There are two parts to this. The question is whether the tenant is being forced to take supplies at a price higher than he can buy elsewhere. The key part is to ensure that, if the tenant feels that he or she is not getting the fairest price from the brewery, he or she can buy elsewhere. They can go to a wholesaler or other sources. That is his or her protection. A protection for the brewery is that it can insist that its beer be sold. A protection for the tenant is that the brewery cannot insist that the beer be bought from that brewery. It can be bought wherever the tenant wishes. The brewery has to compete for it and make sure that they offer the keenest price to the tenant.
After that exchange, I hope that my noble friend will be able to clarify and reassure me that the Government intends to provide certainty of supply, and that this provision will form part of the Bill. This is a very important amendment for the future of the industry.
Moving to Amendments 75, 76, 83 and 86, these are essentially drafting points to clarify the timing on when an MRO offer has to be made. I think the new clause addresses them but I hope my noble friend can confirm this.
Amendment 88 amends Clause 42(9)(b), adding at the end,
“provided that the requirement to enter into a new tenancy or lease if such tenants choose the Market Rent Only option shall not be considered discrimination”.
The purpose of that amendment is as follows. It would surely be unfair for the tenant to use the MRO option as a means to evade his obligations under his existing
lease. A tenant may choose the MRO option, but having made that choice, he must then sign up for it and it should not be discriminatory for the pub owner to require him so to do. Further, in taking the MRO option, the tenant is electing to agree to a normal commercial lease as defined by the British Property Federation. That is to say, an MRO lease does not contain any special underlying legal features unique to the sector. It would be most helpful if my noble friend would give some assurance on that point.
Amendments 79 and 89 are about “significant” and “unfair” and potentially have a greater impact. They concern the events that can trigger the requirement to make an MRO option available. Clause 42(6)(b) requires the offer of an MRO option,
“when the large pub-owning business gives notice of, or imposes, (whichever is the earlier) a significant increase in the price at which it supplies products, goods or services”.
This wording appears to be replicated in subsection (6) of the proposed new clause. Amendments 79 and 89 propose to replace “significant” with “unfair”.
The question is, what constitutes a “significant increase”? Is it the right word anyway? The reasons given for the introduction of the Pubs Code revolve around the inequality of arms between the pub owner and the tenant. The Pubs Code is intended to ensure fair dealing between the two parties and give the tenant redress when unfair practices have taken place. The word “significant” is a general term, not a particular one. The Oxford English Dictionary defines “significant” as important and notable. There might be many reasons for there to be a significant, important and notable increase in the price of what the Bill calls a “product, good or service” supplied to a tenant.
4.30 pm