In at the deep end
The significance of this report is obvious, even to a newcomer. It has helped me to clarify the issues on which the industry is in broad agreement, and those on which there are some deep and keenly felt divisions — even within the PMA’s readership.
My job is not to pick sides, nor at this early stage arrogantly to offer a deep analysis of the problems and opportunities facing the great British pub industry, but to provide the fresh perspective of someone untainted by old arguments and prejudices; ask obvious questions; play devil’s advocate; and point out when the emperor isn’t wearing any clothes.
In that capacity, I hope you will forgive the occasional flash of Louis Theroux-style naivety, and also welcome the insights I have gleaned from 17 years of reporting on business issues across other sectors of the economy. But more of that later.
For now, I merely highlight four quotes from last week’s report that have caused the most comment and discussion among the PMA team and our industry contacts.
On the tie: “There is nothing in itself that causes the tie to be fundamentally wrong — in fact, in some instances, the tied model may be essential to the preservation of small British brewers and local beer — and, with them, British businesses and jobs.”
On licensees’ responsibilities: “Pubs are businesses and their owners should run them rigorously on a sound business basis to generate their respective profits and take elementary precautions before entering into the commitment, such as considering alternatives within the marketplace.”
On the failures of pubcos: “Many people either entering the industry or currently holding leases find it difficult to gain an awareness of the financial realities of the business they are taking on. There has been a lack of transparency around rents and running costs, something which the pubcos have previously done little to dispel.”
On legislation: “The Government is not minded to intervene in setting the terms of commercial, contractual relationships… Legally binding self-regulation can be introduced far more quickly than any statutory solution and can, if devised correctly, be equally effective.”
So there we have it — no statutory regulation, which the Government feels would impose unnecessary additional burdens on business and risk causing unintended consequences. Instead, a legally binding and strengthened Industry Framework Code backed up by an arbitrator, which aims to achieve “the right balance of risk and reward in the relationship” between pubco and licensee.
In principle we can welcome a light-touch approach by Government (those calling for regulation should be careful what they wish for). But following a week in which the Leveson Inquiry has heard heart-rending testimonies of failures of self-regulation in the media, we should defer judgement until we see it working in practice.
