Small Business, Enterprise and Employment Bill

Debate between Lord Berkeley and Viscount Younger of Leckie

Wednesday 28th January 2015 Grand Committee

[Viscount Younger of Leckie]

I note the noble Lord’s point. I would like to illustrate some of the amounts that these pub companies invest. I mentioned earlier that they invest £200 million across the sector each year. One of the larger pub companies has estimated that, had the MRO been in place without an effective opt-out, the £30 million of capital investment which has taken place in the last 18 months would not have happened.

To illustrate how this investment affects individual businesses, another pub company recently invested £245,000 in one of their pubs in Nantwich in Cheshire. This investment created 10 jobs and took the turnover from £145,000 per annum to £330,000. A similar sum was invested in a pub in Wigan, which again boosted turnover from £250,000 to £345,000 and doubled the number of jobs. These are just two examples to add to the ones given earlier by my noble friend Lord Hodgson, of how tied pub companies invest in their estates every year to the benefit of both parties through the tied contract.

I conclude by saying that I hope the Minister has listened carefully to what I have said about the investment angle for pub companies, while not forgetting that we are talking about the livelihoods of tied tenants as well. That is just as important in terms of being fair.

[Lord Berkeley]

The noble Viscount, Lord Younger, has given two more examples to add those of the noble Lord, Lord Hodgson, of the happy tenants who have lots of money. He cited one company as investing £30 million in pubs which would not have invested if the MRO had existed. What assumptions is he making about the fair rent that would result from an adjudication under those circumstances? Is he assuming that the rent would stay the same or that it would go up to compensate for the profit that the breweries would no longer be making when they sell beer or soft drinks? The figure of £30 million is pretty meaningless without knowing on what assumptions it is based.

[Viscount Younger of Leckie]

I take the noble Lord’s point, but I spoke in support of my noble friend Lord Hodgson’s amendments on the grounds that there would be an exemption from the MRO.

[Lord Hodgson of Astley Abbotts]

The issue is that every company has a target return on capital. If it is to make an investment, it wants to make a return on capital and the company will set a target. The problem is that if you are going to invest your £30 million, you want to know what your return on capital will be. One issue that relates to return on capital is what will be the contractual relationship. Therefore, before you make your investment, you want to know what the end play will be, because that means that you can be assured—if it all goes well; it does not always go well—that you will get that rate of return on capital. That is the background to the figure that my noble friend is giving. Companies want to be certain that they have targets for the return on capital which they need to meet.

--- Later in debate ---

[Lord Berkeley]

I am sorry, my Lords, but I will try just one last time. The rate of return could just as easily be calculated on the basis of the rent that the tenant will be paying once he has been through the process, because that will be fixed and the company will know it. That is the rate of return, whether the company likes it or not.

[Viscount Younger of Leckie]

Having been listening to my debate, I should conclude. I should answer the question appropriately. The clause is intended to provide an exemption which would allow an unspecified time for agreement to be drawn up because of the perceived investment to be given by the pub company.

Tourism: Chinese Visitors

Debate between Lord Berkeley and Viscount Younger of Leckie

Monday 12th November 2012 Lords Chamber

[Viscount Younger of Leckie]

We must do all that we can to keep visa application costs down, even though research backed by the tourism industry shows that visa costs and indeed the process for applying are not a significant barrier to in-bound Chinese tourists. It is true that the cost of a UK short-term visa is £78. A Schengen visa is less, at £50, although this cost is expected to increase when the biometric capture is included in the near future. A UK visa has biometric capture, which we regard as important for our security. It is worth pointing out that by 2030 China will have 1.4 billion middle-income consumers. There is therefore a great opportunity for us all to capture some of this market in the future.

[Lord Berkeley]

My Lords, does the Minister agree that comparing the whole of Schengen—more than 20 member states—with one country here and saying that their visa costs are a bit lower is not really the answer? Once one has bought a Schengen visa, one can go around all these states; just one visa is needed. Worse still, to get a visa to come to this country, Chinese people must give up their ID cards for eight weeks, I believe, which is quite serious. Is there not more that the Government could do to rebalance the problems of coming here compared with going to the continent?

[Viscount Younger of Leckie]

The noble Lord makes a very good point. I can reassure him that much is being done as we debate on this issue. I am not in a position to give any more details than that. However, we are aware that tourism in the UK is the fifth biggest industry and the third highest export earner, generating £115 billion in direct and indirect business for the economy and supporting 200,000 jobs. There is therefore much to bear in mind when we look at streamlining and sorting out the issues.