Tuppen: 'We'd pay £100k to new body'
Enterprise Inns boss Ted Tuppen says his company would happily pay a levy of £100,000 or more to set up a body to represent individual licensees to redress the imbalance of power between licensees and tenanted pub companies.
Tuppen said one idea might be to impose a levy across all the tenanted companies, according to the size of their pub estates, to fund the body.
He said: "The Federation of Licensed Victuallers Associations already exists and might be a good place to start. It will cost whatever is necessary. I'd support a levy based on the number of pubs within a company."
Asked whether a figure like the FLVA's chief executive Tony Payne would be the right person to head an independent body, he said: "Tony Payne is the perfect person to set this up, although there are lots of good, independent and re-spected people who could act on behalf of licensees. It's important people keep a sense of proportion — there aren't 30,000 licensees being driven out of business by the pubcos."
Tuppen's comments come in the wake of a letter to Trade Secretary Lord Mandelson asking him not to refer the industry to a Competition Commission inquiry.
The letter makes 13 commitments by Enterprise to improve the tenant/pubco relationship.
The company says that it will roll out "royalty-free" AWP machine share options, which already apply to 2,200 pubs since being introduced just over two years ago. The deal means tenants receive one third of machine income after VAT and duty is paid.
Tuppen said: "There are occasions when we make a loss on this deal, but it makes the machine rent and royalties issue irrelevant. It de-risks machines — there is no danger of a licensee making a loss. Licensees like it — there are some sites where licensees earn 100% of the net profit, and we make a loss."
Tuppen also pledged the company to greater transparency on site profit assumptions, and flexibility on the degree to which sites are tied. He pledged the company to moving away from the Fair Maintainable Trade method of setting rent, to what he calls Fair Maintainable Trading Profit.
The Enterprise thinking is that negotiation takes place based on the licensee's business plan — approved by a trade accountant — showing the Fair Maintable Trading Profit is, with the rent payable flowing from this.
"The whole business of splitting profit is at the heart of many of the problems," Tuppen said.
Meanwhile, FLVA president Tony Payne has welcomed suggestion that the FLVA might be the right body to represent licensees with funding from the pubcos.
He said: "We take it as a compliment. Going national is an interesting idea. We couldn't just do it ourselves. It would be nice if we did it with another already established group. If we were to go national we would have to do a complete restructure."
Clive Davenport of the Federation of Small Businesses said: "The action Enterprise is proposing does not go far enough by any means to bring about the real change that is needed."
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