Pub code of practice to be made legally binding and conciliation service introduced

24 November 2011 by
Pub code of practice to be made legally binding and conciliation service introduced

The Government is to set up a conciliation service to mediate between licensees and pub companies in disputes as part of a raft of measures introduced in response to the 10th report into the state of the pub industry by a panel of MPs.

In September, the Business Innovation and Skills Committee slammed pub companies for what it saw as a failure to get to grips with reform. It was particularly critical of the industry's "half hearted" adoption of new voluntary industry codes of practice.

In its response to the report, published today, the Department for Business Innovation and Skills (BIS) said it hoped to create a more sustainable future for pubs, as it secured an industry commitment to end unfair practices in relation to the beer tie, through a legally binding code.

The main elements of this self-regulatory package include:
The Industry Framework Code to be strengthened and made legally binding
â- The strengthened code will focus on full repairing and insuring (FRI) leases. This will bring about immediate improvements in areas of concern, such as rent, insurance, training and dilapidations, combined with a commitment to discuss further improvements with industry.
â- A Pub Independent Conciliation Advisory Service (PICAS) to be set up to provide mediation and arbitration
â- A three-yearly reaccreditation process for company codes, achieved through examination of annual compliance reports and spot-checks
â- A new Pubs Advisory Service (PAS) established to provide free advice to all prospective and current tenants and lessees

BIS said that making the code legally binding would mean it was enforceable through the civil courts but avoided the need to introduce slow, burdensome legislation.

The strengthened code will also abolish the enforcement of upward-only rent reviews and force pub companies to be transparent with their lessees on issues such as charges for dilapidation repairs and income from gaming machines.

Furthermore, introducing PICAS and the three-yearly reaccreditation process will have a similar effect to establishing a public adjudicator - as recommended by the select committee - but can be done much more quickly.

Consumer Minister Edward Davey (pictured) said: "This is good news for everyone to raise their glass to. It gives the industry more certainty, which is vital to the success of Britain's family brewers, and it gives pub-goers the knowledge that they are drinking a fairer pint down their local.

"The advantage of this self-regulatory approach is that it will deliver these reforms much more quickly than could be done through legislation. I would like to thank the committee for its focused scrutiny on this issue, which has been essential in driving through necessary improvements. I am confident that the industry will lose no time in fulfilling the commitments it has made."

Paul Wells of the Independent Family Brewers of Britain said: "This is good news for smaller brewers because it lifts the recent cloud hanging over the brewery tie and the traditional tenancy agreements, which we all operate. During this long inquiry successive select committees received no complaints about brewery tenancies and we believe that the current code of practice developed by the BBPA, BII and FLVA provides for the resolution of brewery and licensee issues in traditional tenancy agreements.

"In my view many family brewers will now increase investment into their pubs because of the support the Government has announced for the traditional brewery tenancy agreement and the beer tie."

The British Beer and Pub Association (BBPA) is expected to complete the legal processes as soon as possible, with a view to implementing its commitment by the end of 2011. It is expected that PICAS will be set up by the end of February 2012.

But the Association of Licensed Multiple Retailers (ALMR) expressed disappointment at the news that the Government had decided not to consult on the introduction of a statutory code of practice to regulate the behaviour of the major pub companies.

Kate Nicholls, ALMR strategic affairs director, said: "We are obviously deeply disappointed that the Government has chosen not to follow the select committee's route map to lasting, meaningful reform. We still believe that the options laid down by the committee represent the best means to deliver that and today's announcement can only be a partial solution.

"Ministers have mapped out an alternative route but handed discussion over the content of the code back to the industry. This is critical and it must be rapidly and significantly strengthened and enhanced if it is to become a genuine industry document. It is also key that we clarify as a matter of urgency how company codes - as distinct from the industry code - are to be monitored and enforced. Failure to do so will mean there is a very real danger that the major pub companies will face less-onerous obligations than they do at present."

BBPA announces reforms to Pub Industry Framework Code of Practice >>

Government set to respond to BISC committee report on pubs >>

By Neil Gerrard

E-mail your comments to Neil Gerrard here.

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