Amidst the relentless focus on Brexit in recent weeks, it can be easy to forget that there are many other issues effecting this country which need to be addressed. Last week, I and other MPs had the chance to discuss one of these topics, at a Commons Debate on Pubs.
The value of this sector is considerable. Pubs are estimated to support 900,000 jobs in the UK, and generate £13 Billion in tax revenues every year. But the worth of these institutions goes beyond monetary value. Pubs stand at the heart of virtually every community in the UK. The Black Country is of course, no exception to this, possessing a number of outstanding pubs, with a wide selection craft beers and real ales available.
But despite this, there is little escaping from the fact that pubs in the UK are undergoing a historic decline. This is down to a myriad of factors, some of which cannot be entirely be blamed on the industry, such as the rise of cheaply available alcohol from off licences and supermarkets, and the rise of new forms of home entertainment which offer customers an alternative to visiting their local pub.
However, this is not to say that government policy has not also played a significant part in this downturn. Taxation on beer is an important issue- and one that organisations such as the Campaign for Real Ale, and The British Beer and Pub Association have done much to draw attention toward in recent years. Indeed, rates of beer tax in the UK are amongst the highest in Europe. At present, the duty that is applied to a pint of 5% ABV beer is 54 pence. By contrast, the equivalent rate in Germany would be just five pence.
Another major concern are the pressures that individual tenants face from the larger pub companies that they rent or lease their premises from. The terms of the tenancy agreements between these parties have often imposed excessive costs and restrictions on tenants that threaten the profitability of their business.
There have been attempts to address the imbalance of power that is often created by these ‘ties’. During my time as Chair of the Business, Innovation and Skills Select Committee from 2010-2015, I was proud to play a role in the creation of the Pubs Code and Adjudicator, which aims to ensure that tenants are able to exit these arrangements and go without a tie if they wish to do so, and created the ‘Market Rent Only’ Option to facilitate this.
However, since these measures were legislated for back in 2015, there have been some very real issues with their implementation that has prevented them from fulfilling their objectives. So far, they appear to have made no discernible difference to the number of pub closures in the UK.
One of the biggest reasons for this is the approach of the adjudicator, which seems to view its role as facilitating negotiation between tenants and pub companies, rather than taking proactive steps to resolve disputes. As a result of this, tenants often find themselves locked in a process in which pub companies can use their considerably larger resources to leverage a favourable outcome for themselves.
The fact that companies are able to do this shows a clear lack of understanding of the intended purpose of the pubs code and adjudicator on the part of the government. Legislation that was meant to empower individual tenants against larger pub companies is instead being used to reinforce the status quo. The government urgently needs to review this approach if it is to deliver on the initial promise of the Pubs Code and Adjudicator. By doing this, they could significantly strengthen the position of thousands of small business owners across the country, and help to arrest the worrying decline of pubs in the UK.