My Lords, I want to draw attention to some concerns expressed about the Pubs Code etc. Regulations 2016 by the Joint Committee on Statutory Instruments, of which I am a member. The concerns are set out in full in the fourth report of the current Session and I shall touch on the most important of them.
As my noble friend said, the regulations would alter the obligations on pub-owning businesses towards the tenants of their tied pubs. Under Section 43 of the Small Business, Enterprise and Employment Act 2015, the regulations must include provision for a tenant to be offered a market rent-only option. Section 43(6)(c) requires the regulations to provide that option to be offered where there is a significant increase in the price at which a product or service subject to the tie is supplied to the tied pub tenant and where that increase was not reasonably foreseeable when the tenancy was granted.
Regulation 24 among those before us today requires that the market rent-only option be offered where there is a significant increase of that kind irrespective of whether the increase was reasonably foreseeable. Moreover, Regulations 3 to 6 provide that the test of whether an increase in price is significant is to be determined by reference not to the amount by which
the particular product or service has increased in price but to the level of increase in price of a category of products or services.
The Joint Committee on Statutory Instruments concluded—the salient paragraphs in the report are 4.9 to 4.17—that the regulations do not comply with the requirements of Section 43 of the 2015 Act in two respects: they do not include the condition of reasonable foreseeability and the test of significant increase is inconsistent with what Section 43 requires. The department has not provided a satisfactory explanation of either of these two divergences from Section 43 and, therefore, the Joint Committee on Statutory Instruments considers that if the regulations are made there is a doubt whether Regulations 3 to 6 and 8 are intra vires. I would be grateful for my noble friend’s comments.