Oral Answers to Questions
Greg Mulholland Excerpts(7 years, 8 months ago)
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Greg Clark
The whole of the industrial strategy is an invitation to businesses in every sector to come forward and propose to the Government what is required to grow jobs and skills. That is the invitation to all digital companies.
Greg Mulholland (Leeds North West) (LD)
The Pubs Code Adjudicator Paul Newby failed to declare a much more fundamental direct conflict of interest than Charlotte Hogg, yet Ministers are ignoring it. Tomorrow, tenants will protest outside his office. How long will Ministers keep failing to do their duty and not face up to this situation?
Margot James
The hon. Gentleman knows that the Commissioner for Public Appointments stated that the panel considered there were no conflicts of interest in this case that would preclude Mr Newby from doing his job.
Oral Answers to Questions
Greg Mulholland Excerpts(7 years, 9 months ago)
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Greg Clark
The midlands engine is a very important part of the strengthening of the economy, and there is real momentum there. My hon. Friend can look forward to some very important announcements that will be made imminently.
Greg Mulholland (Leeds North West) (LD)
Last week, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Stourbridge (Margot James), said that there had clearly been instances of the pubs code being flouted and that Members should bring such things to her attention. I have a case in her own constituency to bring to her attention, which also shows that the adjudicator is not doing his job. May we discuss this matter please?
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)
I am very happy to discuss the case in my own constituency with the hon. Gentleman, but the Pubs Code Adjudicator is doing a good job. His line of inquiry has received 435 inquiries to date and 121 referrals for arbitration, but I will discuss the problem with the hon. Gentleman.
Statutory Pubs Code and Pubs Code Adjudicator
Greg Mulholland Excerpts(7 years, 9 months ago)
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Greg Mulholland (Leeds North West) (LD)
I beg to move,
That this House welcomes the Pubs Code established in July 2016 to deliver a fairer relationship between large tied pub companies and their licensees and to deliver the principle that the tied licensee should be no worse off than a free-of-tie licensee, introducing a Market Rent Only option for tenants, the right in certain circumstances to have an independent free-of-tie rent assessment and to pay only that sum; is dismayed that pub companies are thwarting the Code and are routinely flouting Regulation 50 that tenants who exercise, or attempt to exercise, their rights under the Code should not suffer any detriment; notes that this includes refusing to allow deeds of variation to leases, forcing tenants wanting to pursue the Market Rent Only option to agree a new lease on unfavourable terms; believes that fees being proposed for independent assessors are wholly unreasonable and that unfair additional charges are being demanded which make it unviable to pursue the Market Rent Only option; expresses strong concern that the Pubs Code Adjudicator (PCA), Paul Newby, who holds shares in, and has loans to Fleurets, which derives substantial income from the regulated pubcos, is failing to stop these practices or uphold the Code; calls on the Government to ensure that the Code works as intended and to accept the recommendation of the former Business, Innovation and Skills Committee to reopen the appointment process for the PCA; further notes that the Code does not apply in Scotland; and urges parity for Scottish tenants.
I thank the Backbench Business Committee for granting the time for this important debate. I thank the hon. Members for Hartlepool (Mr Wright) and for Warwick and Leamington (Chris White), who are, with me, lead Members on the debate. The hon. Member for Hartlepool is the Chair of the Business, Energy and Industrial Strategy Committee, and I pay tribute to all the work it has done on this. The hon. Member for Warwick and Leamington, who is also a member of the Committee, has seen at first hand how pubcos are thwarting tenants in exercising their rights under the pubs code, and the failure of the Pubs Code Adjudicator to address this. I must declare my interest as the chair of the British Pub Confederation, which represents the vast majority of tenants’ organisations in the pubs sector, and pub campaigners as well.
It is now six months since the start of the statutory pubs code—the anniversary was 21 January. I wish to make it clear to the House that I did not want to have to call this debate and to bring to the House what I have to bring today. More than anyone, perhaps apart from the beleaguered pubco licensees, I wanted this issue solved. I wanted the unfair business model operated by the pub companies, and all the tales of abuses detailed by the Select Committee and others, to be a thing of the past, but that will not happen, I am afraid, unless the pubs code is working and being enforced by the adjudicator, and that is currently not the case.
Let me say at the outset that the pubs code must work as intended: it is the law. At the moment, pubcos are flouting the code to prevent tenants from being able to access the market rent only option. That is thwarting the will of Parliament and of the Government, who laid out how the code should work—and, of course, it is causing a great deal of stress to tenants.
Sir Oliver Letwin (West Dorset) (Con)
Does the hon. Gentleman agree that it is no surprise that the pubcos are doing their utmost to thwart the market rent only provisions—that is to be expected—but it is a surprise that the adjudicator appears to have conceived of his position as being that of a kind of private arbitrator and not what we in this House set him up as—a judge who enforces the law?
Greg Mulholland
I warmly welcome the right hon. Gentleman and thank him for his intervention. He has looked at this issue with great thoroughness and intellect, and he is absolutely correct in his assessment.
Nick Thomas-Symonds (Torfaen) (Lab)
Does the hon. Gentleman agree that the real issue is that the adjudicator needs to have the confidence of all parties involved, and that does not seem to be the case at the moment?
Greg Mulholland
The hon. Gentleman is absolutely right. It is simply not acceptable to have ignored the fact that the majority of tenants’ organisations rejected the adjudicator and do not have confidence in him, and then to have rejected the recommendation from the cross-party Select Committee to replace Mr Newby and reopen the process.
In the course of my speech I will present evidence from the numerous cases that have been taken to the adjudicator. I pay tribute to the organisations representing tenants that have supplied that evidence, including the Pubs Advisory Service, the Guild of Master Victuallers, the Forum of Private Business, Licensees Supporting Licensees, the Punch Tenant Network, and Justice for Licensees. That has led to the British Pub Confederation report, which has 19 detailed pages all based on direct evidence from instances where tenants have sought to secure their legal rights under the pubs code by taking their case to the adjudicator.
So what has the Pubs Code Adjudicator produced after six months? A two-page press release. Worse than that, this press release—this glib statement—from the adjudicator’s office is not an honest description of the situation. It provides unexplained and meaningless data while failing to deal with, or even mention, any of the big issues facing tenants. The adjudicator ignores the ways in which the regulated pubcos are systematically breaching the code, covering up his own failures to uphold and enforce it. In effect—this goes back to the point made by the right hon. Member for West Dorset (Sir Oliver Letwin)—he admits his failure both to enforce the pubs code and to understand the real role of the Pubs Code Adjudicator. The statement makes no mention of the myriad complaints about pubco behaviour; no mention of the many complaints about the adjudicator from tenants and their representatives who have approached him; no mention of the cases where tenants are giving up and giving in because of the failure of the code and his office; and, extraordinarily, no mention of the key issues of complaint and concern on which people are seeking clarification, including the systematic ways in which pubcos are insisting that the market rent only option requires a new lease, often on detrimental terms—a clear breach of the pubs code.
Kate Green (Stretford and Urmston) (Lab)
Does the hon. Gentleman agree that the whole point of the pubs adjudicator was to even up an inequality of arms between a single tenant—a sole trader, in effect—or a family business, on the one hand, and very large and powerful chains on the other, and that the lack of equal access to justice or advice for tenants is causing great problems?
Greg Mulholland
The hon. Lady is absolutely right. I am afraid that the intention is not the reality, and that is why this House and the Government must take action.
Chris White (Warwick and Leamington) (Con)
As the hon. Gentleman mentioned, I have seen some of these things at first hand, and it has been an unsatisfactory experience. I would like to share with the House the following quote from a pubco:
“Moving to a Market Rent Only commercial free of tie lease agreement, means larger upfront payments and the loss of our award-winning, business-friendly services and support, aside from business insurance.”
Without naming the pubco or the pub involved, does he agree that this could be interpreted as threatening, and is not a business-friendly approach at all?
Greg Mulholland
The hon. Gentleman is absolutely right. I welcome the support that he is giving to his publican constituents. I have that quote in my speech.
Let me remind right hon. and hon. Members that the pubs code and the adjudicator were introduced in the Small Business, Enterprise and Employment Act 2015. The code came into force last year. It applies only to businesses owning 500 or more tied pubs in England and Wales, of which there are six, and governs their relationship with their tied pubs. The quasi-judicial statutory Pubs Code Adjudicator was created to uphold and enforce the pubs code so that it is properly implemented, and to act as an impartial arbiter when there are disputes on certain issues.
I wish to praise the current Government and the civil servants in the Department—formerly Business, Enterprise and Skills, now Business, Energy and Industrial Strategy—for their very hard and diligent work in bringing through the pubs code, which is a strong, clear document. At this stage, six months in, Ministers and civil servants should not have to intervene given that the adjudicator’s role, as laid down in primary and secondary legislation, is to implement and enforce the code. The role of Ministers should now be to oversee and scrutinise that activity, but I am afraid that they now have to intervene because the Pubs Code Adjudicator is not doing the job as laid down in the pubs code and in the law.
Regulation 50 of the pubs code specifically states:
“A pub-owning business must not subject a tied pub tenant to any detriment on the ground that the tenant exercises, or attempts to exercise, any right under these Regulations.”
This regulation is being routinely ignored and flouted by pub companies. Let me give some examples.
Pub companies are refusing to allow a simple deed of variation to leases if tenants suggest that they want to exercise their right to a market rent only option. This forces them to accept a new lease, which is offered only on unfavourable and clearly detrimental terms, clearly flouting regulation 50. Enterprise Inns is doing this systematically and then telling tenants that they will have to go to arbitration over what is clearly not an arbitration matter but a legal breach of the code’s regulation.
Tenants seeking the market rent only option are being presented with unreasonable charges and terms by pubcos, making it unviable to take or even pursue the option—for example, unreasonable and unaffordable demands for up-front, quarterly payments of rent, or unjustifiable and excessive dilapidations charges. Pubcos are also, as the hon. Member for Warwick and Leamington said, presenting so-called free-of-tie offers, sometimes calling them MRO offers as though they were the same thing as the market rent only option, which they are not; they are deliberately confusing the two. I remind the House that the market rent only option gives the tenant the right to an independent assessment of the market rent, and the right then to take the option on an existing lease with no other changes to the lease or the terms. Yet pubcos are insisting on shorter leases on detrimental terms, clearly breaching the pubs code. In addition, I can tell the House that that document being given to tenants is a Punch document.
Brigid Simmonds, the chief executive of the British Beer and Pub Association—the trade association of the pubcos—has said that it is “inevitable” that free-of-tie agreements would have
“terms that more closely reflect commercial rental agreements elsewhere in the marketplace”.
With the market rent only option, that is not allowed; it constitutes detriment. The lease has to continue on a free-of-tie basis, with the payment of independently assessed rent.
One thing that is putting people off is the fees proposed by assessors for carrying out that independent assessment. I have been sent a document from a surveyor that suggests that the fee can be up to £6,000. Under self-regulation, the maximum fee was £4,000, which was split into a maximum of £2,000 for the tenant and a maximum of £2,000 for the pub company. That was transparent and fair, unlike what the Royal Institution of Chartered Surveyors is presenting. Who is a member of the Royal Institution of Chartered Surveyors? Mr Paul Newby, the Pubs Code Adjudicator. It is a clear case of jobs for the boys, because the people demanding those unjustifiable and excessive fees are his former colleagues, associates and friends. I have to say to the Minister that that shows us again why a surveyor was a wholly inappropriate choice to be the adjudicator.
Pub companies are confusing and misleading tenants so that they miss their trigger point—the very limited window in which they can seek to take the market rent only option. Pub companies are putting pressure on tenants by sometimes bribing and sometimes bullying them into signing on the dotted line, so that they stay tied and do not have the chance to exercise their rights.
Returning to the adjudicator, I remind the House that Paul Newby, the director of pub estate agents and surveyors Fleurets, was appointed as Pubs Code Adjudicator and started work in March 2016, despite the majority of tenants’ groups objecting to his appointment, and despite the fact that he had ongoing financial links to the pubcos that he is supposed to regulate. Mr Newby failed properly to declare the conflict of interest when he applied for the role. As well as being a former director, which he did declare, he astonishingly —and completely unacceptably for someone in a quasi-judicial role—retains shares in Fleurets and has outstanding loans of more than £200,000 to it, with a repayment agreement that is set to last until 2023. That information had to be dragged out of him, and he published it only in December. Just to be clear, Fleurets declares that 20% to 23%—a fifth or more of its income—comes from the regulated pubcos.
To make matters worse, Mr Newby has been allowed to construct his own conflict of interest policy, and—surprise, surprise—it falls well below the industry standard for such documents. Surprisingly, it even falls well below the standards of his own professional body, the Royal Institution of Chartered Surveyors. The conflict of interest policy should be similar to that of the Groceries Code Adjudicator, but, unlike the GCA, the Pubs Code Adjudicator has chosen to publish a separate register of interests, along with an explanation of how his conflict of interest policy will be applied in relation to the register and, specifically, to his own conflict of interest. Mr Newby is setting his own rules to avoid having to disclose fully his conflicts of interest when he takes on cases.
The Select Committee was clear in July 2016 that not only was Mr Newby evasive, but he could not command the necessary confidence of pub tenants, and the appointments process should be reopened. Mr Newby also misled the Select Committee on important points, and has not responded properly to letters asking him for an explanation.
To return to the key point that the right hon. Member for West Dorset made, Mr Newby is the adjudicator, and his job is to uphold and enforce the pubs code. The Government state on the website:
“The Pubs Code Adjudicator (PCA) is responsible for enforcing the statutory Pubs Code.”
He is failing to act as an adjudicator; he is refusing to make rulings on important, basic matters such as the deed and variation versus new lease issue; and he is failing to uphold, never mind enforce, the code. Does he not understand the role—does he not properly understand the code and the legislation—or is this a deliberate attempt to undermine the whole statutory code, as many tenants now fear? The case-by-case approach that he is taking means that there will be no opportunity to look at many of the issues being raised repeatedly by tenants about the way in which pubcos are trying systematically to flout and thwart the code.
Toby Perkins (Chesterfield) (Lab)
I congratulate the hon. Gentleman on his campaigning on this issue over many years, and on securing the debate. What he is saying about the motives for the delay may well be true, but the feedback that I am getting is that the entire industry is frustrated about the failure to make any adjudications. The entire industry will benefit from the certainty that will come from the adjudicator’s getting on and making some decisions, and providing clarification on many of the important points that the hon. Gentleman is raising.
Greg Mulholland
I know that the hon. Gentleman had a meeting with Mr Newby the other day, and I would be interested to know what was said. I issue a word of caution to the hon. Gentleman to be careful who he listens to, and to listen to the licensees who are concerned about the cases being brought before the adjudicator.
The hon. Gentleman is right when he says that Mr Newby must make rulings. His job is not to horse-trade behind closed doors or to muddy the waters; he needs to provide clear guidance on what the code means and deal with breaches. The hon. Gentleman is right that tenants and pubcos need clarity, which Mr Newby is not providing. Let us be clear that his refusal to step in and stop those breaches, or to make general rulings on certain points, amounts to a refusal to perform his important statutory role. That is simply not acceptable.
The most extraordinary thing that I want to set before the House is the fact that Mr Paul Newby, in his role as Pubs Code Adjudicator, has breached the very pubs code that it is his statutory duty to enforce. Extraordinarily, he has breached regulation 38 of the code, which states that if a pubco and tenant cannot agree on the appointment of an independent assessor, the adjudicator
“must, within 14 days of the notification…appoint an assessor”.
Rather than doing so—that is clearly an important part of his role and laid down in legislation—he is passing that duty on to his colleagues in the Royal Institution of Chartered Surveyors dispute resolution service, who are demanding a fee. They have no right to do that; it is not in the pubs code, which the adjudicator has no right to ignore. That has been raised by the Pubs Advisory Service, which made a complaint because tenants were being charged the £250 fee. Mr Newby has said that tenants will no longer be charged, and that those who have been charged will be refunded, but he let that happen. He says that the fee will still be charged but will be paid from levies.
During the very strange period in which Mr Newby wrongly and illegally delegated his duty to appoint an independent assessor, RICS—with the adjudicator’s knowledge—appointed a surveyor called Barry Voysey for a tenant in a Punch rent case, even though Mr Voysey was acting at the same time for Punch Taverns in another rent case. The tenant was appalled at the obvious conflict of interest and refused to accept Mr Voysey or to pay his up-front invoices. The appointment of Mr Voysey breached RICS guidelines—it is defined as a red non-waivable conflict—but it happened under the nose of, and with the knowledge of, the Pubs Code Adjudicator, Mr Paul Newby, who is a member of RICS.
I want to refer to a couple more issues that are of importance to the House. The first is the proposed Heineken takeover of 1,900 of Punch Taverns’ pubs. That is of great concern to Punch licensees and is opposed by the Punch Tenant Network and the Scottish Licensed Trade Association. Star Pubs and Bars, which is owned by Heineken, has 1,100 pubs, so we would be talking about a pub company with 3,000 pubs.
It is clear—this is a worrying competition issue—that Heineken seeks to take over Punch so that it can insist on many more pubs stocking its product rather than that of its competitors. The Heineken bid document states that the company intends to
“improve visibility and increase sales of Heineken brands in high-quality pubs”.
It is clearly a bid to gain market share through the acquisition of pubs, which would, as people have said, create a monster tie and make it much harder for brewers of all sizes to get their products into pubs —that remains an issue.
It is surely time to look again at the maximum number of pubs that a brewery can own, to stop this sort of market dominance, and consider placing a limit on the number of pubs that can be owned by any company—unlike the flawed beer orders. They were flawed because Ministers caved in to lobbying from big brewers and agreed to the loophole that allowed the huge, non-brewing pubcos to emerge, dominate and create their own unfair model; and here we are today.
In relation to the role of the adjudicator, the concern is that Heineken will seek to force Punch tenants to stock only its products—despite the discussions, there is nothing in the code that says it is allowed to do so—but the adjudicator has so far refused to clarify that simple point, which is within his remit. This lack of clarity means that brewers may be able to use the current confusion to threaten legal challenges that could again be seen as putting off discussion of tenants’ rights under the code.
I must mention Scotland, which is just as important as England and Wales to the British Pub Confederation. The Scottish Licensed Trade Association, which is a member of the British Pub Confederation, does a lot of wonderful work in Scotland. Like the British Pub Confederation, the Scottish Licensed Trade Association supports having the same rights for Scottish licensees tied to pub companies. We have the absurd situation that people tied to the same company have certain rights on one side of the border, but a mile away across the border in Scotland, have none of those rights. Those rights should be extended to Scotland, and I look forward to hearing the comments of the hon. Member for Dumfries and Galloway (Richard Arkless), who will speak for the Scottish National party.
Toby Perkins
That is a very important point. In the process of passing the legislation, I believe I am right in saying that SNP Members voted with us in the victory on the vote that was predominantly about pubs in England, because they wanted same rights in Scotland in the future. It is a shame that the system has not been brought in there.
Greg Mulholland
The hon. Gentleman is right. The only way to get such rights and fairness for Scottish tenants was for the system to be established in England first, and I was delighted that SNP Members supported that. I am also delighted that they are represented in the Chamber today, because it is simply wrong that Scottish tenants are discriminated against in comparison with their English and Welsh counterparts.
Richard Arkless (Dumfries and Galloway) (SNP)
I will, indeed, touch on some of the points that the hon. Gentleman and other colleagues have made during the debate. He has made an excellent case, and has outlined many of the deficiencies of the Pubs Code Adjudicator, particularly his conflicts of interest, which seem to have a causal link with the lack of real adjudication. However, I am slightly confused about why the hon. Gentleman is recommending the system to another jurisdiction given that, by his own admission, it does not seem to be working correctly?
Greg Mulholland
The hon. Gentleman makes an excellent point. It was made in the briefing that the British Pub Confederation and the Scottish Licensed Trade Association sent to him. I was with the delegation that met the Minister, Fergus Ewing MSP, and that told him—this is one of the exciting possibilities—that it could be done in a simpler, clearer and better way and in a way that is appropriate for Scotland, which is the challenge for the Scottish Government. The Scottish Licensed Trade Association and British Pub Confederation would be delighted to offer support in achieving the best possible result for Scottish licensees. We need to learn some of the lessons about what is going wrong in this country and about the sort of person who should or should not be the adjudicator, if Scotland chooses to follow the adjudicator model.
In conclusion, the reality is that the statutory pubs code is not working as Parliament intended when we voted it through, and it is not working as this Government intended when they drafted the pubs code. It has been routinely flouted and ignored by pubcos, and Mr Paul Newby—a wholly inappropriate choice for Pubs Code Adjudicator—is failing in his basic statutory duty to uphold and enforce the code. Tenants seeking to exercise their legal right to the market rent only option are being discriminated against, misled and bullied into accepting tied deals. The problems identified by four Select Committee reports and now by the British Pub Confederation report are simply not being addressed.
Two things need to happen. I must say that Ministers have so far ignored this matter and washed their hands of it, but they can no longer do so because the pubs code and the law are being flouted. First, they must intervene now and ensure that the pubs code works as they and Parliament intended. They must ensure that the office of the Pubs Code Adjudicator actually upholds and enforces the code. Secondly, having heard the reality of what has gone on in the six months during which the code has been operating, I am afraid that the Secretary of State must now accept the Business, Energy and Industrial Strategy Committee’s recommendation and reopen the appointment process for the Pubs Code Adjudicator. We need an adjudicator who clearly understands and properly fulfils this important statutory role. That will require someone who does not have the conflicts of interest that Paul Newby has, and someone who will carry out the role as intended, rather than seek to skew the role and undermine the code.
MPs, Ministers, civil servants and the Select Committee have put in a lot of time, but all their work is being thwarted and ignored, so the code must now be made to work, with an adjudicator who will enforce it and who can be held to the appropriate standards for someone in a quasi-judicial position. The law must be made to work, and the will of the House and of Parliament must be upheld.
Richard Arkless (Dumfries and Galloway) (SNP)
I, too, congratulate the hon. Member for Leeds North West (Greg Mulholland), not only on securing the debate but on his tenaciousness, which has been documented. I suggest that he is indeed the pub champion of Westminster. At the very least, given the secondment of the hon. Member for Burton (Andrew Griffiths) to the Tory Whips Office, he has a clear run at that title now—and goodness me, our pubs need a champion.
I was brought up in a pub—thankfully, the right side of the bar. My parents owned a couple of pubs when I was a kid, which extended to a snooker club where I spent most of what some would describe as a misspent youth. If any Members would like to challenge me to a game on the green baize in a nearby establishment, the evidence of that will be there for all to see.
I have always thought of pubs not necessarily as places where people get drunk, but places where people meet one another. I have been fortunate enough to live in various places throughout the United Kingdom, and the first place where I would always go to meet members of the community would be the local pub. It is not only the place to get a drink and have a chat, but anyone looking for a plumber can find one there within 10 minutes, and even get seven or eight different reviews of that plumber from people sitting at the bar.
So pubs are crucial to communities. They bring communities together—they are not only about the pursuit of alcohol—yet they are struggling. Some 25% of our pubs in Scotland have disappeared over the past 10 years. There are social, economic and all sorts of other challenges that they face. People tend to drink at home now; they are reclusing inside their house instead of opting to go to the community-friendly pub. I think that is a great shame, so it is very heartening to have people such as the hon. Member for Leeds North West championing this cause. I wish him all success on the wider issue of bringing pubs back into communities.
The hon. Gentleman gave a detailed analysis of the problems we are facing with the Pubs Code Adjudicator. He and I have spoken on this issue a couple of times, and in particular on the conflict of interest position that the Pubs Code Adjudicator allegedly finds himself in. Being a former lawyer, I am acutely aware of what constitutes a conflict of interest. The word “perception” has been used many times in today’s debate, and I would suggest that a perception of a conflict of interest is indeed enough to create that conflict of interest. We cannot enter the controlling mind of that person and say whether in any given circumstances that particular financial interest is likely to cause them to make a different decision; the perception of that conflict is enough, and I cannot understand why the Government cannot see this. This is the clearest example that I think I have ever seen of a conflict of interest position, and something must be done as a matter of great urgency—perhaps not reopening the appointments process, but at least the Government should call Mr Newby before them to see whether that conflict of interest position is tenable. I cannot understand how anyone looking at this situation could fail to see a clear conflict of interest.
Greg Mulholland
Perhaps I should say, to help the hon. Gentleman on that point and to remind the Minister, that part of the problem is not only that these conflicts were not properly declared by Mr Newby, but that the right questions were not asked at the appointments process. So these things were not known, which is why we have the absurd situation of the Select Committee forcing him to publish his real conflicts of interest when he had been in the job for five months.
Margot James
I have great sympathy with the hon. Gentleman’s point, and I hope that it will be clarified by the Pubs Code Adjudicator in due course. The pubs code itself is not clear on that aspect, and it will be up to the Pubs Code Adjudicator to pronounce on it when he feels that he has enough evidence. I reiterate that I have considerable sympathy with the hon. Gentleman’s point.
Mr Newby has received a positive response from tenants, with the majority supporting his role. I accept that some tenants are deeply opposed to his role, and I could not have sat here for the past hour and a half without realising that, even if I had not known beforehand.
Margot James
I will make some progress before giving way to the hon. Gentleman.
Margot James
I might as well have given way to the hon. Gentleman, because he is making his point anyway. I will shortly come to his point about tenants who support Mr Newby. Suffice it to say that the number of referrals that Mr Newby is getting bears witness to there being tenants who support his role.
Tenants are coming to the Pubs Code Adjudicator to seek the protections provided by the pubs code. In its first six months, the inquiry line set up by the adjudicator to provide information about the pubs code received 435 inquiries, 91% of which were from tied pub tenants or their representatives, which bears out the imbalance that these businesspeople have had to suffer over many years. In the same period, the adjudicator received 121 referrals for arbitration.
I will now respond to a few of the comments made in the debate. My right hon. Friend the Member for West Dorset (Sir Oliver Letwin) and others observed that the Pubs Code Adjudicator has a dual role in both upholding and enforcing the code and in adjudicating on alleged breaches of the code. The pubs code was introduced in law to bring greater protection to tenants and to strengthen their position on what was a very un-level playing field. The PCA’s role is therefore to uphold the law and not to interpret it in a way that is biased towards one party or another on the adjudication side of his responsibilities.
We have heard allegations of ongoing abuse by pub companies, particularly from the hon. Member for Leeds North West, to whom I listened very carefully, and my hon. Friends the Members for Warwick and Leamington (Chris White) and for Tewkesbury. Tenants seeking the market rent only option, it is alleged, are being undermined by tactics deployed by the pub companies that threaten to make the pursuit of a market rent only option unviable, in direct contravention of regulation 50. There have clearly been instances in which the code has been flouted, and hon. Members are right to bring those cases to the House this afternoon. The code is designed to root out those cases, and I urge hon. Members to refer them to the Pubs Code Adjudicator.
On the performance issues, the hon. Member for Chesterfield (Toby Perkins) rightly raised his concern that there have not yet been any adjudications. There is a clear appetite, shared by the Pubs Code Adjudicator himself, for adjudications to start coming out, and I have no doubt that they will start coming out without further delay. There is no doubt that the Pubs Code Adjudicator will start to form some views, based on the evidence that he is seeing, so that we do not indefinitely have a situation in which every single case takes the same length of time as the cases in the first few months of his deliberations. I concur with that point, and I have questioned him about it. He assures me that although the law is technical and is not clear on every point, he will most certainly issue guidance when he is satisfied that he is in a position to do so.
Of course, the Pubs Code Adjudicator has already made statements that should give comfort to the House. On 9 September he made a public statement in response to information he received from stakeholders, in which he reminded the pub-owning companies of their obligations and what he expected of them in relation to the code:
“I expect pub-owning businesses to act in a manner that does not inhibit a tied tenant from accessing their rights”.
He also said that pub-owning companies must make available all relevant information relating to rent assessments and proposals for tenancies, and that they must ensure that MRO tenancies comply with the code and do not contain the sorts of unreasonable terms that we have heard about this afternoon. It is clear from our investigations prior to this debate that at least one pub-owning company is still not complying with the code and is making life difficult for its tied tenants. That needs to be rooted out.
Greg Mulholland
I remind the Minister of her wonderful work when she was a member of the Select Committee and shared exactly its view. She must substantiate her statement that the majority of tenants support Paul Newby. Does she realise that the only organisations he cited in support are: the Association of Licensed Multiple Retailers, which has a regulated pubco as a member; the British Institute of Innkeeping, which is run by someone who used to be a boss of a former pubco; the Federation of Licensed Victuallers Associations, which is run by a former director of Enterprise Inns; and Enterprise Inns, which pays for licensees to sign up to membership? Those are the only people who have signed up, so will she correct the record? The majority of tenant-representing organisations oppose Mr Newby and always have.
Margot James
I do not accept the hon. Gentleman’s criticisms. I am sure that he has not interviewed all 11,500 tied tenants. From the representations that I have seen, the number of tenants that the British Pubs Confederation represents is open to question. It is all very well for the hon. Gentleman to be so critical of the Association of Licensed Multiple Retailers and the Federation of Licensed Victuallers Associations—[Interruption.]
Margot James
Well, it is all very well for him to say what he said, but they are credible organisations. They welcomed the Pubs Code Adjudicator’s appointment and said that it is essential for the post to be held by someone with an in-depth knowledge of the market. When I visited the office of the Pubs Code Adjudicator in Birmingham and met the staff who work behind him, they were relieved that they had the leadership of someone who knew so much about the industry and the market.
Members raised other important issues, including the conflict of interest mentioned by the hon. Member for Hartlepool (Mr Wright). There have been two accusations against Mr Newby: that he has conflicts of interest through his financial interests in Fleurets and—I do take this seriously—that the perception that he is conflicted means that he is not able to carry out his role effectively. There is a delicate balance to be struck when saying that the perception is the reality, which can lead to opportunities to give further credence to the conflict of interest. However, as the Secretary of State explained to the BEIS Committee on 14 December, the appointment process for the post was run in full accordance with the code of practice for ministerial appointments to public bodies. It was a proper and rigorously followed process. The panel concluded that Mr Newby had no conflicts of interest that would call into question his ability to do the job.
The Commissioner for Public Appointments, Peter Riddell, also considered the matter and has confirmed his view that nothing was hidden and that there had been a proper, transparent process. He is also satisfied that the panel was entitled to conclude that Mr Newby has no such conflicts of interest. It would be wrong to deny the judgment of the independent figure responsible for overseeing such procedures. Mr Riddell is a man of great integrity who has a deep understanding of the principles of public appointment.
The Government do not agree that Mr Newby’s previous employment with and financial interests in Fleurets create a conflict of interest that could give rise to a reasonable perception of bias—[Interruption.] I am sorry that hon. Members are dissatisfied with that. We have heard the accusations that Mr Newby misled the BEIS Committee about his financial interests in his former company, but he has not attempted to disguise the nature of his financial interests in Fleurets. He answered the questions he was asked to the best of his ability at the time and there was no intention to mislead. He later became aware that some technical parts of his evidence were inaccurate and wrote to the Select Committee to set the record straight.
The request for early repayment was referred to by the hon. Member for Chesterfield, who was backed up by the hon. Member for West Bromwich West (Mr Bailey), whose speech I listened to with great attention having sat on the former Business, Innovation and Skills Committee in the early years of my time in Parliament when he was its Chairman. During his oral evidence, Mr Newby was open about the nature of his loan arrangements with Fleurets. In order to be helpful, he said:
“I could ask if it would be possible to be repaid more quickly, but that agreement was already in place when I left.”
Mr Newby took the opportunity to update them on that request when he wrote to the Committee. His willingness to seek to address the Committee’s concerns should not be construed as an admission that he is conflicted, nor that the Government think that that is the case.
In conclusion, the pubs code is important for the pubs sector. It is vital that Mr Newby is now allowed to get on with the job. Many adjudications are awaiting an outcome and I share the frustration that we have not yet seen any results. However, six months is not a long time, considering the burden of work associated with the role and the small team of nine people. It is therefore incumbent on us all to give Mr Newby the space to do his job properly over the next few months. I am sure that hon. Members will no doubt request a further statement or perhaps another debate, and I hope that we will be talking more about the outcome than the process. Mr Newby is doing a good job and has much important work to do. Through that work and his adjudications, it is important that the sector’s confidence is built up and, most important of all, that tenants in all our constituencies are protected as Parliament intended.
Greg Mulholland
I thank all the hon. and right hon. Members who have taken part in this important debate. Excellent contributions have come from both sides of the House. Notably, not a single Backbencher stood up in support of Mr Paul Newby or claimed that the pubs code was working. I like the Minister, who did great work with the former Business, Innovation and Skills Committee. I pay tribute to all colleagues on the Business, Energy and Industrial Strategy Committee and to the Member for West Bromwich West (Mr Bailey), its former Chair. I remind the Opposition that the process was started by a Conservative former Chair of the Business, Innovation and Skills Committee, Sir Peter Luff, so it has involved cross-party working.
However, the things that the Minister has had to say today must have stuck in her craw, because she was regurgitating the misleading nonsense that is coming from the office of the Pubs Code Adjudicator. She spoke of visits, visibility, roadshows and what a lovely, charming chap he is, but that is precisely the kind of backslapping approach that has got this sector in such a mess. We have surveyors who know pubco bosses and play at the same golf clubs; we have to get away from that and have a proper system and a real adjudicator, just as the right hon. Member for West Dorset (Sir Oliver Letwin) said. I urge the Minister to listen to him, the hon. Members for Tewkesbury (Mr Robertson), for Warwick and Leamington (Chris White) and for Peterborough (Mr Jackson), and all her colleagues who understand the situation. She did admit that there are clear examples of where the code has been flouted, but she did not acknowledge that the Pubs Code Adjudicator is doing absolutely nothing about them, including deeds of variation, on which I hope we will now get some action.
Will the Minister meet me and representatives from the British Pub Confederation? We will send her a copy of the report, which we must discuss with her and her officials. As we have heard today, the reality is that Mr Paul Newby’s position is untenable. He cannot perform this role and will never have the confidence of tenants. The whole situation around him stinks. The hon. Member for Dumfries and Galloway (Richard Arkless) said something like, “If it looks like a duck and quacks like a duck, it is a duck.” Frankly, Mr Newby is worse than a dead duck; he is a duck that is in real danger of compromising, skewing and watering down everything that the Government tried to do in the pubs code and what this House stood for.
This situation will not go away; Mr Newby will never have the confidence of tenants. The pubs code must be made to work and it is the duty of the Minister and her ministerial colleagues to do that. I look forward to meeting them to discuss that and to present the real evidence, not the nonsense. I remind the House that Greene King, one of the six regulated pubcos, is a member of the very organisation that Mr Newby has claimed supports him. That is the situation, and it is not good enough. The vast majority of tenants, representative organisations and licensees, and all the people whom the British Pub Confederation is representing in cases, oppose Mr Newby and have no confidence in him. He must go. That will happen, but it depends on whether we see leadership from the Government or whether the situation has to drag on for another six months or a year. It will not go away.
Question put and agreed to.
Resolved,
That this House welcomes the Pubs Code established in July 2016 to deliver a fairer relationship between large tied pub companies and their licensees and to deliver the principle that the tied licensee should be no worse off than a free-of-tie licensee, introducing a Market Rent Only option for tenants, the right in certain circumstances to have an independent free-of-tie rent assessment and to pay only that sum; is dismayed that pub companies are thwarting the Code and are routinely flouting Regulation 50 that tenants who exercise, or attempt to exercise, their rights under the Code should not suffer any detriment; notes that this includes refusing to allow deeds of variation to leases, forcing tenants wanting to pursue the Market Rent Only option to agree a new lease on unfavourable terms; believes that fees being proposed for independent assessors are wholly unreasonable and that unfair additional charges are being demanded which make it unviable to pursue the Market Rent Only option; expresses strong concern that the Pubs Code Adjudicator (PCA), Paul Newby, who holds shares in, and has loans to Fleurets, which derives substantial income from the regulated pubcos, is failing to stop these practices or uphold the Code; calls on the Government to ensure that the Code works as intended and to accept the recommendation of the former Business, Innovation and Skills Committee to reopen the appointment process for the PCA; further notes that the Code does not apply in Scotland; and urges parity for Scottish tenants.
Oral Answers to Questions
Greg Mulholland Excerpts(8 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jesse Norman)
My hon. Friend rightly highlights the importance of innovation in driving industrial growth, and it will undoubtedly be at the centre of the industrial strategy as it is rolled out.
Greg Mulholland (Leeds North West) (LD)
Following the recommendation of the Select Committee to remove Paul Newby as pubs adjudicator, new evidence has emerged that shows that he failed to properly declare his interests and also misled the Select Committee. So far, he has refused to resign. Will the Secretary of State now restore confidence in that post by sacking him?
Greg Clark
My understanding is that the appointment followed a proper process. That is what I understand to have taken place, but I will look at the suggestions that the hon. Gentleman has just raised.