So what has changed since BISC 2010?

By Simon Clarke

- Last updated on GMT

Related tags Beer Public house Renting

Simon Clarke (R): not much has changed
Simon Clarke (R): not much has changed
Simon Clarke, licensee at the Eagle Ale House in Battersea gives his assessment on what progress the pubcos have made.

The "activities" of the British Beer & Pub Association (BBPA) and pubcos remind me of a quote from a film: "God is coming — look busy."

We seem to have a similar situation here. "Business, Innovation and Skills Committee (BISC) 2011 is coming — look busy!" The question on everyone's lips should be: "Have any of the purported activities since BISC 2010 resulted in an improvement in tenant profitability, or is it all just smoke and mirrors to avoid the prospect of legislation — again?"

It's all well and good pubcos and brewers endorsing a code. But the whole sector is stagnant because the tenants are not making sufficient profit, if any at all.

You could liken it to the residential property ladder; if first-time buyers can't get on the ladder then those already on can't sell and move up, the market comes to a halt and everyone loses.

If tenants do not make sufficient profit some will go bust. With falling profit comes closures and decreasing investment. Banks are reluctant to offer loans to tied tenants because they are seen as high-risk. Another knock-on effect is the quality of new tenants into the market. With low perceived profit, suitable efficient operators have little incentive to enter the market.

Ask yourselves this: with the huge pubco disposal programme of pubs, how many established tied operators are taking on new pubs? The only obvious growth areas are the freehold market and managed estates, which were notoriously poorer performers than the tied estate until fairly recently.

You will have seen JDW announcing expansion plans and most brewers with tied and managed estates announcing expansion into managed houses while disposing of tied. Punch and Enterprise have indicated they have disposal programmes of tied houses running into the thousands.

I have heard of lots of "free-of-tie price" alternatives, subject to an unrealistic rental increase, pre-determined by the pubco/brewer, but how many tenants have been offered a genuine, fair, free-of-tie option with "a full rent review" (BISC 2010) to an open market rental value?

This was addressed by the BISC 2010: "It is unacceptable that pub companies have again failed [to] seriously offer free-of-tie options."

It was endorsed by then Pubs Minister John Healey and, later, the new Government, which indicated there would be plans to issue a new set of Beer Orders forcing pubcos to offer free-of-tie lease options by June 2011 if the industry failed to do so voluntarily.

Codes are a tiny

section in the BISC recommendations and some hope by keeping "determined progress" in the headlines everyone will forget about the rest.

Pubs are still closing, choice of venue and beer diminishing. So what for tenants and consumers has changed? Answers on the back of a postage stamp please — it's not rocket science.

Simon Clarke is licensee of the Eagle Ale House, Battersea, south London

Related topics Legislation

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