Black Country Tory MP helps inflict Commons defeat on Cameron

Chris Kelly, MP for Dudley South, was among 40 Tory and Liberal Democrat rebels who backed an amendment to the Small Business, Enterprise and Employment Bill.

It will mean pub tenants tied to big companies being able to demand a 'market rent only' (MRO) agreement from them.

Currently, tied pubs exclusively buy alcohol products from the parent company in return for reduced rent on the premises and other benefits but there are widespread concerns and complaints about the abuse of the practice by big firms.

But Britain's biggest pub landlord Enterprise Inns warned the vote to reform the historic 'beer tie' between tenants and pub companies could lead to more closures and job losses.

The British Beer and Pub Association (BBPA) said the vote was 'hugely damaging' and that the Government's own research showed it would result in 1,400 more pubs closing, with 7,000 job losses.

But the Campaign for Real Ale (Camra) said the change would secure the future of pubs, helping them to stay open and ensure the cost of a pint remained affordable. It was also backed by the Federation of Small Businesses (FSB).

The vote saw the Government suffer its first legislative defeat - by 25 votes - as Tory and Liberal Democrat MPs rebelled against the Coalition to support an amendment to the bill.

Liberal Democrat MP Greg Mulholland, who proposed the reform, said it would "simply bring back market forces into a sector that frankly has become grotesquely anti-competitive".

More than 40 Government MPs rebelled in the first legislative vote to go against David Cameron since he became Prime Minister in 2010.

They included 17 Conservatives, Mr Kelly among them, and 24 Liberal Democrats - despite it being Lib Dem Minister Jo Swinson who spoke for the Government.

The result announced in the Commons was 10 short on the No side, a fact revealed by analysis of the divisions lists and confirmed by clerks.

The reverse is the sixth faced by Mr Cameron since he became Prime Minister, but the first on legislation. Other defeats have included an ambush by Labour during a general debate on the economy, and a narrow loss over proposed military action in Syria.

Mr Kelly was unavailable to comment on his reasons for rebelling.

He is standing down at the next election after one term.

Simon Townsend, chief executive of leased and tenanted pub operator Enterprise, which has 5,500 pubs, sounded a grim warning.

He said: "This amendment, which was not supported by the Government, threatens to have serious unintended consequences for publicans and the industry at large."

He said a Government review had rejected the 'market rent only option' as damaging to pubs, communities and the wider industry, and would lead to "widespread pub closures, significant job losses and reduced investment in the sector".

Mr Townsend added: "We continue to believe the tie offers the best operating model for the vast majority of our publicans."