MPs vote for market rent only option in pubs code
The New Clause 2, which outlines that companies with more than 500 pubs and at least one tenanted/leased site will have to offer a market rent only option, will be added to the Small Business, Enterprise and Employment Bill after 284 MPs voted in favour, including 17 Conservatives. There were 269 votes opposing the clause.
In a surprise move during the final reading of the Bill in the House of Commons today, Employment Relations Minister Jo Swinson proposed a new Government amendment stating that a review will be held two years after the Bill is introduced to determine if an MRO option should be included in the code. She said MRO would only be implemented if the review find tenants are not sufficiently protected by the system.
“If it is not working we do not want to be in a situation where we have to go through primary legislation,” she said.
However, the 11th hour amendment was not enough to persuade Government rebels not to vote for Parliamentary Save the Pub Group chair Greg Mulholland’s New Clause 2.
The new clause outlines that MRO would “come in gradually only at certain trigger points”, including lease/tenancy renewals, rent reviews, change of terms or change of pub company.
It also states that large pubcos that also brew beer will be able to insist on their brands being sold in their tenanted and leased pubs, but the tenant would be free to buy them from anywhere.
It states that the MRO option would involve a 21-day period of negotiation followed by a 90-day period of assessment undertaken by an independent expert agreed by the two parties (or appointed by the RICS Chairman if they cannot agree).
After this date the tenant has the right to pay the assessed MRO and can choose where to buy his/her beer, it adds.
The defeat of the Government's amendment that sought to introduce a review to examine the need for MRO and also suggested lowering the threshold for what constitutes a pub-owning company to one with 350 or more tied pubs, means the Bill goes forward to the House of Lords as it was tabled by the Small Business Bill Committee – meaning it only relates to companies owning 500 or more tied pubs.
The Government’s response to the pub statutory code consultation in June stopped short of including a mandatory free-of-tie or MRO option, stating that it “would have been likely to cause a high degree of uncertainty in the industry”, with a likely negative impact on investment, the possibility that several pub companies would abandon the tied market and the risk of higher levels of closures and job losses.
