'Statutory pubco code is the only option'
Members of the Independent Pub Confederation (IPC) have called for a statutory code of practice to be implemented claiming it is the only way to change pubco "behaviour".
Speaking at the second meeting of the Business, Innovation & Skills Committee follow-up inquiry IPC secretary Kate Nicholls said that nothing had changed since the 2004 investigation: "The only answer is a statutory code. That is the only thing that will change behaviour".
However, pubco leaders have said they've made substantial progress to meet the demands of MPs over their treatment of tenants, and rejected claims they are continuing to "mislead" and "con" licensees.
Nicholls claimed that the current pubco Codes of Practice fail to go far enough and the lack of implementation means they have not been effective. She added: "The code could go a lot further." She said this is backed up by statistics which reveal that 20% of licensees are signing a tenancy or a lease when they have not received a shadow P&L.
Nicholls said the current codes were too "vague" and "weak" and don't effectively deal with the key commercial problems faced by tenants. However, she said she would accept a legally binding code with an adjudicator. Campaign for Real Ale chief executive Mike Benner agreed: "The only next step is to put it on a statutory footing which will protect people."
Fair Pint campaigner and pub retailer Karl Harrison added: "Self-regulation is not working. We have a weak code of practice written by the people the code is supposed to apply to."
Harrison said not enough effort had been made when putting together the codes. He said the BII and Federation of Licensed Victuallers Association simply said "Where do I sign?".
The IPC also disputed claims by pubcos that offering geniune free-of-tie options would damage the sector. MP Brian Brinley asked the question: "Aren't you running the risk of creating a senario where many more pubs go to the wall?"
Harrison said claims that more pubs would close if they were allowed to go free-of-tie were "laughable". He was responding to pubco claims that their supply agreements are based upon them having pubs within the tied model.
"We are talking about companies which have collapsed and are trying to defend their business model," he added.
Harrison gave examples of how both the City and the banking sector do not have faith in the tenanted market. He said the fact that Punch is demerging its tenanted businesses showed there was no confidence in the tied model. He called tenanted pubcos intermediaries who simply take "commission and backhanders".
Benner added: "The industry is already at crisis point and we shouldn't be concerned about unintended consequences of pubcos disappearing."
Sanctions
Pubcos chiefs were pressed on the impact of sanctions for breaches of the codes of practice; pubcos that receive more than a set number of upheld breaches risk been stripped of BIIBAS accreditation and be thrown out of the British Beer Pub Association (BBPA).
BBPA boss Brigid Simmonds spoke of the "reputational risk" of having too many breaches. "To me that's a far greater sanction..than removal of membership from the BBPA."
Simon Longbottom, managing director of Greene King's tenanted division Pub Partners, agreed, saying being stripped of accreditation would be a "disaster" but said not being a member of the BBPA had not affected Greene King.
But Nadhim Zahawi MP criticised the fact that the largest pubcos could have 24 unresolved major codes breaches and still keep accreditation.
Fines
Simmonds rejected the idea of the BBPA being given powers to fine members who breach the codes. "I don't think it's the role of a trade association and I don't think we should be able to fine our members."
She said it "wouldn't help" if the codes were made statutory, saying the costs of putting such a system together would not benefit tenants.
She also rejected the call for a grocery sector-style adjudicator.
Simmonds added: "I think we have a very good self regulation system. My view would be that the cost of that at a time when we're still closing 25 [pubs] a week..I would prefer the Government would concentrate on other things."
