Pub Companies

Debate between Vince Cable and Andrew Bingham

Wednesday 9th January 2013 Commons Chamber

[Vince Cable]

We have not come to a final view on that. That is something the consultation process can elicit. As I will set out, and as I think the hon. Gentleman’s spokesman said too, there is no fundamental problem with the tie—there are other ways of dealing with rental exploitation, for example. The question whether to give that offer and build it into the code is a perfectly good question—there are strong arguments on both sides—and I want the consultation to help us to come to a conclusion on it.

The position I have set out will be particularly significant for rent, because the consultation will propose that the guidance issued by the Royal Institution of Chartered Surveyors must be interpreted in the light of the principle I have described. The code will also need to be strengthened on areas such as gaming machines, but that is something else we can explore in the consultation.

[Andrew Bingham (High Peak) (Con)]

I welcome yesterday’s announcement, but will the Secretary of State concede that there are other issues where the relationship between the pubco and the tenant is biased one way? They include, for instance, portable appliance testing—or PAT testing—of electrical equipment in pubs and insurance, all of which are forced through by the pubco at above the market rate. I am concerned that the pubcos might inflate those things to cope with cuts in other areas of their income.

[Vince Cable]

The hon. Gentleman is right. One of the problems that has occurred in the past is that any concession on beer prices would be offset by rent or vice versa. He is right that areas such as insurance are important elements of the package, and they would certainly be covered by the adjudicator.

The proposed adjudicator will be based on the model of the groceries code adjudicator, which was approved by the House recently. I propose that the adjudicator will have the following powers and functions: to arbitrate disputes between large pub companies and their licensees; to carry out investigations based on complaints received; to have wide-ranging powers to require information from pubcos during an investigation and, when an investigation finds that a pub company has breached the code, to impose sanctions on it, including financial penalties in the case of severe breaches; to publish guidance on when and how investigations will proceed and how the enforcement powers can be used; to advise pub companies and licensees on the code; and to recommend changes to the code. The consultation will propose that the new adjudicator, like the groceries code adjudicator, be funded by an industry levy—in this case on the pubcos—with those who breach the code paying a proportionately higher levy. In order to place the most proportionate burden on business, my current thinking is that the new regulatory regime should apply to all pub companies with a tied estate of more than 500 tied pubs. As I have indicated to the House, we are currently talking about six operations.