I am delighted to speak at this important stage of this important Bill. I commend my hon. Friend the Minister and her colleagues for their
work in bringing measures forward not only on pubs, which is an area of particular interest, but other positive measures.
I will concentrate my comments on new clause 2, which I am delighted to introduce on behalf of myself, as the chair of the all-party save the pub group and co-ordinator of the Fair Deal for Your Local campaign, the hon. Member for West Bromwich West (Mr Bailey) who is the Chair of the Business, Innovations and Skills Committee, and my hon. Friend the Member for Northampton South (Mr Binley) the president of the save the pub group and a member of the BIS Committee. Unfortunately, he cannot be here today because he is becoming a freeman of Northampton. I am sure we all congratulate him on that. I am also speaking on new clause 2 on behalf of the 91 colleagues who put their names to it and the many others who have said they will support it.
Over the past few days, in the limited time between Committee and Report, more than 8,000 e-mails were sent by CAMRA members up and down the country and several thousand by members of the Federation of Small Businesses, licensees, organisations and trade unions, urging the Government to take the sensible, obvious, market-based action to resolve the issues that have been a problem in the leased and tenanted pub sector for too long.
So that Members are clear, new clause 2 is the cross-party solution from the Business, Innovation and Skills Committee introduced first by the hon. Member for Mid Worcestershire (Sir Peter Luff), then ably continued by the hon. Member for West Bromwich West (Mr Bailey), and supported by all colleagues on the Select Committee at all stages in this and the last Parliament. It is also backed by the FSB, the Forum of Private Business, the Pubs Advisory Service, Justice for Licensees, Licensees Supporting Licensees, CAMRA, Licensees Unite the union, the Fair Pint campaign, the Guild of Master Victuallers, the GMB and now the Punch tenant network, which represents Punch tenants and is giving an honest and a very different picture of the Punch model from that which Punch Taverns has been trying to communicate to MPs.
To remind the House, the problem is a simple one, despite the complexity of the sector: the large companies went on a reckless acquisition spree, buying up pubs using borrowed money, and got themselves into grotesque amounts of debt—more than £4 billion in the case of Punch Taverns and more than £3 billion in the case of Enterprise Inns—and with nothing to stop them charging unlimited prices for beer and unlimited rents, both of which have gone up and up and up. The beer tie, which was always operated responsibly, has been abused. It used to offer lower rent in exchange for higher beer prices and genuine support for small breweries, but the pub company model does not do that.
What, then, is wrong with the proposals as they stand? I commend my right hon. Friend the Secretary of State and his colleagues in both coalition parties for having the courage to bring forward the statutory code of practice that the Select Committee first recommended so powerfully and clearly in 2009. As drafted, however, the proposed statutory code will not deliver the Government’s two key principles: fairness and the principle that a tied licensee should be no worse off than a
free-of-tie licensee. The problem is that there is no direct mechanism to stop the double overcharging that I have mentioned.
As I have already said, not a single respondent to BIS’s extensive consultation thought that the Government’s proposed parallel rent assessment was the right solution, whereas two thirds said that the Select Committee was right. The assessment would need considerable participation from the adjudicator—in fact, the proposal confuses the adjudicator with the rent assessor, as the adjudicator is there to adjudicate disputes, not to survey and set rents. Without the direct mechanism, the basis on which the adjudicator is set up is currently weak.
Furthermore, the Government made the fundamental mistake that the shadow Minister has pointed to already. The Fair Deal for Your Local campaign and the Select Committee are clear that this measure must not apply to smaller companies—those with fewer than 500 pubs—because that is not where the majority of the problems are. A “large pub company” must be defined as any company with 500 or more pubs of any type, with the measure applying to its leased and tenanted pubs only, not to tied pubs.
The issue of tied pubs is a legal minefield, as the Government have realised, with the absurdity that Harry Ramsden’s, a fish and chip shop restaurant, could have been categorised as a “tied pub”. There are different forms of the tie in the UK—some free houses opt to be tied to a brewer in return for soft loans and business support—and how would we categorise “part tied” and “fully tied”? It is a nonsensical way to categorise. We need to define a “large company” simply as a company with 500 or more pubs, some of which are tenanted and leased pubs, and then apply the measure to the tenanted and leased pubs only. That way, there would be no question of the large managed companies, such as Wetherspoon’s and Mitchells and Butlers, being caught any more than there would be of a restaurant chain being caught.
At the moment, the Bill and code do not deliver what the Government have set out, courageously, to deliver. Do not take my word for it; take the word of one of the two companies lobbying particularly vociferously against the code. In its own prospectus for potential investors, dated 6 October 2014, Punch Taverns said it did not believe that the reforms proposed would materially adversely affect the Punch group. In other words, it would be business as usual, and it would continue to charge excessive beer prices—often 70% more than hon. Members could get from the brewery—and set entirely unregulated rents.
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