Can the BII ever be an impartial policeman?

In the early eighties the economic policies of both Margaret Thatcher and Ronald Reagan were heavily influenced by 'trickle down' theory.

'Trickle-down economics' as it became known was founded on the belief that the benefits of wealth created at the top permeate down so that all ultimately gain.

To enable this business model to flourish 'deregulation' became the buzzword. After all, for entrepreneurs to 'grow wealth' they required high levels of autonomy, thereby allowing them to operate unhindered by the constraints of legislation.

The removal of checks and balances can however on occasion be problematic. After all, when people are given that degree of autonomy it is inevitable that over time, some at least will abuse that privilege.

In recent times the tabloids have been more than happy to highlight the excesses of greedy executives, hence the 'fat cat' headlines.

The banking sector is probably the most notable example. Remember Sir Fred Goodwin and 'that' pension?

His acquisition of ABM AMRO brought the Royal Bank of Scotland to its knees; (only massive government intervention prevented it from going under).

Similarly, ex-Punch boss Giles Thorley's acquisition of Spirit proved equally ill advised, leaving his successor with a thankless inheritance.

I mention these examples because these particular industries were and still are devoid of any external regulatory authority. (The banking sector was, in theory at least, 'policed' by the Financial Services Authority, (FSA) although in actuality this body was little more than a passive onlooker).

The drinks industry appeared to have little need for regulation, after all things appeared to work reasonably well between brewery and tenant. Little really changed when the government opened up the market; consequently the speculative property companies moving in found very easy pickings.

Lack of regulation​

I suspect even the most ardent pubco supporter would accept that the lack of regulation has allowed the big players to abuse their privileged position for their own commercial advantage and that this above all else explains why we are where we are today.

So, the question now of course is where we go from here? Given what has transpired, does the industry now need a regulatory authority to rein in the pubcos?

Absolutely; after all, some of them have a proven track record of abusing trust.

Some suggest that the BII is the logical choice to fill the role, that said many have grave misgivings as to the impartiality of this particular organisation.

Let us not forget that the pubcos provide the BII with a valuable income stream. This fact alone inevitably compromises the extent to which the BII can truly be independent.

Indeed, if Fuller's recent pledge to pay for its tenants to become BII members is taken up by other pubcos is it not likely such 'impartiality' will be further compromised?

The cynic would suggest that the timing of Fuller's announcement might not be completely coincidental; a reminder to the BII perhaps of where their loyalties truly lie?

Given such concerns, it is not difficult to see why many conclude that the BII's appointment as 'policeman' would merely allow the industry to sit in judgement upon itself. Not a satisfactory arrangement I'm sure you'll agree.

Independent​

Speaking to the BISC in 2009 Neil Robertson (Chief Executive of BII) admitted that the BII was not fully independent but claimed that its judgements were "impartial, balanced and sophisticated."

It must be said that some of Neil's more recent pronouncements do cast some doubt upon this claim; particularly his assertion that the industry should be "pleased" with the progress made thus far.

I have to say I find this statement somewhat difficult to comprehend. After all it appears to be completely at odds with the reality on the ground.

The overwhelming consensus is that the pubcos are stalling on meaningful reform and remain oblivious to the REAL concerns of tenants.

A number of pubcos appear content to throw up smokescreens in an attempt to conceal the fact that many of their agreements are actually becoming more onerous. The managed tenancy? I bet the entrepreneurs out there are just queuing up to take advantage of that particular 'opportunity'.

Some of the language currently being bandied about by the pubcos is also very revealing.

It appears deliberately vague and ambiguous, designed to suggest that major reform is under way whilst ensuring that there is little in the way of tangible progress.

"We're putting together a suite of agreements together" they say, "a range of templates". Yeah right!

What of course they don't say is that all agreements have been designed to give the appearance of choice whilst ensuring the tenant sees no real financial benefit.

So forgive me for feeling a little confused. What exactly do we have to be pleased about?

Pyscho-analysed​

As Phil Dixon rightly pointed out, any tenant taking up the FOT option currently on offer needs to be 'psycho analysed'. (This statement does lead me to wonder whether in fact Neil and Phil are singing from the same hymn sheet.)

In February Neil suggested that better training for BDMs would substantially reduce churn. The fact that this particular statement was made by a senior figure in the drinks industry is quite frankly astonishing.

Am I right in assuming that BDMs will be reading about 'Learning to take less' in Module 1 before moving onto 'Giving a great deal more' in Module 2? I doubt it somehow.

Many would argue that the BDM is a major part of the problem not a potential solution.

Let's face it; his/her primary role is to ensure that each outlet generates as much revenue as possible for the pubco. (Substantial bonus schemes are put in place to ensure they are heavily incentivised in this respect).

It should also not be forgotten that the BDM is portrayed as one of the many 'countervailing benefits' provided by the pubco.

The ironic thing is that the primary (sole?) beneficiary is the pubco not the tenant, yet it is the tenant that pays the wage bill, courtesy of inflated wet/dry rent. If it wasn't so tragic it would be laughable.

Major imbalance​

So, again I ask you. What do we have to be pleased about?

Finally, there are the codes of practice which Neil appears very keen to talk up. Words such as 'benchmarking' sound great, don't they? But how do they help make the pubco/tenant relationship more equitable?

Do they offer a viable FOT option? Of course not.

Do they guarantee a market rent that adheres to RISC guidelines? Of course not.

In my experience tenants are not greedy people, they just want to make a decent living for themselves and their families.

However, nothing the pubcos have come up with thus far addresses the major imbalance that currently exists in the pubco/tenant relationship. Corporate greed continues to prevail.

No doubt the in-house surveys the pubcos love to conduct will tell a different story. '99.2% of our tenants think we're fantastic.' Oh that's all right then, what's all the fuss about?

Seven long years we have waited for pubcos to implement reform yet they continue to cling to the past, increasingly loathe to legislate for the future. Their intransigence is there for all to see.

Again I ask you. What do we have to be pleased about?

In its follow up report (March 2010) the BISC stated:

"We need to see clear evidence by June 2011 that, in practice, the BII has the necessary authority and impartiality to be effective as a policeman for the industry. If it fails to demonstrate such qualities, the case for regulatory intervention by the Government, for example the establishment of an Ombudsman or intervention by the competition authorities, will be very strong."

Have any of the pronouncements made by Neil Robertson allayed fears that the BII is too closely allied to the pubcos?

No, in fact I would suggest that what he has said thus far merely conf