My Lords, I have not participated in proceedings on the Bill before, so I apologise to the Committee for coming late in the day. In the light of what I am going to say, I also owe an apology to the noble Lord, Lord Kennedy, the noble Baroness, Lady Deech, and other noble Lords who have put their names to the amendments in this group as I am going to urge my noble friend to resist them. They are perfectly well meaning, but they are the statutory equivalent of trying to make water flow uphill. They can only inhibit, or slow, pub closures. The brutal truth is that there are too many pubs for modern Britain, too often they are in the wrong place and the whole sector is insufficiently profitable. In cases on the margin, where they could, perhaps, be profitable under other ownership, the opportunity to list as an ACV exists, as several noble Lords have said. Pubs are perfectly adequately protected.
This is an issue which arouses strong emotions. Until February 2014—more than three years ago, and therefore outside the time during which I have to declare a past interest—I was a non-executive director of a major integrated brewery and pub operator. It had five breweries from Cockermouth in Cumbria down to Ringwood in Hampshire and operated more than 2,000 pubs. Some were managed—there was an employee running the pub—and some had tenants and were tied, as was the case in those days. It is often overlooked, but that is a very easy way for people to set up their own business because you have a business offered to you, which you can operate, and you can begin straightaway without having to put up much, if any, capital. While under the old system, you had to buy your beer and soft drinks from the owner, food was down to you. I declare that interest because it is important as this is an issue which arouses strong emotions. The last time we got into this discussion, which was last summer, I managed to obtain a starring role in Private Eye as a result of CAMRA’s intervention. My speech was described as “the high point in an otherwise undistinguished political career”, which I thought was fair dues. So are you listening, Private Eye, as I want to get that on the record?
Why does this issue arouse such strong emotions? The noble Lord, Lord Cameron, touched on it. It is because of how people view a community. A community has three aspects that people think are important. They think there should be a shop or post office, some place of worship—a church—and a pub. They do not necessarily want to use them a lot. They will go to the shop or the post office when they have forgotten to buy bread and milk at Tesco. They will not go to church very often. They will go at Christmas and Easter, if they are Christians. They may want to get married there, they may want to have their children christened there and to be buried there—hatches, matches and dispatches—but they will not go much apart from that. They will go to the pub occasionally, but not regularly. The reality is that if you do not use it, you lose it. Most of the pubs that are under pressure are not attracting sufficient custom to be a profitable operation, but because of what is in people’s view of a community, if any of those three pillars is going to close down, people will get exceptionally excited about it and believe that somehow, something must be done—hence the emergence of the ACV procedures.
The second reason people feel so strongly about it is the belief which CAMRA has assiduously fostered—I pay tribute to its campaigning capability because it has been the most enormously successful pressure group—that somewhere in this operation there is a pot of money, that someone is making a lot of money somewhere, and if only it got down to the pub and the pub owner all would be right and the pubs would be happy and we would be in the sunlit uplands once again. The reality is that the sector is under enormous economic and societal pressures. There is not a lot of money in the sector and the idea that somehow pub owners or brewers are making huge profits at the expense of landlords does not tie in with reality. The reality is very different. It is a sector under stupendous strain—and I shall give the Committee three or four quick reasons for that. First, there is exceptionally cheap supermarket alcohol. If noble Lords go to a supermarket on the weekend before a bank holiday weekend, when things are on offer, they can probably buy lager for 60p or 70p a pint. If they go to a pub, they will pay £3 for it. So a lot of people are increasingly buying alcohol in the supermarket and drinking it at home.
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The lifestyle arrangements for Britain have changed. The evenings when people used to go to the pub and sit and chat have changed—people have alternative leisure pursuits. As for the food offering, which is an important part of the pub chain world, other restaurants have grown, and the idea of restaurants and different types of eating have become very prevalent. They have had tremendous cost pressures, with council tax and beer duties; this is the third most highly taxed country in terms of beer duty in the EU. Then of course there has been the living wage, which is important when you are using casual labour. There have been legislative changes, with the smoking ban and the drink-driving ban, and new impositions from licensing laws.
Last but not least, population movement has had a dramatic effect on how people use pubs. The company with which I was involved was based in the West Midlands.
Members of the Committee will know that the centre of the carpet trade was Kidderminster, and the company with which I was involved used to operate 13 pubs in Kidderminster. Around the turn of the century, the carpet trade collapsed, and now there are three pubs in Kidderminster. The brewer did not close 10 pubs, but people did not use them, which is a pattern that has been repeated across the country in a lot of places. Nothing that the amendments proposed by the noble Lords, Lord Kennedy and Lord Shipley, would do attacks or deals with those really important issues about societal change and cheap alternatives and the way in which our population is moving.
There is another reason why it becomes incredibly personal: many people choose to run a pub as a career change. At the age of 40, 45 or 50, they decide that the rat race is not for them, and they think that this is a way for them to get into a different lifestyle. They see themselves leaning over the bar on a sunny summer’s evening, dispensing pints and homespun philosophy and having a delightful lifestyle. The fact is that it is not like that. Most nights are like tonight, when Leicester City is playing Derby County on the telly and people will stay home to watch it. The pubs will sell a few pints and have to clean up, having made virtually no money at all. So after working these grindingly long hours for a relatively low reward, the husband and wife who have taken it on as an alternative lifestyle will say, “What are we doing this for?” None of us likes to think that we have made the wrong decision—so instead of saying that they have got it wrong and that it does not work for them, they say that the system does not work for us, and someone let them down. In circumstances where there is a big brewer or pubco as the landlord, they are the easy people to blame. What is exceptionally attractive about the British character is that when David fights Goliath, the British will instinctively back David—and in this case David is the individual pubs.
A thought was expressed in one or two remarks that somehow there was no interest in companies of which I was a director in maintaining pubs—that we sought to close them—but 40% of the beer that we brewed went through our own pub chains. So the idea that we would try to close pubs is to suggest that we would cut off our nose to spite our face, because we would be destroying 40% of half our business. So we were anxious and keen, wherever possible, to ensure that pubs survived and prospered.
This is part of a long-running attempt to believe that there is somehow a magic key for this door. It began with the establishment of CAMRA in the 1970s and 1980s; the idea was that the pubs were closing because there were no new beers—the big brewers dominated the market, and new beers could not get in because the brewers owned the pubs. So we had the beer orders, the idea of which was to split pubs from brewers and thereby open up the market. Did it have the effect we wanted? It led to the emergence of the pubcos, which are really property companies which sell beer and other alcohol that they buy in as part of their raison d’être.
That could not be accepted, so the idea then was that we must find ways to get more new beers into the market, so that people will go into the pubs to try them.
We introduced a break in beer duty for those producing 50,000 hectolitres a year or less, so you can sell your beer more cheaply. A lot of craft beers have emerged, which people are drinking, but still the mass of the population goes on drinking the major lagers that noble Lords see advertised on their televisions every evening.
Then, because of that, we decided it must be problem with the pub operators, so we introduced the breaking of the tie in the Small Business, Enterprise and Employment Act. There was going to be a pubco and pub regulator, which would rebalance the situation, and everything was going to be all right. But we saw in the FT in December that that is not working well enough, and pubs are still closing.
People are chasing a will-o’-the-wisp, thinking that somehow these pubs can be preserved. Of course there are bad occasions and places where people do not behave as they should on either side of the argument, but the truth is that the pub industry is in decline, has been in decline and will continue to be in decline as a sector until we have far fewer pubs than we do currently.
Lastly, many noble Lords who have spoken talked as if people are being bullied by the major brewers, which are seeking to take advantage of the situation. If, as I do, you ever speak on this matter, you receive correspondence from individuals whose sole asset is a pub and who have found they are locked into a situation where they can move neither forward nor back. The pub is no longer viable—the kitchen space is not big enough, the demographics are not right or the car park is not large enough—and they are locked into an asset which is probably both their house and their business, and in which their whole life savings are invested, unable to move.
I urge the Committee and the Minister not to think in terms of David and Goliath. I share the wish to keep pubs open, but to do that, they have to thrive, and for that to happen, people have to use them. Nothing in these amendments is going to make anybody use a pub. An ACV is a perfectly good and satisfactory means for communities to look after themselves, but all another link in the chain and another restriction will do will be to scare off capital and people wishing to invest in the sector. I hope my noble friend will resist these amendments.