Second Reading

Part of Small Business, Enterprise and Employment Bill – in the House of Lords at 5:31 pm on 2nd December 2014.

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Photo of Lord Snape Lord Snape Labour 5:31 pm, 2nd December 2014

My Lords, this is indeed a long and complicated Bill, in many ways, that has been welcomed from both sides of your Lordships’ House. As has also been said from both sides, it is rather timid in some areas, a couple of which I intend to touch on in my contribution.

I was struck by the comment earlier from the noble Viscount, Lord Eccles, who, if I may summarise what he said, suggested that when all parties agree, invariably there are problems as far as legislation is concerned. The view was often expressed during my time in the Whips’ Office—that somewhat cynical apparatus of state, if that is the right term, in the other place—that gloom would descend if it was visibly apparent that all sides of the House were united on a particular issue. That was largely on the grounds, we felt, that if everyone agrees, as the noble Viscount said, it probably will not work.

However, there are matters within the Bill that people do agree on and that I hope do work. The late payment proposals are welcome and overdue. The fact is that small businesses in particular have great difficulty in getting their money out of larger companies, which often behave in a way that they would not tolerate from their own debtors. The attempt within the Small Business, Enterprise and Employment Bill to bring them to heel is more than welcome. Similarly, on zero-hour contracts my noble friend Lord Mitchell, who is not in his place at the moment, spoke vehemently about the need to abolish such contracts, particularly the exclusivity parts of those contracts, which indeed should have no place in the modern workplace.

I want to concentrate the bulk of my—hopefully brief—remarks on Part 4 of the Bill, on the future of pubcos and, in particular, the relationship between some of the pubcos and their tenants. All of us who take an interest in these matters will be aware of the pathos of the sad cases involving many tenants of pubcos. Many of them have written, I know, to noble Lords on both sides of the House about the problems that they have had. However, at this stage I should perhaps issue a disclaimer about my current physical appearance. I would like the House to bear in mind that the bruises and black eye that I suffer at the moment came as a result of medical intervention rather than occurring on licensed premises. So that is not the reason why I shall express the view that I do.

I would sum up the problems that many tenants of pubcos have by quoting an e-mail that I received in the last few days from a couple, Dawn and Michael Shanahan, who run the Bulls Head in Old Whittington near Chesterfield—not a part of the world I know particularly well. I received their assurances that they did not object to their names and address being heard during the course of our debate. They talk about their relationship with the pubco Enterprise Inns:

Lord Snape,

Our story is short but not very sweet”— it was Mrs Shanahan who sent the e-mail.

“I have lived in the village all my life. I am now 60 years young. When the Bulls head came up for lease 6 years ago we decided that we could bring it back to life as a thriving village community pub. I left a job with the ambulance service and my husband retired from 40 years joinery. We didnt count on any person in this world being as conniving and devious as enterprise are. Our plan was to run the pub for 8 years and then sell the lease on, what a joke that turned out to be!!. We have put all our money, time and energy into trying to run a business that had no chance of success from the beginning. The whole model is designed on people sinking their money into a pub, failing and reeling the next unsuspecting victim in. We have survived for the whole of our time here by robbing Peter to pay Paul. We work all the hours ourselves, we dont take a wage and are now totally wiped out and skint, we have no option but to walk away with nothing but leaving enterprise with a cleaner, better maintained pub for the next person to add to, or to undo all the work we have done, enterprise dont really care as long as the money keeps coming their way.”

“Because we went to our bdm”— their regional manager—

“asking for help and making it clear we have no more money to offer they came up with a proposal. They would loan us the money to … refurbish the pub and put us on ‘the beacon Scheme’. This would have made us managers and if we didnt hit a certain amount of barrelage a week would have given them the right to give us 8 weeks notice to quit. So they were willing to loan us thousands of pounds knowing full well we would not be able to pay it back. That would have left us homeless but still paying for a newly refurbished pub!. When we refused their answer to us was to cut our credit off. So even though we didnt owe them any money we now have to pay for our beer before they will deliver it. They deliberately put you in a position where you have to buy out of tie and then fine you and remind you that you have broke your terms and conditions of your lease. We are desperately trying to hold on until after christmas. Whatever happens within the law now, will be too late to help us but our stories must make a difference and stop these unscrupulous business practices that ruin peoples lives. I am crying as i write this because we have been so naive and trusting and have put our heart and soul into this Pub that has been our home. We have nothing left but debt to look forward to and will be coming out feeling like the worse failures. Please stop these people”.

I think that summarises what is happening as far as relationships between tenants and pubcos like Enterprise Inns and Punch are concerned.

I have a personal story before I sit down. My own daughter and son-in-law ran a pub, an Enterprise Inns pub called the Red Lion in Longdon Green in Staffordshire. They invested all their life savings into the pub—an almost six-figure sum. Like Mr and Mrs Shanahan, when occasionally they had problems paying their bills, the pubco stopped delivering beer, leaving them with no choice—they cannot get beer from anywhere else—but to buy out of tie. They were then fined £500 a time by the pubco. My son-in-law was badly beaten in the pub by a couple he had befriended previously one New Year about seven years ago, and he has never worked since. In the three months that he was in intensive care, Enterprise Inns expressed a view to my daughter that they “had no duty of care to any publican”. My daughter and son-in-law eventually left the pub, literally with nothing, and my son-in-law will never work again. Of course, someone else then took over the tenancy of the Red Lion in Longdon Green, left after about six months and the building was then sold to another company. It has since been refurbished and is a going concern as a restaurant and pub. That is how tenants of the pubcos are being treated.

Although I am grateful that the Minister opened this debate saying that the Government were prepared to accept the amendment from the other place, I would like more clarification from her about any future consultation before these particular clauses—

Clause 40 and the succeeding clauses—are redrafted to ensure, as I indicated in a question to her earlier, that the pubcos will not be allowed to turn back the clock and behave in the way that Jeremy Paxman in the current issue of

The Spectator this week describes:

“Publican after publican has been telling the same story for years, of spivs from rapacious ‘pubcos’ driving them to penury through a beer-buying arrangement more suited to the truck shop on a slave plantation”.

It is some years since your Lordships’ House passed the Truck Acts, and it is about time that we passed another Act outlawing some of the practices of the pubcos. I welcome the clauses from Clause 40 onwards, although they go only so far, and I hope that the Minister can assure us that there will be no attempt to turn back the clock and allow these nefarious practices to continue.