MPs vote for market rent only option in pubs code

By Ellie Bothwell contact

- Last updated on GMT

Related tags: Mro option, House of lords

The new clause was passed by 15 votes after 284 MPs voted in favour
The new clause was passed by 15 votes after 284 MPs voted in favour
MPs have voted to include a market rent only option clause for tied tenants in the pubs code following a passionate debate in the House of Commons, putting the future of the beer tie into question.

The New Clause 2, which outlines that companies with more than 500 pubs and at least one tenanted/leased site will have to offer a market rent only option, will be added to the Small Business, Enterprise and Employment Bill after 284 MPs voted in favour, including 17 Conservatives. There were 269 votes opposing the clause.

In a surprise move during the final reading of the Bill in the House of Commons today, Employment Relations Minister Jo Swinson proposed a new Government amendment stating that a review will be held two years after the Bill is introduced to determine if an MRO option should be included in the code. She said MRO would only be implemented if the review find tenants are not sufficiently protected by the system.

“If it is not working we do not want to be in a situation where we have to go through primary legislation,” she said.

However, the 11th​ hour amendment was not enough to persuade Government rebels not to vote for Parliamentary Save the Pub Group chair Greg Mulholland’s New Clause 2.

The new clause outlines that MRO would “come in gradually only at certain trigger points”, including lease/tenancy renewals, rent reviews, change of terms or change of pub company.

It also states that large pubcos that also brew beer will be able to insist on their brands being sold in their tenanted and leased pubs, but the tenant would be free to buy them from anywhere.

It states that the MRO option would involve a 21-day period of negotiation followed by a 90-day period of assessment undertaken by an independent expert agreed by the two parties (or appointed by the RICS Chairman if they cannot agree).

After this date the tenant has the right to pay the assessed MRO and can choose where to buy his/her beer, it adds.

The defeat of the Government's amendment that sought to introduce a review to examine the need for MRO and also suggested lowering the threshold for what constitutes a pub-owning company to one with 350 or more tied pubs, means the Bill goes forward to the House of Lords as it was tabled by the Small Business Bill Committee – meaning it only relates to companies owning 500 or more tied pubs.

The Government’s response to the pub statutory code consultation in June stopped short of including a mandatory free-of-tie or MRO option, stating that it “would have been likely to cause a high degree of uncertainty in the industry”, with a likely negative impact on investment, the possibility that several pub companies would abandon the tied market and the risk of higher levels of closures and job losses.

Related topics: Legislation

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1 comment

kinda funny

Posted by jon,

so the review for MOR will only apply if after 2 years the code is not working, and yet the pubcos and associated bodies are still terrified. so clearly they feel that with the code in its current state they still stand to benefit. if they had any confidence that the code would create a fair and level playing field then they would have no need to fear or even consider the MRO option. personally i think its a great inclusion as it shows a strong commitment too get things right even if it takes time.

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