Pub Companies

John Pugh Excerpts

Thursday 12th January 2012 Commons Chamber

[John Pugh (Southport) (LD)]

I begin by paying full tribute to the Select Committee for its work, particularly for the sterling work done by the hon. Member for Northampton South (Mr Binley) and my hon. Friend the Member for Leeds North West (Greg Mulholland)—usually the quietest and most self-effacing of men. They have clearly been angered by this issue.

This seems to be a debate about two solutions to a commonly recognised problem—the unfair trading practices associated with the tie, and the relationship between tenants and the pubco. The problem is not one of competition, and it is not one of competition failure or consumer choice. It is connected with associated issues, which hon. Members have mentioned, such as the decline of community pubs, the decline of community cohesion and so forth—generally regarded as a social ill, except perhaps in temperance circles. What we are debating now is not necessarily connected with that problem, however, as free houses are also closing, disappearing and depriving their community of their benefit.

At its simplest, the issue is about the running of the tied pub and how it can be made uneconomic for tenants through unfair and non-transparent terms of trade. It has been suggested that this is not an unwelcome outcome so far as the pubcos are concerned, because they are short of capital and in some cases anxious to sell off. That the terms of trade are penal, non-transparent and arbitrary is simply not in dispute anywhere in the Chamber. It has been demonstrated by the turnover of tenants, who are coming and going all the time, by the Select Committee’s reports, and by the Government’s own undertakings to do something about what they have clearly identified as a problem. The issue that divides the House, if indeed it does divide it, is how to find a way out.

The Government are arguing for a non-statutory code, for fairly straightforward reasons. They dislike regulation in principle—they have said as much—they prefer effective self-regulation, and they believe that a non-statutory code represents a quicker fix. It clearly does not help that their favoured solution is also the favoured solution of the accused—the pubcos, in this instance—and that there has obviously been collusion in the refining of the suggestion, but that in itself does not invalidate the solution.

[Mr Davey]

My hon. Friend has made the serious allegation that there has been collusion with the British Beer and Pub Association. What evidence has he for that allegation?

[John Pugh]

I refer the Minister to the speech of my hon. Friend the Member for Leeds North West, who presented a fair amount of prima facie evidence that I think impressed the House. However, I want to do the Minister a favour here. It could be argued that the consent and co-operation of the pubcos will make any solution more workable—just as restorative justice is often preferable to sheer penal justice—especially if a self-regulatory code is given some legal significance, although, as other Members have pointed out, a statutory code would lead to more compliance and less legal recourse. That sounds pretty reasonable, apart from the fact that the Government clearly promised something else and have lost trust, and the fact that the pubcos have a dismal record of keeping to commitments, as the Select Committee’s report made clear.

Overall, the Government’s response represents the triumph of hope over experience, or of realpolitik over trust. There is a long and—as must not be forgotten—sordid history of a connection between politicians and the brewing industry over the ages, dating back to the time of Gladstone and before, with the tenant often perceived by the Liberals as the victim. Ultimately, this is the Government’s call. If they ignore the Select Committee’s advice, they will risk being considered untrustworthy; I think that that is inevitable now. They gamble on the good faith of the pubcos, but what if they are wrong? That is my main question to the Minister. If this is not a solution but in fact an evasion, statutory regulation must be the only conceivable answer.

[Mr Dave Watts (St Helens North) (Lab)]

Is it not clear that in virtually every case self-regulation does not work, and that Governments are eventually forced to regulate for that reason rather than because they want or prefer to do so?

[John Pugh]

I think self-regulation might work sometimes. What we are debating is what will happen if it does not. What do the Government intend to do in that event? I think it incumbent on the Minister to state plainly that if self-regulation does not work, statutory regulation remains an option. If the Government have an objection in principle to statutory regulation, they must make it clear to the House, because that is the most honest and forthright approach.

[Mr George Howarth (Knowsley) (Lab)]

I have been following the hon. Gentleman’s argument closely. Does he agree—indeed, I think this is his conclusion—that if self-regulation is to work, the industry needs to know that if it does not in fact work, the Government will be prepared to follow up with statutory regulation?

[John Pugh]

I think that the Government must say that. The industry has been given a second, third, fourth, fifth, sixth, seventh—however many chances we may care to cite. If the Government do not intend ever to introduce statutory regulation, they can and should say so at the Dispatch Box today.