Small Business, Enterprise and Employment Bill

Richard Fuller Excerpts

Tuesday 18th November 2014 Commons Chamber

[Jo Swinson]

I am glad to be able to get on to the debate on part 4 of the Bill, which is about pubs. There was considerable debate in Committee on the measures to introduce a pubs code adjudicator and a pubs code, and I am sure that we will have another lively debate today. As my right hon. Friend the Minister for Business and Enterprise has already mentioned, there is considerable interest in this matter in all parts of the House, and it is important that we have good scrutiny of the Bill.

New clause 6 ensures that the definition of a tied pub does not inadvertently capture restaurant or hotel premises, which was a concern raised in Committee. We are aware of one fish and chip restaurant chain that could meet the conditions set out in clause 63, and it is possible that there are others. We all know a pub when we see one, and we all know the difference between a pub and a fish and chip restaurant, but defining that in legislation can prove difficult, particularly given increased food consumption in pubs, which is in large part the result of the hugely successful smoking ban making the experience much more enjoyable. That is a new way in which pubs have diversified, and indeed increased their income, but it makes separating them by legal definition more complex.

New clause 6 therefore provides the Secretary of State with a power to exempt a particular type of tenant or premise from the pubs code in secondary legislation, so that we can ensure that it is only pub premises that are in scope. For the avoidance of doubt, amendment 58 sets out that regulations created through the exercise of that power will not be subject to the hybrid instrument procedure.

There are two other big issues addressed by the amendments in this group. Our discussions today obviously follow many years of consideration by the Select Committee on Business, Innovation and Skills, which has, along with its predecessor Committees, looked in particular at problems in the tied pub sector—I think that there have now been four reports. I would like to pay tribute to the hon. Member for West Bromwich West (Mr Bailey), who I see is here, as well as to his Committee and its predecessors for all their work to ensure that the problems were heard, investigated, documented and addressed.

We heard concerns from Members on both sides in Committee about smaller companies and family brewers being covered by the statutory code and adjudicator. We also heard assurances, through the evidence submitted by smaller companies and family brewers, that they would continue to fund the voluntary regulation system, which I know many hon. Members feel strongly about.

[Richard Fuller (Bedford) (Con)]

The Minister says that there were concerns, but will she also acknowledge that the Government were defeated in Committee because of the strength of those concerns?

[Jo Swinson]

Absolutely. We have been considering how best to respond to those genuine concerns. This Government have no wish to overburden small business. Indeed, we have done a huge amount to reduce regulation on business, particularly small business. Of course, this is a small business Bill. We are trying carefully to strike the right balance between helping smaller pub-owning companies and helping individual tenants and small business people who are struggling with some of the difficulties documented in the Select Committee reports.

We have listened to all the concerns put to us and, on further reflection, have decided not to press amendments 29 to 33, 41, 43 and 44, which were designed to reinstate smaller pub companies within the scope of the statutory pubs code, albeit with lesser requirements. Instead, we will bring forward amendments in the other place to change the exemption to those companies that own fewer than 350 tied pubs. We think that strikes the right balance between preventing overburdening of genuinely small family brewers and ensuring adequate protection of tied tenants in a way that is proportionate.

The hon. Member for Chesterfield (Toby Perkins) made the point in Committee that a threshold of 500, which would have been set out in the Bill, would not have ended up capturing some groups that perhaps would have been expected to be captured. This change will ensure that the adjudicator’s attention, and indeed the costs of compliance with the measures, is focused on the largest companies in the sector and on the end of the market where most complaints originate.

[Richard Fuller]

I just want to clarify what the Minister said. I think that I might be seeing the deft hand of my right hon. Friend the Minister for Business and Enterprise, who seems to be the only one in the Department who understands small businesses. Can the Minister explain to the House what the big difference is between 500 and 350, or is she just grabbing at a number that does not look like 500, which she said in Committee was the right one?

[Jo Swinson]

The hon. Gentleman could recognise and welcome the fact that the Government have responded to the concerns he raised and have moved on the issue, but he has chosen not to, given his comments about colleagues in the Department, with which I wholeheartedly disagree. We must ensure that we consider those concerns, but they were raised not only by his colleagues, but by my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert), who was a member of the Committee, and by Opposition Members concerned about the issue.

--- Later in debate ---

[Jo Swinson]

I regret the fact that my hon. Friend is disappointed, but he was often disappointed in the Public Bill Committee when we were not able to accept his amendments on a range of issues that, if taken together, would have undermined the purpose of the Bill. I know that he speaks up for his constituents and he represents one of the larger pub companies that has its base in his constituency, so I understand where he is coming from. His view of what needs to happen to address the problems and injustices in the industry is very different from that of many, and perhaps most, Members of Parliament. We want to make sure that we get the details right. We want to listen to the House. That is what a responsible Government do.

[Richard Fuller]

Perhaps I was unchivalrous earlier when I said that the Minister does not understand business. It is clear that the Government are on the run. This is the second issue on which they are proposing changes. What role has the Secretary of State for Business, Innovation and Skills played in these last-minute shenanigans?

[Jo Swinson]

Yes, the hon. Gentleman was unchivalrous and I am not sure he rescued the situation with that intervention. My right hon. Friend the Secretary of State, my right hon. Friend the Minister for Business and Enterprise, who is my fellow Bill Minister, and I discuss these issues as the hon. Gentleman would expect, as we try to make sure that we give the right response to the concerns raised in Committee.

--- Later in debate ---

[Toby Perkins]

I am grateful to my hon. Friend for making that point and precisely expressing the passion which so many of us feel for the pubs in our communities. It is precisely because so many of us are concerned about the changing face of the pub trade in our communities that the issue of the contribution of pub companies to pub closures has been so fiercely debated. It is because so many of us believe that the model under which pub companies operate is the cause of many of the pub closures that the Opposition have brought this matter to the House on many occasions, and many other Members have made that case. My hon. Friend is absolutely right that this debate is all about the strength of the industry, but it is also about having a sense of what exactly is being done to support it, and the question of pub companies is a key part of that debate.

I suspect that much of this debate will be about what divides Members, but there is real value in reflecting on what we are all agreed about, including the fact that this Government Bill contains provisions for a pubs code. The very fact that we are debating an issue that for so long seemed destined to elude this Parliament is a tribute to the dogged work not just of the Business, Innovation and Skills Committee, but of Parliament itself. Today still has potential to be a great day for this Parliament.

In reflecting on the contribution that Parliament has made on this question, notwithstanding my reservations about how the Government are handling this incredibly important debate, I want to pay tribute to the many hon. Members whose work has brought us to this point. In no particular order, those who deserve great credit include the hon. Member for Mid Worcestershire (Sir Peter Luff) and my hon. Friend the Member for West Bromwich West (Mr Bailey). They have both chaired the Business, Innovation and Skills Committee, which produced diligent research on this issue in 2004, 2009, 2010 and 2011.

In 2011, the Select Committee finally came to the conclusion that the industry had had enough time to get its house in order and that the time had arrived for a statutory code with an independent adjudicator, open market rent assessments and a free-of-tie option. It is disappointing that it has taken more than three years to get from the Select Committee’s conclusion to the Bill before the House. It will be an even greater disappointment if we have to move away from the Bill and are told that there will be a further review in two years’ time to debate the whole thing again and decide whether we then need the free-of-tie option. What is more important than anything else is that Members do not let the opportunity to take real action through the Bill pass us by.

I want to acknowledge other Members. My right hon. Friend the Member for Wentworth and Dearne (John Healey) was the pubs Minister who empowered the Select Committee to be the arbiter of when the time for action had arrived. The hon. Members for Leeds North West and for Northampton South (Mr Binley) and my hon. Friend the Member for Easington (Grahame M. Morris) led a cross-party campaign to ensure not only that we had a pubs code, but that it would make a real difference for tenants and create competitive pressure on pub-owning companies to ensure that they offered their tenants a fair deal.

I also want to recognise the Minister’s contribution. Notwithstanding what I said about how the Government have handled this Bill and how she has been badly let down on a Bill that appears to be changing in front of our eyes for what appear to be political considerations, the fact is that she did at least end the prevarication—at least, that is what I wrote down in my speech—that we endured under her predecessors. If this was Prime Minister’s questions, I would be told off for writing my script in advance, but that helps when we are going to be on our feet for a while.

To be charitable for a moment, at least we are here to debate the pubs code. The fact that the Minister’s predecessors constantly pushed for review after review and did not take action, while she came forward to say that there would be something in statute, is a source of tremendous credit. It is a shame that she has unfortunately been forced to come to the Dispatch Box to propose a review in two years’ time, with all the uncertainty that that will create. However, she has at least made an effort to get something on the statute book.

There are many other such hon. Members, but the strength of this campaign has been due to the fact that the push inside the House very much reflects the broad coalition in favour of the measures outside it. The case that we and other hon. Members are making today has been supported by a tremendous range of organisations, almost all of whom come under the Fair Deal for Your Local banner.

Just listen, Mr Deputy Speaker—not that you would ever not listen while in the Chair, but perhaps you will do so with particular attention—to the breadth of organisations that support this case. Such breadth makes the case more powerfully than anything else. The organisations include the Federation of Small Businesses, which does not usually demand regulations or that the business relationship between two parties should be put on a statutory footing; the all-party save the pub group, which is so ably chaired by the hon. Member for Leeds North West; the Campaign for Real Ale and the Fair Pint campaign; the trade unions Unite and the GMB; and the Guild of Master Victuallers and the Forum of Private Business.

There are also two support groups, Justice for Licensees and Licensees Supporting Licensees, which were set up to support licensees affected by what had happened in their relationship with the pub company. Such licensees have often been bankrupted or are facing bankruptcy as a result of having chosen to pursue their dream of running a pub. Who would have thought that a support group needed to be set up for people who have chosen to pursue a particular profession or work in a particular industry?

In some ways most significantly of all, the Punch Tenant Network, made up of tenants who run pubs owned by Punch Taverns, has come out in support of new clause 2. Those tenants’ business success hinges to a large degree on the strength—or weakness, depending on how they see it—of their relationship with their pub company, and they are saying that the hon. Member for Leeds North West and 90 other Members are right that the code should be put on a free-of-tie basis. If the network believed the scare stories that the industry is putting about—that the proposed changes will lead to an increase in pub closures, less choice for punters or increased unfairness in the industry—it would hardly be calling on hon. Members to support the new clause.

The House has heard in recent years from literally dozens of Members who are desperately trying to support pubs in their communities that are under threat—all victims of the great pubco scandal.

[Richard Fuller]

The shadow Minister has listed many people who have been involved in the debate on one side or the other. Now, at the moment when the Government are reversing the policy that they had in Committee, does he think it odd from the point of view of protocol that the Secretary of State for Business, Innovation and Skills is not here to explain that change in Government policy?

[Toby Perkins]

The hon. Gentleman has a valid point. We have all received a huge number of representations from members of CAMRA; from pub licensees; from many different organisations, some of which I have just listed; from the pub-owning companies themselves; and from the British Beer and Pubs Association. They have all been lobbying us in support of, or in opposition to, what they thought would be in the Bill. The Minister, whether by her own choice or because of the hand she has been dealt today, has had to say to the House, “Forget all the speeches that you have prepared and all the letters and considerations you have received on this complicated issue, because we are ripping up a lot of the amendments you thought you would be voting on. We’ll discuss some of them later; and on another one, we thought we might lose, so as a bit of a sop we’ll come back to it in two years if there’s still a problem.” It is a shambolic way to present a Bill.

I wish to be conciliatory and work constructively on the issue, but it reflects no credit on the Government or the House when people come to watch our debate, or watch it on television, and suddenly discover that the issues they have been lobbying their Member of Parliament on have been totally changed. It is an absolute shambles. I have some sympathy with the view that the Secretary of State should have been here to explain why the changes have been made. The Minister was unable to tell us whether he has been involved in the discussions—maybe she will want to clarify that now.

However, this is the point that we have arrived at, and I think we all recognise that when the Government are under pressure they will sometimes take the opportunity to discuss with Members in the run-up to a debate what form amendments will take. Let us make no mistake, though—this debate was scheduled for next week, so the Government could have had another week to consider what should be debated. For reasons best known to them, they decided to bring the debate forward and table last-minute amendments. Now, on the day of the debate, they stand up and say, “Forget all those amendments, we’re not doing any of that”. The hon. Member for Bedford (Richard Fuller) may well be right to apportion some responsibility to the Secretary of State, but either way, something that should be a source of pride to the House is now a source of embarrassment. I deeply regret that, because this is an important issue on which there is considerable agreement.

--- Later in debate ---

Our Opposition day debate in 2014 referred to the 500 pub limit as the point at which measures for pub companies should be introduced. It was therefore a major shock for family breweries, microbreweries and other small pub-owning companies to find not only that they had been brought within the scope of the Bill, but that many onerous requirements would be visited on a group of businesses that had been given every reason to expect they would not be involved.

[Richard Fuller]

rose—

[Toby Perkins]

I did not want to take many more interventions because many other Members wish to speak. However, if the hon. Gentleman feels that it would add a huge amount to the debate I will give way.

[Richard Fuller]

The shadow Minister is making an absolutely crucial point. I think he will have heard, as I did, the Minister say that three companies will be captured by the reduction from 500 to 350. Is the shadow Minister aware of what those three companies have done to incur the wrath of the Secretary of State to be included in the regulation?

[Toby Perkins]

I am not sure that I would necessarily accept that we are suggesting those companies are wrath-deserving. We are attempting to create a regulatory framework that is reliable, so that businesses know where they stand. The limit of 500 is arbitrary, as is the 350 limit. I suspect this is more about attempting to save political face than save the actual companies. Suddenly bringing smaller pub companies into the heart of the Bill is seen as an act of bad faith by the industry. Having lost the vote in Committee, and having then voted against almost exactly the amendment that they then attempted to bring back, which, for the avoidance of doubt was the one that is now not being brought forward, is a pretty shabby way to treat an important industry.

Members and the many thousands of CAMRA members who have written to us all in such impressive numbers in the very short period of time during which there has been an awareness of new clause 2 will be aware that the Opposition supported a free-of-tie option for pubco tenants. [Interruption.] Goodness me, this is a magical moment for the House! I can now say I was there when the Minister for Business and Enterprise, the right hon. Member for West Suffolk (Matthew Hancock) actually attended proceedings on his own Bill. I can tell my grandchildren, “I was there!” He is here, Mr Deputy Speaker. Goodness me.

--- Later in debate ---

[Greg Mulholland]

I am delighted that my hon. Friend has raised that issue. So let us all be clear; the clause, in primary legislation, cannot and will not apply to a single family brewer. All the family brewers—members of the Independent Family Brewers of Britain—have fewer than 500 pubs. The clause—in primary legislation to ensure that it cannot be changed—will not apply to them. The simple answer is that it will not and cannot affect them in any way. Surely Conservative MPs above all would like to see more competition and more ability for all brewers—regional and small microbrewers—to compete and to get their beer into pubs if it is good enough and if people want to drink it.

[Richard Fuller]

The Minister has just said that she wants to reduce the limit of the pub adjudicator from 500 to 350, which will start capturing some of the larger family brewers. Is he saying that he stands apart from what the Minister has said?

[Greg Mulholland]

That is helpful but I shall make it clear; the point of new clause 2 is that it is a stand-alone clause and has no bearing on that matter. I understand the position of those hon. Members with family brewers. They can support their family brewers if they wish by opposing new clause 6, but they can still support new clause 2, which, as I say, will apply not to a single family brewer but only to the large pub-owning companies. We have defined that very deliberately, which the Government failed to do despite our telling them that they should. A Member can vote for their family brewer by voting for new clause 2. To be clear; it is primary legislation and cannot then be changed without other primary legislation. It is not being put into the statutory code—secondary legislation—as some measures are. That is precisely why we have done it.

There has been a shameful campaign of misinformation against new clause 2 and the market rent only option from the usual suspects; the large pub companies and their mouthpiece, the so-called British Beer and Pub Association. In reality it is the big brewers and pubco association. They have been lobbying vociferously, making a whole stream of utterly baseless comments. It is simply scaremongering to suggest that somehow these companies offering a fair commercial rent to their tenants would cause collapse, chaos and closures.

--- Later in debate ---

[Paul Murphy]

That is a useful piece of information from my hon. Friend whose seat includes the headquarters and the brewery of Brains.

Finally, I understand the tactic that the Government are using. They think they will lose the vote today, because there are so many Members who believe in the things that we are talking about and who will join us in the Lobby. I am not sure that a review is the answer. A review will simply push the argument and debate further down the road. Oddly enough, those who oppose new clause 2 do not like the idea of a review, and those who support it do not much like it either. It reminds me of Aneurin Bevan who said, “When you are in the middle of the road, someone will knock you down.” I sincerely hope that the Government amendment will be knocked down and that Members from all parts of the House will support new clause 2, as it will have the greatest effect in every single one of our constituencies.

[Richard Fuller]

We have had a fractious debate today. The responsibility for that can be placed firmly at the door of the Secretary of State for Business, Innovation and Skills, who has treated the House in a very shabby way. He has brought forward last-minute amendments and asked this House to take on trust that he can singly make massive and sweeping changes to this industry and that we should just trust him that his word is sound. He is proposing to affect an industry that has long been a mainstay of economies up and down this country.

I have very little confidence that the Secretary of State understands the industry on which he singly wishes to intervene. It is rather a poor show that he has not come to this House, but has instead left a very capable, but nevertheless junior, Minister to outline why the Government are retreating on one set of amendments, and looking to make changes in another set of amendments. That is no way for the proposed changes to be put to this House.

I speak on behalf of family brewers when I say that it is incredibly important that the Government keep the promise that they gave at the start of the consultation that those brewers would not be included in respect of the pubs code adjudicator. I was very pleased that my Conservative colleagues, along with the Opposition and the Liberal Democrats, voted to oppose the Government’s attempts to impose those regulations on small family-owned breweries. Today, the Minister has offered half a loaf back. She has said, “Well, we won’t do it for those who own 500 or fewer. We will do it for those with 350 or fewer. Just trust me, we will make it happen in another House.” I am happy that she is not pressing amendments 41, 43 and 44 today, but I am still at a loss to understand why there is an in-principle difference between 500 and 350. If it is a fact that just three family brewers are impacted by that change, there is a very serious issue about whether this is ultra vires legislation that is being felt by certain family businesses but not by others. I think the Minister will find that she will also have severe problems in the other House.

[Andrew Griffiths]

I completely agree with my hon. Friend’s analysis about plucking the figure of 350 out of the air. Does he share my concerns that this is a recipe for disaster, as we are bound to have legal challenge after legal challenge about what is a competition matter?

[Richard Fuller]

My hon. Friend is absolutely right. This is one of the problems of trying to make policy on the hoof. Small businesses in this industry up and down the country will be looking aghast at the actions of the Secretary of State. Serious business people run these breweries. They have to make long-term investment decisions that affect themselves, their employees and their customers. To have a Secretary of State who makes his position clear on a Friday, but changes it by Tuesday and again when it goes to the upper House sends an incredibly poor set of signals to an industry that has to make those long-terms decision. To be quite honest, a Secretary of State for business should understand that and should have the decency to be here—[Interruption.] I am sorry, I should not say that. It would have been preferable if he had been here today so that he could explain his rather unforced flip-flop at the last minute, because these are unprecedented changes that he is putting forward.

[Mark Field (Cities of London and Westminster) (Con)]

My hon. Friend is making a powerful and impassioned speech. Does he not recognise that Ministers have tried at least to find some element of compromise? For those of us who had some concerns about this—I share the concerns, as they have been put to me by Fullers brewery in Chiswick—the change to 350 provides a reasonable compromise, and it will now go to the other place to be determined.

[Richard Fuller]

My hon. Friend, with his emollient and soothing words, makes a fair point. The Minister has done a fantastic job in presenting these compromises. However, they raise severe questions both in terms of the specificity of the number of companies that will be affected by this additional change and the fact that they were presented to this House at the last minute on a “trust us, we will change it” basis. Yes, it is a step in the right direction, but would it not have been so much better to have this sorted out before and to have included the proposals in the Bill or in the amendments so that we could debate them here today in this House?

This issue shows some of the problems with Government intervention on industry. Essentially, anyone who runs a business knows that they cannot trust the politicians. They cannot trust the politicians to keep the guidelines for the industry safe and secure if we have an interventionist as Business Secretary, and we certainly have that. They cannot trust the Government if they know that they will change the rules one week so that the next week they will affect the industry.