Small Business, Enterprise and Employment Bill

Debate between Greg Mulholland and Sheryll Murray

Tuesday 18th November 2014 Commons Chamber

[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?