Pub Companies

Debate between Martin Horwood and Jason McCartney

Thursday 12th January 2012 Commons Chamber

[Martin Horwood (Cheltenham) (LD)]

I congratulate the hon. Member for West Bromwich West (Mr Bailey) on promoting today’s motion. He is a fellow Robins fan, and I know that he, like me, will have wanted to toast, in a pub somewhere, Cheltenham Town’s phenomenal, confident performance against Spurs last week—but as he rightly points out, the choice of pubs is becoming much more limited. That is happening for many reasons, but the pub tie is clearly one of the factors contributing to pub closures.

I promoted a private Member’s Bill on this subject last year. It received very wide cross-party support, and that same level of cross-party support has been evident in the backing for early-day motions; the all-party save the pub group, ably led by my hon. Friend the Member for Leeds North West (Greg Mulholland); the Select Committee reports that have repeatedly set a timetable, which has now passed, for introducing a statutory code; and, of course, today’s debate and motion.

When I promoted my Bill I received a lot of correspondence, especially from the trade. I did receive one letter from Enterprise Inns, which pointed out the value of the tie. Indeed, the company generously took me round my constituency and demonstrated that the tie can sometimes deliver real benefits; that is true, especially where extensive capital investment is required. Yet the overwhelming volume of correspondence from the trade was supportive of a statutory code with a free-of-tie option.

One of the most powerful letters I received came from someone who said the following:

“I have the misfortune to have a successful pub/restaurant…under a tied Enterprise lease…Having taken the lease last May from previous tenants who couldn’t make the business work, looking back no one seems to have had success since Enterprise bought the pub”.

[Jason McCartney]

The hon. Gentleman makes some excellent points, as many colleagues have done on the basis of their own personal experience, be it from meeting their partner in pubs or having worked in the industry. My experience is of my two local pubs in Honley, in Yorkshire. The Allied has had three tenants in 18 months—it is on to its third lot now—and the Coach and Horses, after numerous tenants over the past three years, has just closed. Although an Indian restaurant called Balooshai is going to open, which I welcome, I no longer have a pub within a minute’s walking distance. For those reasons, as well as because of all the other points made in the Chamber this afternoon, does my hon. Friend agree that action needs to be taken?

[Martin Horwood]

Yes.

My correspondent also said:

“The local rep visited at my request this May, only his 3rd visit and I now prefer to deal with him by email to have everything in writing.”

That supports the points that have been made about loss of trust. The letter continued:

“He first volunteered the figures from the brulines system, showing my doubling sales, food has also gone from nothing to a very good business and is the only way to make any money on this lease. I then put to him that at £5.5k breakeven I am paying about £23k rent and £50k through the beer tie. This equates to around 17% return on the value of the property while I will struggle to even repay my investment let alone make a return on it or pay myself an income. When I put to him that unless he rebalanced this I would be selling up and moving on he confirmed that I have a lease in order that I can do this.”

As my correspondent pointed out, the pubco representative would

“make a mean poker player.”

My correspondent continued:

“I’m waiting to see what comes from Westminster…Last resort is to sell up and move on.”

He points out that this is not just about the price of the beer either, saying:

“Aside from paying between 1.5 to 2 times wholesale value within the tie. Enterprise restrict what I can buy, for example I can not have Crabbies Ginger Beer”.

I have never heard of that. [Hon. Members: “Oh dear!”] Other hon. Members obviously have.

The letter continues:

“this may seem petty, but Crabbies is heavily marketed and is hence what customers ask for.”

He concludes:

“With a monopoly to supply 7,000 pubs, the service is understandably poor, why would you offer more than a week or 2 payment terms, daily delivery, knowledgeable staff, sale or return, dependable deliveries, useful special offers, volume discounts, why would they? It’s not as if I can take my business elsewhere.”

That inequality in the power relationship between struggling small businesses and the major pubcos demonstrates my point.