Diary special: Pubco Report

Evidence from pubco chiefs

Punch boss Giles Thorley, along with Ted Tuppen and Simon Townsend, of Enterprise Inns, "made assertions which, on investigation, proved to give a partial picture, or were, on one occasion, positively false". The report says "slips of the tongue may occur" but "these repeated slips have undermined the reliability of their evidence".

Punch and Brulines ​

"Our chairman visited the Eagle [pub] to witness a demonstration of Brulines. It was clear that the essence of the mechanism used by Brulines is a simple wheel that cannot differentiate between densities. Punch has since admitted in a letter two months after the evidence session that 'the system does not measure the difference in density of beer versus water'. We are disappointed that Punch misled us in oral evidence and that they have not apologised for doing so."

Evidence from licensees​

"Our witnesses were impassioned. The stories we heard from individual lessees were extremely troubling; indeed, many were heart-rending. On the other hand, we initially had 50 complaints from a pool of some 30,000 lessees. We asked the pubcos about some of these complaints and received a different account of events."

Pro-Enterprise submissions​

"We note at a very late stage in the inquiry several Enterprise lessees contacted the chairman expressing their support for the company and giving examples of help they had been offered. This had the appearance of a campaign."

Transparency on rental valuation​

"The rental valuation method for pubs appears to be the product of history and tradition. If it is to be fair, there must be far greater transparency about how rents are calculated to ensure equality between the parties to the negotiations. If this is not improved as a matter of urgency, there are compelling arguments for abandoning the method entirely."

Unfairness of rent hikes​

"A lessee was presented with a 100% rental increase at her first five-year review even though there had been no change in the local environment or economy — the only difference being the money she had invested in upgrading, as she put it, an 'old and shabby building'. We consider it is manifestly unfair for pubcos to profit from increases in trade brought about by such changes."

Closure: pubco vs freehouses​

"It is clear that figures for pub closures do not adequately cover cases where individual lessees go out of business without the pub itself actually closing. We cannot be confident that pubco lessees are less likely to fail than other licensees."

Financial assistance​

"Not all lessees receive financial help, even when losses are due to external factors. We have heard from a lessee of a rural pub whose only access road was closed for six weeks, a lessee whose pub flooded and was closed for four months, and a lessee who had a double shooting on the doorstep of their pub — none of whom received any temporary rent reduction or financial assistance."

Cost of beer in tied system​

"If the interests of the pubcos operating a tied system and their lessees were truly aligned, one would expect that pubcos would want a system in which the combination of rental costs and beer costs enabled their lessees to supply beer at a price that was competitive with other pubs. This does not seem to be the case."

BDMs — help or hindrance?​

"We are sure that there are business development managers adding value in the way pubcos claim. However, many lessees who submitted directly to our inquiry were uncomplimentary. One lessee told us when she approached her BDM for help he told her he could get her a council house by evicting her. Another told us: 'Our BDM has had no help to offer or any constructive advice, only telling me where he is going for the third holiday of the year'."

Breaking the tie​

"We are concerned that the simple breaking of the tie in these very challenging economic times could lead to a chaotic situation in which the finances of the pubcos were completely undermined, with unforeseeable consequences for their ability to maintain their business and, we believe, the very real risk of widespread pub closures as a direct result. We have no wish to be the cause of an even sharper decline in the number of public houses."

BBPA and BII's role in complaints​

"Lessees have very little confidence in either organisation. We have received evidence questioning both the positions of the BBPA and the BII and their relationship with the pubcos. A lessee said she has written twice to the BII asking for an investigation of Enterprise's codes of practice and never received a reply."

Rent arbitration​

"Lessees and their representatives have told us that the cost of these methods was too expensive and deterred them from taking action. One lessee faced with an increased rent told us: 'We are racing towards arbitration, which we can ill afford. It is obviously cheaper for us to accept the £1,400 rise and save thousands but it feels wrong when we are placed under such tough operating conditions'."

Gaming machine supplier Kossway on the AWP tie​

"If a tenant is deemed fit and proper to run a pub and promote the sale of beers, wines and spirits to the best of his ability, to maintain and keep that pub and pay the rent, then surely he must be deemed as capable of making a simple decision as to whom he wishes to supply his gaming and amusement machines and at what terms. The pubcos' claim that they provide assistance to the tenant is nonsense. Their real objective is to gain as much income as they can get away with from the gaming and amusement machines sited throughout their tenants' estates."