BISC calls for statutory pubco code of practice

In a stinging attack on pubcos, BISC chairman Adrian Bailey said that the “deep seated” problems between tenants and pubcos have not been sufficiently addressed, despite this being the fourth select committee report into the matter over seven years.

The Report said the pubcos had “wasted” their final chance to deal with the issues by themselves with reform moving at a “glacial” pace and it had now lost patience with them.

The Committee said that the decision had not been reached “lightly” and “they were firmly of the view that statutory regulation should only be used as a last resort.

“However, our hand has been forced and we see no other alternative for an industry which has for too long failed to put its own house in order.”

Bailey said: “Each report challenged the industry to deliver meaningful reform.

“On every occasion the industry was found wanting. The third report in 2010 delivered a final ultimatum to the industry: eighteen months to show that they were working successfully within the voluntary code. That has passed, and the evidence is that they are not.

"The message now can only be: three strikes and you’re out.

“We are firmly of the view that statutory regulation should only be used as a last resort, but we can only conclude that industry self-regulation has failed.

“We fully realise the implications of our recommendations and we have not come to this decision lightly. But we see no other alternative for an industry which has failed to put its own house in order.”

He added: “Pubs are businesses, and they need to be able to succeed as businesses, but they are also at the heart of our communities, and we are losing them at an alarming rate.

“The position of the previous Government — endorsed by the current Government — was that if we so recommended, it would consult on how to put the Framework Code on a statutory footing.

“It is now time for the Government to act on that undertaking. In its response to our Report, the Government must set out the timetable for that consultation and begin the process as a matter of urgency.”

Half-hearted implementation​

The Report said that while the new codes of practice are a step in the right direction and there had been “genuine commitment” to reform in some areas, they only address a number of limited areas. It added that the codes had been undermined by “a process of implementation which can only be described as half-hearted”.

It delivered a damning assessment of the British Beer and Pub Association’s role. “The BBPA has shown itself to be impotent in enforcing its own timetable for reform and the supposed threat of removing the membership of pub companies who did not deliver was hollow.

“The voluntary withdrawal from the BBPA by Greene King, which has suffered no reputational loss as a result, clearly demonstrates that fact.

“Furthermore, while the BII may be seen to have done an adequate job in accrediting the new codes of practice, it is clear to us that its enforcement role is fundamentally undermined by a lack of meaningful sanctions for non-compliance.

“Given the high number of breaches allowed before sanctions would be applied we believe that “naming and shaming” and subsequent withdrawal of BII accreditation is insufficient.”

However, the BBPA said it was "deeply disappointed" with the report and said it believes a statutory code would close more pubs.

Time for a statutory code​

The Report added: “The position of the previous Government — endorsed by the current Government — was that if we so recommended, it would consult on how to put the Code on a statutory footing.

“It is now time for the Government to act on that undertaking. In its response to our Report, the Government has to set out the timetable for that consultation and begin the process as a matter of urgency.

“We further recommend that the consultation includes proposals for a statutory Code Adjudicator armed with a full suite of sanctions. Considering the amount of evidence gathered by us and our predecessor Committees this should not be a lengthy process; and given the Government’s undertaking to us we do not anticipate any meaningful delay.

“Furthermore, we caution the Government that offering a compromise of non-statutory intervention would be a departure from its undertaking to us and would not bring about the meaningful reform that is needed.”

Welcome news​

Two key trade bodies have praised the recommendations. Independent Pub Confederation chairman, Bill Sharp, said: “The pub industry has been under almost continuous and unprecedented scrutiny for the past decade and this is the fourth major report into the sector.

“It is not surprising, therefore, that this is a detailed, well-informed and thorough examination of the key issues affecting our sector and industry efforts to address them. MPs have clearly listened to all sides of the argument and the report is a balanced and fair assessment.

“As always, the devil will be in the detail and, over the coming days, we will be absorbing this and stand ready to work with all industry stakeholders and government to translate the Committee’s recommendations into meaningful reform and deliver the free, fair and flexible competitive market place the IPC has been striving for and which the sector desperately needs.”

Mike Benner, CAMRA chief executive, said: “Too many of the UK’s pubs are blighted by the actions of the large pub companies whose business model has been so reliant on exploiting a position of power to the cost of pub licensees, communities and the consumer.

“The committee’s recommendations seek an end to barriers to growth in the pub sector, a culture of inflexibility and artificially inflated beer prices. We now urge the Government to show it’s on the consumer’s side by following through on its promise to take action on the back of these recommendations.

“A statutory code with a powerful adjudicator will mean lower pub prices for consumers and fewer pub closures. CAMRA last week published new data showing that nearly double the number of tied pubs are closing compared to free of tie pubs.”

Right the fundamental wrong​

Save the Pub Group chair and Lib Dem MP Greg Mulholland said: ““For companies who are supposed to have reformed themselves, the report is devastating.

"It not only shows that pub owning companies, who are really just property companies, continue to take more from pubs that is reasonable or fair; but the report also shows that some companies are actually misleading potential tenants, which is a disgrace and something Ministers should investigate.”

He added: “It is time to right the fundamental wrong of the Beers Order in allowing property companies to own and exploit so many of Britain’s pubs. It is time to free the pub sector and to give the pub back to the people who run them and who rely on them.”