Small Business, Enterprise and Employment Bill

Lord Howard of Rising Excerpts

Wednesday 28th January 2015 Grand Committee

[The Deputy Chairman of Committees (Baroness Stedman-Scott) (Con)]

My Lords, I advise the Committee that if this amendment is agreed to it pre-empts Amendments 91A and 91AZA.

[Lord Howard of Rising (Con)]

My Lords, I wish to speak to Amendment 91D in this group. Its purpose is to remove uncertainty and so give smaller breweries a stable background in which to run their businesses. Helping small business is after all the purpose of the Bill. For these smaller breweries—indeed, for any pub company—to be successful in a declining market, it is essential that they make significant investment in their pubs. This necessary investment is not practical if they do not know under what rules they are operating. My noble friend mentioned changing the figure of 500 by affirmative resolution, but while change by regulation or order goes some way towards parliamentary examination it is, for practical purposes, a rubber stamp. Between 1950 and 2014, only 11 resolutions were rejected in the other place and only five in your Lordships’ House.

For that reason, if the Secretary of State can change the 500-pub definition to a different number by regulation, that will create uncertainty and severely restrict, if not halt, the investment necessary for the survival of the smaller breweries—which, by the way, generally speaking, have been increasers rather than closers of pubs. If noble Lords think that it is overpessimistic to say that investment will dry up, I remind them that under the last change in the rules governing the ownership of pubs many famous names, as my noble friend Lord Hodgson alluded to earlier, such as Whitbread, Bass, Scottish & Newcastle, Courage and Watneys have been absorbed by multinationals. It would be against the spirit of what we are trying to achieve today if a consequence was to contribute to the demise of small breweries.

Any change to the number of 500 should be subject to primary legislation. I urge the Minister to consider the amendment seriously so that those smaller breweries can continue to invest and create the prosperity necessary to maintain that part of the pub sector and help stem the decline of pubs.

[Lord Whitty]

My Lords, I have three amendments in this group which go in exactly the opposite direction of the noble Baroness’s amendments.

We could keep the question of definition to talks between now and Report. I do not want to go over the arguments that we had earlier, but to define the owners, the pubcos, to which this applies in reference solely to tied pubs runs the danger of those pubcos altering their tenancy arrangements so that they fall below the threshold. I assure the noble Lord, Lord Howard, that this provision is not intended to hit the family and small regional brewers. We know that the large companies have a range of arrangements with their tenancies and are defined by the totality of their portfolio. It is relatively easy, given the turnover of tenants, for the companies to switch from one form of tenancy to another. They would have a motivation to do so, in order to fall below a tenancy threshold related to tied accommodation alone.

This is one of the issues on which we should have further talks. It is possible that we would have a different tied-specific definition, but that would require other obligations being put on the pubcos so that they would not change the designation of their portfolio to get around this threshold. I suppose that it would be difficult to draft such clauses, but there is a real danger of them gaming this situation. We know that some companies are already contemplating breaking their structure up.

We need more talk about what the definition covers. In a sense, this is the wrong way to go about it, but I would hope that the noble Baroness would not press the amendment and would rather make it subject to the talks to which she has committed for the coming period.