BISC: Davey faces scrutiny over pubco-tenant decision

He was speaking during a BISC session yesterday, where business minister Ed Davey faced more than two hours of questions on the decision to support self-regulation rather than a Statutory Code of Practice.

Bailey said: “I hope this will be the last report by the committee but I expect it’s not going to be. This committee is not going to let it go.”

Minister Ed Davey faced tough scrutiny from the committee on the negotiations with the British Beer & Pub Association (BBPA), which resulted in an agreement for a strengthened Industry Framework Code (IFC), Pub Independent Conciliation Advisory Service (PICAS) and a three-year accreditation for company codes.

Davey told the BISC: “I think the solution to make sure the code legally binding and introduce an independent mediation service delivers what this committee wanted and delivers it more quickly.”

Competition​

Davey said the Office of Fair Trading (OFT) response to the CAMRA (Campaign for Real Ale) super-complaint - which decided not to refer the tie to the Competition Commission - made an “important contribution” to the Government’s decision.

“When you think about Government intervention you need to ensure you have good grounds for doing that,” he said. “And the prior reason for any state intervening in any industry is when there is grounds of competition leading to a consumer detriment.

“I was surprised when I read your report that you had failed to look at that.”

However, Bailey responded: “This issue is not about competition as such it is about the balance of power between the pub, licensee and the tenant and the pubcos. And the report is about pubcos and not competition. Can you please not continue with this ‘red herring’?”

MP Brian Binley agreed: “It wasn’t about competition. In fact if you look back at the history of this whole trade, Government involvement on the face of competition has rather messed it up.

“All your nonsense about the OFT is simply not relevant to this particular question.”

AWP tie ​

Davey also told MPs that the Government wanted the IFC to commit to reform of the Amusement with Prizes (AWP) tie.

“We haven’t got everything that we wanted, or the Association of Licensed Multiple Retailers (ALMR) wanted.

“We got huge amounts on rent, insurance, dilapidations, training, price lists, upward-only rent reviews, and so on. The thing that we didn’t get was the full package that we would have liked to have got on AWP machines.”

He added: “We would have liked to get agreement on absolutely everything but we did manage to get commitment on important issues."

Negotiation​

Davey was questioned on why he did not consult other trade groups such as the ALMR and the Federation of Small Businesses, before finalising the agreement with the BBPA.

Davey defended his position claiming the negotiations were conducted with reference to information from the ALMR.

“When we were negotiating with the BBPA we were in close contact with members of the IPC and ALMR.

"My officials spoke to them each week during the negotiation period. We were very clear what the ALMR wanted us to achieve and I believe we moved the BBPA very significantly,” he said.

New entrants and non-BBPA members​

Davey was quizzed on how tenants with lease agreements with non-BBPA members would access the agreed scheme.

Bailey said: “There is nothing legally to stop a pubco getting together a niave group of tenants, recruiting them to the pubs and they would have no legal cover.”

Davey said this information would be provided through the pre-entry awareness training course (PEAT). However, the point was made that these licensees would not be obliged to fill out PEAT as their pubco would not be covered by the industry agreement.

Concern was also raised about the current lack of information being given to tenants entering pub trade and how these licensees would be informed about the mediation service PICAS.

Davey said: “I would argue with respect in the days of the internet and Google you should be able to find that information from PICAS. It couldn’t be easier today.

“It is reasonable for Government to expect business people to do a bit of research before they invest.”

Binley asked why the Government didn’t insist that pubcos implement deeds of variation to incorporate the new codes of practice into lease agreements.

Davey said the idea was considered but it would mean around 20,000 deeds of variation would need to be produced which would result in “significant costs” to the industry.

However, Davey revealed that an agreement had been made between BBPA members that if they sold a premises to a non-BBPA member a deed of variation would be implemented to ensure legal cover for the licensee.