The final item of business is a members’ business debate on motion S4M-12348, in the name of Paul Martin, on protecting rent-tied pub tenants in Scotland. The debate will be concluded without any question being put.
Motion debated,
That the Parliament notes calls for a statutory code of practice for pub companies to be implemented in Scotland; understands that members of the UK Parliament recently amended the Small Business, Enterprise and Employment Bill to introduce a code of practice designed to govern the relationship between pub companies and their tenants in England and Wales; notes the view that Scotland should have an adjudicator to protect hard-working licensees, including in Glasgow Provan, and that this would allow licensees to offer a wider selection of beers and promote market competition, and recognises that a Campaign for Real Ale (CAMRA) survey found that 99% of rent-tied pub tenants in Scotland would support such a move.
17:07
I thank all the members who supported the motion in my name. The motion attracted support from all the political parties in the Parliament with the exception of the Conservatives. [Interruption.] I note that from a sedentary position Alex Johnstone has made a gesture towards me, but I do not know whether it means that the Conservatives now support the motion. Perhaps he can make that clear during his speech. I hope that, after a constructive debate this evening, we can take forward the issue of rent-tied pub tenants in a cross-party manner.
Many of us have various experiences of pubs—some have more than others—but the thrust of the debate is about the contractual arrangements that tied pubs find themselves in. It is estimated that there are more than 4,600 pubs in Scotland and that more than 20 per cent of them are tied pubs owned by pub companies. I am sure that over the years we have all received representations on the challenging economic climate for those pubs and, for that matter, many pubs across Scotland, particularly because of laws that have been passed in Westminster and in the Scottish Parliament. We owe it to hard-working pub tenants not to put further obstacles in their way in dealing with the challenges that they will face over the coming years. We support many of the legislative changes that have been made, but that makes it all the more important to take forward this debate at the same time.
All the evidence that I have seen has recognised that the tied model is wide open to abuse; many tenants find themselves trapped in bleak financial situations and forced to buy products at an inflated rate from the pubcos, which allows them to save little and invest little in their business. Last year, CGA Strategy surveyed Scottish tied-pub tenants for the Campaign for Real Ale, and its findings were shocking. I will highlight a number of them. It found that 66 per cent of the respondents earned less than £15,000 per annum, and 10 per cent of them earned less than £10,000 per annum; that 74 per cent of respondents considered themselves worse off as a result of the tied model; and that 3 per cent had a very positive sentiment for the tied-pub arrangement that they have with the pubcos. In taking the issue forward, we should also recognise that 99 per cent of respondents felt that the Scottish Government should take action now to protect pub tenants north of the border.
The tied-pub model has been scrutinised over a number of years, particularly at Westminster, and the United Kingdom Government received a great deal of evidence on the subject in 2013. I will highlight examples of the pubcos’ activities, and I am sure that members will highlight others. Practices include pubcos informing tenants about large rent rises without giving them any justification for the increases and pubcos providing tenants with misleading estimates of potential sales.
I met a publican who advised me that, if he invested in his premises, the works would be done by the pubco’s contractors at an inflated rate, to ensure that the pubco received its cut from the work. I think that most of us would find such practices unacceptable. They certainly do not support small businesses across Scotland.
For far too long, tied-pub tenants have been squeezed by the pubcos, which behave like payday lenders. That is unacceptable, and I call on the Government to take specific action. Last year, MPs considered what became the Small Business, Enterprise and Employment Act 2015 for England and Wales to ensure that no tied-pub tenant is worse off than a free-of-tie pub tenant. The act introduces a statutory code of practice and an independent adjudicator to govern the relationship between tenants and pubcos, and it was amended to include a market-rent-only option for pub tenants. The bill provided options to ensure parity in the relationship between pubcos and tenants.
For many years, there has been a constitutional discussion about this grey area. There have been a number of constitutional discussions over the years, and that has been one of them. As a result, Scottish publicans will not benefit from the new laws that have been passed at Westminster. Today, I call on the Scottish Government to introduce an independent adjudicator, a statutory code of conduct and a market-rent-only option, which will make the position in Scotland similar to that in England and Wales. That would let every tenant choose between a tied and a free-of-tie arrangement, which would allow the market to decide which is best, and it would allow tenants a fair, reasonable and transparent review of the true rental value of their property.
For once, legislation has been passed at Westminster that we agree with. I am surprised that the Scottish Government finds itself in the position that we have to debate the issue, given that we have received cross-party support, including support from Scottish National Party members. I say that in a constructive tone, because I want to take the matter forward and ensure that publicans and small businesses throughout Scotland benefit.
We should recognise the importance of these businesses. I think that members will be surprised to hear that pubs directly employ more than 43,000 people in Scotland. They are an important part of our industry and they provide employment opportunities for people in Scotland.
I call on the Scottish Government to give clarity today on how we can move forward. I ask the minister—I will intervene on him if he does not confirm this—to give us a commitment that there will be a similar consultation exercise to the one that was carried out at Westminster, and that the Scottish Government will look to legislate before the Scottish Parliament elections next year.
I call on the Parliament to support the sentiments of my motion.
17:14
I congratulate Paul Martin on securing the debate and I thank all the groups, some of which are here tonight, that sent in information—and also a bottle of beer, which was welcome.
I will talk about the legislation that was passed at Westminster, which Paul Martin touched on, and what tied pubs are. In March 2015, the primary legislation at Westminster to establish a statutory code and adjudicator received royal assent. However, although that legislation has been passed, the code will not come into effect until June 2016, and it will be implemented via secondary legislation. Over the next year, there will be further consultation with a range of stakeholders to write the code, and the adjudicator will be established. During that consultation, the adjudicator will look at how disputes will be arbitrated and how investigations will be undertaken into breaches of the code.
From the motion and what we are hearing in the speeches from Paul Martin and others tonight, it seems that what is being asked for is in line with the legislation that has been passed at Westminster, which is supported by small and large businesses and organisations. It is important to note the timescale of one year for consultation on that legislation. I wonder whether the minister would be minded to set a similar timescale for consultation on adjudication under the similar proposals that the motion calls for.
Tied pubs and tied beer work in two ways. Beer and other products are supplied to the pub tenant on an exclusive basis in return for a fixed below-market rent for the pub and other benefits. The tenant generally agrees to pay above the wholesale market price for the tied products—for example, the beer. It is estimated that there are around 850 tied-lease agreements in Scotland, 530 of which are with companies that are covered by the legislation that has been passed in England and Wales—that is an important point.
I have a brewery—the Drygate brewery—in my constituency. Paul Martin’s constituency contains the Tennent’s Wellpark brewery, and there is also the West brewery. Tennent’s has been established for many years and I have met the brewers, but the Drygate brewery and the West brewery are smaller breweries that are coming on board, which is great. In my eyes, that is not about competition; it is about fairness and equity for everyone to enjoy. Not only big breweries should have equity; everyone should be able to get fairness and equity.
Will the member give way?
I am sorry, Dennis, but I have only four minutes and I am in my last minute. [Interruption.] I am sorry—it was Mike Russell.
I will talk briefly about my part of Glasgow—Kelvin—which is in the city centre. I have 319 pubs in my constituency as well as one brewery. They provide more than 2,000 jobs for 16 to 24-year-olds and more than 5,000 direct jobs. The total number of jobs provided is 6,684, so a lot of people rely on the sector, which contributes to the economy of not only Glasgow but Scotland.
I would like the minister to look at the proposal that is in the motion and let us know whether he is prepared to look at it in the same vein as Paul Martin mentioned.
17:18
I join Sandra White in welcoming the debate and congratulate Paul Martin on securing this debate on an important issue.
Pub company reform is crucial to the wellbeing of Scotland’s beer and pubs industry. The fact that two pubs close every week in Scotland is a stark reminder of the need for action. Like many members, in advance of the debate I was contacted by constituents and pub tenants about the specific difficulties that are faced by rent-tied pubs. I have previously written to the minister on the issue and hope that he will address some of my constituents’ concerns this evening.
The CAMRA briefing that was circulated ahead of the debate provided some eye-opening statistics. Forcing licensees to buy beer from their landlords has resulted in their paying at least 50 per cent more than they would on the open market, and CAMRA’s survey of tied-pub tenants last year showed that almost two thirds of respondents had an income of less than £15,000 a year. It is such financial pressure that results in rent-tied pubs being 62 per cent more likely to go out of business than pubs that are free of rent ties.
We must remember the human cost of closures because, as Sandra White says, thousands of people are reliant on employment in pubs, including rent-tied pubs. Therefore, it should come as no surprise that there is demand for a Scottish pubs code to ensure that tenants who are tied to large pub companies are no worse off than if they were tie free.
As Paul Martin said, we have recently seen action to increase protection for those tenants in England and Wales through the Westminster Small Business, Enterprise and Employment Act 2015. The act introduces a statutory code and an independent adjudicator to ensure that the relationship between tied licensees and pub companies is subject to fair and lawful trading. As Paul Martin said, it also introduces a market rent-only option, so that tied tenants can buy beer on the open market.
The introduction of such an option in a Scottish pubs code would allow tenants to choose between a tied agreement and a non-tied agreement every five years or in the event of a significant increase in the price of tied products. That would place tenants in Scotland in a fairer and far stronger negotiating position. That is crucial in delivering a fair deal for tenants and keeping prices reasonable for pub-goers. I am sure that there are quite a few pub-goers in the chamber this evening.
I want to highlight the thoughts of a rent-tied pub tenant in my area. The licensee of a Paisley pub told me that, having seen the action that has been taken down south, he thinks that it is a “no-brainer” that the same action should be taken here. He and many others are calling on the minister to listen to their voices. He told me that allowing pubs such as his to buy beer on the open market could be the difference between struggling to make a living and having a thriving business.
Support for action is widespread. As we know, brewers including Tennent Caledonian Breweries, Fyne Ales and Williams Bros have all indicated their support. They say that tied rents place restrictions on both Scottish brands and publicans, and that bringing Scotland into line with England and Wales would mean that those operating in the Scottish market would see positive changes in their businesses.
Ninety-nine per cent of tied licensees agree that the Scottish Government should ensure that the protections to be afforded to tied licensees in England and Wales are also enacted in Scotland. Paul Waterson, chief executive of the Scottish Licensed Trade Association, said:
“Our message remains clear—we need parity with the rest of the UK, and we need it fast.”
I join Paul Martin in urging the minister to listen to those voices calling for reform and to outline what actions the Scottish Government will take to provide much-needed protection for rent-tied pub tenants in Scotland.
17:23
I offer reassurance to Paul Martin. One or two things have taken up my attention in recent weeks, so I managed to miss his motion; otherwise I would have signed it. However, I am taking tonight’s opportunity to express my support for the motion and the principles that lie behind it. I hope that he sees that as a guarantee of my support.
It was some years ago—in fact it was the week of my 18th birthday—that I first presented myself to a senior rugby club. The club captain looked up at me and said:
“Aye, you’re a big lad, but you’ll hae to put on weight or you’ll get hurt.”
That night, I did two hours of physical exercise and then we retired to the pub where the real training started. I must say that I have been working on that training ever since. The truth is that I discovered that beer is good for you. I went on to adopt that practice through my career in the young farmers movement, where a similar approach was taken.
The sad thing is that the many pubs that I remember being in at that time no longer exist. The pressure on our licensed trade is quite extraordinary. The effect that various other socioeconomic drivers have had on the licensed trade has, sadly, been negative. Too many of us now buy our wine or our beer at supermarkets, take it home and drink it in front of our children. That is not ideal, yet it is the practice that we now indulge in. The number of pubs has fallen dramatically and, although they have often been made for the best of motives, other changes continue to drive a fall in demand for the traditional pub. The smoking ban, the need for which we all understand, had an impact on many bars. The more recent change in the blood alcohol level limit for driving has affected footfall in many country pubs. There is therefore serious pressure on the licensed trade.
Does the member accept that minimum pricing might swing the balance back towards the pubs?
Absolutely, but I must point out that I was not questioning the motives that lay behind the changes that have taken place. Those motives are sound, even though I have occasionally argued against some of the drivers for them.
The number of pubs is falling, and the vast majority of the pubs that we have lost appear to have been rent-tied pubs. That is the sector that is under the greatest pressure. There is also the concern that some members have expressed that the changes in the law south of the border might result in attempts being made to force the tied-pub trade forward in Scotland in an area where the pressure has not been visible in recent years.
I back changes that will free up the pub market in Scotland and prevent those who are in rent-tied situations from having to accept financial decisions and buying pressures that are not of their own making but which will reduce their income and the viability of their pubs, thereby leading to yet more closures.
I believe that beer is good for you and that local pubs are good for their communities. However, unless we take swift action to avoid the continuing decline of the traditional pub, we will lose many more. The rent-tied pubs are the battlefield on which the issue is being fought.
I think that I have given members an insight into my views and what motivates them, and why I believe that it is worth pursuing the proposed change. I hope that Paul Martin will now accept that even the Conservatives accept his point of view. Let us go forward together and make sure that we do not lose any more pubs than is necessary.
17:27
I thank my colleague Paul Martin for bringing the issue of rent-tied pubs to the chamber for debate.
On the surface, this evening’s debate is about the licensed pub trade, but it is really about Scottish small businesses. The most damning statistic of all is that tenanted pubs in Scotland are 62 times more likely to close than are their free-trade counterparts. The pubs that we are talking about are not run by huge companies or by big businessmen or businesswomen, but by ordinary people who work tirelessly, day in and day out. For that tireless work, they are not paid a salary that provides security for their families or one that allows them to enjoy a lifestyle that rewards their hard work; in most cases, they are paid less than £15,000 a year.
We all agree that Scotland needs a thriving business sector in order to grow our economy, but it simply cannot be fair that hard-working, honest publicans work day and night without receiving the benefit of a pay cheque that befits their efforts. I believe that enacting legislation similar to the legislation that has been brought in in England and Wales to protect rent-tied tenants will certainly help, although it will not solve the problem completely.
The introduction of a statutory code of practice that encompasses fairness and lawful dealings will provide guidance, support and clarity to the industry in Scotland. A Scottish adjudicator should also be established, which should have the power to arbitrate in disputes between pub companies and tenants. It should provide a fast, low-cost and effective means of redress for tied tenants in the event of code breaches, and it should have the power to impose financial penalties.
For me, the issue is quite simple: too many of our pubs in Scotland are closing down and many that have not closed are only a few steps away from disaster. It is in the interests of everyone in this chamber that our pubs do well. I am not by any manner of means advocating that we should all go out and rectify the situation tonight, but it is imperative that our publicans earn a decent wage, that they reinvest in the economy and that they grow their businesses and create jobs in our communities. If the current policy is continued, many ordinary people will lose not just their jobs, but their livelihoods.
Our friends in England and Wales have already legislated for this issue; I believe that it would be foolish of us not to follow them. Let us use this Parliament’s powers to allow the pub sector to thrive. Let us create jobs, energise and empower people, and give communities the pubs that they deserve and can be proud of. With the Tennent’s training academy in Glasgow, its recently opened conference facilities at the Wellpark brewery and the Drygate bar that has already been mentioned, we can see the great benefits that the pub trade can bring to the Scottish economy if it is allowed to flourish.
As I have said, bringing our laws into line with the situation in England and Wales will not solve the problem overnight, but it will be a start. Let us make that start, and get out there and speak to everyday pub owners across the country to find out what support they need and what is and is not working for them. Let us start the process of change. I would—even though I am a teetotaller—most certainly drink to that.
17:31
I am very pleased to have the chance to speak in the debate. I am not sure that, technically, my CAMRA membership is a registrable interest, but nevertheless I declare it in the interests of transparency.
CAMRA exists not just to campaign for real ale but to celebrate something positive about the kind of alcohol culture of which we should be proud. That is not something that this Parliament often does well; in fact, one of my bugbears over the years has been that, very often, we talk about alcohol either in terms of harm—social harm, harm to health and criminal justice consequences—or in terms of economic benefits such as the amount of money people are making from whisky exports, the number of jobs involved and so on.
However, we never talk about the kind of alcohol culture that would be healthier and which our society could be proud of and happy about. We talk about the negative aspects of the culture and the positive aspects of the economic consequences, but there is nothing in between; the motion opens up a space for us to say something about the kind of healthier alcohol culture that we should be aiming for. That is why I congratulate Paul Martin most sincerely on bringing the motion to the chamber for debate.
There are some who will advocate for the change that is set out in the motion on the principle that markets ought to set rents, or that free markets operate more efficiently and contribute more to the economy, but members will understand that that is not my starting point. My starting point is to recognise that we are talking about a sanctioned and legalised recreational drug that we have allowed, over the past few decades, to be handed over overwhelmingly to a tiny number of multinationals. We used to have so much more diversity not only in production and on-sales in Scotland and other countries, but in small businesses that had their roots in communities.
A recreational drug should be sold carefully and responsibly; that is best done by independent businesses that have their roots in their local community, rather than by someone who is not part of that community taking decisions centrally about business operations. Because such independent businesses look after their staff, they have low turnover, and there is someone behind the bar who knows what they are doing if problems emerge or behaviour gets out of hand. Those are the kinds of businesses that we should be trusting to sell the product responsibly and carefully.
The small independent producers—the kind of producers that are flourishing in Scotland—make their profits from quality, not from volume sales. We should see them having a bigger and growing share of the products that are sold in the country. It is a rare and enjoyable novelty when I agree with something that Alex Johnstone has said, but beer is good for you, if we are talking about quality beer that is sold in a responsible and careful way. The independence of those businesses—both the brewers and the independent pubs—will lead to that outcome.
That is what I have in mind in supporting the motion. Even though an individual pub may decide that it is happy with the reduced rent that the beer tie gives it, part of the consequence is that it will have an increased incentive on the sales end—on volume sales. If we want the incentive instead to be in producing a good-quality environment that people want to be in and which feels safe—and healthier, even, with the smoking ban—we need to recognise that we should not put pressure on pubs to recoup the inflated price that they pay for their beer always and only through volume sales.
Whether people come at the motion from a free market point of view or from the point of view of the responsible selling of something that should not be handed over to the free market and the view that we should invest in quality, not in volume sales and not just in economic output, every part of the political spectrum can unite around the issue. I hope that the minister, in responding to the debate, will say positively that he intends to take the action for which we are all calling.
17:36
I thank Paul Martin for bringing forward the subject for debate. I, too, have been concerned about it for some time.
My starting point has to be that I like beer. In particular, I like to try beers from Scottish brewers, especially smaller brewers. In my constituency, we have the West brewery in the old Templeton building at Glasgow Green, which Sandra White mentioned—members may be familiar with it. That has been a huge success, with its German-style beers that are made in Scotland. I think that Mr Harvie also frequents it.
From a jobs and business perspective, we want to encourage smaller Scottish businesses to develop new products, grow their business and create more jobs.
The point that John Mason makes is absolutely crucial in respect of microbreweries and small breweries, particularly in rural areas. There are a number of those in Argyll; Fyne Ales is one that is involved in the debate. Without ending the present system, the opportunities for those breweries will remain more limited than they should be.
Yes. I was in Mr Russell’s constituency the other week with the Equal Opportunities Committee, and I tried three variations of the Islay brew, which was very acceptable.
It frustrates me when I see folk in Scottish pubs and restaurants drinking imported beers when perfectly good Scottish alternatives are available. Some of those people will complain about a lack of jobs in Scotland, but they drink imported products. Where is the logic in that? Having got that point off my chest, I accept that there are problems apart from consumer choice. Indeed, in many cases, there is no consumer choice. That is what we are discussing with the whole question of tied pubs.
As I understand it, that approach has at least two major impacts: it restricts the choice of beers that are available to customers, and it seriously distorts a market to the disadvantage of smaller pub operators especially. However, I did not realise until I read the briefings that there is also an issue with tenants’ deposit bonds, which can involve deposits of between £6,000 and £50,000. That is clearly a serious initial commitment. The briefings have made it clear that there is less of a problem in Scotland, with 850 out of around 4,900 pubs in tied tenancy/lease agreements. That is about 17 per cent, compared with 39 per cent down south. Fergus Ewing has made that point both face to face and in writing. I appreciate his letter to me of 8 January, which very much showed an openness and willingness to listen to any evidence that might be produced.
However, I object to Scotland always being compared with England, whether favourably or unfavourably. We have our own Parliament and we can do things in our own way. If we want to make comparisons, there are lots of other countries that we can compare with.
The briefing from licensees supporting licensees also accepts that the situations in Scotland and England are different, but one of its key arguments is that, whereas beer prices are higher to compensate for lower rent, in recent times both the cost of beer and the rental element have gone up substantially, which has led to problems for tenants.
I read the House of Commons library’s comments on the matter. One or two quotes are interesting. For instance:
“The … Business and Enterprise Select Committee … found that the notion that tenants were receiving countervailing benefits that compensated for higher tied beer prices was also questionable: ‘There is no evidence demonstrating that a tied lessee receives benefits not available to free of tie tenants or freeholders.’”
It also says:
“Last year, for the first time, rent as a percentage of turnover in the tied estate overtook the free-of-tie estate.”
There is nothing inherently wrong with the franchise-type model, in which reduced fixed costs are compensated for by higher running costs. However, the argument is that the balance has been lost in recent times, which has trapped some who would benefit from having other options. The idea of break clauses and the option to have a different model after, say, five years strikes me as attractive.
We want to encourage pubs as a positive aspect of our culture. They face other challenges, which other members have mentioned. I hope that the minister is able to indicate some changes, whether or not they are exactly the same as happened in England.
17:40
I speak in the debate with some trepidation, as I am obviously in the company of experts when it comes to the business of beer and its consumption. I will try the best that I can to play my part.
I thank Paul Martin for the members’ business debate that has introduced me to some of the complexities that lie behind the business of public houses throughout Scotland. The briefings from CAMRA, the Scottish Beer and Pub Association and many constituents throughout South Scotland—the region that I represent—have helped to educate me about some of the stresses and strains that should have been apparent to me previously but which I did not consider in my daily study of the issues that attract my constituents’ attention.
It is evident that the trade is under pressure. As Neil Bibby said, at least two public houses a week close in Scotland. In South Scotland, that is a serious threat. Unfortunately, we do not have the luxury that Sandra White has of many public houses and thousands of jobs. The hamlets and towns in South Scotland value greatly the presence of a public house in their midst. The public house contributes through not only its business but the community aspect of its presence, which supports communication across communities and maintains relationships with people who live in the area.
As Mr Johnstone indicated, the introduction of the smoking ban and the recent changes to alcohol limits for driving in particular have had an impact on the pubs. It is not all negative because, certainly, since the introduction of the smoking ban, pubs have become more hospitable, the food has become more enjoyable and the culture of pubs has improved accordingly, although I am sure that there are people in Scotland who disagree.
The change in alcohol limits has properly impressed upon drivers the need to be aware of the new limits and, in many cases, they have decided not to drive at all. That has been reflected in the numbers of people who go into our pubs and enable them to make profits. The Parliament has no responsibility for ensuring that people make profits, but it has a responsibility to try to provide a context in which people who conduct proper business are able to do so at profit and to employ people at a rate of pay that is acceptable in our society.
For those reasons, as well as having read the briefings from the various groups and having listened to those who are engaged in the trade, I think that the proposals that Paul Martin outlines and the experience in England and Wales need urgent attention from the minister. In the event that he finds it difficult to action the proposals that Paul Martin made, I expect him at least to begin a consultation with some urgency because businesses are dying as we speak and there is a need for us to take all the steps that are available to us to deliver for the people who provide a trade on our behalf and for our enjoyment.
17:44
I thank Paul Martin for allowing us an opportunity to debate an extremely important matter. I also thank him for his constructive tone in opening the debate, which I hope will continue, and I thank all members for their diverse contributions, conducted, if I may say so, in a tone of sober conviviality, if that is not an oxymoron.
We can all agree that pubs play an enormous part in our culture, heritage, communities and society. They contribute in great measure to our economy and to employment, as we have heard from many members. There seems to be a large concentration of them in Sandra White’s constituency, which may account for her happy demeanour. They contribute to a large number of employment opportunities, particularly for young people, and I pay tribute to all those who work in pubs, clubs and restaurants and who, although they have to work antisocial hours, serve the public so well.
The trade contributes £1.5 billion to the Scottish economy, with 58 per cent of all tourists and 71 per cent of overseas visitors saying that they have eaten in a bar or pub. As Graeme Pearson said, the smoking ban may have triggered an appetite to diversify and provide other services, such as better food, with pubs reaching out to other clientele, becoming more family friendly and perhaps introducing more females into the equation in some pubs. Not everyone can diversify, but we recognise the entrepreneurialism and imagination of those who run pubs in Scotland and the enormous contribution that they make to the economy and, as Patrick Harvie said, to the pursuit of human happiness.
However, the serious issue is what we can do to address the important question that has been raised. There are many pressures on pubs, and members have alluded to the diverse nature of those pressures. I am pleased that the Scottish Government has kept in place the small business bonus, which I believe results in around two in five pubs paying zero or reduced business rates. That is a real contribution to the small pubs that get that benefit. As someone who ran a small business before being elected to Parliament, I know how important such a benefit is, and we will continue the small business bonus scheme, if we are re-elected, until the end of the next session of Parliament in 2021.
Through Skills Development Scotland, we also provide access to a range of support for people who are looking to develop a career in the pub sector. We have developed the taste our best scheme, which is open to pubs and is raising the standard of food—and, if I may say so, cuisine—in Scotland to a higher level. Our food is now superior to what is available in many other countries that we visit, and we might not have said that 20 or 30 years ago.
The motion calls for a statutory code of practice and for an adjudicator for pub companies to be implemented in Scotland, following the introduction of legislation in England and Wales. I am entirely open to such measures, and I want to comment on some of the arguments that have been made today.
First, it has been acknowledged that the sector in Scotland is rather different from that in England. There are 4,900 pubs in Scotland and most of them—64 per cent—are independent free trades. The figure in England is almost inverted; most pubs in England are tenanted, not freehold. That is a difference.
If I heard him correctly, Mr Martin mentioned that, in Scotland, the number of tenanted pubs is 1,100, but actually only 538 tied pubs fall under the pubco umbrella. In other words, the protections, options and measures that are to be afforded in England and Wales—if the legislation goes through and the code of practice comes into effect, which I understand is intended to happen in June next year—would apply in Scotland to only 11 per cent of pubs and to rather less than half of the tied pubs.
Will the minister give way?
I will do so in a minute.
I just want to make the point—it is not a point against the motion; it is a point of fact—that, if we agree to follow suit after England has legislated, we will affect only slightly less than half of the tied pubs. There is therefore an argument that, if action is required, we might want to go further than legislators down south have done, if the evidence gives us a basis for doing so.
Although I recognise the minister’s latter point, which I think is constructive, the fact that the numbers in Scotland are nowhere near the increase that we see in England and Wales has been used as an argument against legislating in Scotland. However, why should the numbers matter to the Scottish Parliament? We should take the issue forward regardless of the numbers.
That is a fair point. I am making the argument that we are talking about 11 per cent of pubs in Scotland. That is an important point to make.
There is a not insubstantial price tag to legislative measures. The best guesstimate is that the policy that has been introduced down south might lead to some further pub closures and bring about an indirect cost to business of £16.7 million a year. It would be imprudent not to consider carefully that cost estimate and what the costs might be in Scotland. None of us has mentioned the imposition of additional burdens as being helpful. We must drill down and consider the matter carefully.
Today, I received a letter from various bodies, urging support for the motion. Among other things, the letter said that the evidence is crystal clear that the tied-pub model has been abused in Scotland as it has been in England. Tenants are forced to buy overpriced products from large multinational pubcos, restricting their offer and putting them at a serious disadvantage. On the other hand, people on the other side of the argument—John Mason alluded to this—have stated that rent levels are below the competitive market rate and that other special commercial or financial advantages and benefits apply, such as financing or granting loans on favourable terms, equipping publicans with a site or premises for business, providing them with equipment or undertaking other investments such as providing wi-fi, Sky Sports and accommodation.
I mention both sides of the argument because there are two sides: there is a claim and there is a counterclaim. Instinctively, as someone who ran a small business and is in a party that supports fairness and equity, I am, I guess, on the side of the small guy—the tenant. That is where we are coming from, and where Mr Martin and many of the members of all parties who have spoken in the debate are coming from.
Will the minister give way?
I have very little time left.
I am sorry that I have not been able to address more points, but I want to say that the Scottish Government recognises that we need to take the matter forward, and we have had meetings with many of the interested parties. That is why, today, I am announcing that the Scottish Government will commission a study to look at the various pub models that operate in Scotland, in order to see whether pubs in the tied sector are being treated more unfairly than those in other sectors. For the study’s findings to be robust and informative, it will require the co-operation of the entire sector. Once we have considered the outputs of the study, I shall most certainly come back to the chamber or make a parliamentary statement of some form to outline our intentions.
I very much welcome the fact that this debate has allowed us to focus on some of the issues, and I hope that the announcement of the study will be welcomed by all members.
Meeting closed at 17:53.Previous
Decision Time