It's time to protect pubs from exploitative PubCos

Too many pub companies force their licencees to buy limited products at inflated prices. But the Tories have consistently failed to act.

I often say that one of the best things about my job is that no two days are the same. But for the first time since I became shadow minister for pubs, I’m getting a strange feeling of déjà vu. This is now the third January in a row I’ve been involved in a grassroots campaign to drag ministers to the House of Commons to talk about supporting British pubs.
Pubs need this support so they can get a fair deal. Most people know a favoured local which has been left derelict or transformed into a supermarket. These personal stories are reflected by the national figures. The Campaign for Real Ale (CAMRA) estimates that 26 pubs close each week and that each closure costs the local economy £80,000. Pubs are more than just businesses – they are community hubs, part of the fabric of neighbourhoods which bind us together.
That is why it is so important that we fix the unbalanced and unfair relationship between landlords and the large pub companies (known as PubCos) from whom they rent their premises. In the House of Commons on Tuesday we will be repeating our call for a proper statutory code to govern this relationship and protect landlords.
Many landlords used to dream of opening a pub so they could be their own boss and run their own business. Unfortunately this dream is all too often not matched by reality. The PubCos own three quarters of Britain’s pubs and often require their licencees to buy all drinks products from them, at whatever price they determine. There also many disputes about setting of rents on pubs, and even cases where a licencee works hard to increase the profit of their pub only to see this swallowed up in increased rents the next year. The PubCos have been accused of creating perverse incentives to squeeze short-term finance out of their properties rather than promote long term stability. No wonder CAMRA estimates that three fifths of landlords tied to PubCos earn less than the minimum wage.
The cross-party BIS Select Committee has investigated this issue several times and has consistently recommended a strengthened statutory code to rebalance this relationship. Such a step is also supported by trade unions and small business groups. However, the Tory-led government has consistently failed to act.
A new statutory code would not be a silver bullet addressing all of the challenges that publicans face, but it would certainly make a positive difference.
In January 2012, the House voted unanimously to introduce such a code, but the government did nothing. So in January 2013, I called an Opposition Day Debate to highlight this inaction.  Just 24 hours ahead of the debate the government announced a dramatic U-turn and promised finally to introduce the code.  But a year later, despite a lengthy consultation, nothing has changed in legal terms.
So next Tuesday we will be debating the issue once again.
I will make a genuine offer to work collaboratively to get a code on the statute book to support local publicans.  But any new code must meet three key tests:
1. The Beer Tie, whereby landlords can only buy products from their PubCo, works for some licencees. However, for many others it means they can only buy limited products at inflated prices. We want every landlord to have the choice of whether to go free-of-tie. This would allow licencees to operate in a re-constructed market which would actually be more competitive.
2. When a new licencee takes over a pub, or when an existing rent contract expires and is renegotiated, there should be a fully transparent and independent rent review completed by a qualified surveyor.
3. There must be a truly independent body to monitor the regulations and adjudicate in disputes between licencees and pubcos.
Many Lib Dems privately claim that they are persuaded of the need for these measures, but have difficulty persuading the Tory side of the coalition. I hope we are able to gain enough support from right across the House to ensure that next Tuesday marks the start of a brighter future for this great British industry.
The Campaign for Real Ale estimates that 26 pubs close each week. Photograph: Getty Images.

Toby Perkins is Labour MP for Chesterfield and shadow minister for small business

Photo: Getty Images
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A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess

The Tories are in a mess over cuts to tax credits. But a mere U-Turn may not be enough to fix the problem. 

A spectre is haunting the Conservative party - the spectre of tax credit cuts. £4.4bn worth of cuts to the in-work benefits - which act as a top-up for lower-paid workers - will come into force in April 2016, the start of the next tax year - meaning around three million families will be £1,000 worse off. For most dual-earner families affected, that will be the equivalent of a one partner going without pay for an entire month.

The politics are obviously fairly toxic: as one Conservative MP remarked to me before the election, "show me 1,000 people in my constituency who would happily take a £1,000 pay cut, then we'll cut welfare". Small wonder that Boris Johnson is already making loud noises about the coming cuts, making his opposition to them a central plank of his 

Tory nerves were already jittery enough when the cuts were passed through the Commons - George Osborne had to personally reassure Conservative MPs that the cuts wouldn't result in the nightmarish picture being painted by Labour and the trades unions. Now that Johnson - and the Sun - have joined in the chorus of complaints.

There are a variety of ways the government could reverse or soften the cuts. The first is a straightforward U-Turn: but that would be politically embarrassing for Osborne, so it's highly unlikely. They could push back the implementation date - as one Conservative remarked - "whole industries have arranged their operations around tax credits now - we should give the care and hospitality sectors more time to prepare". Or they could adjust the taper rates - the point in your income  at which you start losing tax credits, taking away less from families. But the real problem for the Conservatives is that a mere U-Turn won't be enough to get them out of the mire. 

Why? Well, to offset the loss, Osborne announced the creation of a "national living wage", to be introduced at the same time as the cuts - of £7.20 an hour, up 50p from the current minimum wage.  In doing so, he effectively disbanded the Low Pay Commission -  the independent body that has been responsible for setting the national minimum wage since it was introduced by Tony Blair's government in 1998.  The LPC's board is made up of academics, trade unionists and employers - and their remit is to set a minimum wage that provides both a reasonable floor for workers without costing too many jobs.

Osborne's "living wage" fails at both counts. It is some way short of a genuine living wage - it is 70p short of where the living wage is today, and will likely be further off the pace by April 2016. But, as both business-owners and trade unionists increasingly fear, it is too high to operate as a legal minimum. (Remember that the campaign for a real Living Wage itself doesn't believe that the living wage should be the legal wage.) Trade union organisers from Usdaw - the shopworkers' union - and the GMB - which has a sizable presence in the hospitality sector -  both fear that the consequence of the wage hike will be reductions in jobs and hours as employers struggle to meet the new cost. Large shops and hotel chains will simply take the hit to their profit margins or raise prices a little. But smaller hotels and shops will cut back on hours and jobs. That will hit particularly hard in places like Cornwall, Devon, and Britain's coastal areas - all of which are, at the moment, overwhelmingly represented by Conservative MPs. 

The problem for the Conservatives is this: it's easy to work out a way of reversing the cuts to tax credits. It's not easy to see how Osborne could find a non-embarrassing way out of his erzatz living wage, which fails both as a market-friendly minimum and as a genuine living wage. A mere U-Turn may not be enough.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.