Commercial Rent (Coronavirus) Bill

Sarah Olney Excerpts

2nd reading
Wednesday 24th November 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats welcome the Bill and we hope it will be passed swiftly in order to protect struggling businesses. I have spoken to many businesses in my community that have really struggled with rent bills over the past 20 months. This is been a significant issue for many. As the Minister said, many landlords and tenants have been able to come to terms and make arrangements for how rent payments will be made, but a number have not been able to do so. I am thinking in particular of Don Fernando’s restaurant in Richmond High Street, a legendary Spanish restaurant right by the railway station that has been there 30 years. It was unable to make such an arrangement and it is still getting rent demands from its landlord, which is registered in Jersey, unfortunately. This is a significant issue for the restaurant. Only the stay of execution allowed by the moratorium on evictions has enabled it to carry on trading. It is still open and I was there a few weeks ago. It is doing well, but it has significant concerns about its rent debts, so on its behalf I very much welcome the steps that the Business Department is taking.

Of course, this affects not only tenants. I have spoken to landlords as well, including small landlords and landlords of single units. In some cases, where they are letting those units out to large multiples, some of those retail chains are just turning round to those landlords and saying, “We are not paying.” Up to now, there has been no mechanism to enter into a negotiation on this. It is very much the weaker party in these transactions that has to suffer the consequences, and on that basis I am really glad that this arbitration mechanism is being brought in. It will give a voice to both sides, particularly where there are no other mechanisms to resolve the issue.

My only slight grumble is that we could perhaps have passed this Bill sooner. The moratorium has been extended several times, which has been welcome, but bringing this Bill to Parliament more promptly would perhaps have allayed some fears and got the process going sooner for certain tenant-landlord relationships. But better late than never, as they say. It is here now and we certainly plan to support it. I hope that we will use this opportunity, even though we want to pass the Bill swiftly, to scrutinise it a bit further. One of the important points we want to raise is how arbitrators can effectively assess whether a business would have been viable. That is an important point, and we need to see more discussion about it. In the context of the pandemic, many businesses had to close because of Government instructions, but consumer behaviour has also changed radically as a result of the pandemic. As we look back over the past 20 months, I do not know how easy it will be to say which businesses would have been viable if their rent arrears had not built up to such an extent.

There are lots of great businesses in my constituency that came through the pandemic because they changed their way of working, including developing their online offering and doing home deliveries. We see right across our business sector, particularly in our small businesses, that entrepreneurs will always respond to challenges. Many businesses now look quite different from how they looked before, which is an example of how it is difficult to say what would or would not have been viable. Many business owners or their family members have suffered coronavirus infections, and they suffered untold disruption in their personal life that will have affected their ability to run their businesses. Again, how can we judge what would have been viable? How would things have been different? That is a difficult question to answer.

I welcome this further support to help businesses through what we might call the after-effects of lockdown.

[Mr Perkins]

The hon. Lady raises an important point. From what the Minister said, it sounds like a business will be eligible if the amount it owes in rent is the difference between going bust or not. Many businesses might have major rent payments that take them right to the brink, going through all their savings; other businesses might have debts that are slightly more than their rent, but the support would make a huge difference. I fear we may end up with a huge number of businesses being shut out of this important redress, so I urge her and other colleagues to scrutinise this point in Committee.

[Sarah Olney]

That is exactly right, and it is the point I am trying to make. Every context and every business is different. The business owners will have faced different challenges, and the environment in which they trade will have faced different challenges. The hon. Gentleman has already spoken about hospitality businesses facing significant challenges, and it is difficult to see how we can have one set of guidance that covers the viability of every kind of business of every size and every sector.

[Janet Daby]

In that same vein, small businesses, and even large businesses, have seen a surge in energy costs and product costs. Does the hon. Lady agree that there is increasing financial pressure on businesses?

[Sarah Olney]

I absolutely agree. We see a maelstrom of different pressures on businesses at the moment, and many of my retail businesses are experiencing difficulty in getting stock for a number of different reasons, many of which will be familiar to Members. There are increased energy costs, and we are still facing quite an uncertain Christmas.

Hospitality businesses across the country are keen to open their doors to Christmas parties, but there is still a lot of uncertainty about the public health situation, which will prevent many of them from being able to make the revenue they would expect. That will obviously have an impact on their ability to pay their debts. As the hon. Member for Brentford and Isleworth (Ruth Cadbury) said, it is not just their rent debts; they have VAT bills, rates bills and loans to repay. There are so many different debts mounting up as a result of lockdown, and there is still a great deal of uncertainty, coming from a number of different sources, on whether businesses can count on the revenue to service all those debts. There are a lot of pressures facing businesses.

[Matt Rodda]

Does the hon. Lady agree that the Government need to get on top of the supply-chain issues, particularly in our ongoing relationship with the European Union, the issues in Northern Ireland and the cross-channel issues? These could potentially have a serious impact on businesses and families this Christmas. It is high time the Government got on with developing a positive relationship with our neighbours.

[Sarah Olney]

I entirely agree. I would now normally be at the Public Accounts Committee, which is currently looking at the readiness of UK ports for Brexit, how well our port and logistics sectors are dealing with Brexit and how well the Government have prepared them. The picture is mixed, but there is no doubt that there is more disruption to come, because we have not yet implemented all the checks that will be required in due course. Some will come in on 1 January, and there will be others in July 2022. It is fair to say that we are still not through this huge period of uncertainty, and there is a great deal more still to come.

I welcome this Bill, but I would like to see the Government do more to help our retail, hospitality and personal services sectors, and all the other sectors that make up our high-street economy, because of all the positive impacts a thriving high street has on our local communities. I want to see the Government go a bit further to support businesses on our high street.

I am keen for the Government to consider scrapping the upward-only rent review clause that is often in new leases. Richmond High Street, in particular, is suffering from this clause. We now have very high rents for all our retail units, which is a private sector matter but we are finding that it creates a barrier to entry for new retail, hospitality and other businesses that might want to take up a town centre lease.

Leases are based on old-fashioned ways of doing business, and we often find that landlords put an upward-only rent review clause in leases. When the lease terms are renewed, the clause means that a firmly established business that has generated a great deal of business as a result of its location will find that its landlord puts up the rent to such an extent that the business cannot service it with its revenue. I am keen that leases and rent payments should reflect underlying market conditions, which would help a huge amount. More needs to be done. We talk about leasehold reform a lot in this place, but I also want to see it for commercial rents. I would welcome the scrapping of upward-only rent reviews.

I echo the hon. Members for Chesterfield (Mr Perkins), for Reading East (Matt Rodda) and for Brentford and Isleworth (Ruth Cadbury), who mentioned the business rates review, which is urgent because we want to help businesses to have better control of some of the costs of doing business. There is no doubt that business rates are a key part of that, and we are keen to see a review as soon as possible. A review has been promised for many years, and business rates are a fundamental part of the business costs that are continuing to be a deterrent to new entrepreneurs.

We very much support the Bill, which is the right thing to do. We want to support our town centre businesses, and there is more that could be done, particularly on rent and rates. We are keen to support the Bill, but we need to scrutinise the arbitration clauses a little further.