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Parliament pubco debate: BISC chair warns that statutory code will not solve all pub trade problems

By Gurjit Degun , 09-Jan-2013
Last updated on 10-Jan-2013 at 10:32 GMT

Related topics: Pub industry statutory code, General News

The chair of the select committee looking into the pubco-tenant relationship has warned that a statutory code will not solve all the problems in the trade.

Bailey: “Without a transparent and accepted basis for rent reviews, the advantage of free of tie disappears

Bailey: “Without a transparent and accepted basis for rent reviews, the advantage of free of tie disappears"

Speaking to MPs in Westminster, Adrian Bailey, chair of the Business, Innovation and Skills Select Committee (BISC), said that some problems in the industry are "beyond solving in any statutory code".

He added: "Nonetheless, such a code will go a long way to dealing with some of the sense of injustice felt about the unfair balance of the relationship between the pub companies and licensees. The key question is whether today's proposals will deal adequately with that problem."

About a free-of-tie option and the balance of risk and reward, Bailey said that it is important that any fair deal provision is “defined and well understood”.

However, he pointed to the “deep suspicion” in the trade of the “closeness” between the Royal Institute of Chartered Surveyors and pubcos leading to artificially high rents.

“This comes down again to the issue of getting a fair deal and the balance of risk and award,” said Bailey. “Without a transparent and accepted basis for rent reviews, the advantage of free of tie disappears. We could end up with a balanced relationship between tied and free of tie, with both being profoundly unfair when it comes to the balance between the pub companies and licensees.”

He welcomed the Secretary of State’s commitment to be "open-minded" about a free-of-tie option, but added: “We must have a transparent and robust process for rent reviews that can be accepted across the industry. This particular piece of legislation will not solve everything, but it will go a long way to doing so."

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