Pub Companies

Paul Blomfield Excerpts

Thursday 12th January 2012 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

I represent a constituency that includes 197 community and city centre pubs, as well as five breweries. Almost 4,000 people are employed in the industry in one way or another. I cannot miss the opportunity to point out that CAMRA held its last annual conference in Sheffield and, in effect, endorsed us as the real ale capital of the country, praising our unrivalled choice of real ales and pubs—I challenge the Minister to come and sample some of them. I am also a member of the Business, Innovation and Skills Committee. Furthermore, in one of my jobs before being elected to this place I ran a £5 million licensed operation consisting of several bars and pubs.

We are talking about a sector that employs about 500,000 people in 54,000 pubs. As the hon. Member for Pendle (Andrew Stephenson) said, the sector is in crisis, with about 25 pubs closing every week. We know that, and we see it in our communities. As several Members have said, that is a loss to not only the landlords and the people who work in the pubs but the communities.

As the hon. Gentleman said, there are several reasons for those business failures, but a key factor is the way in which the big companies, which own almost half our pubs, squeeze unreasonable returns out of their landlords to support their own flawed business model. To respond to a point made by the hon. Member for Bristol North West (Charlotte Leslie), it is that business model that should be allowed to fail, not the business model of the individual small business men and women who run the pubs.

It was not supposed to be like this, and those behind the 1989 beer orders legislation cannot have expected such an outcome. The legislation was supposed to open up the market to give small players a better chance; instead, the big corporate interests regrouped, and seven pub companies now dominate the industry. However, Parliament has responded, as has been said. In 2004, the Select Committee on Trade and Industry highlighted concerns about the unhealthy and unbalanced relationship between pub companies and their lessees. Five years later, the Select Committee on Business and Enterprise revisited the issue, concluding that little meaningful reform had taken place.

As several Members have said, that was accepted by the then Labour Government. When the Business, Innovation and Skills Committee report was published in March 2010, the then pubs Minister, my right hon. Friend the Member for Wentworth and Dearne (John Healey), gave notice to the pub companies that if in the Committee’s view the voluntary code was not working as well as it should be by 2011—this is crucial—the Government would put it on a statutory basis.

The coalition maintained that commitment. When the Secretary of State was questioned in July 2010 by the hon. Member for Northampton South (Mr Binley), who is the deputy Chair of the Business, Innovation and Skills Committee—he is a relentless champion of small business, and I am sorry he is not in his place to hear me say that—he confirmed that commitment. He said that pub companies were “on probation” from the Committee and that “the commitment is to give them until 11 June and if they have not delivered a more satisfactory arrangement then there will have to be legislative action.” So, in 2011, the Select Committee reviewed the position and gave the Government its report on the industry’s probationary period. In our report, Members from all three parties represented on the Committee agreed that there had been

“a process of implementation which can only be described as half-hearted”.

We also found that the

“BBPA (British Beer and Pub Association) has shown itself to be impotent”,

and that there had been

“a lack of meaningful sanctions”.

We concluded:

“This latest attempt at reform has failed…We therefore conclude that the reforms do not meet the test set by our predecessor committee.”

That should have been the end of the matter; following several years of consideration by successive Select Committees and clear pledges from successive Governments, the time had come for legislative action and a statutory code.

At that point, however, the Government reneged on their commitment and put the corporate interests of the big pub companies before the interests of the small business men and women who run our pubs, and before those of the consumers who use them. Not only did the Government make the wrong call following our report; appallingly, it became clear—thanks to the work of the hon. Member for Leeds North West (Greg Mulholland)—that they had already made their mind up before receiving our verdict. The Minister should be held to account for that. The industry needs action now, and I support the motion.