Neighbourhood Planning Bill

Debate between Greg Mulholland and Toby Perkins

Ping Pong: House of Commons
Tuesday 28th March 2017 Commons Chamber

[Toby Perkins]

I am pleased to speak in support of Government amendments (a) and (b) in lieu of Lords amendment 22. I think they will make a material difference to the fortunes of many of Britain’s 48,000 pubs; give certainty to investors in the pub trade; and, crucially, put communities back in control of decisions that have a real bearing on their community. I speak as chairman of the renamed all-party parliamentary pub group, and as a real pub enthusiast.

I would like to record my appreciation of many people and groups in securing this important victory, including Lord Kennedy who tabled the amendment in the House of Lords and was very successful in ensuring such overwhelming cross-party support that the Government were persuaded to adopt the amendment in lieu. I also thank the pub-supporting campaign groups such as CAMRA and the British Pub Confederation, and my fellow members of the all-party parliamentary group on pubs, who held a really informative round table last week on the many different approaches across the country to using the planning system to save pubs.

I would also like to acknowledge, as did the Minister, the important work done by my predecessor as chair of the APPG, the hon. Member for Leeds North West (Greg Mulholland), who proposed the motion in Committee that was subsequently supported by my hon. Friend the Member for Oldham West and Royton (Jim McMahon).

I also think it right to acknowledge that the hon. Member for Bristol North West (Charlotte Leslie) originated the process with an amendment to a different Bill. Although the case she made was unsuccessful, it has proved important in bringing about this change.

As I said a moment ago, I am grateful to the Government for broadly adopting a motion to which there had been some hostility. It takes courage to change one’s mind. The Under-Secretary of State for Communities and Local Government, the hon. Member for Brigg and Goole (Andrew Percy), came to the CAMRA reception and assured us that the Government were listening, and the Government’s actions on this occasion suggest that he was as good as his word. All due credit should be paid to him.

There is nothing quite like the first visit to any British pub. I know that I am not alone in feeling that little frisson of excitement when I step through the door of a pub for the first time—pushing open that creaking door, and wondering what will be waiting for me behind it. It is, one might say, an adult and real-life version of an Advent calendar: behind every door is a different surprise.

As one of those doors creaks open, we wonder how the pub will be laid out. Will we be able to get a table? Who will be in there, and how many people will be in there? What will be on the walls, and what will the bar look like? Each pub is different. Will the bar steward’s face be a picture of welcoming joy—or maybe not? Will there be a log fire in the winter? Will there be a garden in the summer? Will there be a dartboard, a pool table, a pub dog or cat? Will a loudmouth be propping up the bar, commenting on topics on which he has assumed a level of expertise from a programme that he once saw on television? Will someone be commenting on the performance of his Member of Parliament and asking, inevitably, whether that Member of Parliament will be claiming his pint back on expenses? That one never really grows old.

Finally, of course, there is the question of what the pub will be serving. There is so much more to visiting a pub than having a drink, and that is the magic of it. I know my own favourite beers, and I can pop into Morrisons just down the road and buy as much as I like, far more cheaply than I can in many pubs. However, the drinks are just a fraction of the experience; the magic comes from the entire ensemble. Just as there is a magic to visiting any pub for the first time, there is a joy in having a local where you really feel at home, and where the characters, the beers, the landlord or landlady and the décor seem almost as familiar as if you were indeed in your own home.

We live in different times, and—let us be candid—in difficult times for the pub trade. The days when a single publican, running a single pub for decades at a time, was a staple of every high street are long gone. The long-standing publican is now becoming a rarity, and our communities are the poorer for it. However, many of those communities still have long-standing connections and relationships with their local pubs. Whether they are regular attenders or occasional visitors, the pub is a part of their community—one that we all too often take for granted, and a feature that is only really missed when it is under threat or gone.

Let me assure the House that none of us is suggesting that unpopular or poorly run pubs have a right to exist. Communities that do not back their local pub cannot assume that it will always be there. When I bought my house back in 1998 the Terminus was my local, but after a string of landlords within just a few years, it is gone. The only reminders of it are a plaque on the wall that reminds us where it once stood and the local bowling green, which is still called the Terminus Bowling Club although the pub from which it took its name is long gone.

In a small town like Chesterfield, I have to walk a mile to reach what you would call my local, and that, I think, is a comment on the times in which we live. If we do not get out and support our pubs, it is no good complaining when they are gone. Similarly, the industry knows that it is living in an ever more competitive world. The competition for the leisure pound has never been fiercer. From satellite television and a bottle at home to an array of takeaways and restaurants to suit every palate, the alternatives to a pint in the local are multitudinous.

Pubs will continue to close on occasion, but I think that it really sticks in the craw of communities when popular and well-used pubs—or even pubs that play a central role in a community—which may well be under poor management at a particular time are lost for good without the community having any say. The tenant in a pub is not just a business owner but the guardian of something precious in that community, and the duty of the pub-owning business to ensure that the guardians it appoints have the wherewithal to protect the precious assets that they are responsible for running is very important.

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

I thank the hon. Gentleman for his kind words earlier. The main purpose of the amendment that we are all supporting today is to tackle the scourge of predatory purchasing, especially by supermarkets. The Co-op is the worst in that regard. Does the hon. Gentleman think that it is time for CAMRA to look again at its agreement with the Co-op, and to say, “This must stop, because it has not worked”—as, hopefully, the amendment will?

[Toby Perkins]

I certainly support the amendment, and I agree that it is necessary because previous measures were not working. I met representatives of the Co-op recently, and their approach was pretty constructive. They said that they would be making a planning application in every case.

[Greg Mulholland]

It is interesting that the hon. Gentleman met those Co-op representatives recently. As he knows, last year the Save the Pub group was misled by the Co-op, which gave a clear assurance that it would not take pubcos’ view of viability as fact, but, as has been made clear by local CAMRA branches and the British Pub Confederation, it has continued to do so. The Co-op speaks with forked tongue, as the Save the Pub group has proved before, and I hope that the hon. Gentleman will stick with holding it to account.

[Toby Perkins]

We certainly will stick with holding it to account. If the hon. Gentleman has evidence that, since those reassurances were given, the Co-op is going down that road without seeking planning permission, I will definitely support him in what he has said.

In Chesterfield, we organised a huge public campaign which, although it does not relate specifically to the Co-op, is relevant to the issue that the hon. Gentleman has raised. We campaigned to save the Crispin Inn in Ashgate Road when EI Group, previously known as Enterprise Inns, wanted to sell it to Tesco. The campaign was won and Tesco pulled out, only for a new developer to come along and demolish the pub, and then start consulting on what should happen on the land where it had stood. Eventually, housing was built there.

In my previous role as shadow pubs Minister, I met so many groups all over the country who were fighting so hard to save the pubs that they loved and on which communities depended. It was wrong that a developer could turn a pub into a supermarket without planning permission, but could not do it the other way round. It was wrong that a building that was potentially a precious community asset could be knocked down before the community was even able to have a say. The coalition Government did take steps to reinforce the right of communities to have a say, but, although well intentioned, their efforts were a bit like trying to catch a flood in a cup.

The great attribute of the amendment proposed by Lord Kennedy and subsequently adopted, with further amendments, by the Government is that it gives certainty to everyone involved in the industry. We must never forget that Britain’s pubs are a business, an industry with investors who need certainty. The danger of going too far down the localism route was that when a business was considering an investment decision, it was faced with potentially dozens of different legislative approaches and hurdles across its portfolio. That approach also left councils at the mercy of aggressive legislation, and they were expected to incur the legal expense of defending the measures that they had introduced to protect their pubs.

The “asset of community value” approach has given some communities a precious opportunity to fight for the pub that they love, but it did mean that often the only way to save a pub was to agree to become its owner. There is some value in that sort of community activism, but it should not be necessary to be willing to buy a pub in order to have a view on it.

Last week, the APPG heard from the community team that had successfully bought the Antwerp Arms in Tottenham, having used the ACV legislation to save their pub. We also heard from Wandsworth Council, which had placed a requirement for article 4 directions on about 220 of its locals. It deserves credit for its efforts, but the danger of using article 4 directions is that the landscape is different in each local authority. That led to some publicans having to obtain planning permission just to paint or decorate their pubs, which is a positive disincentive to improving or investing in the pub estate. The approach that is being advocated today will bring the certainty and clarity that everyone connected with the industry needs, and it will not prevent the owners of buildings from adopting the needs of their buildings to maximise new opportunities.

--- Later in debate ---

[Toby Perkins]

Will the hon. Gentleman expand on his suggestion? Many of us share the concern, which I raised a moment ago, about a rush towards demolition. He proposes a moratorium, but is he proposing that the industry commits to such a thing or that the House passes something to bring it about?

[Greg Mulholland]

I am asking the Minister and the Secretary of State for Communities and Local Government. The Secretary of State’s name is on the amendment, so I take this opportunity to thank him because he has clearly listened and accepted the proposal. As he knows, I also go to pubs in his constituency because I have family in Bromsgrove.

It is for the experts in the Department to consider the possibility of introducing a moratorium, because there is no possibility of it being done externally. This is not a matter simply for the industry. The Co-op is probably the worst pub killer of all the supermarket chains, others of which have been pretty bad. The supermarket chains are not part of the pub sector, and they see pubs as fodder for imposing their unwanted stores on communities. The supermarket chains will clearly not jump to do this, and nor will developers that are seeking to exploit high land values in London, St Albans and other parts of the country. From that point of view, it would be great if the Minister said that there should be a moratorium and, in the spirit of this change, called on people not to pursue such conversions now that they are deemed by Parliament to be wrong.

This is not the end of the matter. Ultimately, it has not been about securing great protection for pubs; that is one of the things that has been rather misunderstood and misrepresented, sometimes by both sides of the argument. It is simply about giving communities a say and about removing absurd permitted development rights that created a loophole that has been exploited by large pub-owning companies and large supermarkets for too long. There will still be predatory developers, and pub companies will still seek to undermine pubs to secure development or to go through the planning process for building a supermarket.

As I have said, the assets of community value scheme remains important, but it is now time to consider strengthening it. Giving communities a genuine right to buy, as communities in Scotland have, is long overdue and would represent genuine localism. I have had a conversation with the Minister, and it is now time to consider a separate category in the planning and tax system for community pubs, which are the ones that we really care about. They are the ones that have the community value, which many Members have mentioned, in a way that other licensed drinking establishments do not.

CAMRA has so far said that it does not want to engage in this, but it is now time to crack the nut of defining a genuine community pub that does the things we have talked about and that has value to the community. The British Pub Confederation and Protect Pubs certainly wish to do so. If we do that, in addition to creating the extra layer of genuine planning protection for those pubs, and only those pubs, against predatory development, and only when the pubs are viable, we can crack the nut of having a different system of taxation, and we will never again see the disastrous headlines for the Treasury such as of one pub in York facing a 600% increase in its rateable value. I was in that very small pub, the wonderful Slip Inn, a couple of weeks ago during the Liberal Democrat conference. As I did at the meeting with the hon. Member for Bristol North West, I offer to work with the Minister to find a way of doing that, which could offer the security we need for our hugely important, viable community pubs.

This wonderful news is the start of a conversation, and I thank the Minister and all those involved. This is a hugely significant day in pub campaigning. As this is English Tourism Week, I know that every Member here today, and many more who are not, will want to raise a glass to this win for pubs and to the Minister for listening to all the campaigners who have helped to make it happen. They will want to toast this victory and the importance of the great English and great British pub.

Statutory Pubs Code and Pubs Code Adjudicator

Debate between Greg Mulholland and Toby Perkins

Thursday 26th January 2017 Commons Chamber

[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.

Enterprise Bill [Lords]

Debate between Greg Mulholland and Toby Perkins

Tuesday 2nd February 2016 Commons Chamber

[Toby Perkins]

The hon. Gentleman asks a legitimate question. All of those questions were debated at the time of the original legislation. As my hon. Friend the Member for Great Grimsby (Melanie Onn) said, a compromise was reached. The existing compromise is vital for the convenience store sector. The number employed in large Tesco, Morrisons or Sainsbury’s stores far outweighs the number employed in those other stores. I will not say anything more about that matter, but the exchange between the hon. Member for Strangford (Jim Shannon) and the Secretary of State entirely exposes the fact that many people do not entirely understand what they are being asked to vote for today.

I come to this subject as someone who ran his own small business for five and half years before entering this place and who spent the previous 20 years working in a range of medium-sized businesses—I was once a human being. I have also had the opportunity, as a shadow Business Minister, to debate many of the issues.

I was struck by what the hon. Member for Derby North (Amanda Solloway) said about the impact of late payments on small businesses in particular. Late payments beget late payments: when someone receives payments late from their customers, they end up being late payers to their suppliers, and so it goes on. She is absolutely right to say that action needs to be taken. She may want to research the amendments that we tabled to the Small Business, Enterprise and Employment Bill during the last Parliament. Those were far more powerful proposals, and I may encourage my Front-Bench colleagues to dust them off and have another look at them. Those serious legislative proposals would have outlawed late payment and removed the incentive for late payment.

When discussing late payments, we must understand why they exist. Payments are made late because businesses like to keep the money in their account for the purposes of cash flow. There will be an opportunity for a small business to go off to the commissioner and report their customer, but in the course of that process the big company may well have paid the small business. That will not get the small business paid any quicker; it just puts in place a bureaucratic process. The idea of a small business commissioner in itself is not a bad one—it may well deal with some of the disputes between suppliers—but the idea that it is the solution to late payments is entirely wrong. It will make very little difference to whether or not companies are paid late.

The hon. Member for Burton (Andrew Griffiths) spoke about major companies that are setting out with purchasing terms of 90 or 180 days. They are paying after 90 days and they are not even late. The Government may say that, if companies do not pay within 60 days, they cannot be classified as a prompt payer under the prompt payment code, but these are relatively small measures. They do not provide legislative protection against major firms in the way that the amendment I proposed in the last Parliament would have done. I urge the Government and all members of the Bill Committee to look at how we can strengthen the proposals, because this is a matter of real importance.

It always strikes me that the Secretary of State believes all regulation to be a bad thing. Recently, I met the UK Weighing Federation, which had a reception in Parliament. It said that the lack of policing of the regulations in the weighing industry leaves the UK market open to cheap foreign imports that are not compliant and that undercut good-quality British manufacturing.

I agree with my right hon. Friend the Member for Don Valley (Caroline Flint) that we do not want unnecessary burdens, but we do want a regulatory regime that protects not only the consumer, but British businesses that are doing things in the right way. A similar case was made by NAPIT recently in respect of the electrical competent persons register and the lack of policing of building regulations.

Part 7 includes measures on the pubs code. I was pleased to hear the Secretary of State say today that the Government have listened and learned from the discussions in another place, and that the four triggers that were originally put in place when the legislation passed in that famous defeat of the Government in the last Parliament will be retained in the pubs code. It is incredibly important that the code continues to operate in that way.

It is important to remind Members who were not here in the last Parliament why we decided to legislate for the pubs industry in a unique way; we have not used that for any other industry. There was a simple unfairness in the relationship between the major pub companies, with all the power they had, and the small individuals who owned a single pub, who often put their life savings into it, only to find that the information that they had going into the relationship was very misleading. As a result, those people often found that they were not in a position to get the deal that they thought they were signing up to. It was incredibly important that we came up with an arrangement where they had the opportunity, at certain trigger points, to say, “I don’t think this relationship is working for me. I’d like to take my chances on the open market and buy beers from wherever I can.”

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

Is the hon. Gentleman concerned that pubcos are misrepresenting their investments and seeking, via that loophole, to game the legislation and avoid the market rent-only option?

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[Toby Perkins]

There is talk of substantial investment, but a substantial level of investment by a city-centre pub will be far greater than a substantial level of investment by a small pub on a street corner. Is it clear what the Government mean by substantial investment?

[Greg Mulholland]

It is not clear, and I do not believe that there is sufficient understanding of the reality of pub investment. I suggest that Ministers in the Department and other Members read an excellent article in The Publican’s Morning Advertiser by Robert Sayles, published on 6 January 2015, which exposes part of the myth that has been created by pubcos and their supporters. For instance, in 2015 Enterprise Inns invested £66 million—which sounds a lot, but only amounts to £13,200 per pub across the estate—and, interestingly, made a loss of £66 million at the same time, which it can offset against tax. Who is really investing in its pubs?

BIS has said that it will look at ways of preventing the pubcos from gaming the position. However, I want to deal with another myth. The last Conservative Government were right to introduce the Beer Orders in order to bring about competition. The fact that they gave way to industry lobbying and provided a loophole to allow the creation of the stand-alone pub companies was the problem, not the Beer Orders themselves. The Government must not do the same thing again. We must have a market rent only option that is triggered in the way that was intended in the legislation, and there must be no opportunities for the pubcos to game that, including abuses of the investment waiver. I look forward to continuing to work with the Minister and her team to deliver that.

Small Business, Enterprise and Employment Bill

Debate between Greg Mulholland and Toby Perkins

Tuesday 18th November 2014 Commons Chamber

[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.

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[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.

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[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.

Small Business, Enterprise and Employment Bill

Debate between Greg Mulholland and Toby Perkins

Wednesday 16th July 2014 Commons Chamber

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

In the limited time available to me, I shall, as chair of the all-party save the pub group, restrict my comments to the pubs section of the Bill. That is not to say that there are not many excellent measures in the Bill, but I want to concentrate on those relating to pubs. I am sorry that the Secretary of State is no longer in his place, as I wanted to put on the record my thanks to him for listening, doing what was clearly needed and legislating to deal with the flawed and discredited business model that has done so much damage to the valued institution of the great British pub.

I have said very vocally that BIS and the Government got it badly wrong in 2011 when they decided to go down the self-regulatory route yet again, even though it had clearly failed, as was shown by the Select Committee. I give every credit to my right hon. Friend and to Ministers for looking at the issue again, listening, acknowledging that the problems were still there and in many cases getting worse, and finally acting. I pay tribute to my colleagues in the all-party group and to the Fair Deal for your Local campaign, which was formed in April last year, bringing together the Federation of Small Businesses, the Forum for Private Business, the Guild of Master Victuallers, the GMB, Fair Pint, the Pubs Advisory Service, Licensees Supporting Licensees, Justice for Licensees, the Campaign for Real Ale, and Licensees Unite, part of Unite the union, which represents more than 2 million members and many, many licensees up and down the country as a strong voice for the pub sector.

We in the campaign and the all-party save the pub group warmly welcome the fact that we will have legislation; that we will finally have a statutory code of practice. I and the two vice-chairs of the all-party group have written to the Secretary of State—which is a good job because I will not get the chance to outline my position in the limited time available now—to make clear the Bill’s flaws as we see them.

First, there is no apparent mechanism by which the Government will deliver their clear commitments to fair and lawful dealing and—crucially, to pubs in companies that have 500 pubs or more—to a tied licensee not being worse off than a free-of-tie licensee. It is not clear how the parallel rent assessment can do that or how the adjudicator would enforce that.

Secondly, it is a huge flaw that the enhanced code will apply to companies with 500 tied pubs. That makes no sense at all. This is about market share, as with the beer orders. As we have said clearly and consistently, it must apply to companies with 500 pubs or more of any kind, but within that it must apply only to leased and tenanted or franchised pubs, not tied pubs. That is crucial; otherwise, as we have seen, the large pub companies will simply put people on free-of-tie agreements, or so-called free-of-tie pricing, and put their rent through the roof, even further above market level. Clearly, that will take more money, and the problem will not be solved.

[Toby Perkins (Chesterfield) (Lab)]

I add my congratulations to the hon. Gentleman on the work that he has done on this issue. Does he agree that in some ways what is proposed misses the mark, because not only does it expect too much of the small family brewers, for which we have such high regard, but it expects too little of the pub companies that many of us have considerable concerns about?

[Greg Mulholland]

The Fair Deal for your Local campaign clearly campaigned for a statutory code to include the all-important market rent only option—the Select Committee solution—for companies with 500 pubs or more. We did not envisage or call for a code for companies smaller than that. It is interesting that we have ended up here because the so-called British Beer and Pub Association, which is the mouthpiece for the pubcos, decided that it was a clever tactic to try to deflect any legislation by saying, “Oh no, we mustn’t have a two-tier system,” which has backfired terribly. Once again, the BBPA has badly let down the family brewers, who should seriously consider whether to continue to remain part of an organisation that lets them down and is increasingly discredited.

Pub Companies

Debate between Greg Mulholland and Toby Perkins

Tuesday 21st January 2014 Commons Chamber

[Toby Perkins]

My hon. Friend has successfully predicted what I am going to say. I will definitely touch on that issue, because it is one of the key elements of the debate.

I also want to take this opportunity to reflect on some of the other contributions that have been made in the run-up to the debate by Members trying to support pubs in their area. The hon. Member for Leeds North West (Greg Mulholland) has been a determined campaigner on this issue. Among his many valuable contributions to the campaign, his article in the Yorkshire Post on 10 May was on message enough for the Liberal Democrat press office to promote it with the message that

“pubco terms are the biggest reason for pub closures”.

That was his view in May 2013, as I know it remains. Now, eight months later, I am disappointed to see that he has signed the amendment proposing that the Government need more time to come to the conclusion he has so consistently and persuasively argued for.

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

The hon. Gentleman might be disappointed, but I was disappointed that he has tabled this Opposition day motion. We have had a conversation about this. My belief is that support for this issue commands a majority in the House of Commons, and that we need to do this properly, rather than through an Opposition day debate. I look forward to getting the recommendation from the Department for Business, Innovation and Skills and, at that point, getting everyone on both sides of the House together to push this through.

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

I cannot say that it is a pleasure to take part in the debate. I echo the comments made by the hon. Member for West Bromwich West (Mr Bailey), the Chair of the Business, Innovation and Skills Committee. I pay tribute to him, to his predecessor, the hon. Member for Mid Worcestershire (Sir Peter Luff), and to his Committee for their excellent work. It is a stunning example of a Select Committee. Like the hon. Member for West Bromwich West, I would rather we were not having another debate on pub companies. If we have to have one, I would rather that we were voting on Government proposals that do what the Committee has said the Government should do since 2011.

We will have to have at least one more debate on pub companies—I have shared that with the hon. Member for Chesterfield (Toby Perkins). When we have the response, we will need to bring it before the House and show that the majority of hon. Members support not only action but the only sensible and obvious action, namely the Committee’s suggestion of a market rent only option.

It is important to remember the history of pub companies. Let us be clear that we are debating pubcos because of the concerted lobbying of a number of organisations. Last year, I was pleased to bring those organisations together under the banner of the Fair Deal for Your Local Campaign. Those 10 organisations—the Federation of Small Businesses, the Forum of Private Business, the GMB, the Guild of Master Victuallers, Fair Pint, the Pubs Advisory Service, Justice for Licensees, Licensees Supporting Licensees, CAMRA and Licensees Unite—have a membership of more than 2 million people. The campaign is now supported by no fewer than 206 MPs on both sides of the House. It is supported by the whole Opposition, so there is a clear majority for action.

I pay tribute to one MP who was a supporter of the Fair Deal for Your Local Campaign—the wonderful Member for Wythenshawe and Sale East, Paul Goggins, who is sadly no longer with us. I thank Paul for his support, which was yet another example of his commitment to social justice and a reform that we need if we are to have a fairer society.

The Department for Business, Innovation and Skills decided in 2011 not to do what we believed it would do. The reality is that we were outdone by some rather dodgy, behind-the-scenes lobbying. That is precisely why we set up the Fair Deal for Your Local Campaign—to ensure that, with the might of the 10 organisations behind us, we could tackle that lobbying head-on, which is precisely what we have done. It was the freedom of information request submitted by the all-party parliamentary save the pub group that outed the lobbying and led to the first debate and the unanimous vote for action.

To be fair to the Department for Business, Innovation and Skills and the Government, the motion in January 2012 said that we must have a consultation in autumn 2012. It appeared that we would not have one, but it happened. The consultation showed what we knew it would show: that the problems are as bad as ever and that self-regulation has failed. The response was the debate a year ago and the announcement of the consultation.

As someone who has campaigned on pub companies for something like six or seven years, I of course share hon. Members’ frustration. I am more frustrated than anyone and wish that the Government had responded by now, but they have not. The only reason that I shall support the amendment is that, as the Chair of the Business, Innovation and Skills Committee has said, there has been last chance after last chance for the industry, so the Government should have a last chance to act. This is that last chance. I assure the Chair of the Committee and the House that if the Government do not announce swiftly that they will back the Committee’s solution, and in a time frame that allows for legislation, they can be assured that I will lead the criticism most loudly, because it is so long overdue. That is where we are and I hope we will get a decision as soon as possible. What we are seeing from the rather desperate lobbying by industry sources are the death throes of an unjustifiable and unregulated business model, and the last sorry chapter in one of the worst and most shameful episodes of corporate abuse and financial mismanagement that the UK corporate sector has ever seen.

The Secretary of State was right to say that the issue is not the existence of a tied model, and just to correct my hon. Friend the Member for East Hampshire (Damian Hinds), it is not about the abolition of the tie. The Fair Deal for Your Local Campaign is very clear that it is about stopping abuse of the tie. That abuse is endemic because of reckless financial mismanagement, the acquisitions spree and the overvaluation scam that led to huge debts that are the reason why these companies are taking so much of the profit—often 75% and even 100% of pub profits—and stopping tenants and lessees making a living.

This is not about emotion or roses around the door, but cold, hard economics. While average tied rents are higher than free-of-tie rents—it should be the other way around, because the only justification for the tie is that if people agree to pay more for their beer they should pay a lower rent—beer prices go up and up and up, and the increases are above inflation every year.

I am delighted to see the Secretary of State back in his place. Does he know that Punch Taverns, which was the largest pub company, made an astonishing £2.271 billion in 10 years from selling on beer, simply by acting as a middle man, driving the price at the brewery down and selling on to tenants? I say to all my Conservative coalition partners—many are hugely supportive of this campaign, standing alongside the Federation of Small Business and the Forum of Private Business, and understand that this is about freeing up small businesses and giving them a chance—that this is about bringing in market forces. I say to those who are confused that this is not a market place that it working; it is an abuse of capitalism and a twisting of the market.

[Toby Perkins]

I thank the hon. Gentleman for giving way, though he has moved on slightly from the point I wanted to intervene on. On whether what we are now seeing are the death throes of a shameful part of the history of our corporate world, does he share my astonishment that the big pub companies are making the case that if their customers have the choice not to use them, they will not use them, and that that will cause them to collapse? Can he think of any other industry that would think it was credible to say, “The only reason our customers use us is because they have to, and if they don’t have to, we will collapse”?

[Greg Mulholland]

As the hon. Gentleman and, I think, many right hon. and hon. Members know, there has been an extraordinary campaign of misinformation on behalf of the big pub companies by their lobbyists the British Beer and Pub Association. I am sorry to say that it includes false statements that have been given even to the Select Committee: false statements about the reality of pub closure figures, and lots of unsubstantiated nonsense about how giving the right to a fair rent—that is all we are talking about; the right to choose whether to have a rent-only agreement—will somehow close breweries, create all sorts of disasters and close pubs. That must be stamped on. I urge all Members to read “Setting the Record Straight” by the Fair Deal for Your Local Campaign, which puts those myths to bed.

Pub Companies

Debate between Greg Mulholland and Toby Perkins

Wednesday 9th January 2013 Commons Chamber

[Toby Perkins]

That is a valuable question and one of the things we will be investigating in more detail during the consultation. I think, however, that the costs will be minimal in comparison with the massive loss to the Government from revenue going out of the industry as all these pubs close. If we recognise—as many of us do—that the way in which pubcos have constituted their business model is having a dramatically damaging effect on the industry, we will see that the cost of those closures will dwarf any cost to the Government from such a transfer.

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

The hon. Gentleman will be aware that many pubco lessees are receiving considerable amounts of tax credit because despite having a big turnover they are not earning enough. The taxpayer is currently subsidising the pub companies, which is outrageous.

[Toby Perkins]

That is a typically excellent and important point from the hon. Gentleman. Evidence shows that more than 50% of landlords with tied pubs earn less than £15,000 a year. That is shocking to many people who know the huge hours that many publicans put in.

I have already mentioned some challenges facing the industry, and although the health benefits of the smoking ban are widely accepted, we must recognise that it had an impact on many pubs. We have seen aggressive pricing from supermarkets as the off-trade increased its market share. As if that was not enough, the trade is now reeling from the news that I am on the wagon for January. I have not touched a drop for eight days, 13 hours and about 37 minutes.

As my right hon. Friend the Member for Wentworth and Dearne mentioned, pub companies have been the subject of four Select Committee hearings in seven years, and on each occasion the big pub company lobby said that this time the steps they would put in place would really make a difference. The scrutiny that the Committee has given the issue, and the tempered and responsible way in which it has attempted to work with the industry, demonstrates our Select Committee system at its very best.

The previous Government deserve tremendous credit for their empowerment of the Business, Innovation and Skills Committee on this issue. They recognised the expertise and diligent consideration that went into the reports and trusted the Committee to judge whether a statutory code was the answer. It is worth reminding ourselves that throughout Labour’s time in office, the Committee’s recommendation was to give self-regulation time to work. Its verdict that the final chance for self-regulation to work had passed came in summer 2011, but until that time it never called for regulation to be brought in. Therefore, any claim that this issue should have been dealt with years ago is unreasonable because the Government were working on a cross-party basis with the Committee and the all-party save the pub group. Everyone attempted to give the industry every possible opportunity to put its house in order before going down the route of regulation.