The Future of Pubs

Rory Stewart Excerpts

Thursday 9th December 2010 Westminster Hall

[Greg Mulholland]

I do not think that I have ever taken part in a debate in which the interventions were so accurate and helpful. My right hon. Friend and ally is right that there is a scandal going on, with pub owners—whether individuals, pub companies or brewers—who have decided that they want to do something else with the pub deliberately running it down. Often an inappropriate person is picked to run it. That has happened in Leeds and, I am sure, around the country. It is a scandal, and takes us back to the fact that communities have no say in the process.

I hate to see boarded-up pubs. One of my local pubs, the Summercross, remains boarded up after we were conned by a company that told us it would quickly build a care home there. That was more than two and a half years ago, and it is still a huge eyesore in a very pleasant part of Otley. The surrounding community has no power. I agree that there should be powers to stop people land banking derelict buildings that could and should be used. However, we must not let that become an excuse for it to be made even easier for people to lose their pubs.

I welcome the community right to buy that the Government have proposed and look forward to hearing more about it from the Minister. It fits very well with the idea of the big society and with our passion for empowering communities, decentralising power and giving communities a voice. However, I have one note of caution to sound for the Minister about something I have raised previously. Although it is incredibly welcome that communities are to be given the opportunity to see whether they can take over ownership of their pubs, that will not solve the problem of popular, wanted and viable pubs closing. In some areas the community will be unable to take a pub on, or will not want to; but it will still want the pub to continue. I have seen many cases in which a good small pub company, small brewery or individual wanted to buy or take on a pub; but they can currently be prevented from doing so. Unless we include in the planning process a right for communities to have a say in a process, that gap will not be plugged. I ask the Minister to consider that.

I now turn my attention to the model of the beer tie operated by pub companies, which my hon. Friend the Member for Staffordshire Moorlands has already outlined. It would be useful to give the House an update on the current position. I look, once again, to the Opposition Benches, because, after a long campaign fought by several organisations, the previous Government listened and acted. That was extremely welcome and I was delighted when the present Government, through Business Ministers, said that they would follow the process that was put in place by the previous Government. That was extremely important and positive.

I shall not go through the figures and the issue of the tie, but the present position is that three recommendations were made by the previous Government and adopted by the present one, and they come within ministerial responsibilities. The first is that the industry should ensure the accuracy of flow-monitoring equipment. We have already had mention of that. The second was the implementation of a code of practice; and the third was that Ministerial action should follow a failure to do those things and establish a code of practice that addressed the concerns of the Select Committee on Business and Enterprise. That is crucial. In addition, Ministers would consider the matter and would be minded to refer the matter to the Competition Commission if reform was not forthcoming.

I raised concerns with the Minister’s colleague, the Secretary of State for Business, Innovation and Skills, to whom I was perhaps a little less kind in a previous debate, about the merging of the Competition Commission with the Office of Fair Trading and its implications for the process in question. That is in the light of the fact that the OFT came up with the extraordinary decision that, although it admitted that tenants were not treated fairly and beer prices to the customer were higher, there were no competition issues. I look forward to hearing about that.

So far the result of the process is that only two companies have established an accredited code by the deadline, which was 1 July 2010. The deadline for implementation was 1 October. Therefore 28% of British Beer and Pub Association members failed to meet their obligations. The BBPA framework on which the codes are based deliberately and explicitly excludes the commercial issues that constituted the problems highlighted in the ministerial response. Crucially, no company code offers a genuine free-of tie option to lessees and few offer a guest beer option. The reality—I have to make this clear—is that so far those companies deemed to be operating unacceptably to the previous Government and the Select Committee, and to this Government, are still doing so. Unless that changes significantly, Ministers will have to act.

I have to mention the codes of practice, some of which are now being produced. Hon. Members may not be surprised that I will mention specifically the Enterprise Inns code of practice, a glossy document that starts:

“Our new Code of Practice sets out our commitments to you”.

However, it generally sets out the tenants’ obligations to Enterprise Inns. Tenants are being pressed by Enterprise business development managers to sign the certificate of acceptance in the manner of a door-to-door window salesman. I ask the Minister’s colleagues in the Department for Business, Innovation and Skills to look at that, because not only are the codes—particularly that one—not delivering what they were supposed to deliver but there is a danger that they will make the situation worse, will put more onus on the tenant and are doing nothing to address the problems in that business relationship.

I shall mention something now that will upset deeply my colleague the hon. Member for Burton although he may wish to comment on it in his speech—I hope that he does. The largest pub company, Punch Taverns, is in a desperately parlous financial position. It gives me little pleasure to say so. There is a crisis in the biggest pub companies, which are in eye-watering debt. That is the biggest threat that the British pub faces at the moment. Hon. Members have said that that is because of bad business decisions—the sort of gambling that gave the bankers a bad name—including over-valuing their estates, and now they are in vast amounts of debt to creditors. Pubs are being sold and closed continually to deal with that. Enterprise has just raised another £9 million from auction.

There is concern that Punch is teetering on the brink. I hope that that is not so, because the last thing that we want is many pubs suddenly coming on the market and many of those being converted to other uses. That goes back to what I said before. We have to get something in the planning process that stops people simply getting rid of pubs for what they can get.

I come now to my final question to the community pubs Minister. It gives me great pleasure to call him that. The Minister is a fan and a friend of the pub and I look forward to chatting with him, perhaps over pints in pubs, as we move forward and work together with his team and the all-party save the pub group. Are the Government committed to a below-cost selling ban? I think that all hon. Members would support that to stop the scandal of supermarkets selling beer below cost. It is not a price-fixing measure or thinking that is against the free market; we are simply saying that supermarkets should not be selling beer below cost to get people into their stores. If they want to do that, they can do it with chicken or bread, or things that are useful to people, but they should not undermine pubs and sell irresponsibly.

[Rory Stewart (Penrith and The Border) (Con)]

I would not encourage supermarkets to underprice other goods, such as dairy products, for the sake of beer. I strongly support the hon. Gentleman’s saying that they should not underprice beer, but we should not encourage them to underprice bread or any other commodities, either.

[Greg Mulholland]

I was not suggesting that they should do that. If they really want to attract people to their stores in a moral way, they should do so with things that are of value. I am not for one minute suggesting that people should be under-cutting. I am one of many people—I am sure that colleagues have campaigned for it—who would like a supermarkets ombudsman and fair pricing for dairy farmers, for example. I reassure the hon. Gentleman on that point.

I have asked the Leader of the House about below-cost selling, which was not in the policing Bill last week, although many hon. Members thought that it would be. Can the community pubs Minister give us some news about when that will come forward? I hope that this is the last Christmas that we see irresponsible promotions that do damage to pubs, which also rely on Christmas.

Duty is a challenge. I congratulate the Government on not increasing beer duty again, because it has gone up too high and has been damaging. I hope that that message has got through, even in this difficult time, because putting too much duty on beer will have a detrimental effect, particularly on smaller and medium-sized breweries that come above the progressive rate relief, which incidentally we must keep for microbreweries that a colleague, who is no longer in place, so correctly mentioned.

My final challenge to the Minister is not for his Department, but is one that he should pass on. We must find a way to help pubs by allowing a differential rate of duty. That is a challenge with regard to European law, but we can face that and should not keep using it as an excuse. There are ways of doing that. One way, which has been raised, is to have a differential rate of VAT for pubs, which is worth putting on the table. Another way would be to have a differential rate for draft beer, which at the moment is believed not to be possible through EU law.

Another solution was given to me by the head brewer at Fuller’s in London. There may be a way to have a different rate of duty on real ale, specifically cask ale, which is our great national drink—our Burgundy and Bordeaux—of which we should be prouder and about which we should make more noise. Every barrel and cask that leaves a brewery has an allowable duty-free element, because it is a sedimented product. If that provision could be unified, it would remove all the bureaucracy of checking at the gate and the different rule per beer and there might be a way to allow a different rate of duty perfectly legally within EU rules. I put that challenge to the Minister.

I thank all hon. and right hon. Members for attending this important debate. It is great to see such a wonderful turnout and I know that they are all passionate. I look forward to working with all of them, and with the community pubs Minister and the all-party save the pub group, to do as much as we can to support and save our great British institution.

--- Later in debate ---

[Andrew Griffiths]

As always, my hon. Friend’s inner conservative core comes through. I do not want to interfere in people’s lives. I do not want to interfere in the pricing, but the reality is that either way, society is paying for the impact of irresponsible pricing by supermarkets. We pay for it in the social toll that it is taking on society, we pay for it every Friday and Saturday night in increased policing costs, and we pay for it in the impact on accident and emergency units throughout the country when people have drunk too much alcohol.

[Rory Stewart]

Would my hon. Friend tax it more? Is that not the way to deal with the matter?

[Andrew Griffiths]

That is a suggestion. I think that with the new coalition Government, there is now recognition that something needs to be done. My right hon. Friend the Home Secretary, in numerous speeches, has made the commitment to ban below-cost selling. My hon. Friend the Member for Leeds North West points out that we were expecting that last week in a Bill. It did not arrive. It is incumbent on us to press the Government to deliver on their promises, but if we cannot come up with a solution—a method for identifying what is below-cost selling that works—we should go down the taxation route. Exploring the idea of an off-sales tax would be interesting. Such a measure would help to level the playing field between the supermarkets, which have no responsibility for the after-effects of drinking, and the pubs, which, in contrast, have to pay for and deal with the implications when people drink too much alcohol.

I will finish my remarks quickly, because I have spoken for some time, but the industry does have to bear a little responsibility. It has not yet coalesced around a definition of what below-cost pricing means. There is an element of interference from Brussels that prevents us from clearly targeting it. I am referring to European competition laws. However, it cannot be beyond the wit of man for civil servants, the industry and retailers to get together and come up with a solution for below-cost selling that takes into consideration the cost of production, that leads to an increase in the price of alcohol on the supermarket shelves and that will begin to redress the balance and support our pubs.

I say to the Minister that although not many Opposition Members are present, there is a strong commitment on both sides of the House to support pubs and to tackle below-cost selling. We look to him not only to do what he can within his area of responsibility in the Department for Communities and Local Government, but to be a pocket rocket for the brewing industry and the pub industry, to be our champion across Whitehall and across Departments to ensure that we can say that this coalition Government, for the first time, did something to help British pubs.

--- Later in debate ---

[Rory Stewart (Penrith and The Border) (Con)]

I, too, will be brief. Is there just one more Member to speak?

[Dan Rogerson]

Two more.

[Rory Stewart]

My apologies. I will limit myself.

This is an enormously interesting debate partly because—rocks hitting the building aside—it is a debate that we would not have had in the past. When Winston Churchill tried to talk about pubs, it was an incredibly controversial subject. When he was a Liberal, he ran his entire campaign attacking the Tory Government on the basis of the open hand at the Exchequer and the open door at the pub. In my own constituency, pubs were a taboo subject. This whole debate would have been like arguing for a larger salary for Jonathan Ross. It would have been a suicidal debate in this Parliament before the second world war.

So I am grateful that this debate is happening and I am grateful to the Members of Parliament who have spoken so eloquently about the glory of our pubs. For example, my hon. Friends the Members for Filton and Bradley Stoke (Jack Lopresti) and for Carmarthen West and South Pembrokeshire (Simon Hart) spoke in an extraordinary way about what a pub means to us. It is not just about the young farmers’ club—I have also cycled from pub to pub with the young farmers’ club—but about what pubs mean for the broader economy. In my own constituency of Penrith and The Border, pubs are important for tourism. For example, the George and Dragon at Garrigill is an absolutely essential pub for tourists on the coast-to-coast route and the Pennine way. People need to stop and eat. Pubs are essential to the broader economy.

I represent the most sparsely populated constituency in England. We have 280 pubs in the Eden district alone for 50,000 people—a density of pubs that is more than six times higher than the national average. That reflects the nature of our communities and the nature of our identity.

However, the problems that these pubs face are not problems that we can belittle or try to micro-manage from Parliament. Structural issues across the country have meant that, since 1997, 2,200 schools, 550 clinics and hospitals, and 330 police stations have all closed. The pubs are part of that broader movement of the stripping-out of rural services. These are structural issues. In France, they are fighting to protect the French bistro. France has lost 6,000 bistros. So we cannot imagine that these events are simply accidents of pricing or smoking policy; instead, they are a whole shift in culture.

The small solution that I want to propose in the limited time that I have available is community pubs. The community buy-out of the Crown at Hesket Newmarket was, of course, the first in the country. Cumbria is now repeating that fourfold. However, these are very difficult things to do. The problems that communities face in buying out pubs are the same problems that they face with everything: problems with financing; problems with organisation; problems with regulation, and problems with landlords who refuse to sell. As Members of Parliament, we have a unique role to play on behalf of communities, convincing landlords to sell and convincing communities to come together and find financing, through the Plunkett Foundation or the big society bank.

In the end, however, two things remain. The first is that communities know more, care more and can do more than people in Westminster, and the second is that we need to recognise that, with all our orthodox attachment to the free market, this sector is an example of where it may be necessary to have subsidy and regulation, to protect something that cannot be quantified simply—a value that spreads into the deepest recesses of English civilisation.

In a room such as this one—a wooden hall—one of the very first elements of law saw King Edgar the Peaceful introduce legislation on the licensing of alehouses in 965AD. It is with that point that I conclude—and with a great testimony to the introduction of music. Let us say, as Churchill and our other predecessors could never have said, “Let us sing, let us eat, let us drink, let us be merry, for tomorrow we die.”