Adrian Bailey
Main Page: Adrian Bailey (Labour (Co-op) - West Bromwich West)Pubs Code and the Adjudicator
Adrian Bailey ExcerptsWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
It is an unalloyed pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Member for Leeds North West (Greg Mulholland) on securing this debate and on his long-standing and tenacious involvement with the issue, which has played a vital part in bringing this legislation to the statute book.
My own relatively minor and insignificant involvement with the legislation stems from my involvement on the Select Committee on Business, Innovation and Skills pre-2010, under the chairmanship of Sir Peter Luff, and subsequently as Chairman between 2010 and 2015. Significant parts of the legislation are based on our recommendations. Overall, I am absolutely delighted that we have got this far, as it has been a long and hard battle. Having got this far, not to get it all right would be a tragedy. This debate is particularly relevant in assessing where we are with it, the potential consequences of not getting it right and what we can do to ensure that we do.
Although I did not mention them, there were two previous inquiries into the issue even before my involvement, under the chairmanship of Sir Peter Luff. These issues have been debated for well over 10 years in successive Select Committees, and three broad themes have emerged from all the inquiries. The first is the huge imbalance in advantage between the pub companies and the tenants who run their pubs: the plight of tenants, their low income and the churn of tenancies that has played a significant part in the decrease in pubs in our country and in local communities. We must not forget the often harrowing tales of some individuals who have been ruined as a result.
The second theme is the appalling relationships between many tenants and the pub companies and the climate of fear that has prevailed. I conducted a survey prior to the last election on the proposed legislation, and on the incomes and conditions of some of the tenants operating in the pubs in my constituency. I got probably a 50% response and what was significant was that not one of those who responded said who they were or what pub they were in. One person specifically said they were not prepared to respond because they feared some sort of retaliation. To me, that was perhaps more representative than almost anything else of the climate that pub tenants have to work under.
The third theme has been the attitude of the pub companies in responding to the very reasonable and moderate recommendations of successive Select Committees that they sort their own house out and introduce codes of conduct and standards of behaviour on a voluntary basis. It is fair to say that those successive Committees were met with resistance, obstructiveness and, in one classic case, downright abuse. Some long-standing Members may remember Ted Tuppen, the former chief executive of Enterprise Inns, describing the members of Sir Peter Luff’s Business, Innovation and Skills Committee as all being morons. I can take being called a moron; what I am concerned about is that if we do not get this right we might start being called low-achieving morons, and I really would object to that.
Because of the obstructive attitude of some in the industry and the snail’s pace of reform on a voluntary basis, there has even been some reluctance in Parliament. Indeed, the hon. Member for Leeds North West and others will know what a difficult job it was to move the previous coalition Government from their position on voluntary reform to taking the necessary steps to legislating for it. It was only when it became crystal clear that voluntary reform was just not going to work that the Government were prepared to introduce legislation. I give all credit to those involved for accepting that it was not going to work and then taking the necessary steps to introduce legislation.
Having got so far—to a point where we are actually looking at the code—it is crucial to get the code right, because all the history of the involvement of the pub companies shows that they will do whatever they can to find ways of subverting the will of Parliament and what is appropriate to get a fair and equal balance between themselves and the tenants. I will not reiterate comments about the loopholes that have appeared, because they have been thoroughly, effectively and comprehensively articulated by the hon. Member for Leeds North West. However, it is crystal clear that unless amendments are made to the code, there could be ways in which this group—these pub companies—will subvert the long- stated will of Parliament on these issues. I look to the Minister’s response to hear exactly how the Government intend to engage and address the concerns that have been quite properly raised. If they do not, then locking tenants into a statutory framework that fails to address the underlying principle that the Government have articulated—that tied tenants should not be worse off than free-of-tie tenants—will mean an opportunity lost, which could present more and more problems in future.
Let me just say a few words about the appointment of Mr Newby. I do not like getting dragged into issues about individuals and personalities, and I certainly do not like prejudging somebody’s performance. However, I must make a number of general points about the appointment. The first is the crucial strategic importance of getting the appointment right. Whoever is in this post has a pivotal role, not only in interpreting and delivering justice for the parties involved in any dispute, but in transforming, in the years ahead, the confrontational and aggressive culture that exists between the parties, which could be really significant in the future development of this particular industry.
For that to happen, there must be total confidence on both sides of the historic divide, but it is quite obvious that the stated levels of interest of this person have given rise to serious concerns. I know that my hon. Friend the Member for Sefton Central (Bill Esterson) has written to the Minister and I believe there has been a response that sought to allay those concerns, but subsequent remarks by the hon. Member for Leeds North West indicate that there is still huge concern about the perceived level of conflict of interest of the person in this particular position.
[Steve McCabe in the Chair]
My other query on this issue, and perhaps the Minister will allay my fears, is about the accusations—I would not pretend to know just how valid they are, but they appear to have come from a BIS source—that this particular person has been involved with the drafting of the code of conduct.
Anna Soubry
It is a pleasure to serve under your chairmanship, Mr McCabe. May I make it absolutely clear that Paul Newby has not been involved in the drafting of the code? To allay the hon. Gentleman’s concerns, let me say that the only dealings he has had with officials in BIS since the announcement of his appointment, which was made in the House in a speech—without any comment, if I may say so; there might then have been some fractious discussions as a result of an urgent question—have been in relation to the setting up of his office.
Anna Soubry
Let me make it absolutely clear that there has been no help at all in the drafting of the code. The only help has been in the setting up of the office.
Mr Bailey
It is very helpful to have that on the record. I am sure that the Minister will understand, as I do, that often in politics perception can become reality, and if these rumours are going round, obviously that has considerable significance and could underlie or even reinforce the level of suspicion that exists about the proposed impartiality—
Mr Jackson
In an effort to be helpful and for the avoidance of doubt, let me point out that the Minister said on 10 March that Mr Newby had
“already started work. He has been very helpful to my officials in making sure that we have the pub code up and running, and ready to come before this House.”—[Official Report, 10 March 2016; Vol. 607, c. 425.]
Therefore, with all due respect to the Minister, there was some room for ambiguity and I am pleased that she has clarified that matter now.
Mr Bailey
I thank the hon. Gentleman for his intervention, which demonstrates the source of the ambiguity. That is certainly something that needed to be clarified, because if there is any suspicion that the arbitrator is involved in the drafting of the code, that calls into question the future impartiality of its interpretation. His intervention also demonstrates how easy it is, in this rather long-standing antagonistic set of relationships, to set things going that could perhaps be remedied with a slightly different approach.
What is undeniable is the lack of trust from the tenants’ side on the appointment of Mr Newby. I do not like to prejudge that appointment. The hon. Member for Peterborough (Mr Jackson) mentioned having some kind of pre-appointment hearing for the adjudicator. That had crossed my mind as being something that, if the Minister is to go ahead and make this appointment, might go some way to satisfying everybody. I am in a slightly difficult position, because I am not on the Business, Innovation and Skills Committee—as its former Chair, I do not feel that it is my job to start recommending what it should be doing now—but it would certainly fall within the Minister’s remit to perhaps gently suggest that it would be helpful for the Department to have such a hearing. I know that often there are informal channels of communication between Departments and Select Committees, and their roles can be reinforced if those channels are used properly. I gently suggest that the Minister could look, if not at a BIS Committee pre-appointment hearing, then at some form of parliamentary scrutiny that would enable an adequate response to the questions that are circulating.
In conclusion, I reinforce this point. The legislation has been a long time coming and people have devoted so much work to it. A successful outcome is so important. Given its long gestation, we do not want the legislation to be damaged at birth. I stress the need for the Minister to listen to the comments that have been made today. She should take them on board and provide mechanisms and responses that will not only enable the wider participants—the tenants, the community pubs and the beer-drinking community—to be satisfied, but Parliament, too. Every opportunity should be given for scrutiny to deliver that satisfaction. The importance of the industry to the individuals within it, the communities they represent and the economy as a whole is so great, and we want to get the legislation right. This is a once-in-a-lifetime opportunity. I ask the Minister to listen to everyone to ensure that we get it right.
Bill Esterson (Sefton Central) (Lab)
It is a pleasure to serve under your chairmanship, Mr McCabe, as it was to see Sir David in the Chair earlier. I congratulate the hon. Members who applied to the Backbench Business Committee on securing this afternoon’s debate. It has been an excellent debate, and I want to mention the hon. Member for Leeds North West (Greg Mulholland) in particular. It is nearly 30 years since I attempted the Otley run, much of which is in his constituency. I was a Leeds student then, and cannot remember it very well. We can all guess some of the reasons why my memory is not what it was.
I value the country’s pubs, whether they are in Leeds North West or my constituency. Members of Parliament have a duty to look after them as much as possible, particularly the ones that are run by pub tenants, because this is about a fairer deal at our locals. At a time when pubs are closing at a rate that has not been seen in more than 100 years, there is an urgency about doing what we can to support the great British institution of the local pub. A fairer market would help local communities and economies as well.
The prearranged monopoly, which is what beer ties amount to, locks microbrewers out of almost a third of the market. The Society of Independent Brewers showed a 25% increase in the choice of cask beer available in the UK between 2012 and 2015. That is 4,000 cask ales—a huge industry with incredible potential for many small and micro businesses. Imagine the potential for sales and jobs in the industry if the market grew by up to 50%, and yet microbrewers are denied access to a third of pubs because of their ownership structures. I have three excellent new microbrewers in my constituency alone: Red Star, Neptune and Rock The Boat. Members will be able to sample some Red Star ale when it is on sale in the Strangers Bar in the week commencing 8 June. I encourage you to sample some as well, Mr McCabe.
Bill Esterson
I am not sure what the ethics of such a proposal would be, so I shall move on, but I would be happy to share a pint with my hon. Friend in that week.
There is real consumer appetite for quality, locally-produced real ale. The monopoly on beer sales for pub companies and the breweries they own really does not reflect what consumers want to buy. The landlords of pubs in my constituency, including the Corner Post, Stamps and the Freshfield, are seeing booming custom and will back me up because they are serving some of the beer that I mentioned from the breweries that have recently started up. We have heard many stories, not only today but over the years, about how pub tenants have been ruined or promises of investment have not materialised because of the actions of the pub-owning companies. That is why it is so important that we get this absolutely right.
Market rent-only is only an option. If the pub companies and brewers run a robust and positive business model, they have nothing to fear from the alternative. If pub companies feel that they are giving tied tenants the best option, they should be willing to put the options for their tenants on the table and convince them that beer ties are a sensible business decision.
We await the publication of the pubs code. When she responds, I hope the Minister will tell us when it is going to be published. It needs to be published soon, so that the industry has the time to analyse it properly and to address the weaknesses we have heard described today—I will come to some of those later—before it goes live on 1 June. Suspicion has often been raised about how the code has been handled and we need to see the final version to allay those concerns. Let us remember that it took an amendment tabled by the hon. Member for Leeds North West for the market rent-only option to be included in the Small Business, Enterprise and Employment Act 2015. That amendment received wide, cross-party support. To their credit, the Government accepted the will of MPs and peers and made the commitment to include market rent-only options and parallel rent assessment to go alongside them.
Parallel rent assessment matters because it offers a side-by-side comparison, so that pub tenants can determine whether to remain tied or to go free of tie. Pub tenants need parallel rent assessment so that they can make an informed decision, so having market rent-only without parallel rent assessment simply made no sense. That is why there was so much concern when the initial consultation that was published in autumn 2015 appeared to exclude parallel rent assessment. But, after a lot of fuss, including during exchanges with the Minister on the Floor of the House at BIS questions, the mistakes in the consultation were rectified. The Minister deserves some credit for her response on that occasion.
What a great pity, then, that doubts still remain about the effectiveness of the pubs code so close to its implementation. The Government say that the market rent-only options will be offered to landlords at rent review or lease renewal. They also say that the trigger will be the rent review or lease renewal itself, rather than, as seemed likely at one point, only in the event of an increase in rent. However, there are two interpretations as far as tied tenants are concerned. One is that the effective date for rent review is the date of implementation; the other is that it is the date on which the notice is issued and when the review process starts, which is six months earlier.
The market rent-only option will be enforceable only from 1 June this year. Only rent reviews or lease renewals made after that date will entitle a tied tenant to a market rent-only option. When she responds, will the Minister clarify whether renewal notices issued before 1 June will allow pub companies to avoid offering the market rent-only option, even when the reviews are agreed after 1 June?
Then there is the pubs code itself and the concerns raised by the British Pub Confederation and others. The draft code appears to allow pub companies to force tenants to surrender a long lease for a much shorter one in exchange for the market rent-only option. The problem with that is that a tenant who takes a short lease will face uncertainty about what will happen at the end of it. Running a business of any kind requires certainty, and when the building itself is so crucial to the business—in fact, in this case the building is the business—not knowing whether a lease will be renewed dramatically reduces the attractiveness of market rent-only. This approach certainly appears to be the very opposite of creating the level playing field that I think we are all trying to achieve.
The draft code also suggests a waiver of the right to the market rent-only option for prospective new tenants, so pub companies could decide to let pubs only to tenants who waive their rights. Our concern about the loopholes that have been discussed today is that the combined effect of the two proposals in the draft code could mean business as usual for the pub companies, because tenants who want the market rent-only option will not have their tenancies renewed, while only those who accept the tie will be allowed to take on leases. Will the Minister clear this up and say whether those provisions will be included and whether the loopholes will be removed from the final version of the code? If they are not, pub tenants might start to think that the pubs code is not actually going to change very much at all.
All that brings me to the appointment of the Pubs Code Adjudicator. Like other Members, I think the hon. Member for Peterborough (Mr Jackson) made an excellent speech. I agree with pretty much everything he said. He made the points that, for a free market to operate effectively, it needs to be a fair market—I agree wholeheartedly with that—and that unless the code is drafted correctly, it will be unworkable. He also talked about conflicts of interest, which I will come to shortly.
In a number of our exchanges, not least when my hon. Friend the Member for West Bromwich West (Mr Bailey) was on his feet, the point was raised about whether the newly appointed adjudicator, Mr Newby, had been involved in the drafting. I think the Minister was trying to clear that up. Mr Newby may well have been involved in setting up his office, which of course is entirely proper; the problem is that the Business Secretary’s letter to the British Pub Confederation says that
“he shared his professional insights”
when the draft pubs code was discussed with him. I do not know whether that counts as setting up his office or as helping to draft the pubs code, but there seems to be some blurring between where setting up an office ends and helping to draft a code begins. In the end, I am not sure we are much further forward on what his role has been so far.
On the point about conflicts of interest, the Fair Pint campaign’s submission to the Small Business, Enterprise and Employment Bill Committee was clear: do not appoint a surveyor to the post. Any surveyor with experience of the field will have potential conflicts of interest. They will have acted for the big pub-owning companies and will not be seen to be impartial in arbitrating as the adjudicator between pub companies and tenants.