Lord Hodgson, Conservative peer and former director at Marston’s, had tabled an amendment to the section of the Small Business Bill dealing with the pubs code calling for an exemption for “a mutually agreed period in return for a significant investment”.
Speaking during the last sitting of the committee stage last week, Lord Hodgson said: “The basic point is that integrated pubcos that wish to sell will not invest £100,000, or even £84,000, if there is no guarantee that they will be able to sell their beer and if, after the money has been accepted and an investment has transformed the pub, the tenant will be able to say that they want to change the basis of the contract.
'The amendment would permit—not require—a situation in which if significant investment has taken place, of the sort that I have just described, the two sides could agree a period during which the MRO option would not be available. Without this, pubco investment will be significantly reduced.”
However, Baroness Neville-Rolfe, Parliamentary Under-Secretary for the Department for Business, Innovation and Skills said: “We recognise that pub-owning companies have an important role, and the importance of investment.
"However, the Government do not support an exemption of that kind. We consider that the return on investment should not be any different if tied rents are fair and leave tenants no worse off than if they were free of tie.
"If the MRO is set at a fair market rent, that is likely to lead to the rent increasing, and that increase should allow the pub company to recoup income lost through the removal of the beer tie.”