Pubcos toast code reforms but lessees left bitter

12 December 2011
Pubcos toast code reforms but lessees left bitter

When Consumer Minister Edward Davey said last week that plans to reform the regulation of tied and leased pubs was "good news for everyone to raise their glass to", he didn't specify whether the glass had to be half full or half empty.

In the event, it looks as if much of the industry has made its own mind up. While some, particularly the pub companies, were brimming with satisfaction, others seemed to be staring into a near empty vessel, the remnants of a beery foam stuck to the side of the glass.

The Government's announcement came in response to a report by a panel of MPs, the Business Innovation and Skills Committee (BISC), which slammed pub companies for what it saw as a failure to get to grips with reform. The committee was particularly critical of the industry's "half-hearted" adoption of new voluntary industry codes of practice regulating tied and leased pubs, and called for a statutory code of practice.

THRASHED OUT

Instead, the Government last week unveiled a package of measures to strengthen the Industry Framework Code, which forms the basis for individual companies' codes of practice (see box for more details). The new code was thrashed out "after discussions between Government and industry partners" rather than by consultation. It is legally binding and disputes can be taken up in the civil courts but is not a statutory code.

The British Beer and Pub Association (BBPA) chief executive Brigid Simmonds said the announcement was "a further sign of our commitment to work with our members and industry representatives to strengthen the self-regulatory framework and the health of the sector as a whole."

And certainly it seemed like most pub firms and brewers were happy with the move. Paul Wells, chairman of the Independent Family Brewers of Britain, was pleased that Davey had made a specific reference to the importance of the beer tie and traditional tenancy agreements to family brewers.

"We believe the current code of practice developed by the BBPA, the Federation of Licensed Victuallers Associations (FLVA) and the British Institute of Innkeeping (BII) provides the resolution of brewery and licensee issues in traditional tenancy agreements," he said.

Meanwhile, Enterprise Inns boss Ted Tuppen, so often cast as the "bad guy" in the debate over the tie, struck a similarly positive tone. "We are delighted that having examined the issues raised by BISC, the Government has concluded that self-regulation in the UK pub industry can provide effective protection for individual publicans and that the entire industry may now concentrate all of its energy and resources on the real challenges facing UK pubs without further distraction," he said, on the day the price of shares in his firm rose 13%.

But others were less happy. The Association of Licensed Multiple Retailers (ALMR), which represents many pub firms which operate tied properties, said it was disappointed the Government had decided not to consult on a statutory code of practice. Kate Nicholls, ALMR strategic affairs director, said the reform was only a "partial solution".

ALTERNATIVE ROUTE

"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 it if it is to become a genuine industry document," she added.

The Campaign for Real Ale (Camra) was similarly downbeat, complaining that the Government's reforms were "too weak" to save Britain's pubs, and failed to offer genuine free of tie and guest beer options. Camra chief executive Mike Benner branded the Government "cavalier" for "rejecting the recommendations of the BISC and instead putting its faith in the ability of the very companies accused of malpractice to finally put their house in order."

The most excoriating criticism came from Justice for Licensees, which called the Government's response "disgraceful and inadequate" and accused ministers of appearing to "pander to the corporate culture".

With reactions like that, Tuppen's hope of no further distractions looks remote.


Reforms to the Pub Industry Framework Code of Practice

1 A more robust accreditation process for company codes of practice, which will require reaccreditation by the BII every three years.

2 New arbitration service, the Pub Independent Conciliation and Arbitration Service (PICAS), for disputes other than rent to be created, targeted to launch by February 2012.

3 The industry framework code will be legally binding which means it is enforceable through civil courts but avoids the need for legislation and further red tape on pub companies.

4 A strengthened code which will focus on full repairing and insuring leases. The enforcement of upward-only rent reviews will be abolished. Pub companies will also have to be transparent with their lessees on issues such as charges for dilapidation repairs and income from gaming machines.

5 A new Pubs Advisory Service (PAS) which will provide free advice to all prospective and current tenants and lessees.

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