HL Deb 23 April 1990 vol 518 cc351-9

5.14 p.m.

Lord Trefgarne

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill. In so moving, I should like to explain why a government amendment that I had intended to table is not on the Marshalled List today. In my speech in which I moved the Second Reading of the Bill on 22nd March I stated that the Government intended to bring forward an amendment to provide that special arrangements for compensation should apply during the period of adjustment to a more open market.

I have to tell your Lordships that when my officials came to table that amendment on my behalf last week, they were advised by the House authorities that it was outside the rules of relevance with regard to the Bill and ought not to be tabled. I myself was abroad on official business at the time. Therefore, I returned to find that an amendment which I had undertaken to bring forward at the Committee stage of the Bill today in the event could not be moved.

I am now considering urgently what is the right way forward in these circumstances. I shall come back to the Chamber on this point at the next stage of the Bill. In the meantime I beg to move.

Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)

Lord Williams of Elvel

My Lords, the noble Lord, Lord Trefgarne, will realise that he has put the Chamber in an extremely difficult position. On 22nd March at Second Reading there was a clear and unequivocal undertaking from the Minister that he would bring forward the amendment that he described. It is the normal procedure in this House that such amendments would be tabled for consideration at the Committee stage.

As he said, the Minister found himself unable to fulfil his undertaking. We must assume—and I do so—that he made that undertaking in good faith. We must also assume as a working hypothesis that the Minister is not a half-wit and that he had been properly advised on the undertaking that he gave. Neverthless, the Government have failed to bring forward the amendment that we were promised. That raises several important issues.

First, there is the importance of the matter for tenants of licensed properties which are dealt with under the Bill. They have been relying on the Government to bring forward an amendment. They have argued the case in another place, and indeed here, and I imagine that the Government accepted their arguments. So they are relying on the Government to bring forward a proper amendment.

At a time when the industry is being substantially reorganised, as I said during the Second Reading debate, it is correct and proper that the Government should give consideration to those tenants who may in some way be unfairly dislodged, at least during the interim period. Obviously we should like that consideration to be extended beyond the interim period. Nevertheless, the Government promised us an interim period.

The Long Title of the Bill is narrowly drawn. We took advice on whether or not the amendments that we proposed were in order. No doubt our advice was the same as that given to the Government; namely, that our amendments—apart from the one that I have put down on the Marshalled List today—were out of order.

The Government have one last chance. The Minister must fulfil his undertaking. If not, I must tell him that we believe that the Bill should be withdrawn and the Government should re-submit a Bill which will have a proper Long Title. That will allow the noble Lord to fulfil his undertaking and in addition enable us to discuss all the matters that were debated at Second Reading, given a wider scope for the Bill. If that undertaking is honoured on Report, as the Minister suggests, I shall argue that the matter is so important that Report procedures for the Minister's amendment—and we accept that he gives us the assurance in good faith that he will bring it forward on Report—are not possible. The matter is such that it cannot be considered on Report procedures and we shall wish to have a full Committee-style discussion on that amendment. Indeed, if the scope of the Bill is widened and our amendments, which I foreshadowed at Second Reading, become in order, we shall wish to have a recommitment of the Bill and we give no undertaking as to timetable.

However, if the Minister cannot meet his obligations at Report stage—I am sorry if this is a matter of amusement to the noble Lord but it is a matter of great seriousness to this Chamber—and if the Bill is withdrawn and resubmitted in a different form, then from the Opposition I shall undertake to give all aid to the Government. We do not oppose the principle of the Bill, as I explained on Second Reading. We shall undertake to give all aid with the new Bill provided certain conditions are met on the timetable and we shall do our best to make sure that it goes through expeditiously.

Finally, it appears to be another case where DTI Ministers have made another foul up. I look very closely at the noble Lord. I refer to examples such as House of Fraser, the Iraqi supergun, Barlow Clowes, and Rover—the list is becoming endless. I very much hope that this time the noble Lord will get his act together and make sure that we are satisfied that the undertakings he made solemnly to this House at Second Reading are met.

The Viscount of Falkland

My Lords, we do not wish to follow with further chastisement to the noble Lord along the lines given by the noble Lord, Lord Williams of Elvel.

We are extremely disappointed by the outcome of the Bill; and the limitations that have been put upon us and upon other noble Lords. We should like to have pursued an amendment that dealt with contracting out. Where contracting out is permitted, we believe that many of the measures that were seen to be recessary by the Monopolies and Mergers Commission will not be able to be introduced.

That fact affects the whole point of the Bill. How the Government will get themselves out of this position is a matter of some curiosity to us. However, we agree with the noble Lord, Lord Williams, that it is vital that something be done. If the only way forward is to produce a No. 2 Bill, I hope that the noble Lord, Lord Trefgarne, through the usual channels will get together with the Opposition parties in order to move quickly. In the meantime, we look forward to hearing what is to be done.

Lord Kimball

My Lords, I hope that my noble friend will realise that there are those of us on this side of the House who do not share the view of the noble Lord, Lord Williams, that the Bill is a mistake. The Bill is perfectly correctly drafted for what it was intended to provide.

Lord Williams of Elvel

My Lords, perhaps I may intervene at this point. I stated at Second Reading that the Opposition welcomed the Bill. We had certain reservations about it, but we welcomed the principle of the Bill. We do not think that it is a mistake.

Our problem is that the Government, in the form of the noble Lord, Lord Trefgarne, undertook to introduce certain amendments. Those would normally have been introduced at Committee. That has not been done. That is our difficulty.

Lord Kimball

My Lords, the noble Lord, Lord Williams, does not seem to realise that there are many on this side of the House to which those amendments are not acceptable and who do not feel that a compensation clause is necessary. That goes one further step down the road of destroying the proper, commercial relationship between the brewer and his tenant. I shall be extremely disappointed if we see that Bill amended. It is quite excellent. It is a one-purpose Bill in which compensation plays no part whatsoever. My noble friend cannot expect any co-operation from many on this side of the House if he brings back another Bill to introduce a matter that most of us feel is quite unnecessary and which we do not wish to be added to the Bill.

We are perfectly happy with the Bill as it now stands. We shall co-operate in any way. I cannot say the same if we advance down the road of an unnecessary compensation clause. As I understand it, it is not a question of withdrawing the Bill in this House. It will have to go to another place and go through all its stages there. There will not be time to complete it. The sensible thing is to realise that for once the Government have made an error in promising compensation. They cannot deliver it. We had better get on with the Bill and see whether a compensation clause is necessary at a later stage.

Lord Tordoff

My Lords, I hope that the noble Lord will not pursue that line. The Government have made a promise to the House and through apparent inadvertence I hope rather than conspiracy are unable to bring an amendment forward. I hope the noble Lord is not suggesting that the Government should hide behind that inadvertence in order to fail to meet a promise to this House. The problem is not to do with the Bill but with propriety in your Lordships' House.

Lord Williams of Elvel

My Lords, if I may respond to the noble Lord, Lord Kimball, the noble Lord, Lord Tordoff, is quite right. Given that the Government made their undertaking in good faith, will they now honour it?

Lord Trefgarne

My Lords, with the agreement of your Lordships, perhaps I may now bring the debate to a conclusion. I wish to make it quite clear that I had every intention of tabling an amendment, and instructed my officials so to do. When they arrived at the Public Bill Office, they were told that the amendment was not within the scope of the Bill and could not therefore be tabled in accordance with their advice. I very much regret that; but that is the fact of the matter. I undertake to consider very carefully what has been said during the debate and to do my best to resolve the matter between now and the next stage.

Lord Williams of Elvel

My Lords, will the noble Lord give us an undertaking that on Report he will produce a solution to the dilemma?

Lord Trefgarne

My Lords, I certainly shall if I possibly can. If not, I shall have to be in touch with the noble Lord.

On Question, Motion agreed to.

House in Committee accordingly.


Clause 1 [Licensed premises: application of Landlord and Tenant Act 1954, Part II]:

Lord Williams of Elvel moved Amendment No. 1: Page 1, line 15, leave out ("1992") and insert ("1990").

The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 2, 4 and 5 since they address the same point.

It was a matter that I raised on Second Reading. It relates to the interim period that the Bill as presently drafted prescribes for protection for tenants. In other words, if the Bill is passed without amendment, the tenants who are not protected up to 1992 remain unprotected. But if my amendment is accepted, the provisions of the Bill —in other words, the repeal of the section of the Landlord and Tenant Act with which we now know the Bill is concerned—will apply earlier than would otherwise be the case.

That has been a matter of contention both here and in another place. The problem is that the Government seem to assume that tenancies are on a three-year rolling period without notice. In most tenancies there is a notice period of 12 months. At any moment the landlord can give notice that the 12 month period will now apply and that therefore the tenancy after that notice will come to an end. Tenants may be on a three year rent cycle but not on a three year period of notice to quit; they may be on a 12 month period of notice to quit. The longer the period before the implementation of the Act (as it will be), the more tenants will lose their pubs.

I should not like Members of the Committee to feel that it is an unimportant matter. As I said at Second Reading, we are now in the process of a clear and substantial reorganisation of both the brewing industry (in the sense of brewing beer) and the retail industry (regarding selling beer). We have had, for instance, only recently the situation where the Scottish and Newcastle company have sold some 250 pubs in order to come below the 2,000 limit that the Government have set. The pubs have been bought by a variety of owners. Scottish and Newcastle was an excellent landlord, as I understand it. But it has sold its pubs to other landlords. While in some cases the various codes of practice involved have been accepted, and the provisions of the agreement have not been challenged, in other cases that is not so. Although Scottish and Newcastle originally said that the purchasers would have to comply with the Brewers Society code of practice, that has not been written into the sale agreement on these pubs. One new owner within two or three weeks offered the public house to a tenant at twice the original purchase price on the understanding that that was now the new value and that the tenant was no longer protected. If the Grand Met/Courage deal is agreed approximately 1,500 public houses will be sold. Again, there is no guarantee that there will be any protection for the tenants and their future is uncertain.

As Members of the Committee will be aware, in another place and on Second Reading we argued for the tenant's right to buy but that was not accepted by the Government. We are fearful that in the interim period tenants will remain unprotected in the case of a sale.

As always the Government have taken the line that they wish to be fair as between the landlord and the tenant. As always we have argued that there is not a level playing field; that the balance is in favour of the brewers and the subsequent owners of the pubs. Therefore, the tenants need more protection than is provided in the Bill as drafted.

The current situation is causing uncertainty in the trade. That is bad for tenants and customers alike. I beg to move.

5.30 p.m.

The Viscount of Falkland

We have considerable sympathy with the reasons for the amendments as put forward by the noble Lord, Lord Williams of Elvel. No doubt there is a danger of the scenario that he described and a number of tenants may be put under notice in the interim period. Nevertheless, the new tenants will immediately fall within the Act. We are faced with choosing the lesser of two evils; that of retrospective legislation and the threat of notice hanging over a number of tenants before the end of the three-year tenancy.

We believe that in a difficult situation the Government have struck the balance about right in setting the date at 1992. Although we recognise the unsatisfactory aspects that have been outlined we cannot support an amendment which introduces retrospective legislation because that is bad in principle.

Lord Trefgarne

The Government take the view that the amendments would involve too great a departure from the principle that we should not arbitrarily change the basis of existing agreements. In recent years the most common form of pub tenancy has been the three-year agreement. If the amendments were accepted all such tenancies entered into since July 1987 would be brought within the framework of the 1954 Act. In other words, some two-thirds of current agreements would be affected and put on a basis which neither landlord nor tenant could have anticipated at the outset. In general the Government do not believe that agreements entered into on a particular basis should have that basis changed unless there are very good reasons.

The approach that we have sought in the Bill is to leave the great bulk of existing agreements unaffected. Two categories of agreements will have their basis changed by the Bill. First, any agreements entered into since 10th July 1989 will have statutory protection from commencement. Following the Government's announcement on that date of their intention to legislate, it is clear that parties to such agreements will know that the 1954 Act might apply to their tenancies and will apply if the legislation is passed. Secondly, any old tenancies entered into before 10th July 1989 or of longer term which still exist on 11th July 1992 will by that date be brought within the 1954 Act. Such tenancies will be in the minority; perhaps only 10 per cent. of brewer-owned premises. In those circumstances the Government believe that it is right that tenants should be protected within a reasonable timescale. They will thus be able to exercise their new rights to buy products outside the tie without fear of repercussion on their security of tenure.

On the grounds of equity, however, the number of landlords faced with such changes in the basis for their agreements should be kept as small as possible. For those reasons I cannot commend the amendments to the Committee. I hope that the arguments will find favour with Members and that the noble Lord will not press his amendments.

Lord Williams of Elvel

I am grateful to the Minister for his reply and for stating what was known to be the Government's view. I take issue with the noble Viscount, Lord Falkland. I do not believe that I am proposing anything which could conceivably be interpreted as retrospective legislation.

The Minister said that the Government do not wish arbitrarily to change agreements. However, agreements are arbitrarily being changed. When Scottish and Newcastle sells its public houses to various entrepreneurs, or when in the future Grand Met sells many more public houses to all kinds of entrepreneurs, the agreements into which the tenants thought they were entering in good faith—that is, before the announcement of the provisions of the Bill and the report of the Monopolies and Mergers Commission whose conclusions were partly endorsed by the Government—will be changed. I am arguing that the Government and Parliament in its consideration of the Bill should ensure that the tenants have the protection that will apply to new tenancies after 1992.

I do not believe that the Minister has made out a proper case for the Government's view and I wish to seek the opinion of the Committee.

5.37 p.m.

On Question, whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 42; Not-Contents, 120.

Annan, L. Jeger, B.
Barnett, L. Jenkins of Putney, L.
Birk, B. Kilbracken, L.
Blease, L. Kirkhill, L.
Brooks of Tremorfa, L. Listowel, E.
Bruce of Donington, L. Llewelyn-Davies of Hastoe, B.
Carmichael of Kelvingrove, L.
Mason of Barnsley, L.
Carter, L. Murray of Epping Forest, L.
Cledwyn of Penrhos, L. Nicol, B.
Cocks of Hartcliffe, L, Pitt of Hampstead, L.
David, B. Ponsonby of Shulbrede, L. [Teller.]
Davies of Penrhys, L.
Dean of Beswick, L. Prys-Davies, L.
Dormand of Easington, L. Rea, L.
Ennals, L. Soper, L.
Ewart-Biggs, B. Strabolgi, L.
Gallacher, L. [Teller] Taylor of Blackburn, L.
Graham of Edmonton, L. Turner of Camden, B.
Hatch of Lusby, L. Underbill, L.
Hirshfield. L. White, B.
Hughes, L. Williams of Elvel, L.
Jay, L.
Abinger, L. Lauderdale, E.
Addington, L. Lawrence, L.
Airedale, L. Liverpool, E.
Aldington, L. Lloyd of Kilgerran, L.
Allerton, L. Long, V.
Ampthill, L. Mackay of Clashfcrn, L.
Arran, E. Macleod of Borve, B.
Aylestone, L. Malmesbury, E.
Balfour, E. Margadale, L.
Belhaven and Stenton, L. Merrivale, L.
Bellwin, L. Mersey, V.
Beloff, L. Meston, L.
Belstead, L. Mills. V.
Bethell L. Montgomery of Alamein, V.
Blatch,B. Mottistone, L.
Blyth, L. Mountevans, L.
Bonham-Carter, L. Munster, E.
Boyd-Carpenter, L. Murton of Lindisfarne, L.
Brabazon of Tara, L. Nelson, E.
Broadbridge, L. Nome, L.
Brocket, L. Onslow, E.
Brookes, L. Orkney, E.
Brougham and Vaux, L. Orr-Ewing, L.
Butterworth, L. Park of Monmouth, B.
Campbell of Alloway, L. Pender, L.
Campbell of Croy, L. Platt of Writtle, B.
Carnegy of Lour, B. Porritt, L.
Carnock, L. Pym. L.
Cobbold, L. Reay, L.
Colnbrook, L. Renton, L.
Constantine of Stanmore, L. Rochester, L.
Cottesloe, L. Romney, E.
Cox, B. Ross of Newport, L.
Crickhowell, L. Russell, E.
Dacre of Glanton, L. St. Davids, V.
Daventry, V. Sanderson of Bowden, L.
Davidson, V. [Teller.] Seear, B.
Denham, L. [Teller.] Sharpies, B.
Derwent L. Stedman, B.
Eden of Winton, L. Strathcarron, L.
Elibank, L. Strathclyde, L.
Elton, L. Strathcona and Mount Royal, L.
Ezra, L.
Falkland, V. Strathmore and Kinghome, E.
Ferrers E.
Eraser of Kilmorack, L. Sudeley, L.
Gardner of Parkes, B. Swinfen, L.
Greenway, L. Swinton, E.
Grey, E. Thomas of Gwydir, L.
Gridley, L. Tordoff, L.
Hanworth, V. Tranmire, L.
Harris of Greenwich, L. Trefgame, L.
Henley, L. Trumpington, B.
Hesketh, L. Ullswater, V.
Hives, L. Vaux of Harrowden, L.
Hooper, B. Vinson, L.
Hunt, L. Westbury, L.
Hutchinson of Lullington, L. Winchilsea and Nottingham, E.
Hylton-Foster, B.
Johnston of Rockport, L. Wise, L.
Killearn, L. Young, B.
Kimball, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.45 p.m.

[Amendment No. 2 not moved.]

Lord Trefgame moved Amendment No. 3:

Page 1, line 18, at end insert ("and section 24(3)(b) of the 1954 Act (which, in certain cases, preserves the effect of a notice to quit given in respect of a tenancy which becomes one to which Part II of the 1954 Act applies) shall not have effect in the case of a tenancy which becomes one to which that Part applies by virtue of this subsection.").

The noble Lord said: This is a technical amendment. Its purpose is to remove any doubt there may be about how the Bill operates on tenancies which are brought within the 1954 Act when there is already a notice to quit outstanding.

Section 24(3)(b) of the 1954 Act deals with a situation in which a tenancy comes within the provisions of the Act for the first time but where a notice to quit has already been served by a landlord. Its intention was to cover circumstances such as those in which a premises changed use; for example, from residential to business use.

It has, however, been brought to our attention that this section of the 1954 Act could be construed also to cover a situation where a tenancy came within the provisions of the 1954 Act for the first time by virtue of the Bill. If so, some landlords could defeat the protection afforded by the 1954 Act by serving notices to quit.

The amendment would prevent this by making it explicit that Section 24(3)(b) of the 1954 Act would not apply where tenancies were brought within the 1952 Act by virtue of the Bill. Landlords can, however, commence the statutory procedure for ending the tenancy where it expires shortly after 11th July 1992. I beg to move.

Lord Williams of Elvel

We support this amendment. We think it rectifies a defect in the Bill. Perhaps it would have been courteous of the Minister to recognise the role of the lawyers of the National Licensed Victuallers Association in bringing the defect to the attention of the department. I am glad that the Government have accepted their point of view and have moved this amendment. We support it.

Lord Trefgarne

If I have omitted to offer praise where it is due, I hasten to rectify that.

On Question, amendment agreed to.

[Amendments Nos. 4 and 5 not moved.]

Clause 1, as amended, agreed to.

Remaining clause agreed to.

House resumed: Bill reported with an amendment.