Pubs Code and the Adjudicator

Rachael Maskell Excerpts

Thursday 14th April 2016 Westminster Hall

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr McCabe. May I start by saying what an excellent introduction we have had to the debate. Indeed, Members from all parts of the House have spoken in this timely debate about how we move forward and the next stage of a long and important process. I put on record my interest as secretary of the Unite group in Parliament.

The Small Business, Enterprise and Employment Act 2015 was passed before I came to this place, so I thank colleagues for all their work in bringing forth the legislation over a long period of time to try to bring greater justice to the industry. That is obviously a welcome step forward. We are at the last stages of the process, and for Parliament to have a real function in that, it is important that our debates can change and influence things. I hope that today’s thoughtful debate will help move the situation to a happy conclusion for everyone. It is important to get it right, to ensure confidence in the process, and that we can sustain the industry to see good growth on all sides that serves all interests.

We have heard the statistic that 27 pubs are closing a week. Seventeen pubs have closed in my constituency, so I know that we have to get the issues right. From talking to tenants, I know that they are concerned about the future if we do not get the code right.

I am going to make a brief speech and will not repeat all the excellent points that have been made. First, I will talk about the impact on my constituency of York Central, which has 132 pubs. I am not going to name them, for obvious reasons, but they form a major part of our local economy. They provide jobs for 3,037 people, about a third of whom are young people. The pubs pay out £32.2 million in wages and bring in nearly £25 million to the Treasury. It is important for the economy, locally and nationally, that the industry is sustained in the future. The loss of community pubs shows how fragile the industry is and why it is so important to get the pubs code absolutely right.

We have heard about some of the issues facing tenants, and they are reflected by the issues that tenants in my constituency face. Shorter leases bring instability for tenants who want to invest in their business for the long term. That lack of security destabilises their opportunities, so it is important that we ensure that the loophole is closed. We do not want to see shorter leases exchanged if people want to move forward with the market rent-only option. That option is important for tenants who want to use their expertise to develop their business in a way that they know can succeed, particularly in difficult times.

The point on waivers has been well made. If people are asked to sign waivers to address other issues, that cannot be right. We know from so many other pieces of our law that waivers can be abused. I can think of so many other instances. I ask the Minister to consider removing waivers as an option within the code. Can we tighten up on that issue?

I want to talk through what a landlord from York told me. He specifically asked not to be named, which speaks to the fear among tenants that my hon. Friend the Member for West Bromwich West (Mr Bailey) described. He went through a recent rebidding process in which his pubco came to him with a new rent that was 100% higher. The pubco wanted to double the rent for his business. Following that, there was some horse trading with the Royal Institution of Chartered Surveyors. It was not possible to move the situation forward, so a third expert accredited surveyor was brought in from RICS, and they were able to reduce the rent by a third. It was a very expensive process for the tenant, and the outcome was unsatisfactory. One way forward would be for tenants to ask an adjudicator to oversee the process. The cost of appealing and taking the process further was prohibitive for the tenant. As we have heard, tenants often earn around £15,000 a year. They are on very low wages and we will see injustice unless we get the whole system right. That is why today’s debate is so important.

Given those issues, we need to ensure that pubcos cannot abuse the system. I have heard about the issuing of section 25 notices, ending leases just before the pubs code comes in so that new terms can be set. That cannot be right. It is an abuse of the system. We should make the system watertight so that tenants have confidence in it and so that pubcos know what the rules are and where the lines are drawn and cannot exploit the system. We need rigour to be put back into the system.

It is important that the adjudicator has the confidence of all parties. When I think of comparable roles, that is so apparent. In fact, the adjudicator’s office states,

“the adjudicator acts as a fair and unbiased referee looking into complaints”,

so it needs to have people’s confidence. In so many other areas of arbitration—I have experience of ACAS—if people do not have confidence in the arbitrator, the arbitrator is changed. There is still an opportunity to make right this wrong and to ensure we get confidence behind the post.

I am not talking about the person. I am sure that Mr Newby is a man of integrity and probity. I do not know him and I certainly will not judge him, but it is important that we move forward with the confidence of all concerned, and I hope that Mr Newby will look at his own position if the Minster does not take steps to ensure that confidence can be built. It is absolutely crucial that this system works.

It is also important that future processes are scrutinised to ensure that such conflicts do not arise or can be detected at an earlier stage. Whether that is about clarity of the application process, or scrutiny of the appointment process, it is important for the integrity of the House that we get this right in future, and it is important that this is seen as a learning process to make sure that wrongs can be righted.

My constituents and tenants in York are concerned about the future of their industry. There is instability in their industry and they want to get the code absolutely spot on so that they can continue to build their businesses. We have an issue with drinking in York. Community pubs are the safest place that people can go to drink, but if the code is not right, those pubs could be vulnerable and we might see an escalation in the abuse of alcohol and the dangers that go with it. Even from a health perspective, it is important to get the code absolutely spot on. We have that opportunity. We have another six or seven weeks to go before the code is introduced. It is never too late to make things as tight as possible, and today’s debate is an opportunity to do that. We should make sure that the right person oversees the process and has the confidence of all concerned as he takes the code forward.