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Viscount Montgomery of Alamein: My Lords, before the noble Lord sits down, perhaps I may correct him on one matter of fact. Generally speaking, there is no cover charge in France. However, there is frequently a minimum charge. The minimum charge is usually sufficient to cater for the person who comes in and orders one course and a glass of tap water to which the noble Lord referred. Therefore, it is a minimum charge rather than a cover charge. There is no cover charge.
Lord Monson: My Lords, I am grateful to the noble Viscount for pointing that out. It is a long time since I have eaten o la carte in France. I go there as often as possible, but I usually eat the prix fixe menu because it is so much better value. However, that gives me an opportunity to say that, if one sees the words "minimum charge" on a menu, it is extremely off-putting. I would prefer to have a cover charge because there is something very down-market about seeing "Minimum charge £5" on a menu. I would prefer not to see that, but it is entirely a question of personal taste.
Lord Cadman: My Lords, in rising to speak in support of the Bill I hope to be brief in view of the hour. The only interest that I can declare is that of a consumer, albeit one who still pays his dues to the British Hospitality Association. Also, my wife and I were the operators of a restaurant business for some eight years until fairly recently.
During our incumbency of that business we sought selectively and voluntarily to ask our customers for a contribution towards service. Our motivation was to ensure that our staff were adequately rewarded for the extra effort involved in dealing with large groups and at
The public seem to have accepted that a service charge is something that they must pay if they want to eat out. Otherwise, what restaurant would be able to get away with imposing it? That is the whole point underlying this practice. It has been suggested that restaurant staff wages will suffer, or that somehow restaurants will pay more in VAT and national insurance contributions as a result of the Bill. That will only occur if the restaurant finds itself able to incorporate any charges it might make into its menu prices thereby increasing them, or by reducing staff wages to compensate for its inability so to do.
It goes without saying that unless the restaurant has a captive audience its prices have to reflect market forces and I can assure noble Lords that there is a great deal of competition out there, notwithstanding the fickle nature of restaurant customers in general.
Making a cover charge is, I feel, less of a problem. At least it is normally nominal and is generally accepted as being for bread and consumables not charged for on the menu. Again, I have to say that these days those who make a cover charge feel that they can get away with it. I should be careful here because cover charges are made in your Lordships' House. Perhaps it is a tradition, but it may be one which has become inappropriate.
Providing uncompleted credit card vouchers for signature is, of course, an open invitation to the customer for a gratuity and no customer ought to feel obliged to accede. I know of one charge card company which actually encourages this practice, although I have to say that I feel it encourages fraud. In our business we had some instances of customers signing the voucher and neglecting to fill in the total. After all, if a customer wishes to add something to the bill in this way he can always ask the waiter to bring another voucher for him to complete and destroy the original.
As things are at present there is total confusion with customers not knowing their rights, or whether any contribution they make goes where they think it ought. Some restaurants make charges of varying amounts; others do not. Some charge groups; some impose a charge above a certain amount spent; some are optional; some are not. It is total confusion, and perhaps some regulation is now necessary. I welcome the Bill and should like to thank and congratulate my noble friend for the way in which he introduced it. I wish the Bill a fair passage.
Viscount Mountgarret: My Lords, I begin by congratulating the noble Viscount, Lord Thurso, on an excellent maiden speech by one who is obviously at the top of the tree in his profession, as is the noble Lord,
I must declare an interest in that I am involved with my stepson who has just started a very humble sandwich bar. I hope that one day he might go the route of others to the top of the profession. Like me, he is very opposed to the Bill and I shall tell the House the reasons.
I believe that the sentiments expressed about the unnecessary addition of cover charges, that it is not fair to add in service charges and so on, cloud the issue. The noble Lord, Lord Rathcavan, said that he does not like them. I do not like them. To my mind, a £16 steak is £16 and there should not be any cover charge, nor should there be an automatic service charge. But that does not mean that we need to regulate the matter. Parliament is not there for that; there are trade associations which are more than capable of putting their own house in order. Just because my noble friend Lord Bradford says that it has not been done is no justification for Parliament to legislate. If one takes it to absurdity, are we to have every mortal thing regulated?
I may be treading on tricky ground here because I do not know the facts too well. However, let us take the Jockey Club which runs racing. An enormous amount of freedom is given to the Jockey Club to make the rules and run racing and it is autonomous. If all the rules and the organisation were to be regulated by Parliament, it would completely destroy freedom of life and freedom of choice. It would be most unfortunate.
I must apologise to my noble friend. Having been in the position of proposing a Private Member's Bill which noble Lords kindly allowed me to introduce, like my noble friend Lord Montgomery I know what it is like to have perhaps not the wholehearted support of one's colleagues and friends. At the end of the day, we Back Benchers must stick together because united we stand, divided we fall. However, one cannot support something with which one disagrees fundamentally.
Let us take the wording of the Bill. I am no parliamentary draftsman, but line 10 of Clause 1 states that any restaurant or premises offering similar services "is misleading as to price" if it indicates a separate charge for service of food and drink and a separate cover charge. But that is not misleading, it is very clear. I should like to see on the menu that a cover or service charge is made if the restaurant wishes to make it. It is up to the customers to decide whether they accept it. If they do not like the way the restaurant runs its business they can stay away and go elsewhere. Therefore, to have the clause as drafted is a contradiction in terms. It is not misleading; it is clear and indicative.
Clause 2 is misleading. It is designed to discourage reward and thanks by a customer for service or whatever it is by saying on the menu that staff do not expect a gratuity, end of story. Many customers would feel, "The staff don't expect it, I'd better not give it". Noble Lords know as well as I do that no two people think alike and a customer at the next table may wish to give a tip or gratuity.
I wonder if anyone remembers how the late Nubar Gulbenkian would arrive at the Ritz Hotel in his taxi, turning, as he put it, on a sixpence, would sit down at his table and would produce the equivalent of a £20 note. Putting it on the table, he would say to the waiter: "It's yours if I'm satisfied. It's mine if I'm not".
My noble friend Lord Bradford mentioned going to a restaurant and bribing the chef. It really does not matter a hoot. You either bribe the chef beforehand, or bribe the waiter and the chef afterwards. The fact is that if a customer tips the waiter, or whoever, he will enjoy better service next time than the man who does not. Therefore it is quite wrong to try to encourage customers not to give a tip by having those words in the Bill.
My noble friend Lord Montagu said that it is the responsibility of management to reward, and not the customer. I disagree. It is not the responsibility of management to reward, except in so far as it is entirely right, proper and desirable that the staff are properly rewarded in the level of salaries they receive. But that is not up to the customer; it is up to management. The knowledge that the restaurant trade is badly paid is irrelevant in the context of whether the customer should tip or whether there should be a service charge. Basic pay is basic pay, and it is an area where there could, and should, be improvement, hopefully with the encouragement of the associations.
Last year I was in the United States and Canada, which I am sure many noble Lords know far better than I. I found that the service received in every restaurant, across the whole of the United States, was excellent because the waiters rely on tips. It was known that the prices did not include tips, and therefore the staff gave a better service. On the other hand, if a service charge is added, they can sit back if they feel so inclined and do nothing. That is the advantage of tipping.
My noble friend Lord Bradford, like me, does not like regulation. He stated that. Yet here he is trying to regulate. He said that the association had failed to get its act together and therefore legislation was necessary. That is a non sequitur. He said that his wife had an unfortunate experience in a restaurant. I suggest that perhaps she will not go to the restaurant again. He listed the organisations that support the Bill, such as the Four Seasons. But do they support the principles? I do not believe they do. I know the Four Seasons quite well, and I seem to recall that it certainly had a cover charge and a service charge added.
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