BBPA code: ACPO chief is acting above his powers

Your front page story on the Association of Chief Police Officers (ACPO) applying the new British Beer & Pub Association (BBPA) code across the board (Morning Advertiser 26 May) set alarm bells ringing in my head.

Irrespective of the desirability of the code, the outcomes it is designed to promote, or the merits of the BBPA, I suspect that ACPO president Chris Fox is acting way beyond his powers in expecting all pubs to adhere to the code.

There are codes of practice and guidelines on codes that do carry a certain weight in law, but these tend to be issued by organisations, like the Health & Safety Executive, who themselves have some status in law. The BBPA has none.It is a private club and is not entrusted with statutory powers nor given regulatory authority by statute.

Happily I am no lawyer, but I would like to see legal opinion on this matter. I strongly suspect that a publican, and certainly a freehouse publican not attached to a BBPA member company,is under no obligation to comply with the code, whatever ACPO would like them to think. The Association of Licensed Multiple Retailers (ALMR), for example, could equally well produce its own code (as, for that matter, could the Women's Institute). If the codes were incom-patible, ACPO would not be competent to insist upon one over the other, for the simple reason that neither the BBPA nor the ALMR could claim a unique authority to demonstrate the superiority of their code. That task would fall to a judge, and since judges ­ not police officers ­ make laws, I suspect that Chris Fox does not have the power to demand that councils apply a code drawn up by the BBPA as a means of testing publicans' suitability to be licensed.

Furthermore I suspect that any responsible landlord penalised by a council for non-compliance would have very strong grounds for appeal.

Peter Haydon (in no particular capacity)

68b Elmwood Road

London

SE24 9NR

The RICS needs to put its guidance in order

The Trade & Industry Select Committee (T&ISC) held its inquiry last year to confirm its understanding, as well as that of the Appeal Court and the EU understanding, that tied-trade tenants were not financially worse off than if those tenants had been free-of-tie.

The report issued as Volume 1 in December and Volume 2 in March concluded that inquiry. It had found there was a substantial lack of transparency in profit assessment and rental calculation coupled with "double taking" with regard to AWP machines ­ pubcos taking up to 50% at the time of emptying, then a further 50% of the remainder in rent, plus a royalty.

The T&ISC confirmed that tied-trade tenants should not be financially worse off than if those tenants had been free-of-tie and stated that in future all profit assessments and rent computations should contain whole and comprehensive detail; and that such detail should form an addendum to the lease, thus ensuring transparency.

Given that both the accounts of two of the main pubcos and reports from two main pubco investment analysts show that the tied-trade tenants will be financially worse off than if those tenants had been free-of-tie, there is clearly a major conflict between what should happen and what does.

So why do the tied tenants suffer? After all there are professional valuers governed by the Royal Institution of Chartered Surveyors [RICS], which one would assume ensure the fairness to tied tenants.

The flaw is that the RICS, in its guidance notes to surveyors/valuers, indicates that the tied tenants should be worse off. Its view is that rent based on half of the lower profits a tied tenant would make, should be less than half of the higher profits that a free-of-tie licensee would make*. Unfortunately, this means that through valuersfollowing their profession's guidance, tied tenants are worse off.

Should valuers adopt the stance that they follow their profession's guidance when they know that it is contrary to good practice? That would be like saying "I only followed orders"; and we all know the origin and consequence of that expression.

As a result of the RICS stance, many of the 30,000 tied tenants are paying an excessive rent, thousands of consumers are paying too much for their pint, and the pubcos are filling their pockets with income that they should not receive. At the same time, it may be assumed that valuers are making commission and/or fees out of the misery of tenants, particularly through the churn. Concurrently, the excessive income is exaggerating property values and the share prices for the pubcos.

The solution is simple. The RICS should put its guidance in order to ensure tied-trade tenants are not financially worse off; failure to do so will condemn pub property valuers to a similar status as that of reprobate timeshare salesmen. At the same time, the RICS should endorse cessation of the unprofessional practice of portraying to work for both landlord and tenant; no other profession would subscribe to such conflict of interest.

The problems are aggravated by low standards applied in the calculation of hypothetical figures. The RICS handbook requires that when straying into other areas of professional expertise, its members must meet the professional standards of those other professions. This should mean that when using a profits method for rental calculations, they should meet professional accounting standards. Time and again, valuers make estimates because they are too lazy or ignorant to carry out calculations, or because it benefits their client not to do them. Thus, instead of costing the relevant staff rota to operate the hypothetical business, having regard to man hours and different staff costs (a chef cannot be on minimum wages), they posit 15% of turnover as staff costs. This is based on supposed practice from time immemorial.

Apart from its failure to relate to the implications of the hypothetical business ­ the more ambitious the business, the greater the staff required ­ it overlooks the fact that the national minimum wage (NMW) means that wages have risen ahead of the Retail Price Index (RPI) and the lazy figure of 15% must have increased ­ even if it had been right in the first place.

* Letter from RICS to T&ISC dated 23 July 2004 Para 10 "Where the tenant is tied in respect of part, or all, of his drink purchases, and possibly machine income as well, the net profit that is achievable by the business will be lower than if the business is completely free of any tie. As such, the rental value for a tied lease will be lower than for a free-of-tie lease".

Brian Jacobs

via e-mail