognised that the largest number of concerns originate at the end of the market with the largest pub companies, which is why we will focus the pubs code adjudicator on those companies. We recognise that there are concerns about other parts of the market, but clearly the House can return to those issues in future if it so wishes. We think that focusing the adjudicator’s attention in that way will resolve the vast majority of the issues that we have identified in the market.

We have listened to the concerns about smaller pub companies and family brewers. Of course, later this afternoon we will discuss another issue about which hon. Members from various parties have expressed strong views. It is clear from the number of hon. Members who have put their name to new clause 2 that there is a strong desire in the House for the statutory code to go further and to introduce the market rent only, or MRO, option.

We ran a consultation on that whole issue. As I pointed out in Committee, and as was said on Second Reading, it was one of the most popular consultations the Department has run in a very long time.



It received a huge number of responses because tenants, individuals and campaign groups take a great interest in the issue. Many representations were made on whether there should be a market rent only option and there was support from many quarters for that approach, but we recognise that there could be uncertain outcomes from such an approach. We would not want unintended consequences to harm the sector and the people we are trying to protect—

[Greg Mulholland (Leeds North West) (LD)]

Will my hon. Friend give way?

[Jo Swinson]

I will finish my sentence, then I will give way to my hon. Friend, who has such a strong record of campaigning in this area.

We recognise that many hon. Members worry that the pub companies need the very real threat of tenants going free of tie before they will offer their tenants a good tied deal. I can commit today that the Government will bring forward amendments in the other place to respond to this. Following the many Select Committee reports and the campaigning by my hon. Friend the Member for Leeds North West (Greg Mulholland) and others in all parties in the House, we have listened to those strong representations and we plan to add to the Bill a power to introduce a market rent only option after two years if a review concludes that the measures have not delivered sufficiently for tied tenants.

[Greg Mulholland]

I thank my hon. Friend for all the work she has done. I will respond to that last point when I make my speech. She commented on the popularity of the consultation; two thirds of all who responded backed the market rent only option. None supported what the Government are proposing—a parallel rent assessment—so what was the point of the consultation?

[Jo Swinson]

The point of a consultation is to explore the issues and, if necessary, to make changes to the Government’s proposals in response. That is exactly what we have done. The parallel rent assessment responds to some of the concerns expressed in the consultation about the initial ideas that we had outlined. It is right that the Government should be flexible enough to respond to a consultation. If the Government go into a consultation with a set of plans and come out of the consultation with exactly the same set of plans, that means either that the plans were perfect—sometimes that may be the case—or that the Government refuse to listen. That was the point of the consultation on this issue.

My hon. Friend makes the point that there was great support in the consultation for a market rent only option. He is right. The Government recognise that. Although I appreciate that he will be disappointed that that will not culminate in the Government accepting his new clause 2, it gives a great fillip to campaigners who have worked on this issue and shows that the Government are serious. We think that the parallel rent assessment approach that we have outlined will deliver the “no worse off” principle, which we should all be able to agree is what we want for tenants. We will make sure that with the further power, the market rent only option is still on the table if, for any reason, the parallel rent assessment proposal does not deliver the intended outcome.

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[Toby Perkins]

I have just been waiting for the right hon. Gentleman to arrive, Mr Deputy Speaker. The debate barely seemed worth getting on with until he was here.

The people who have written to us in such numbers will be aware that we have supported the introduction of a free-of-tie option for pubco pub tenants at the date of renewal ever since the Business, Innovation and Skills Committee concluded that the industry had had its last chance and that the time was right. That was back in September 2011, and in debates in January 2012, 2013 and 2014 the Opposition sought the support of the House for that viewpoint. It will therefore come as no surprise to Members that it remains the view of Opposition Members that the time for the mandatory rent-only option is now.

I am delighted that a cross-party group of Members has tabled new clause 2. In a time of great cynicism with politics, the fact that Members of four different political parties have added their names to it shows that there are things more important than naked party political advantage. It shows that this House can work in the finest traditions of democracy in a collective voice in support of our pubs, not because there is necessarily party political gain but because it is the right thing to do. I pay tribute to all those who added their names and to everyone from any party who votes for it today.

I look forward to the contribution of the hon. Member for Leeds North West (Greg Mulholland). I hope he considers that yet another review is not the right step for the industry. It appears to be a political solution to a political problem at a time when a serious industry needs a serious response from this place, and needs to be able to conduct its matters with real certainty knowing what it will face in the future. I think that anyone bought off by the review and the suggestion that the issue will be looked at in two years’ time if today’s measures are not considered to have worked was never really serious about supporting it in the first place. The House should vote in support of new clause 2 and repeat the unanimous support it gave to the motion in the January 2012 Backbench Business debate.

In conclusion, I said on Second Reading that the Government had introduced a Bill that expected too much of family brewers and not enough of pub companies. I also said that I hoped the Bill would leave the Committee and Report stages in a stronger shape than it arrived in. Already, thanks to the hard-won amendment brought by the hon. Members for South East Cornwall (Sheryll Murray) and for Burton (Andrew Griffiths) and others, it could do that. Supporting the two other substantive amendments before us today would mean that we were finally on the way to repaying the debt the House owes to Britain’s publicans.

By supporting our amendment 5 and ensuring that large pub-owning businesses with tenanted, leased and franchised models are exempted, by continuing to reject any amendments that bring family brewers under the scope of the Bill and by backing new clause 2 to ensure a free market solution in this most important of industries, with an industry regulator, the House can unite in support of Britain’s pubs and ensure that the pub sector enters a new, better and more optimistic period free from the restrictive practices that have been allowed to dominate, with faith in the market to choose who is offering a fair deal. That will allow our pubs to offer one of the greatest of all Britain’s great inventions, the simple pint of ale, for many hundreds of years to come. I commend our amendment to the House.

[Greg Mulholland]

I am delighted to speak at this important stage of this important Bill. I commend my hon. Friend the Minister and her colleagues for their work in bringing measures forward not only on pubs, which is an area of particular interest, but other positive measures.

I will concentrate my comments on new clause 2, which I am delighted to introduce on behalf of myself, as the chair of the all-party save the pub group and co-ordinator of the Fair Deal for Your Local campaign, the hon. Member for West Bromwich West (Mr Bailey) who is the Chair of the Business, Innovations and Skills Committee, and my hon. Friend the Member for Northampton South (Mr Binley), the president of the save the pub group and a member of the BIS Committee. Unfortunately, he cannot be here today because he is becoming a freeman of Northampton. I am sure we all congratulate him on that. I am also speaking on new clause 2 on behalf of the 91 colleagues who put their names to it and the many others who have said they will support it.

Over the past few days, in the limited time between Committee and Report, more than 8,000 e-mails were sent by CAMRA members up and down the country and several thousand by members of the Federation of Small Businesses, licensees, organisations and trade unions, urging the Government to take the sensible, obvious, market-based action to resolve the issues that have been a problem in the leased and tenanted pub sector for too long.

So that Members are clear, new clause 2 is the cross-party solution from the Business, Innovation and Skills Committee introduced first by the hon. Member for Mid Worcestershire (Sir Peter Luff), then ably continued by the hon. Member for West Bromwich West (Mr Bailey), and supported by all colleagues on the Select Committee at all stages in this and the last Parliament. It is also backed by the FSB, the Forum of Private Business, the Pubs Advisory Service, Justice for Licensees, Licensees Supporting Licensees, CAMRA, Licensees Unite the union, the Fair Pint campaign, the Guild of Master Victuallers, the GMB and now the Punch Tenant Network, which represents Punch tenants and is giving an honest and a very different picture of the Punch model from that which Punch Taverns has been trying to communicate to MPs.

To remind the House, the problem is a simple one, despite the complexity of the sector: the large companies went on a reckless acquisition spree, buying up pubs using borrowed money, and got themselves into grotesque amounts of debt—more than £4 billion in the case of Punch Taverns and more than £3 billion in the case of Enterprise Inns—and with nothing to stop them charging unlimited prices for beer and unlimited rents, both of which have gone up and up and up. The beer tie, which was always operated responsibly, has been abused. It used to offer lower rent in exchange for higher beer prices and genuine support for small breweries, but the pub company model does not do that.

What, then, is wrong with the proposals as they stand? I commend my right hon. Friend the Secretary of State and his colleagues in both coalition parties for having the courage to bring forward the statutory code of practice that the Select Committee first recommended so powerfully and clearly in 2009. As drafted, however, the proposed statutory code will not deliver the Government’s two key principles: fairness and the principle that a tied licensee should be no worse off than a free-of-tie licensee. The problem is that there is no direct mechanism to stop the double overcharging that I have mentioned.

As I have already said, not a single respondent to BIS’s extensive consultation thought that the Government’s proposed parallel rent assessment was the right solution, whereas two thirds said that the Select Committee was right. The assessment would need considerable participation from the adjudicator—in fact, the proposal confuses the adjudicator with the rent assessor, as the adjudicator is there to adjudicate disputes, not to survey and set rents. Without the direct mechanism, the basis on which the adjudicator is set up is currently weak.

Furthermore, the Government made the fundamental mistake that the shadow Minister has pointed to already. The Fair Deal for Your Local campaign and the Select Committee are clear that this measure must not apply to smaller companies—those with fewer than 500 pubs—because that is not where the majority of the problems are. A “large pub company” must be defined as any company with 500 or more pubs of any type, with the measure applying to its leased and tenanted pubs only, not to tied pubs.

The issue of tied pubs is a legal minefield, as the Government have realised, with the absurdity that Harry Ramsden’s, a fish and chip shop restaurant, could have been categorised as a “tied pub”. There are different forms of the tie in the UK—some free houses opt to be tied to a brewer in return for soft loans and business support—and how would we categorise “part tied” and “fully tied”? It is a nonsensical way to categorise. We need to define a “large company” simply as a company with 500 or more pubs, some of which are tenanted and leased pubs, and then apply the measure to the tenanted and leased pubs only. In that way, there would be no question of the large managed companies, such as Wetherspoon’s and Mitchells and Butlers, being caught any more than there would be of a restaurant chain being caught.

At the moment, the Bill and code do not deliver what the Government have set out, courageously, to deliver. Do not take my word for it; take the word of one of the two companies lobbying particularly vociferously against the code. In its own prospectus for potential investors, dated 6 October 2014, Punch Taverns said it did not believe that the reforms proposed would materially adversely affect the Punch group. In other words, it would be business as usual, and it would continue to charge excessive beer prices—often 70% more than hon. Members could get from the brewery—and set entirely unregulated rents.

--- Later in debate ---

[Greg Mulholland]

The hon. Gentleman is absolutely right. It was Punch Taverns’ acquisition spree that took the leased pubco model to Scotland—it bought up pubs simply as a way of artificially increasing the value of the company—although there are other tied leased pubs in Scotland as well. The only way to get justice for Scottish licensees is for Westminster to pass new clause 2 today: I had a meeting last year with Minister Fergus Ewing, and he said that if that happened, the Scottish Government would consider enabling legislation to take it forward in Scotland. So it is vital for Scottish licensees, as well as for English and Welsh ones, that we vote for new clause 2.

The new clause has been carefully drafted with the help of expert surveyors, lawyers and publicans. It is a new clause that works, and I pay tribute to all who helped to draft it and to the Clerks in the Bill Office who assisted with the process. It would make for clear primary legislation specifying how the market rent only option would work in practice and exactly what it would be, and crucially—this is why Members can give it their support—it would come in gradually over five years and be triggered only at certain key points in the cycle of a lease or tenancy. It would be triggered at five-year rent reviews, on lease renewal, on the sale of the property title, if there was a substantial change in prices—mirroring BIS’s own clauses—which would be for the adjudicator to decide, or if there were a change of circumstances, such as the opening next door of a Wetherspoon’s offering cheaper beer prices, which should lead to lower rents, but often does not under the pubco model. The new clause would give the large pubco tenant the opportunity to go to the adjudicator to plead that it was a significant change in circumstances.

The process is clearly laid out in the new clause, and there can be no confusion or suggestion it would come in straightaway: a tenant serves notice requesting an independent assessment of the market rent; there is a 21-day period of negotiation to allow the two parties to come up with a new deal; if they do, there is no need for it go further; but if they cannot agree within the 21 days, they must agree to appoint an independent surveyor to set the rent; if they cannot agree, the surveyor is appointed by the chair of the Royal Institution of Chartered Surveyors, as is standard practice, following RICS guidance, and in conformity with statutory guidance for tied pubs. At the end of the 21 days, the rent assessment is done and presented, and then there is another period of negotiation for both sides, at which point the company should come forward with attractive, fair tied agreements to keep them buying beer through them, but offering genuinely lower rents and genuine business support.

That is a reasonable, gradual process that will simply bring back market forces into a sector that has become grotesquely anti-competitive. It is closed to many smaller breweries, it is not working for publicans or those communities losing their pubs, and frankly it is not working for the large companies either.

[Sheryll Murray]

I am a little confused. The hon. Gentleman has not mentioned the economic impact that his free-of-tied proposal might have on small family brewers. Has he done any work on the financial impact on family brewers, such as the one owned by my constituent James Staughton, who rely on selling their beer far and wide across the UK?

--- Later in debate ---

[Greg Mulholland]

I am delighted that my hon. Friend has raised that issue. So let us all be clear; the clause, in primary legislation, cannot and will not apply to a single family brewer. All the family brewers—members of the Independent Family Brewers of Britain—have fewer than 500 pubs. The clause—in primary legislation to ensure that it cannot be changed—will not apply to them. The simple answer is that it will not and cannot affect them in any way. Surely Conservative MPs above all would like to see more competition and more ability for all brewers—regional and small microbrewers—to compete and to get their beer into pubs if it is good enough and if people want to drink it.

[Richard Fuller]

The Minister has just said that she wants to reduce the limit of the pub adjudicator from 500 to 350, which will start capturing some of the larger family brewers. Is he saying that he stands apart from what the Minister has said?

[Greg Mulholland]

That is helpful but I shall make it clear; the point of new clause 2 is that it is a stand-alone clause and has no bearing on that matter. I understand the position of those hon. Members with family brewers. They can support their family brewers if they wish by opposing new clause 6, but they can still support new clause 2, which, as I say, will apply not to a single family brewer but only to the large pub-owning companies. We have defined that very deliberately, which the Government failed to do despite our telling them that they should. A Member can vote for their family brewer by voting for new clause 2. To be clear; it is primary legislation and cannot then be changed without other primary legislation. It is not being put into the statutory code—secondary legislation—as some measures are. That is precisely why we have done it.

There has been a shameful campaign of misinformation against new clause 2 and the market rent only option from the usual suspects; the large pub companies and their mouthpiece, the so-called British Beer and Pub Association. In reality it is the big brewers and pubco association. They have been lobbying vociferously, making a whole stream of utterly baseless comments. It is simply scaremongering to suggest that somehow these companies offering a fair commercial rent to their tenants would cause collapse, chaos and closures.

[Liz McInnes (Heywood and Middleton) (Lab)]

Will the hon. Gentleman give way?

[Greg Mulholland]

I remind the House of what was said by the BIS Select Committee in its follow-up report in 2011—

[Liz McInnes]

Will the hon. Gentleman give way?

[Greg Mulholland]

Let me finish my point and I will give way. The Select Committee said:

“The BBPA (British Beer and Pub Association) has shown itself to be impotent in enforcing its own timetable for reform and the supposed threat of removing the membership of pub companies who did not deliver was hollow.”

Just last year the chief executive of the British Beer and Pub Association misled the Select Committee and said two things that were factually untrue, as well as presenting a series of baseless evidence.

Finally, before I give way, I will read what the Select Committee said in its 2008-09 report:

“As is noted elsewhere in this Report…in evidence to us both Mr Thorley of Punch and Mr Tuppen and Mr Townsend of Enterprise Inns made assertions which, on investigation, proved to give a partial picture, or on one occasion were positively false.”

Members on all sides of the House can know exactly how to take the absurd and baseless claims from those organisations.

[Liz McInnes]

Like the hon. Member for South East Cornwall (Sheryll Murray), I am seeking clarification on small family brewers. I, too, am confused by the effect of the proposal on J.W. Lees brewery in my constituency, which has fewer than 500 pubs but has a strong retail arm. I am concerned—as is the brewery, which asked me to raise the issue during the debate— about the effect it will have on a family brewer with fewer than 500 pubs but which has a strong retail arm.

[Greg Mulholland]

I thought I had given clarity. I ask the hon. Lady and all hon. Members to read this detailed new clause, as this is precisely why all of us who have been involved in writing it have done so. Let me read new clause 2(4):

“For the purposes of this section,”

meaning the market rent only option,

“the definition of a ‘large pub-owning business’ is a business which, for a period of at least six months in the previous financial year, was the landlord of—

(a) 500 or more pubs (of any description)”.

That cannot apply to any family brewer, and because it is in primary legislation, it cannot be changed in the future.

[Richard Graham]

Will the hon. Gentleman give way?

[Greg Mulholland]

I will briefly, but I have covered the point. I do not think I could make it any more clearly, but I will give way to my hon. Friend, whose work I respect.

[Richard Graham]

The point is not so much about whether the specific paragraph excludes microbrewers and small family brewers; the question is whether they support this proposal. It is interesting that the microbrewers’ trade association does not. It is concerned that it leaves the doors open for greater domination by foreign-owned brewers such as Carlsberg and AB InBev. The issue is not the hon. Gentleman’s integrity or the value of his drafting work on the paragraph, but the unintended consequences of new legislation. I should declare that my family has a pubco. It is a very small pubco, with two pubs, but we would not be in favour of the amendment.

[Greg Mulholland]

I will put on record strongly that there are many small pub companies and breweries that run their pubs exceptionally well and, interestingly, are doing very well and are expanding rather than contracting, but here is the rub: I speak directly to my Conservative coalition colleagues. The question I put to them is this: “Do you believe in competition? You all say you do. If you do, you should not be afraid of allowing brewers of all sizes to compete.” The reality is that small microbrewers do not have adequate, fair and direct access. They cannot turn up at thousands of pubs and say, “We would like to sell our beer to you because we believe it is good.” They are prevented from doing that.

Let me tackle the issue directly; this will be controversial. SIBA, the Society of Independent Brewers, has a direct delivery scheme that used to be part of the solution to the pubco closed shop. It is now part of the problem; many small independent brewers have contacted the save the pub group to say that. Incidentally, there was a U-turn in SIBA’s position. SIBA was a member of the Independent Pub Confederation, which supported the market rent only option. Seemingly without consulting its members directly, SIBA suddenly decided that it was against it; that is what SIBA members have told me. It no longer represents the majority of microbrewers on this key issue.

[Toby Perkins]

I wish to reinforce the hon. Gentleman’s point that new clause 2 is precisely about a free market option, and that to defend the status quo is to defend a restrictive practice, which should be absolutely anathema to any Conservative MP; if they vote against the new clause, they will be voting for a closed shop and against an open market.

[Greg Mulholland]

I share the shadow Minister’s bafflement about that, and I am delighted that we have a strong group of Conservative colleagues who, having heard the reality of the situation from their local branch of the Campaign for Real Ale, their local pubco publicans and their local Federation of Small Businesses branches, are fully supportive.

[Ian Lucas (Wrexham) (Lab)]

Does the hon. Gentleman agree that it is quite extraordinary that there seems to be such a strong voice for preventing new market entrants from moving into the brewing industry? Those are important small businesses that want to make progress. The message I hear from microbreweries is that they are prevented by this archaic and extraordinary system that we have endured for far too long.

[Greg Mulholland]

The hon. Gentleman is absolutely right. I repeat that if we believe in competition, an open market and entrepreneurship, we cannot defend the closed shop of the leased pub sector, which is dominated by these large companies.

[Richard Graham]

The hon. Gentleman is generous in giving way and I appreciate that, especially as he knows that I will not necessarily speak in support of his new clause. The crucial point is that hundreds of new microbreweries have been springing up over the last few years; the microbrewery in my family’s pub sprang up last year. This will make no difference to them whatever.

[Greg Mulholland]

I am afraid that the hon. Gentleman is simply wrong. I can send him the e-mails I have received from microbreweries—cider as well as beer producers. They are desperate to get more direct access, so that they can knock on the door of the pub 2 miles down the road and say, “We believe our beer is great and that your customers would like to drink it. We would like to sell it to you at our brewery price, rather than you having to go through the SIBA-directed delivery scheme, which has a considerable mark-up, or get on a pubco list,” as the pubco outrageously demands an incredibly low price that many microbrewers simply cannot afford to brew at, and then marks up prices by 60% to 70% to sell the product to their own so-called business partners. Is that seriously a model that Conservative MPs can support? I remain baffled by that.

Let me remind you, Mr Deputy Speaker, of the reality of the pub company model. As I look round, I see hon. Members who have family and smaller brewers in their constituency and want to support them; I respect their position, and I am at one with them on that, which is why the Fair Deal for Your Local campaign has always said that the provision should apply only to companies with over 500 pubs.

Let us look at the reality of what the big pubcos have done to skew the traditional tied tenancy model. Punch Taverns, a pub company that does not brew a single pint of beer, made a profit over 10 years—these are its figures from its own annual report—of £2.271 billion, all from on-selling beer to its own so-called business partners. Frankly, in any other country, that would be called a protection racket. It is extraordinary and unjustified, which is why it is right for us to try to deal with it.

If Members do not believe that this is an anti-competitive model—I know that some colleagues behind me do not, for their own reasons—they should listen to former Punch licensee Alison Smith, a Conservative activist who has e-mailed all colleagues today to tell of the reality of the pubco business model, and how it stifled her and her partner, preventing them from being able to create a successful pub. Even though they were doing well and improving their business, the draconian terms of the pubco lease meant that that was simply not possible.

What do hon. Members think these large pub companies are? They are not pub companies at all; unlike the traditional brewers, these are people who do not really care about our pubs or our brewers. There was a huge rush in the City when people saw this “get rich quick” scam, a way to inflate the value of companies artificially by basing it on what they could overcharge their own tenants by—their tenants for 25 years on these outrageous, new, long-term, fully repairing and insuring leases.

Let me give the example of what happened to the excellent Sir John Barleycorn in Hitchin. The community, I am delighted to say, applied to use powers introduced by this coalition Government to apply for community value status; they applied for the pub to be an asset of community value. There were objections. The most vociferous one said:

“the current use of the premises as a public house…does not itself further the social wellbeing or social interests of the local community and therefore is not land of community value.”

Who said that? Was it someone living down the street who was anti-pub? No, that objection was from the so-called pub company Punch Taverns, which was seeking to get rid of this pub and sell it off after forcing out the licensees. That is what is going on.

If there is any doubt that this model is closing pubs, let me read out the stark evidence of the figures. These figures, collated by CGA Strategy for the British Beer & Pub Association and CAMRA, showed that there was a much greater drop in the number of leased and tenanted pubs than in the number of free houses between December 2005 and March 2013. The number of non-managed—that is, tenanted and leased, mostly tied—pubs fell by 5,117, whereas there was a fall of only 2,131 free-trade pubs. All pubs have issues—there has been a difficult recession—but the difference is clear and stark.

We could also look at the pubco trade association’s own figures—figures that it has frankly been keeping very quiet about. Its own figures show that over 10 years, the number of non-managed—in other words, tied, tenanted and leased—pubs decreased by 8,000, while the free-trade sector expanded by 1,600 pubs. I repeat: that is its own figures. Between 2008 and 2012—just four years—the two giant pubcos, Enterprise Inns and Punch Taverns, collectively disposed of over 5,000 pubs—a third of all their pubs in just four years. Can any Member seriously stand up and say that this is a business model that is working for pubs?

[Toby Perkins]

The hon. Gentleman is hitting on a really important point. These big pub companies are often heralded for employing so many people, but they, of course, inherited these pubs and employees, and what they are doing over a long period is laying people off and shutting pubs, not the opposite.

[Greg Mulholland]

Absolutely. The debt level is still in the billions, and the hon. Gentleman will be aware of the extraordinary restructuring that has left Punch shareholders owning only 15% of the company. Meanwhile, the Punch tenant network expressed its serious concern about the effects on them of the company’s instability.

[Mr David Ward (Bradford East) (LD)]

My hon. Friend mentions the high number of pubs that have closed, but there is also the personal tragedy: a whole succession of tenants went into business with really high ambitions, and found that they simply could not make a living out of the existing model. That is a personal tragedy for them and their families.

[Greg Mulholland]

My hon. Friend is absolutely right. Every pub is a story about a community, and a story about the people who are running it. There have indeed been many tragedies. I had one in my constituency; a pubco tenant died of a heart attack a week after closing his pub. There are awful stories of human misery here. It comes down to the simple problem I outlined at the beginning: the over-charging. These companies continue to take more than is fair. It can often be 70%, 80%, 90% or even 100% of the pub’s profit, meaning that licensees cannot make a living.

Most revealing of all, I have asked Punch Taverns—in writing, and to its representatives’ faces—four times why it is so afraid of the market rent only option, the simple option to give tenants the right, at certain trigger points, to be offered a fair commercial market rent, and it has failed to answer four times. That, Mr Deputy Speaker, tells you all you need to know. It tells you that this business model is precisely based on taking more than is fair and sustainable. The only solution is the market rent only option.

Let me deal finally with the Government’s suggestion of a compromise: “Perhaps we can include a reference to the market rent only option or the Business, Innovation and Skills Committee option being built into the Bill, but only after a review two years after the statutory code comes into force.” I understand why this is being said, because the will of this House is clearly in support of the market rent only option, with 90 coalition MPs signed up to the Fair Deal for Your Local campaign, which calls for that option. I understand why the Government Whips are getting so worried: they realise that they might lose this vote today.

Let me say clearly on behalf of the campaign and all the organisations that have expressed this view that the last thing we need is yet another review. We have had four exhaustive Select Committee reports. In 2011, when the Government were supposed to act, we had a Department for Business, Innovation and Skills review, and BIS decided not to act. What was supposed to be the last chance became a second-last chance for the pub companies. When people realised that nothing had changed, there was a further review. We have had four reports and two reviews. The simple reality is that we need action and need it now. I ask you, Mr Deputy Speaker, to grant a vote on new clause 2; I think that you will agree that it is the will of the House to vote on it, given the support for it.

The simple message from all the Fair Deal for Your Local campaigns, thousands of tied publicans, and all who believe in pubs, publicans, communities and fairness is “No more delays, no more reviews, no more excuses.” Please let us solve this problem at last, properly, once and for all. Please let us all vote for new clause 2 today.

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

I have a sense of déjà vu as I rise to speak about this subject yet again. I shall confine my remarks to new clause 2, because that very well-researched clause is consistent with nearly 10 years of successive recommendations from the Business, Innovation and Skills Committee, and because I feel that it will address an issue that all the other proposals have failed to address: the unfair relationship between the pubco and the tenant. That unfairness, and the need to redress it, were spelt out to me in a letter that I received from a tenant, who wrote:

“The pub company wins all the time, they get a share of the Games Machines, the pool table, the Rent and they also put £30-£50 on top of each barrel so we pay a lot more for our beer than buying it off a wholesaler or warehouse.”

I realise that the Minister and the Government have moved a long way in the last two years, from insisting that a voluntary code would be sufficient to deal with the problem to recognising, following a long consultation, that it was necessary to introduce a statutory approach. However, I feel that, in its current form, that approach is lacking.

Let me begin by responding to the Minister’s reference to a possible Lords amendment postponing the implementation of the Government’s proposals until after a review and a ministerial decision. I oppose that course of action for a number of reasons, some of which were mentioned by the hon. Member for Leeds North West (Greg Mulholland). The industry has already been consulted to death. As the Minister said, the Government’s last consultation received an enormous number of responses, and it took them a long time to reach their conclusions. I therefore see no grounds for any further consultation.

The issue here is the deeply entrenched position of the British Beer and Pub Association, which represents the pub companies and which, over the years, has consistently paid lip service to the BIS Committee recommendations for the introduction of a voluntary code while dragging its feet and procrastinating at every stage of the procedure. Indeed, our last report referred to “glacial” progress. There is no reason to believe that any further consultation over the next two years will make any difference whatsoever.

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[Andrew Griffiths]

I can reassure the House that I will not be speaking for 40 minutes, nor will I be reading off a list of pubs that have been saved or want to be saved around the country. I just want to get to the nub of the point.

I begin by telling the Minister that I want to help her today. In fact I want to help her so much that I have sent my researcher off to WHSmith to buy two packets of Benson & Hedges, not because I have taken up smoking or I think her nerves are bad, but just in case she wants to write two new policies while we are having this debate and she needs something to write them on.

We have debated this issue for many years and today the Minister comes up with an amendment that was cobbled together within the last couple of hours. This is an important industry. It employs thousands of people across the country. Livelihoods depend on the decisions we make today, and I am deeply concerned that there has been no consultation whatsoever with the industry about her proposal today to have this two-year stay so that we can assess the situation. There has been no impact assessment, and there have been no discussions.

I have the same aims as the hon. Members for West Bromwich West (Mr Bailey) and for Leeds North West (Greg Mulholland). We want to see pubs prosper. We want to see pubs thrive. We want to keep the community pub. We want publicans to do well and to be profitable. It is how we achieve that that is key. The hon. Member for West Bromwich West mentioned unintended consequences. I have heard that said a number of times over the last 24 hours or so. I would bring the House back to the fact that we find ourselves in this situation because of the beer orders. A Conservative Minister decided, with the best of intentions, that the Government should interfere in the market; the Government decided that they should split up the big brewers because they were acting in an uncompetitive way and the consumer was not getting a good deal. They broke up the big brewers. The reality is that that decision set us on this path we are on today with the pub companies. We should therefore be careful and cautious—and afraid—of unintended consequences. The hon. Gentleman said that there is no certainty. Of course there is no certainty, but as politicians—as legislators—we have to act with caution when we are interfering in business and in the marketplace and in people’s livelihoods.

[Greg Mulholland]

A little bit of the beer orders story is conveniently forgotten, which is that it was not the Government’s decision; it was the industry lobbying to stop there being a limit on non-brewing companies that led to the creation of the large pub companies. The lesson is to not listen to that sort of self-interested industry lobbying and instead get the legislation right.

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[Andrew Griffiths]

Thank you, Mr Deputy Speaker. I saw that look in your eye, so I shall try to make some progress.

[Greg Mulholland]

rose—

[Andrew Griffiths]

I think I have been fairly generous, but I will of course give way to the hon. Gentleman.

[Greg Mulholland]

The most fundamental dishonesty is the suggestion that the new clause would abolish the beer tie. It absolutely would not; it would simply give an option, at certain trigger points, for people to choose between a tied agreement and a rental-only agreement. That would make the tie work properly and ensure that we got back to what the beer tie used to be.

[Andrew Griffiths]

I think I found a question in the hon. Gentleman’s intervention. Given that he spoke for only 40 minutes earlier, I quite understand why he wanted to have another go.

I should like to get back to the point made by my hon. Friend the Member for Tewkesbury (Mr Robertson) that people often find they have signed up for things that they did not expect. They find that they have been hoodwinked because they were not given all the details, and that they have not got a fair deal. That is what we want to outlaw. I want briefly to consider what, under this legislation, someone wanting to take on a tenancy today would have to do. First, they would have to have a business plan, which would have to be assessed. They would have to have an accountant and a lawyer, and they would be told what they are paying for their rent, their beer, their whisky and for everything else. They would also be told how many barrels of beer and bottles of whisky the pub sold in the past year, in the previous year and in the past five years. All that information would have to go before their accountant before they could sign. I do not know what other Members think, but I think these people are grown ups and business people. If they are provided with all that information calmly and clearly so that they can make a decision, it is not for government to intervene to tell them they cannot engage in a business agreement that is perfectly legal.