Landlord and Tenant (Licensed Premises) (No. 2) Bill [H.L.] (Hansard, 23 July 1990)

§ Lord Williams of Elvel
My Lords, I beg to move that the Bill be now read a second time.
This is a small Bill designed to meet the undertaking that the Government gave on Second Reading of the Bill your Lordships have just passed. It is concerned with the compensation of tenants during the transitional period contained in the Landlord and Tenant (Licensed Premises) Bill.
Clause 1 defines the type of tenant entitled to compensation and is an amendment to Section 37 of the 1954 Act. Clause 2 defines the method of deciding compensation which should be done in negotiation between tenant and landlord and to be decided by a court in default of agreement between the landlord and the tenant. Clause 2(2) defines the transitional period in the same way as the Landlord and Tenant (Licensed Premises) Bill. Clause 3 excludes Scotland and Northern Ireland, and gives a short title and commencement to the Bill.

§ Lord Kimball
My Lords, I do not wish to delay the House at this late hour or at this late stage in the Session. Had the Bill any chance of making progress, there are several relevant arguments that I would wish to deploy. There is no valid argument why the level of compensation for public house tenants should be any greater than that for any other business tenant; that is, six times the rateable value of the tenancy. That is the minimum value only. In practice, most brewery companies have paid more.
What is the value, from the point of view of compensation, of an exceptional tenant who may well enjoy exceptional trade and profits thereby? He can hardly expect to be paid for that good will at a time when he is leaving and taking his skills with him. I should wish to develop those and many other arguments at greater length had the Bill any chance of making any parliamentary progress.
Much more serious is the problem before us tonight. I am certain that the noble Lord, Lord Williams, did not in any way intend to mislead the trade, which is interested in the Bill, and other people who are interested in it by pretending that the Bill could make any progress. Perhaps we may look at the precedents for a moment. The time for Private Members' Bills has expired. After all, that is all the Bill is—it is a Private Member's Bill. There is no more time. There is no precedent for time to be given to a Private Member's Bill after Private Members' time has expired.
There was a case, and the noble Lord may well have looked it up, on 16th February 1956 when, as a result of a pledge given by the late Lord Avon as Prime Minister in the 1955 general election another place was given a four-day debate in government time to come to a conclusion on the late Mr Sidney Silverman's Death Penalty (Abolition) Bill. In 1979 it was suggested that Private Members' time might be extended beyond 4 p.m., as it then was, on a Friday in another place to allow the House to reach a decision on Private Members' Bills. That was one of the factors that cost the Leader of the House his job.
The noble Lord may well have looked up in Hansard the question of Lords amendments to Private Members' Bills. I accept that since 1950 there have been 19 cases where government time in another place, after the Standing Order time has expired, has been given to Lords amendments to Private Members' Bills which have passed all their stages, but that figure is inflated by the deal that is always made by the Government at the time of the dissolution.
For instance, on llth May 1983 it was agreed by all concerned that no fewer than three Private Members' measures, which had already passed their first stages in both Houses, should be allowed to proceed. Those are the only precedents that I can find. They are listed in col. 360 of Hansard of another place of 25th June 1984. There are no precedents for government time to be given to Private Members' Bills and there is no precedent that the noble Lord can quote as to why his Bill should receive any time. He may well say, "When we were in power, government time was given". But look at the muddle the late Mr. Crossman got into 1258 then. Having started in 1966 to allow time for Private Members' Bills, he rapidly had to give up that concession. This Bill cannot and will not proceed because there is no time for it. I am certain that the noble Lord does not intend to mislead the trade by pretending that the Bill will ever reach the statute book in this Session, because it will not.

§ Viscount Ullswater
My Lords, I wish to say at the outset that the Government will not oppose the Second Reading of the Bill. We have debated on a number of recent occasions the difficulties experienced by my noble friend Lord Trefgarne in seeking to provide for a transitional period of greater compensation for certain tenants of licensed premises.
With regard to the detail of this Bill, I wish to make two observations. First, the Bill provides that any such additional compensation should be related to the goodwill in the business. When putting forward the Government's view on this point on 22nd March, my noble friend made it clear that we had considered but rejected the idea that goodwill was a suitable basis for determining compensation. It is not a well defined concept, and in the precursor to the Landlord and Tenant Act 1954, had been found to give rise to much dispute and difficulty of interpretation in the courts.
The second issue I wish to draw to your Lordships' attention is that by setting a transitional period which ends in July 1992 we believe that the class of tenants affected by the measure will be so small as to be practically non-existent. I shall try to explain this. Clause 2(1) of the No. 2 Bill limits the entitlement to additional compensation to those whose tenancies are brought within the 1954 Act by virtue of the Landlord and Tenant (Licensed Premises) Bill. With your Lordships' leave, I shall refer to the latter as the No. 1 Bill. Clauses 2(2) of the No. 2 Bill then goes on to say that this compensation will be payable in respect of tenancies that end between the coming into force of the No. 1 Bill and 11th July 1992.
Under Clause 1(1) of the No. 1 Bill, the 1954 Act will only apply during this period to tenancies entered into after 10th July 1989. Earlier tenancy agreements are not affected unless, by Clause 1(2), they are still in existence on 11th July 1992. Thus, for a tenant to benefit from the additional compensation provisions in the No. 2 Bill, his tenancy must both commence and terminate between 10th July 1989 and 11th July 1992. Since the great majority of brewery tenancies are for three or more years we believe that this Bill will have little practical effect. However, these are Committee points. They are not grounds on which the Government would wish to oppose the Second Reading of the Bill.

§ Lord Williams of Elvel
My Lords, I am grateful to the noble Lord, Lord Kimball, and the noble Viscount, Lord Ullswater, for their comments on my Bill. I forgot to do so, but at the outset I should have congratulated the noble Viscount on his new appointment. He will be leaving these sad little matters of compensation for pub tenants and moving on to higher spheres—no doubt after the dinner break.
1259 The argument of the noble Lord, Lord Kimball, is familiar, it comes from a familiar source. We need not worry too much about what the Brewers' Society thinks of the question of compensation. The noble Lord, Lord Kimball, was perfectly honest and frank in Committee on the No. 1 Bill. Perhaps I may refer to it in the same way as the noble Viscount. The Brewers' Society does not like this Bill; there is a difference of opinion between it and ourselves. There was also a difference between the Brewers' Society and the Government at one point and it appears that the Brewers' Society has won.
The noble Lord, Lord Kimball, treated us to a discursus on procedure in another place; he is a much greater expert than I on such procedure. I have no comments to make; it would be improper for me to comment on procedures in the other place. I repeat what I said the other day, that for our part—that is on behalf of my noble friends, and having consulted my right honourable and honourable friends—if the Government were to decide to make time for this Bill—and I accept the "if—amended in whatever fashion suits the Government so long as we can agree on the basic form, we will make sure that in another place the Bill has an absolutely fair wind. I can say no fairer than that.
On advice, I have agreed that today we should deal only with the Second Reading of the Bill. It will allow your Lordships to consider over the Summer Recess what points your Lordships might wish to make in Committee. Through the usual channels, it has been agreed that the progress of the Bill in your Lordships' House will be such as to allow it to reach another place by the time the other place reassembles after the Recess. That is a good procedure; it will allow the Government and the noble Lord, Lord Kimball, to study our proposals. They may then come up with any amendments they feel might be appropriate, in the event of the Government deciding to adopt the Bill and make it their own. On that basis I wish to move the Second Reading.
The noble Viscount, Lord Ullswater, said that goodwill was not a well defined concept. I find that proposition difficult to accept. Over 25 years of practice in business I have dealt with goodwill both on an accountancy basis and on other bases. Goodwill is perfectly well understood. Landlords and tenants of these businesses understand very well what we are talking about. There should be no difficulty with the calculation I have in mind.
I disagree with the noble Lord, Lord Kimball, and the noble Viscount; it is not the case that the number of tenants affected will be small. I am advised that the number of tenants will be rather large because this happens at the moment. Tenancies are being revised by landlords in licensed premises and there is a fairly serious problem. The Government would do well to study it.
We cannot go much further than this on Second Reading. I believe the Bill meets the Government's own undertaking. It recognises the problem that both the Government and the Opposition recognised and 1260 attempts to deal with it. I realise that the drafting may be unsatisfactory. I merely ask the Government to adopt the Bill themselves. If they do not, we will take it through the remaining stages in this House and see whether the Government will adopt it in another place. That is what my party wants to do. I believe I speak for the Benches on my right. That is what we all wish to do and that is what we propose. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the whole House.

Viscount Long
My Lords, I beg to move that the House do now adjourn during pleasure until ten minutes past eight.