Pub Companies

Debate between Toby Perkins and Tony Cunningham

Wednesday 9th January 2013 Commons Chamber

[Toby Perkins]

I am going to crack on.

In summing up the debate a year ago, the former Minister claimed that he had come up with the toughest self-regulatory regime imaginable. Whatever hon. Members’ perspective, surely none can believe that that was true. The code did not include the free-of-tie option, which is consistently cited as the most significant factor. It did not include the principle of tied lessees being no worse off or an independent adjudicator, and it did not deliver an advisory service. The organisations that were formed were hopelessly compromised. How could anyone possibly believe that that was the toughest regime imaginable?

In case anyone believes the House did not do its duty, let us recall the House’s view at the time. I said in the debate a year ago that there was a cross-party consensus in that Members of all parties agreed that the Government were wrong. To a man and woman, not a single Member dissented to the motion that only a statutory code with a free-of-tie option and an open-market rent review would resolve the problem.

That is exactly the same request that the Opposition respectfully make today. The right hon. Member for Kingston and Surbiton did not vote against the motion, and nor did the Secretary of State, the Prime Minister or any Member of the House, yet despite the vote, the Government seemed to believe that that was that. On 20 October 2012, the Under-Secretary declined in an interview in the Morning Advertiser—so it is alleged—to take action, saying that self-regulation was working and that the Government had delivered on all their commitments. Two weeks later, she received notification of Department for Business, Innovation and Skills questions to be answered on 8 November and saw that four of my hon. Friends had tabled questions on pubcos and the Government’s failure to live up to the motion passed by the House. Between Monday and Thursday of that week, the Secretary of State chose to conduct his call for evidence. On 20 December, the Labour party gave notice of its intention to call this debate. Yesterday, less than 24 hours before the debate, the Government made the announcement that we are discussing. That is the recent history.

[Sir Tony Cunningham (Workington) (Lab)]

Will my hon. Friend give way?

[Toby Perkins]

I have come to an entirely natural breaking point, so I am delighted to give way.

[Sir Tony Cunningham]

All hon. Members welcome a statutory code, but I hope my hon. Friend agrees that there is no point having one unless it has teeth. A statutory code must have the requisite teeth.

[Toby Perkins]

That is an excellent point—it is so good that I intend to make it myself shortly. I agree entirely with my hon. Friend.

You will note, Madam Deputy Speaker, that I have thus far been unremittingly positive in my contribution, but even I have my limits. Even my naturally sunny disposition cannot conceal the painful truth of the challenges that the Secretary of State faces if his optimistic announcement is to deliver change. The stipulation of the principle that a tied licensee should be no worse off than a free-of-tie licensee will inform the interpretation of decisions made by the Royal Institution of Chartered Surveyors. The advice that guidance should be interpreted in the light of the principle is an extraordinarily welcome step. Beyond rents, however, it is hard to see how that principle can be assured without the freeing up of the market that would happen if a free-of-tie option were offered to all new or renewed contracts. Surely, it is only the combination of fair rents and freedom to buy where the landlord chooses—tied if they wish, free if they do not—that frees the industry from the shackles of the pubcos.

Let me make it clear: we are not calling for the end of the tie. We support the Government’s decision to restrict these measures to companies with more than 500 pubs, and recognise that some pubcos use the tied arrangement responsibly. We also value the small family breweries and recognise the important role the tie plays for them. That is why we support a genuine free market option for the major pub-owning companies that allows for a free-of-tie option, with fair rent or a tied option, to be chosen by the landlord. It is impossible to see how the Secretary of State’s proposals will not be compromised without that.

In the initial press release issued at 1.40 pm yesterday, note 7 read:

“The Code will not mandate, as some campaigners have suggested, a ‘free of tie option with open market rent review’. Neither will it abolish the beer tie. Evidence strongly suggests that the tie itself is not the issue—it is in fact a valid business model and its removal would significantly harm the British brewing industry. It is the abuse of the tie in certain circumstances that is causing the problem. The Code will ensure that pub companies use the tie responsibly.”

By 4.37 pm, less than three hours later, an amended press release had omitted note 7 and there was no mention of the free-of-tie option. This is no way to run a whelk stall, much less take crucial decisions on a vital and struggling industry. The central part of this whole issue was ruled out at 1 o’clock, but by 4.37 pm was apparently back on the table.