Pubs Code 2016

Debate between Toby Perkins and Adrian Bailey

Wednesday 24th January 2018 Westminster Hall

[Mr Bailey]

Again, my hon. Friend makes an important point. The more we drill into this subject, the more comes out of it. Unfortunately, I am too constrained by time to go into every single issue that arises.

[Toby Perkins (Chesterfield) (Lab)]

I am keen to intervene before my hon. Friend moves on from that point. As I understand it, in the four cases in which the Chartered Institute of Arbitrators found that there was a conflict of interest, Mr Newby has continued to arbitrate. He has not accepted the verdict of the Chartered Institute of Arbitrators. An important question for the Minister is whether he thinks that if the Chartered Institute of Arbitrators believes that there is a conflict of interest, Mr Newby should respect that verdict.

[Mr Bailey]

My hon. Friend raises another significant point. By continuing to act on the case, Mr Newby is acting in breach of the code of conduct of the professional institute of which he is a member.

It is also significant that successful negotiations between the pub companies and tenants were rare. Eight times as many cases were referred to the PCA for arbitration, and four times as many went to independent agreement, as decided by bilateral negotiations between the tenants and the pub companies. It is not difficult to understand why. There is now overwhelming evidence that the pub companies’ historic antagonism, intimidation and bullying has continued, and the confrontational culture has prevailed, deterring tenants from taking, seeking or achieving market rent only options as a result of bilateral negotiations with the pub companies.

That is confirmed by the market rent only verification exercise of August 2017. The report states:

“Almost without exception, tenants and tenant advisers reported that while the POBs are abiding by the letter of the Pubs Code, to varying degrees they are not acting within the spirit of the Code; and that some are taking a legalistic approach to the Code.”

The second highest number of calls to the Pubs Code Adjudicator inquiry line related to the behaviour of pub companies, and they included accusations of intimidation, bullying and delay tactics. Those are not my words, but the words of the report.

I do not have time to examine every device used by the pub companies to frustrate negotiations but will pick out just a few. First, they include processes in their negotiations with tenants that are designed to push up costs, and include conditions not commonly found in tied tenancies or pre and non-code free-of-tie agreements.

Secondly, there is insistence by the pub companies for a brand new tenancy agreement, rather than a deed of variation to an existing tied tenancy. That enables pub companies to introduce new terms and requirements not historically found in a free-of-tie agreement, but that introduce substantial additional upfront costs.

Thirdly, deposits and advance rents are designed to make the market rent only option unaffordable. Lastly, there are unreasonable, unexpected and novel improvements of dilapidation requirements, including things such as a new roof, new pumps, resurfacing of car parks, cellar cladding, fire rules assessments and, I believe, patios as well. I would stress that those are only some of the strategies used by the pub companies to circumvent the spirit of the law.

Arising from a letter from my hon. Friend the Member for Leeds West (Rachel Reeves), the Chair of the Business, Energy and Industrial Strategy Committee, on 3 November 2017, the Pubs Code Adjudicator acknowledged

“that very few MRO notices served by tied pub tenants convert into MRO tenancies, and that bilateral negotiation and agreement between pub-owning businesses and tied pub tenants appear to be by exception.”

That is a formal confirmation from the Pubs Code Adjudicator that, in effect, it is not working. It is clear from the verification exercise that the pub companies are using their legal expertise and superior bargaining power to perpetuate the status quo and to thwart the intended objectives of the pubs code legislation.

In the same letter, the Pubs Code Adjudicator says that he is prepared to use his enforcement powers to ensure compliance if necessary. We have been operating with the code for 18 months, and there is overwhelming evidence that it is necessary and reasonable to ask why—given the evidence that has emerged in that period —he has not done it already. Instead, the adjudicator has published a compliance code for pub companies which, frankly, we would have expected to have been produced much earlier. Predictably, the pub companies have reacted with an antagonistic letter to him. I am afraid that, on the basis of earlier precedent, it is only the threat of legal action that will move the companies.

In the same letter, the adjudicator says that he will make recommendations to Ministers about business practices that he believes are unfair to tied pub tenants but are not breaches of the pubs code. Again, the evidence about that has been there for a long time, so why has he not done that before? I ask the Minister this question: if the recommendations from the adjudicator are forthcoming, or indeed even if they are not, will he make the appropriate changes to the legislation to ensure that it meets its objectives?

In his letter to my hon. Friend the Member for Leeds West, the Pubs Code Adjudicator asserts that his aim is to help to reshape the culture of the industry. To date, there has been absolutely no sign of that. The pub companies are intransigent and have enormous resources at their disposal. To change the prevailing culture, a much tougher approach is needed. The PCA is running out of time and it is time that the Government sought a replacement.

The Government need to make a couple of headline adjustments to the legislation or the code to ensure that the code is effective and the problems that I have outlined are overcome. Many such changes would do that, but there are two key ones. The first is to ensure that the definition of the market rent only option makes clear the right of a tenant to pay an independently assessed market rent, and only that rent, to the pub company. Secondly, the only changes to deeds of variation that should be allowed are the severing of tied terms and the rent being an independently assessed market rent. Those two alterations would go an enormous way to addressing some of the important grievances that have emerged so far, but many others could be made.

I will conclude by saying that, as I said earlier, I have been involved with this for a very long time—many Members from all parties in the House have been equally committed. I pay tribute to my predecessors as the Chair of the Business, Innovation and Skills Committee and its predecessor Committees, and the many campaigners in the many voluntary groups who have been so assiduous and dedicated to ensuring that we drag these companies kicking and screaming, by whatever legislation is necessary, to confront their responsibilities as operators of important community facilities that play an absolutely vital role in so many people’s lives, and in the lives of so many communities. I will not rest until that is done and I hope that other Members and the Government will work with me to ensure that we achieve that goal.

Neighbourhood Planning Bill

Debate between Toby Perkins and Adrian Bailey

Ping Pong: House of Commons
Tuesday 28th March 2017 Commons Chamber

[Toby Perkins]

We certainly will stick with holding it to account. If the hon. Gentleman has evidence that, since those reassurances were given, the Co-op is going down that road without seeking planning permission, I will definitely support him in what he has said.

In Chesterfield, we organised a huge public campaign which, although it does not relate specifically to the Co-op, is relevant to the issue that the hon. Gentleman has raised. We campaigned to save the Crispin Inn in Ashgate Road when EI Group, previously known as Enterprise Inns, wanted to sell it to Tesco. The campaign was won and Tesco pulled out, only for a new developer to come along and demolish the pub, and then start consulting on what should happen on the land where it had stood. Eventually, housing was built there.

In my previous role as shadow pubs Minister, I met so many groups all over the country who were fighting so hard to save the pubs that they loved and on which communities depended. It was wrong that a developer could turn a pub into a supermarket without planning permission, but could not do it the other way round. It was wrong that a building that was potentially a precious community asset could be knocked down before the community was even able to have a say. The coalition Government did take steps to reinforce the right of communities to have a say, but, although well intentioned, their efforts were a bit like trying to catch a flood in a cup.

The great attribute of the amendment proposed by Lord Kennedy and subsequently adopted, with further amendments, by the Government is that it gives certainty to everyone involved in the industry. We must never forget that Britain’s pubs are a business, an industry with investors who need certainty. The danger of going too far down the localism route was that when a business was considering an investment decision, it was faced with potentially dozens of different legislative approaches and hurdles across its portfolio. That approach also left councils at the mercy of aggressive legislation, and they were expected to incur the legal expense of defending the measures that they had introduced to protect their pubs.

The “asset of community value” approach has given some communities a precious opportunity to fight for the pub that they love, but it did mean that often the only way to save a pub was to agree to become its owner. There is some value in that sort of community activism, but it should not be necessary to be willing to buy a pub in order to have a view on it.

Last week, the APPG heard from the community team that had successfully bought the Antwerp Arms in Tottenham, having used the ACV legislation to save their pub. We also heard from Wandsworth Council, which had placed a requirement for article 4 directions on about 220 of its locals. It deserves credit for its efforts, but the danger of using article 4 directions is that the landscape is different in each local authority. That led to some publicans having to obtain planning permission just to paint or decorate their pubs, which is a positive disincentive to improving or investing in the pub estate. The approach that is being advocated today will bring the certainty and clarity that everyone connected with the industry needs, and it will not prevent the owners of buildings from adopting the needs of their buildings to maximise new opportunities.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

While we commend local authorities for taking the trouble to exercise the procedure that my hon. Friend has outlined, it was difficult for a number of authorities in other parts of the country that did not have the necessary capacity or the ability to meet the potential costs that would have enabled them to build up the case for doing so. This measure will be enormously helpful in ensuring that local authorities need not embark on that potentially expensive route.

Pub Companies

Debate between Toby Perkins and Adrian Bailey

Tuesday 21st January 2014 Commons Chamber

[Toby Perkins]

I almost got carried away there, then my hon. Friend announced that his pub was in fact closed. However, the fact that his determination and vigour will ensure that it soon reopens gives us all a sense of enthusiasm and excitement.

My hon. Friend the Member for Edinburgh South (Ian Murray), a former Enterprise Inns landlord himself, will have the honour of winding up the debate. I also want to salute the many other hon. Members who are here today and who have previously raised this issue in debates here or in the press, or joined campaigns in their communities to highlight the problems caused by aggressive pub company behaviour.

In September 2011, the Business, Innovation and Skills Committee’s fourth review of pub companies finally settled on the view that only a statutory code with a mandatory rent-only option would put the pubco relationship on a fairer footing. I was therefore disappointed by the suggestion in today’s Government amendment that Labour should have regulated this issue before. The Government will know that it was precisely because the Select Committee wanted to give the pubcos time to get their house in order that they were given a final chance in 2010, with a timetable that the Secretary of State supported when he first came into office.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Does my hon. Friend agree that it is rather strange that the Government are using the previous Government’s decision to abide by a Select Committee recommendation as an excuse to ignore the current Select Committee recommendation?

[Toby Perkins]

My hon. Friend’s intervention gives me an excellent opportunity to put on record my gratitude—and that of the whole House and the wider coalition supporting the reform—for his work as Chairman of the Select Committee, which has led the way on this issue. I entirely agree that it is odd that, with such a large body of opinion in favour of the reform, it has been so difficult for the Government to support the recommendation that the previous Government were behind and that this Government said in 2011 that they would support.

--- Later in debate ---

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

This is a debate that I never thought we would need to have again. Last year, we were given assurances that a statutory code would be introduced; a year later, there is still no sign of it. The motion reflects the sense of exasperation felt by Labour Members—and perhaps privately by many Government Members—about the lack of progress on this issue.

[Toby Perkins]

Does my hon. Friend share my fear that we will potentially be back here another year to have yet another debate? I am pencilling that into my diary.