The Minister says from a sedentary position, “Get ready.” We understand that Lynton Crosby has been telling the Conservatives to get ready for the past four or five months, but they never seem to reach the point he promises. We will no doubt debate that over the next six weeks.
The Government’s Lords amendment 39 replaces clause 42. We were proud to support the new clause tabled by the hon. Member for Leeds North West. We
did not think that Report stage was the time to get into a detailed discussion of all the nuances of each individual line, and we know that a tremendous amount of work went into drafting a clause that would offer all the necessary protections. We felt, however, that ultimately it was too prescriptive and could have unintended consequences, and we are pleased to have worked with the Government on the drafting of the new provision.
Lords amendment 39 retains the triggers of renewal of tenancy, rent assessments and significant and unexpected price increases or other events beyond the tenant’s control that have a significant impact on their level of trade. The amendment omits the transfer of title and administration triggers that were in the original clause.
On balance, we support that omission, albeit not without reservation. We believe that the impact on the natural order of a competitive market that would have resulted from pub tenants having the right to opt out at the point of transfer of title would have caused a real disincentive to invest. Ironically, it would have meant that when a pub was sold from a major pub chain to a microbrewer, fledgling pub operator or family brewer, the MRO could have been triggered, acting as a disincentive to the sort of business transaction we want to support and encourage as part of the diversification of the pub market.
That means that campaigners and the next Government will need to be vigilant to prevent any attempts to use the amendment to game the legislation and exempt from the rights companies with any association with companies that we would expect the legislation to cover. The Minister in the other place has made specific the Government’s intentions and we have heard that there is consistency across the coalition.
On the subject of tenants of pub-owning companies that go into administration, we fear that, at a time when the whole future of a large number of pubs would be very uncertain, the original provision would have made the task of the administrator a great deal more difficult. When they would be attempting to bring order to a complicated situation, some of the stock they were trying to sell off to new providers would disappear and move into the free trade sector. We concluded that that would make it much more difficult for pubs to survive in the event of a major pub-owning company failure. For those reasons, we support those omissions from Lords amendment 39.
On Lords amendments 47 to 53, we are pleased that the Government have not sought to reintroduce to the code pub-owning companies with fewer than 500 pubs. The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) and I have enjoyed many a to and fro on the subject during the Bill’s various stages, but I remain of the view that, in voting the way we did, some egregious practices may not be covered by the protections. However, without that concession, we would have been less likely to win the support of the House for the MRO option. In the final analysis, that prize was worth the sacrifice. As a gesture of good will to the industry and as a matter of honour, this House should stick to what we have given it to believe we were legislating on, namely a code containing provisions for businesses owning more than 500 pubs. We are therefore pleased to support the Government’s commitment.
The Government have probably got the balance right in Lords amendment 47, which accepts our suggestion of extending code protections—apart from the MRO option—to tenants whose pubs are sold from a pub-owning company covered by the Bill’s provisions to a company outside the Bill’s scope.
Lords amendment 46 also performs a delicate balancing act by retaining the protection for pub-owning brewers to offer free of tie while also retaining their right to insist that their product is marketed. The question I asked the Minister is important, because some pub-owning brewers might think that retaining their stock and the right to market it is more important than their wholesale business. In that eventuality, if a brewer stops selling through their wholesale business, which they are perfectly entitled to do, a tenant who is in principle free of tie will still be forced, under the provision, to buy from that brewer as the only option available. We will need to look at that again.
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In summary, the pubs code with a market rent only option, which Opposition Members and indeed many right hon. and hon. Government Members have called for during most of this Parliament, is now being delivered. A considerable amount of work still needs to be done to ensure that the code backs up the Bill’s intentions, but this House and the other place have done a job of work and the Bill, which we have a chance to pass into law today, is a good deal stronger than anyone could have anticipated back in July.
The Minister is absolutely right to say that Lords amendment 86 is very important. Ironically, she quoted her right hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone), who said in 2009 that four years was too long to wait, but she has been part of a Government who have waited until the very end and who—even during the passage of the Bill—did not intend to bring in such a provision until, in the face of defeat in the other place, they had to back down on the amendment championed by Baroness Thornton and Baroness King. The amendment stayed on the Lords marshalled list for weeks and weeks without the Government taking any action. When Baroness King spoke in favour of the amendment during a Lords debate on international women’s day, no Government peers rose to support her. Although I entirely agreed with the principles laid out by the Minister, it is a little bit rich for her to claim that Lords amendment 86 is part of some grand strategy, when it was simply a reaction to an impending defeat in the other place.
Notwithstanding that fact, an important step has been taken, and if Baroness King was willing to heap praise on the Government for their athletic U-turn, who am I to stand in the way of recognising that in this area, as on pub companies, the Government may have taken some time to get there, but they have got to the right place in the end?