My Lords, I will speak also to Amendment 90C. We come to Clause 60 about levy funding. This brings us to the age-old question of who is going to pay for the regulatory structure now being set up.
Clause 60(1) says:
“The Adjudicator may require pub-owning businesses to pay in each financial year a levy towards the Adjudicator’s expenses”.
Pub-owning businesses are, of course, defined elsewhere in the Bill as having 500 or more tied pubs. I think the word “may” is a euphemism. “Will” require is undoubtedly the right way to put it—who else is going to pay?
I recognise that any pubco with fewer than 500 tenants falls outside the code, although I share the questions of the noble Lord, Lord Berkeley, over the logic of why a tenant of a pubco owning 500 tied pubs should be treated any differently from a tenant of a pubco owning 450 tied pubs. The noble Lord, Lord Berkeley, made a very fair point as far as that was concerned. But I can reassure him because the answer is that in quite a short period of time it will not be outside the code. It is inevitable that the MRO option and the Pubs Code generally will roll out over the whole pub sector. It may be unofficial but no small pubco or brewery will be able to resist the demands of one of its tenants who thinks that his rival on the high street who is owned by a large pubco has gained some competitive advantage. The small pubco or small brewer may resist for a bit, but in fairly short order they will have to concede or risk having some seriously disaffected tied tenants, on the basis that the tenants will say that if the brewer has nothing to hide, they have nothing to fear.
The code will become the standard for the industry, not just in the way the MRO option has to be offered but in a range of other factors that make up the tied relationship under the code. My argument is that those who use the code and are able to take advantage of it ought to pay for the system it establishes. So Amendment 90B leaves out “may require” and inserts the words “must require every”, and Amendment 90C
changes the definition of those required to pay the levy to include all companies or breweries that operate tied pubs.
The levy, which will be presumably be levied on a per-pub basis, would not cost the smaller companies much. The bulk of the costs of the new regulatory regime will be borne, quite rightly, by the larger tied estates. However, there is an important point of principle that those who benefit from a regulatory regime should contribute, however modestly, to its cost. I beg to move.
7.15 pm