Luff tells the pubcos: "You're on probation

By Hamish Champ

- Last updated on GMT

Related tags: Pub companies, Peter luff

The pub industry remains "on probation", and woe betide pub companies if they do not implement initiatives to reform their business practices and...

The pub industry remains "on probation", and woe betide pub companies if they do not implement initiatives to reform their business practices and make life better for their licensees.

That was the message from Peter Luff, the Tory MP and chairman of the Business, Innovation and Skills (BIS) committee which delivered its verdict on the pub sector today.

The BIS report stopped short of recommending referring the pub industry to the Competition Commission, as many had hoped. But it called on the pub companies to prove they had mended their ways by June next year or else it would "not hesitate to recommend that legislation to provide statutory regulation be introduced".

Speaking after the publication of the much-anticipated document, Luff said he acknowledged the industry had made progress in some areas, notably in respect of moves by the Royal Institute of Chartered Surveyors to improve its existing guidance on valuations.

However he denied his committee colleagues had "backed away" from taking action, and warned that pub companies' codes of practice should be properly policed.

Dismissing calls that his committee's findings lacked credibility, Luff sent a clear warning to pub companies that they should not think they had got off the hook simply because there had been no recommendation for a competition referral.

"They have been found guilty and are on probation," he said. "I am not confident about change and I need persuading that companies have changed," adding he and his committee colleagues had been impressed by the stand taken by the BII and in particular its chief executive Neil Robertson over the organisation's ability to enforce the codes of practice being put in place.

Luff added that he hoped his confidence in the BII boss "was not misplaced".

"We have no clout, we can't force anything, but we have a moral authority. The issues are so important that they need to be addressed," he added.

Luff said the report was backed by all 11 members of the BIS committee, suggesting some of the industry's more ardent critics on the committee had been won over since the mauling they gave industry figures at last December's hearings.

The BIS chairman said he did not trust the British Beer & Pub Association to deliver, and said that the organisation would do well to engage with the Independent Pub Confederation, the umbrella body which represents a range of licensee interest groups. "It (the BBPA) sees the IPC as the enemy and that sort of stance is part of the problem," Luff said.

The pub industry issue had been one of the most emotive Luff had covered, he said. "I would love to be have been able to say that we sorted everything out but I can't," he added.

Certain practices clearly infuriated the Tory MP. Luff said he had been "spurred into fury" by reports that pub companies fined licensees via direct debt for buying out of the tie, a practice he had been assured had stopped, although he was not convinced.

Noting his sympathy for small regional brewers Luff said he didn't have an issue with the beer tie, so much as it was the way it was implemented, and that tied tenants should be no worse off than their free-of-tie counterparts.

On the machine tie, Luff condemned the rentalisation of machine income and called for tenants to be offered the choice of tied or free-of-tie deals. "If they go for free-of-tie, that says a lot. Pubcos don't do enough to take half the takings," he added.

Finally he reiterated his warning that unless pubcos smartened up their act and if tenants remained unhappy in 15 months time, MPs would kick up a stink about the industry again.

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