Hansard

I refer members to my entry in the register of members’ interests.

It is a critical time for pubs and all those whose livelihoods depend on the licensed trade. The Tied Pubs (Scotland) Bill would give much-needed hope to tied publicans that the sector can build back better, and that overdue reform is almost here.

A tied pub is a pub that is required to buy at least some of its products from its pub-owning company. Evidence that the model skews against tenants led to a campaign for reform. That campaign brought about change in England and Wales with legislation in 2015, and it did so with cross-party support. The purpose of my bill is to bring that change to Scotland.

As campaigners told the lead committee, the problem is that pubcos take too much of pubs’ profits, leaving the tenant—the small business—unable to make a living. In written evidence to the committee, a publican from Renfrewshire said that the

“tenant has no real control over the prices and share of profits ... the Pub co ... restrict the opportunities for tenants to develop a viable and profitable business.”

A publican from Aberdeen said:

“Everyone that works in the building gets a wage but there have been times where we don’t have wages for ourselves as the expenses are too high.”

He estimates that he would be £35,000 to £40,000 better off if he did not have to pay excessive mark-ups on tied products.

A survey by the Campaign for Real Ale of 200 Scottish tied tenants found that 74 per cent believe that they were worse off due to their tie, and 96.5 per cent believed that a lower dry rent did not fully take into account higher costs. Only 3 per cent had a positive sentiment about their tie. Two thirds were earning less than £15,000 per annum, and 99 per cent believed that the Scottish Government had to act. That is why I decided to introduce the Tied Pubs (Scotland) Bill.

The bill would require ministers to create a pubs code to govern the relationship between pubcos and tied tenants, and an independent adjudicator. The code would be based on three principles: fair and lawful dealing by pub-owning businesses towards tied tenants; tied pub tenants to be no worse off than if they were not tied; and tied agreements to offer a fair share of risk and reward.

Part 4 of the United Kingdom’s Small Business, Enterprise and Employment Act 2015 was the starting point for my bill, but it was only a start. Where possible, I have sought to improve on the 2015 act and learn from where it fell short. For example, the fair share of risk and reward principle is not on the statute book at Westminster. I included it in my bill because I believe that it would better protect tenants from profit extraction.

In common with the 2015 act, my bill would give tenants a market rent-only option. That option would involve the right to break the tie and pay a fair market rent, but without the complex trigger points that are in the UK act. In the bill, market rent-only rights are simpler, cleaner and automatic, and would eliminate the need for long arbitrations.

My bill includes guest beer rights, which would mean that tenants could stock at least one product of their choosing, thereby helping them to respond to demand, maximise their takings and support Scotland’s brewers.

The bill would require the Parliament to approve the adjudicator, and prevent anyone with recent involvement in the industry from being appointed, and therefore keep our pubs code adjudicator free from conflicts of interest.

Should the bill progress, I will work with the Scottish Government and other parties to seek consensus on further improvements. I thank the minister, Jamie Hepburn, for listening to the voices of Scotland’s tied publicans, consumers, small business groups and unions over recent weeks, and for his time in discussing how to progress the bill and deliver much-needed change.

The committee commended the intent behind the bill, but it was disappointing that only a minority of members recommended legislation. In the report, that minority notes that the bill is supported by the majority of those who responded to the committee’s call for evidence. That is right: the overwhelming majority of evidence supported legislation, including submissions from the Scottish Licensed Trade Association, the Federation of Small Businesses in Scotland, GMB Scotland, and the Society of Independent Brewers, to name just a few.

The committee’s anonymous survey of tenants also found that 93 per cent supported the bill. An independent Scottish Parliament information centre analysis of the survey states that

“tenants want to see a fairer split of risk and reward—currently there is a feeling that tenants take on most of the risk while pub-owning businesses take an outsized share of the reward.”

Many responses to my consultation were supplied anonymously or confidentially, as many tenants feared recrimination. Nonetheless, tenants participated in my consultation. Again, 93 per cent of responses supported legislation.

The committee expressed frustration at “polarised” arguments. There is no doubt that opinion is divided. However, the word “polarised” suggests that it is divided equally; it is not. On one side are the interests of tenants, workers, consumers and producers; on the other are the corporate interests of a few large pub companies, which want to remain unaccountable.

I also want to draw attention to two recent developments that mean that Parliament and committee members must look at the issue in a new light.

First, the Pubs Code Adjudicator for England and Wales issued Heineken-owned Star Pubs & Bars with an unprecedented £2 million fine for breaching the pubs code. That was just weeks after Lawson Mountstevens, its managing director, told the committee:

“We are absolutely an honourable company.”—[Official Report, Economy, Energy and Fair Work Committee, 18 August 2020; c 52.]

Star’s headquarters is here in Scotland, but Scottish tenants have no adjudicator to protect them. The adjudicator said that Star

“did not engage frankly and transparently with its tenants”,

and went on to say that

“The company must change its mindset and become proactive in its approach to compliance.”

How can Parliament trust such companies to voluntarily regulate themselves?

Secondly, the UK Government published its review of the code for England and Wales. Far from recommending a return to deregulation, ministers said in writing to the Pubs Code Adjudicator:

“retain evidence you may come across where ... your existing powers are insufficient ... This will allow ... consideration of”

the

“case for strengthened powers as part of the next statutory review”.

Not only is there a regulatory gap with England and Wales, but if we do not act that gap will grow. Tenants of large pub companies in England and Wales have the protection of a code, while tenants of those same pub companies here in Scotland do not. The bill seeks to address that injustice. Fairness is the principle at the heart of the bill, and I ask the Parliament to support the general principles of the bill.

I move,

That the Parliament agrees to the general principles of the Tied Pubs (Scotland) Bill.