Energy Bills
Debate between Toby Perkins and Ed Davey(10 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Davey
My hon. Friend raises an interesting point. Certainly, we and, indeed, Ofgem have been looking at how we can reform the wholesale market in a way that deals with the problems. Ofgem’s suggested “secure and promote” reforms—which the Labour party appears not to have read—will ensure that we will have much greater competition in the wholesale market, which means that independent generators will be able challenge the big six and their vertically integrated model. There are, therefore, alternative models to ensure that we get competition working in the generation markets, which has not happened for far too long.
Toby Perkins (Chesterfield) (Lab)
More than 5,000 people in Chesterfield signed a petition urging the Government to freeze energy prices. They will be mystified as to why the Minister thinks it is a good idea to put money saved from energy bills on to the tax bill instead. In answer to the question asked by my hon. Friend the Member for Halton (Derek Twigg), the Secretary of State said that he had discussed profits and prices with the big six energy companies. Did he tell them that he thought that profits and prices were too high?
Energy Price Freeze
Debate between Toby Perkins and Ed Davey
Mr Davey
I am going to make some progress. I have given way a lot and will not give way for a while yet.
On Labour’s pool and ring-fencing proposals, the Government contrast the policies of the right hon. Lady with our policies for greater transparency in the financial accounts of the big six and for Ofgem’s wholesale market reform “Secure and Promote”. Interestingly, when I asked her whether she had read that document, she said that she had not—[Interruption.] To be fair, let me correct the record: she did not answer the question. If she has read it, she can come to the Dispatch Box and tell us. She is not coming to the Dispatch Box, so we know that she has not read the document. Let me help the right hon. Lady. It would have been beneficial for the Opposition to have read the documents. They claim that Ofgem is appalling and is not doing any work on competition, but the document shows that it has done so.
Interestingly, the reason for the work is given at the beginning of the document. Ofgem produced the document because it wants to make more competitive markets to help the consumer. The right hon. Lady has not read the document. That is not very good. It is clear from her policies that she has not done so.
Mr Davey
I am going to answer the question. When the hon. Member for Southampton, Test reads this paper, he will know that it is in a series of papers and other papers deal with those issues. The relevant paragraph—it does not deal with netting off, but it deals with the impact of netting off—is on page 7. The right hon. Member for Don Valley should like this, because we have some agreement on the need to make sure there is competition in the wholesale markets. It states:
“It could also encourage business models that reduce the need to trade in the wholesale market, such as vertical integration and long-term contracts. Poor liquidity therefore inhibits competition between incumbent players in the market.”
In other words, we need these proposals so that there is more competition in the forward markets so that new entrants can come in and the prices that the incumbents charge are more transparent—something that the right hon. Lady says that she wants to see.
Toby Perkins
I have heard the Secretary of State in this mood before. The last time was when he was defending the pub companies. A few months after he left that job, his party agreed that we were right and that he had been wrong all along. He is a tremendous defender of the vested interest. Can he tell me why any of the thousands of people in Chesterfield who happily signed our petition because they are so concerned about the cost of fuel should have any confidence, listening to him, that because he is doing this job things will be any different in the future? People are struggling, and he just does not have the answers.
Mr Davey
The hon. Gentleman cannot have been listening to the debate. It is clear that it is the Government who are standing up to vested interests, because we are bringing in competition against Labour’s big six. The problem for the Opposition is that they created the big six: we are the ones putting pressure on the big six.
Pub Companies
Debate between Toby Perkins and Ed Davey(12 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Toby Perkins
I am afraid I do not have time.
The hon. Member for Bristol North West (Charlotte Leslie) felt that on balance there needed to be some regulation. She defied those who think that a Member cannot make a serious speech wearing a scarf—something that may catch on.
My hon. Friend the Member for Sheffield Central (Paul Blomfield) talked about how, because of their flawed business model, the big pub companies are squeezing out unreasonable returns. My hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) said that the Prime Minister was dodging his round at the bar. The hon. Member for Nuneaton (Mr Jones) reminded us of the role of the pub in uniting couples over the years. He reflected on the good fortune of Mrs Jones to have been drinking in the right pub at the right time.
There were interesting contributions from my right hon. Friend the Member for Torfaen and my hon. Friend the Member for York Central (Hugh Bayley). The hon. Members for North Swindon (Justin Tomlinson) and for East Hampshire (Damian Hinds) spoke about alternative ways in which pubs might choose to improve themselves.
Today we have heard a lot about the history of this issue, but it is worth reminding ourselves that we have had seven reports and there have been four inquiries by the Business, Innovation and Skills Committee. The Government’s response has many flaws, which other Members have exposed, but I want to talk about two specifically.
On the issue of pub closures, which was exposed by the hon. Member for Pendle (Andrew Stephenson), the Minister has swallowed the big pub company line that free-of-tie pubs are more likely to close. He must know that in general tied pubs do not close permanently, because, as the hon. Member for Brighton, Pavilion (Caroline Lucas) pointed out, they have a history of churning through huge numbers of landlords who try and fail—another business going under, another life unfairly ruined. One pub company had a churn rate of 65%, so although the hon. Member for Solihull (Lorely Burt) says that people should go into such arrangements with their eyes open, that does not reflect the reality experienced by many tenants and lessees. Like the hon. Lady, my hon. Friend the Member for Edinburgh South (Ian Murray) was previously a landlord—for Enterprise—and has strongly made the point that many people’s lives were ruined because they were not aware of what they had let themselves in for.
In March 2010, a Federation of Small Businesses survey found that 84% of tied businesses believed that their relation with the pubco did not allow them to compete effectively, 90% believed that the arrangements meant that they could not make a fair profit, and 87% indicated that they wanted to be free of the tie. Despite that evidence, the Government say in their response, as my hon. Friend the Member for Wrexham (Ian Lucas) pointed out, that the debate over tied or free-of-tie status is a distraction. We think that is entirely wrong.
The FSB is not the only organisation to study the issue. The Institute for Public Policy Research also questioned tenants and lessees, and its findings showed that free-of-tie landlords manage pubs longer, are more optimistic about the future, are less likely to be struggling financially, and earn more. According to that study, 46% of tied publicans earn less than £15,000 a year. The hon. Member for Cheltenham (Martin Horwood) noted that the IPPR found that 88% of publicans who claim to be struggling financially identified the beer tie as one of the most significant factors in their financial problems.
The Minister, in his written response, built a man of straw, claiming that the critics were calling for the tie to end completely. He must know that that is not the case. All the critics are saying is that if the traditionally tenanted arrangement is such a good deal, why can the big pub companies not offer both tied and free-of-tie options, and let their tenants decide?
The Select Committee discovered that at every turn the big pubcos had failed to take the actions they had promised. In desperation, the Committee said in March 2010 that it would give the industry a final chance to prove that self-regulation could work. It was supported by a sympathetic Government who promised to back its findings. When there is such knowledge and such commitment and when the industry has been given every chance to put its house in order, how can the Minister possibly write that the issue is more complicated than the critics realise?
What the critics may have failed to understand is not the issue surrounding pubcos but the developing relationship between the pubcos, the BBPA and the ministerial team. As the hon. Member for Leeds North West said, the save the pub group has discovered, through freedom of information requests, that throughout the process the referee was getting changed in the same room as one of the teams.
Toby Perkins
The Minister’s colleagues, the hon. Members for Southport and for Leeds North West, were deeply uncomfortable about the relationship. The findings of the save the pub group, through freedom of information requests, show that parts of the BBPA’s report—including the typing errors—were just cut and pasted into the Government’s response. I do not know whether the Minister is still listening to me. It is difficult for him to say that there is no evidence when Members who sit on the same side of the Chamber as him feel that the relationship is deeply unhealthy.
It transpires that before the Select Committee report came out the Minister had made up his mind that he would not consider legislation. As I said, the Government’s response to the report is, in substantial part, the BBPA’s own report. As my hon. Friend the Member for West Bromwich West said, it is now clear that the Minister has had no independent legal advice on the legality of the framework, and instead has relied on legal advice provided by the BBPA. It has become clear that his officials were assisting the BBPA with the wording of a press release as early as October, when as far as interested bodies were concerned the Minister was still sticking to his commitment to push through legislation. In fact he was merely paving the way for the BBPA’s preferred option. That is just what we know. Other information requested by the save the pub group has been hidden by the Government. How much worse can it be?
The verdict of the all-party save the pub group is damning. It says that the Minister has not been naive; the action is deliberate and, at best, a lazy response by him in the hope of clearing his desk. The verdict of the Federation of Small Businesses is equally clear. It is extremely disappointed by the Government’s response to the Select Committee inquiry and extremely concerned that this agreement appears to have been negotiated with the BBPA and the larger pubcos without substantial consultation with interested parties.
If a Minister were able to come to the House and create a policy that united opinion throughout the House, including the Select Committee, and among the numerous groups referred to by the hon. Member for Leeds North West, we would call him a genius. I have no idea what the word is for the opposite of a genius, but the Minister appears to have achieved the absolute opposite of that united opinion. Who else is calling for the Government to legislate on this issue? Who else does the Minister think simply does not understand its full complexities? Alongside the Select Committee, the Federation of Small Businesses and the all-party save the pub group, there is CAMRA, the Independent Pub Confederation, Fair Pint, the GMB, the Association of Licensed Multiple Retailers, the Guild of Master Victuallers, Unite, the Society of Independent Brewers and the Forum of Private Business. If the Minister could leave the Chamber and come up with a policy that united all those people in his favour, he would take a huge step forward in his career.
As has been declared, this was an opportunity to take steps to resolve the problems faced by the 87% of landlords who indicated that they wanted to be free of the tie. The Minister has wilfully and deliberately set out to avoid living up to that commitment. He says in the Government’s response that the industry will waste no time in living up to these demands, given the parliamentary interest in the matter. As the hon. Member for Eastbourne (Stephen Lloyd) made clear, that is a risible claim, as all the evidence we have seen from the pub companies over the years demonstrates.
Who has the Minister let down? He has let down the Select Committee, which worked so hard and which he promised to back, and all those who contributed to its hearings. He has let down the small family brewers who have been shut out of many pubs as a result of the pub companies’ market domination. He has let down the Federation of Small Businesses, which campaigned so strongly, and let down CAMRA and the Fair Pint campaign. He has let down the 25,000 publicans across Britain who run tied pubs. Most of all, he has let down the customers who were relying on him to secure a fairer balance between landlords and the pub companies.
Never before has there been such a concern about crony capitalism or such an expectation that the Government should stand up for small businesses. This issue confirms what we have always suspected: beneath the warm words, what we are getting from the Government is business as usual. They are on the side of the rich and the powerful, standing up for large vested interests and leaving publicans to fight for themselves.
Ultimately, this issue set three tests for the Minister. Would the Government intervene to ensure a fair relationship between big pub businesses and small business people? Would they keep their word and do what was right, even when a big, powerful lobby asked them not to do so? Would they listen to the voice of the people, the voice of small businesses and the publicans at the coal face of the industry or, when they were needed, just back down? On all those tests, the Government have failed.
This is not a party political issue. Everyone agrees that the Government have got it wrong, as we heard today from Conservative and Liberal Democrat Members. A huge opportunity has been missed and the pub lobby will not believe that this House is serious about action, but it is not too late. Members must ensure that the industry is held to account by supporting the motion, ensuring that an independent body is allowed to come in and monitor what actually happens. Only then will there be any chance of people having a serious hope that the House will take action. I commend the motion to the House.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
It might surprise the House to learn that I am very grateful for today’s debate and for all the contributions made by hon. Members, not least because our deliberations will be read by the industry, including the pubcos, and because there is agreement on a number of issues. We all agree that, while we want to enable businesses to generate growth and jobs, we also want them to operate fairly. There is no doubt that the Business, Innovation and Skills Committee identified a number of concerns about how the pub industry is operating. I strongly agree with the importance the Committee and hon. Members attached to the role of pubs in communities the length and breadth of this country.
Before addressing some of the specific issues raised today, I would like to outline the reforms that the Government recently secured from the industry so that no one is in any doubt about them. The reforms deliver on our promise to take action and are much more significant than many Members have suggested today. The industry framework code is to be made legally binding, and I can tell the House that all six of the big pubcos, as well as a number of the smaller family operators, have already declared publicly on their websites that they are legally bound by this code and sent letters to their licensees setting out an open and unlimited offer to this effect. That already represents over 70% of the tied trade and 100% of the large pubcos.
A pub independent conciliation and arbitration service—PICAS—is to be set up. It will provide mediation and arbitration on any matter relating to the framework or company codes and the results will be binding on both parties. That will be done by the end of next month. There will be a three-yearly re-accreditation process for company codes, administered by the British Institute of Innkeeping benchmarking and accreditation scheme through examination of annual compliance reports and spot checks. A new pubs advisory service—PAS—will provide an initial offering of free advice to all prospective and current tenants and lessees. There will be a strengthened framework code, with a particular focus on full repairing and insuring leases and on issues such as rent, insurance, transparency and pre-entry training. This strengthened code was agreed between the BBPA, the BII, and the FLVA, which is a licensee organisation, on 22 December. Those reforms have the potential to deliver real change for tenants and lessees across the country, and they are being brought into effect far more quickly than legislation could achieve.
There have been suggestions of collusion, with allegations that in the process the Government listened only to the BBPA and were deaf to the voices of licensees. That is simply not true. I have met CAMRA three times over the past year; I have met my hon. Friend the Member for Leeds North West, the chair of the all-party save the pub group, four times over that period; I have met the Independent Pub Confederation; and I have met representatives of the Association of Licensed Multiple Retailers, a licensee organisation, with which we were in detailed discussions while negotiating with the BBPA.
Toby Perkins
Did any section of the representations from the groups that the Minister has just mentioned find its way directly into the Government’s response, or was it simply the BBPA’s representation that turned up there?
Mr Davey
I heard the concerns of those organisations and the problems in the industry, and that is why we have taken action. The hon. Gentleman tried to say that this was not a party political issue, but he made it into one. He and his hon. Friends had 13 years to take action, but they took none.
During this process, I have read copious reports on and information about the concerns of licensees, and we have taken action to address their concerns when we have felt that action is appropriate. We will always listen—
Mr Davey
My right hon. Friend the Secretary of State said that he would take action, and we have taken action. Let us be clear that what the Select Committee wanted was legislation to deal with the problem. Through negotiation and using contract law, we have got legally binding codes of practice that are in the spirit of what the Select Committee asked for. More than that, the Committee asked for an adjudicator, and we will have PICAS to adjudicate on the code by February. Not only are we tackling the issues that the Committee raised, we are doing so far more quickly than expected. I would have thought that the hon. Gentleman would welcome that.
Toby Perkins
It is one thing for the Minister to argue that what he is doing is better than what he undertook to do, but it is simply wrong for him to try to claim that he is doing what the Secretary of State and he undertook to the Select Committee to do. He must know that the commitment that the Secretary of State gave is not what he is delivering. Why does he not just be honest and say that?
Mr Davey
Throughout my speech I have shown that the hon. Gentleman was wrong in almost everything that he said to the House, and he is wrong again.
I recognise that some Members would want us to have gone further, yet our reforms, including the strengthening of the code, its establishment on a legally binding footing and the soon to be completed establishment of PICAS, will mean real change for licensees and tenants across the country.