Government unveils new statutory pub code

The government has unveiled a new statutory code designed to help licensees of tied pubs who feel they are being squeezed by big pub companies.

The move came after the government declared that a self-regulatory approach in relation to tied pubs was not working.

Some tenants and licensees of tied pubs have long complained that the high prices they are forced to pay to buy supplies, coupled with other factors like the enforcement of large rent hikes, has left their businesses struggling to survive and left them earning less than the minimum wage.

Under the new measures designed to tackle the problem, the government has introduced a "Core Code" to protect all tied tenants.

Among the reforms established within the Core Code are: the right for tenants to request a rent review after five years; the creation of an independent adjudicator who will have the power to enforce the code, investigate breaches and impose sanctions, including financial penalties, on pub companies if they fail to comply with the new rules; tied licensees will also have the right to review the information pub companies used to determine a rent increase; and tenants will be able to choose whether to be tied for gaming machines.

Meanwhile, under the Enhanced Code, tied tenants whose pub owning company owns 500 or more tied pubs will have the right to request a "parallel free-of-tie rent assessment" if they cannot agree a tied rent with their pub company, with the aim of determining whether these tenants are worse off than their free-of-tie counterparts.

However, the code will not give tenants the right to choose and automatic free-of-tie option. The government said it acknowledged that the "market rent only" option was popular with tenants but would have created a "high degree of uncertainty in the industry, with a likely negative impact on investment and the possibility that several pub owning companies would abandon the tied market", which the government said it feared would lead to closures and job losses.

For similar reasons, it said it had also decided not to include a guest beer option in the code, which would have given tied tenants the right to purchase one beer of their choice from any source.

Commenting on the unveiling of the details of the code, Business Secretary Vince Cable said: "Far too many landlords feel their income is squeezed by big pub companies. So today we are taking action to make sure they get a fairer deal.

"The introduction of a statutory code will make sure that tied tenants get an accurate assessment of how better off they could be and the new independent adjudicator would make sure pubs companies are forced to act to redress the situation if they aren't behaving responsibly."