Neighbourhood Planning Bill

Lord Porter of Spalding Excerpts

Report: 2nd sitting (Hansard): House of Lords
Tuesday 28th February 2017 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, pubs, as we realise, arouse strong emotions. We had a lengthy debate on this topic in Committee in the Moses Room. I do not want to rerun all the remarks that I laid out then. I remind the House that until three years ago I was a non-executive director of a company that operated brewers and about 2,000 pubs. I am outside the quarantine period, so that is no longer in my entry in the Register of Lords’ Interests.

I begin from what I hope is a shared position: we all want to keep pubs open wherever possible. The question posed by this amendment is at root this: will pubs be kept open by this additional legislation? I am afraid that for me the answer is negative. Pubs are closing because people use them less, and people are using them less because of changing leisure habits. Pubs are closing because people can buy the beer far more cheaply in the supermarket and then drink at home. Pubs are closing because of increasing beer duty and council tax and because of the introduction of the minimum wage, the living wage, the smoking ban, the drink-driving ban, new licensing requirements, and new health and safety legislation. Collectively, these have all combined to squeeze the general profitability of pubs to a point where many can no longer provide an adequate return to long-suffering and hard-working landlords.

Legislation cannot make a bad landlord into a good one. Legislation will not enlarge the curtilage, or land area, of a pub to enable new kitchen facilities or new parking areas to be constructed.

[Lord Porter of Spalding (Con)]

Will my noble friend give way? He said that no pubs are closing because of the changes to permitted development rights. I do not think anyone disputes that a number of pubs will close because they are not used by the communities that they are situated in, but can he prove that no viable pubs have been turned into supermarkets?

[Lord Hodgson of Astley Abbotts]

I certainly cannot. There are 37,000 pubs in the country and I am not able to stand here and say that the 37,000 pubs have been operated completely to the highest standards or that people have not tried to run them down. I shall return to the point about how there is already adequate protection for the community if it chooses to use it. One of the ways to improve a pub is to improve your kitchen facilities or enlarge your car park, but some of these pubs do not have the land area or curtilage to be able to do that.

It is not as though there is not already an opportunity for individual communities, using the asset of community value—the ACV facility—to apply for it to be listed. The noble Lord, Lord Kennedy, suggested that this was not an adequate remedy and that in some cases local authorities were reluctant to get involved for a series of reasons. I am sure there have seen cases like that, which is why I shall come in a minute to the question of one of the remedies for this. But equally, it is fair to say there are cases where local authorities have blanket-classified a whole series of pubs in their area—the lot—and that is also not what the ACV arrangements were designed to do.

Am I suggesting that every pub is being run scrupulously? Of course not: there are thousands of them and there will be outliers, on both sides of the case, in every community and every part of the country. But to introduce new legislation on the basis of a small number of cases—and it is a small number of cases, some of them anecdotal—is in my view a mistake. What the industry needs above all is more investment, not less, and nothing is more likely to put off potential investors than restrictions on how they can, in the end, realise their investment.

It has somehow gained credence that the groups at which these amendments are aimed are the allegedly rapacious pubcos and integrated brewers. If that is the aim, I have to tell the House that the target is being missed. The losers will be the independent operators, for example the many thousands of mum and dad operators. There are probably 20,000 couples who have worked long and hard, maybe after inheriting the pub from parents, and who now wish to sell up and retire. But because of restrictions like these, they find the sale price of the pub—also their home and their only asset—reduced in price drastically and maybe even unsaleable pending the ACV negotiations. If it is felt that the ACV process is not working well, I agree that it should be reviewed—but reviewed in the round so that the cases that the noble Lord, Lord Kennedy, refers to and the other cases where there have been block listings can be looked at and we can see how the balance of the ACV operation has been proved to work.

I urge those who support the amendment to be careful what they wish for. Legislation about the pub industry in the past has all too frequently led to some very unhappy unintended consequences. It is worth remembering that the emergence of the pubcos—companies that only own pubs, buy in all their beer and alcoholic drinks and are most disliked by CAMRA—came about only because of legislative action. The beer orders had the intent of opening up the market by reducing the power of the large brewers to dictate which beers were produced, and which owned and controlled the vast majority of the pubs.

Forced divestment of pubs did not lead to the anticipated happy outcome. It led instead to the emergence of what were essentially specialist property companies, all too often highly geared, with all that that implied for reinvestment in the pub industry. In my view, a similar unintended consequence may result if my noble friend were minded to accept this amendment, or the noble Lord was minded to put it to the vote and won the subsequent Division. My reason is this: because of the highly competitive nature of the market for the sale of alcoholic drinks and other changes in our socioeconomic life, pubs have increasingly turned to food, as a means of improving their profitability. Increasingly, they are becoming, in effect, restaurants. If I were an independent owner of a pub, faced with yet further changes, I would consider what the balance of my business was like; I would boost my food offering and apply for a change of use from my current A4—drinking establishment—to A3—restaurant/café. As a result the loss of pubs would accelerate, not slow down.

There is no evidence of widespread running down of pubs to accelerate closure. Where it happens the ACV procedure is available for the community to use. A handful of cases do not justify the imposition of additional restrictions on the whole industry. Hard cases make bad law—

--- Later in debate ---

[Lord Tope]

My Lords, I have added my name to the amendment of the noble Lord, Lord True, and, once again, I find myself supporting him strongly on this issue. We went through the Housing and Planning Bill together, usually extremely late at night—I recall being worried about whether I would get away in time to catch my last train. It worried me at the time that Conservative Richmond and Liberal Democrat Sutton, which are almost neighbouring boroughs, were so much in agreement. Now, when I hear that tonight we might be keeping the noble Lord, Lord True, from his budget-making council meeting, I feel that I almost owe it to my Liberal Democrat colleagues in Richmond to speak for at least another three hours on this extremely important amendment. Maybe we will do that.

I strongly support the noble Lord, Lord True, on this issue. I was, for 13 years, leader of a council in an almost neighbouring south London borough—Sutton. As I have said many times in this Chamber, I was a town-centre councillor in that borough for 40 years. I should perhaps add that it is still Liberal Democrat run after more than 30 years, so we are clearly doing something right there. This is a serious issue. It has affected Sutton and many London boroughs, and no doubt other parts of the country but particularly London, where residential property values are much higher and property owners and developers can make much more money from residential development than from office development.

Like the noble Lord, Lord True, in spite of the temptation he offered me, I will not go through all that I have said in previous debates, both on the Housing and Planning Bill and in Committee on this Bill. This matter was discussed in Grand Committee. I know that the noble Lord, Lord True, was unable to be there but I raised the issue there as well. I repeat that, in the time it took us to get an Article 4 direction into the town centre in Sutton—in a little over a year, but I will come back to that in a minute—the town centre lost 28% of its office space in about 18 months. The noble Lord, Lord True, talked about the figures for Richmond. Similarly, the percentage of office space in Sutton that was occupied or partly occupied was 62%. So we are not talking about empty and redundant offices which are past their sell-by date or are in areas where they are no longer needed; we are talking about active employment zones where people have jobs or go to shop or eat in their lunch hours, and which are a very important part of the local community.

I mentioned the Article 4 direction, which eventually we got for the town-centre area. Initially, my council proposed to get an Article 4 direction for the borough as a whole. I see the noble Lord, Lord True, nodding in agreement. Perhaps that was also the case in Richmond—I know that it was in a number of other London boroughs. It was made very clear to us by the Government at the time that that was a non-starter—it would not happen. So in Sutton we attempted to get an Article 4 direction in rather more targeted areas. Again, it was made clear to us that that would not succeed, so we targeted solely the town-centre area, to which I have referred on a number of occasions.

If you introduce Article 4 immediately, you are liable for considerable compensation payments to potential owners. It is simply not a viable option, particularly in a valuable town-centre area, so it needs 12 months’ notice. That was probably a significant contributor to why we lost 28% of our office space in the notice period for the Article 4 direction. As I said in Grand Committee, since Article 4 has applied in the town centre, that process has slowed down considerably for a number of reasons, but what has happened now is that the same developments are happening in a number of the district centres, where Article 4 does not apply and where, frankly, to go through the lengthy and expensive process of introducing Article 4, even if it were likely to be successful, would be time-consuming, expensive and possibly not so effective.

Minister after Minister, including the noble Lord on the Front Bench today, has quoted Article 4 as the answer to this problem. Clearly, attitudes have changed, and perhaps the understanding of the problem is greater than it was. Are the Government any more minded now than they were 12 or 24 months ago to accept Article 4 directions for the whole of a local authority area, as distinct from a very targeted approach? If that were the case, it would be very useful to know that from the Minister and would at least be of some help—and a very refreshing and welcome change.

I share the view of the noble Lord, Lord True, that the proper answer to this issue is to allow local authorities to decide for themselves, knowing and recognising the local situations. Like the noble Lord, Lord True, and as I have said on other occasions, I have no problem with the issue in principle. I understand and entirely accept that in other parts of the country it has proved very successful. However, in our part of south London, and in other parts of London, exactly the opposite has been the effect; it has been disastrous.

I turn now to the reason for which this measure was introduced. The current Minister, Gavin Barwell, a former Croydon councillor—another south London councillor—has said that housing need and the need to meet the Government’s housing targets override any concerns about permitted development rights. As I said before, it is not just about housing numbers. It is about housing need and about actually getting the right sorts of homes—not necessarily houses—in the right places. It is about the homes that are needed in areas where there are jobs for people to work in and where they support the local economy and do not detract from it.

Above all, this should contribute towards affordable homes. I leave aside for the moment what is the definition of an “affordable home” in south London, but south London needs affordable homes, and this process is providing very few, if any, affordable homes at all. Indeed, London Councils gives some figures, stating that:

“Between May 2013 and April 2015 at least 16,000 new dwellings have avoided the full planning process through office-to-residential PDRs. Had these developments been required to seek full planning permission for their conversion, many of them could have been required to contribute to affordable housing provisions”,


and, indeed, to contribute in many other ways to the local infrastructure—all of which is avoided by permitted development rights. It is questionable to what extent these really contribute to housing need in parts of London, as distinct from housing numbers. We should remember that there is an important distinction there sometimes.

A final point, which I raised very late at night during the Housing and Planning Bill, is that I would understand this a bit better if it was felt that the councils concerned were failing to meet their housing targets. Almost a year ago, I quoted the figures from my own council, and no doubt the noble Lord, Lord True, could do the same for his council. For each of the previous 10 years, my council—of which I am no longer a member—has more than met its housing target. Taken over the 10 years as a whole, housing completions in our borough were 130% above target. What is the justification for imposing the permitted development rights when it means losing all other planning gain that comes from such developments and, most importantly, losing the opportunity to get more much-needed affordable housing?

For all those reasons, I am more than happy to support, once again, the amendments of the noble Lord, Lord True. Like him, I do not know whether they are precisely right or necessarily the right answer. For me, the right answer is to trust the local authorities to do what is best for their area. But if we still do not have a Government willing to do that—I accept that the coalition Government were no better; indeed, they were arguably worse—then at least let them allow some leeway in those areas where it is an extremely important and pressing issue. What is happening in London today will happen in other parts of the country very soon, if it has not happened already.

[Lord Porter of Spalding]

My Lords, I support the amendment and declare my interests in the register as chairman of the Local Government Association and leader of a small rural district council, which, thankfully, is not affected by this issue and I do not think will, at any point soon, be directly affected by this issue.

I apologise to the House because, having tabled a similar amendment for Grand Committee, I was unable to attend to move it because I had an important diary clash and was speaking elsewhere at a conference. I thank my noble friend Lady Cumberlege for moving the amendment, which by all accounts she did much more eloquently than I would have done, so noble Lords had the bonus of having a better speaker delivering it.

I will not say too much because I need my noble friend to get back to make sure his budget is safe. This is a problem in very few areas around the country. It would not take much to shift from the Government’s point to be able to meet at least some of the concerns that are being raised. I do not think that anybody has a problem where redundant office accommodation has been lost that then becomes a benefit and an asset to the community by being turned into residential. But when this policy is driving viable businesses out of their homes, it has probably gone a step too far. Having listened to the debate on the previous amendment, I wonder whether it would help the Minister if we started to refer to these offices as white-collar cathedrals.