Lords amendment: In 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 Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood)
I beg to move, That this House doth agree with the Lords in the said amendment.
The Landlord and Tenant Act 1954, as amended in 1969, will offer more protection to tenants of licensed premises if the Bill is passed. I know many people will welcome the amendment. I believe it is common ground with the Opposition that the extension of protection offered by this legislation will be beneficial to the tenants to whom it will apply and I welcome their support for the measure.
The amendment has arisen out of consultations during the passage of the legislation. We believe that it represents a further improvement in the protection which the legislation will afford to affected tenancies. As the words of the amendment show, it disapplies a section of the 1954 Act, which could otherwise call into doubt protection for tenants where notice to quit might already have been served—something that the National Licensed Victuallers Association, among others, is worried about. I hope that the Opposition will agree that this amendment is welcome and strengthens the protection that the Bill offers.
§ Mr. Doug Henderson (Newcastle upon Tyne, North)
The Opposition have reservations about the Bill, but we support the amendment, as was made clear by the noble Lord Williams in another place, and I repeat our support on this occasion.
I commend the National Licensed Victuallers Association, which has been extremely diligent and meticulous both in this matter and in assisting politicians throughout the passage of the Bill. It was due only to that diligence that we were able to modify the wording on this subject so that the Bill could achieve the common ends agreed between the Government and the Opposition.
The amendment provides further minor protection for a tenant. However, I regret that the Government, during the preparation of the amendment in another place, were unable to incorporate a commitment given in both Houses on compensation, which is also relevant when a tenant may be forced out of a tenancy. I refer the House to the original commitment given by the Minister in response to a probing speech from a Conservative Back Bencher when the matter was considered in Committee. The Minister said:I shall re-read what has been said by hon. Members on compensation and give it further thought".—[Official Report, Standing Committee G, 25 January 1990; c. 71.]40 I am pleased to be able to acknowledge that further thought was given to the matter by the Government, and when it was considered in another place the noble Lord Trefgarne gave a further commitment when he said:I can announce that after further consideration the Government intend to bring forward an amendment which will recognise that special arrangements for compensation should apply during the period of adjustment to a more open market. The amendment will provide that for a transitional period additional and separate compensation will be payable to tenants of un-licensed premises to which the Landlord and Tenant Act 1954 Part II will apply because of the Bill, and where the landlord wishes to use them as on-licensed premises himself."—[Official Report, House of Lords, 22 March 1990; Vol. 517, c. 413.]That commitment was welcomed by all those participating in the debate in another place. It was with some amazement that the Labour party spokesman on trade and industry in another place reported to me that, following discussions which had taken place with the noble Lord Trefgarne, it was found impossible to amend the Bill in a way that would accomplish what had been agreed.
In another debate in another place on the same issue on Report on 17 July this year, the report was accepted only with the proviso that there was regret that it had not included mention of compensation although the Government entered into a commitment in Committee in the House, which had been reinforced by a further commitment given on two occasions in another place.
I wish that the Government had given more careful scrutiny to the Bill when they were preparing the title and drew up the clauses. A crucial part of the Bill was found not to be in order by the House of Lords. It means that the protection that Members on both sides of the House want is not in the Bill.
The Landlord and Tenant (Licensed Premises) (No. 2) Bill is in another place, and it covers this ground. It has been supported by the spokesman of the Labour party and the Government in another place. I understand that procedurally it will not be possible for that Bill to come before the House, which would enable it to have an opportunity to become law during this Session.
While agreeing to support the amendment, I ask the Minister how he intends to proceed with the question of compensation, which the industry agrees is desirable and which the House has acknowledged all hon. Members would like to achieve.
There was virtual unanimity among all those who took part in the debate in another place. Although there are timetabling problems, the issue will not go away. The Minister ought to tell the House how the Government propose to honour their commitment. Are they prepared to consider introducing a short Bill next Session on lines similar to those in the No. 2 Bill that was introduced in another place? Alternatively, would it be possible for the Government to table an amendment for inclusion in other miscellaneous legislation to cover the important question of compensation?
§ Mr. Stan Crowther (Rotherham)
As my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) pointed out, the Opposition accept the amendment. It is needed to close a small loophole in the Bill. I am the parliamentary adviser to the National Licensed Victuallers Association which drew the Government's attention to a loophole that they had 41 overlooked. I, too, praise the NLVA for spotting this error in the original drafting of the Bill. I am pleased that the Government have acted upon the association's advice.
However, it is tragic that this is the only amendment to come to us from another place. Important though it is, the amendment does not implement the solemn undertaking that was given by Lord Trefgarne on behalf of the Government on Second Reading in another place. He said that the Bill would be amended to provide better compensation for tenant licensees whose houses are taken back by the brewers for management in the transitional period before the full protection of the Bill becomes available to them. Many tenants are already affected, partly because of the Government's other legislation on the matter, which has resulted in many of the large brewery companies taking back houses for management in order to reduce the number of tenanted properties. Many licensees will, I fear, be denied the protection that Lord Trefgarne tried to promise them.
§ Mr. Graham Riddick (Colne Valley)
The hon. Gentleman rightly points out that the beer orders that the Government pushed through the House will result in a significant number of tenanted houses being taken back for management or being put on the open market. Why did not the hon. Gentleman at that time join me in the Lobby to oppose those two orders?
§ Mr. Crowther
I shall not attempt to answer that question. If I did, we should be straying a long way from the business before the House. It would not be sensible to reopen a debate that has long since gone. I am concerned with the position as it is now and as it will be in the near future.
I hope that the Minister will respond favourably to the point put to him a few minutes ago by my hon. Friend the Member for Newcastle upon Tyne, North. Licensees were given to believe that an amendment would be tabled on the lines to which I have referred, but it has not arrived. Lord Trefgarne gave that undertaking in the other place on Second Reading. I do not blame him for the fact that he was unable to table the amendment that he had promised. It appears that the Government's advisers on procedure, whoever they may be, had failed to detect that the Clerks in the other place would rule that such an amendment would be out of order.
Lord Trefgarne was therefore placed in the embarrassing position of having to tell their Lordships that he could not implement the promise that he had made. In Committee, however, on 23 April, he said: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."—[Official Report, House of Lords; 23 April 1990, Vol. 518, c. 354.]Exactly three months later, at Third Reading on 23 July, he had still failed to resolve it, although other suggestions had been put to him—for example, a short No. 2 Bill to take care of the matter. Why Lord Trefgarne did not do that no one seems to know.
Lord Williams of Elvel showed the way that it could be done by introducing his own Bill which would have implemented the Government's promise, if only the House of Lords had had time to do so. If that Bill had been introduced by the Government in April when Lord Trefgarne found that he was unable to amend the first Bill, everything would have been taken care of and the 42 protection that had been offered to tenant licensees would be about to be implemented. It is tragic that that has not happened.
The amendment is important. It improves the Bill. However, it remains a modest little measure which falls a long way short of the high hopes that were raised at the time of the Monopolies and Mergers Commission's original recommendations, which would have improved the protection given to tenants.
I do not intend to comment on the other matters in t he MMC's report. They are not before the House. I am concerned only with the MMC's recommendations for the protection of tenants. They have not been implemented in full, although Lord Young said originally that he intended to implement them in full. It is a tragedy that that has not happened. Consequently, we end up with half a loaf which is, no doubt, better than no bread at all. I hope, however, for better things in the next Session. I suppose that we have to be thankful for small mercies, but time will tell just how small this one is.
§ Mr. D. N. Campbell-Savours (Workington)
I had not intended to speak in the debate until, when I was sitting in the Tea Room, I saw the Bill's title on the Annunciator. It struck me that the Bill was relevant to a case in the county of Cumbria which I decided to bring to the attention of Parliament at some stage.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I hope that the hon. Gentleman recognises that we are debating not the Landlord and Tenant (Licensed Premises) Bill but a specific and particular Lords amendment thereto.
§ Mr. Campbell-Savours
It is precisely that, Mr. Deputy Speaker. It relates to the position of a particular licensed tenant and the lack of protection for his interests during an argument that he had with the brewery. I understood that when the Bill was discussed in the other place it would lead to an amendment that would safeguard his position.
There is a pub in the county of Cumbria which some eight years ago was turning over approximately £35 a week—a very small sum indeed. A well-known brewery in the north of England owned the pub. It removed the tenant and a new tenant was brought in who increased the turnover of that pub from that small sum to more than £300,000 a year. The brewery developed the business, the barrelage and a food business to go with the sale of drink.
The pub has become well known in Cumbria. Some months ago the brewery informed its tenant that it wished to take the property for itself and, in effect, to evict him. That is what it means in practice. The brewery informed the tenant that it intended to install one of its own managers. It wanted to do that because it was rationalising its estate. That company, which is a reputable local company, wishes to secure the highest possible return for its shareholders and for its internal investment in its brewery operations. Therefore, it felt that it needed a turnover injection of that scale to help to improve its profitability.
The tenant felt most aggrieved and looked to Parliament and the law for a means by which he could be properly compensated—that is what we are considering in the amendment—either by the state, which was not really his priority, or by the brewery. Having taken legal advice, he discovered that he had no rights in law. The only thing 43 that supported his position was a code of conduct that had been drawn up by the breweries and with which they are expected to comply.
The result was that an argument broke out about the compensation that should be paid to that tenant, who was about to be evicted. I am unaware of the final settlement, but I know that it runs into very few thousands of pounds. We must take into account that, over a period of seven years, that man and his wife had built up the business until it had a turnover of £300,000. One would expect them to receive compensation in excess of £100,000 to enable them to purchase another public house.
I expect that, in future, the Bill will protect people in that position and enable them, if a brewery must take a commercial decision based on the need to rationalise, to acquire another public house so that they can rebuild their business. I do not see how, in natural justice, a principle can be reasoned or defended by which a man's livelihood can, in effect, be terminated because a brewery wishes to rationalise.
If the Minister checks his facts, he will find that that matter has been referred to by a Member of Parliament for Cumbria, but I do not intend to identify the pub or constituency. The Minister should reply directly to the point that I have made. No doubt that publican will see the Minister's reply reported in the newspaper, and in so far as it directly relates to the substance of the amendment, and indeed the substance of the Bill, perhaps the Minister will take the opportunity of replying.
§ Mr. Redwood
I am grateful to the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) for offering the Opposition's support for the amendment. We all agree that it is a welcome improvement in the protection afforded to tenants under this legislation.
I express gratitude to the hon. Member for Rotherham (Mr. Crowther) and echo his words, because the National Licensed Victuallers Association has been helpful to me and to other hon. Members during the passage of the Bill. It found something that needed improving and the Government responded. I hope that the hon. Gentleman agrees that the dialogue between us was useful.
I said in Committee that we would carefully consider compensation to see whether there are ways of improving it further. I gave a cautious pledge to improve it further because I well knew that there were many technical and other problems barring the way to achieving a better compensation regime to which I needed to give further thought. My noble Friend in the other place thought that those obstacles had been cleared and that he could see a way of drafting something that would meet the requirement. He offered that in good faith, and he and the Government are sorry that it was not in order in the other place. This House understands the rules of procedure, which are not a matter for the Government. Like the Opposition, the Government should live within the rules of order and accept all the judgments of the proper authorities. Unfortunately, this matter was not in order and so we were not able to make progress in the way that my noble Friend had thought possible when he made his 44 pledge. He apologised for that in the other place, and I echo his apologies on behalf of the Government. We are sorry that it was not possible, but that is how the procedure had to work, given the nature of the short title of the Bill.
The Bill already contains compensation provisions which are important to the industry. The Government believe that it is important that the Bill should go through in a timely way to make that protection available.
§ Mr. Crowther
We all accept that Lord Trefgarne gave in good faith an undertaking which he was unable to implement. I do not understand—and I should like the Minister to try to explain this—why the Government did not adopt one of the other options open to them of introducing a short Bill on the lines of the Bill introduced much later by my noble Friend Lord Williams of Elvel. If they had done so, there would have been ample parliamentary time for it to go through both Houses and to meet, in a different way, the undertaking given by Lord Trefgarne.
§ Mr. Redwood
Lord Trefgarne gave his undertaking on the basis that he would be able to amend this Bill, which would have been the shortest and simplest way of proceeding had it been in order. When the Government considered the other possibility we realised that new legislation would have required substantial allocations of new parliamentary time and we did not feel that that would be possible within the limited time available. We felt that it was important not to jeopardise the substantial protection that the legislation offers.
§ Mr. Henderson
Will the Minister confirm that the Opposition offered a clear run through the other place and through this House if the Government were prepared to introduce a short Bill?
§ Mr. Redwood
The Opposition said that they would help, but such a Bill must go through all due procedures and at each stage there would need to be scrutiny of the drafting. No one can foresee whether legislation will cause problems or not.
As to the No. 2 Bill, although the Government stated that they would welcome a further strengthening of the compensation provisions, we indicated that goodwill was not the right way to achieve that. There are all sorts of problems with defining and calculating goodwill in businesses, and the reasons behind those complexities led to the dropping of the goodwill basis for compensation in the 1954 legislation, as reaffirmed by the 1969 legislation. That is the problem that the Government have had with the method chosen for the No. 2 Bill. That Bill, because of its drafting, offers protection to few people and that, too, is a technical problem.
I accept what the hon. Member for Workington (Mr. Campbell-Savours) said about his constituency case. It does not sound like a terribly nice situation for him or the licensee, but the purpose of the Bill is to improve tenants' protection and to offer compensation to those eligible under the Bill. We believe that that is a substantial move in the right direction, and it is all that we can do within the time available to the House. I urge the House to accept the amendment and, on the wider issue, to accept the Bill as a welcome step in the right direction.
§ Question put and agreed to.