Let’s all face the facts, self-regulation will fail

18-Oct-2012 - Last updated on 12-Mar-2017 at 02:09 GMT

Clarke: "Self-regulation is doomed to failure"

The Government’s answer to the select committee’s inquiry into pubcos did not seek to accommodate the recommendation that lessees should be given an option to choose a free-of-tie agreement at lease renewal or rent review, accompanied by an open-market rent review, writes Simon Clarke.

The idea being that this would self-police the system whereby tied agreements would have to compete in an open-market situation with free-of-tie agreements — effectively tied rents would have to be seen by lessees as compensating them for excessive tied-product prices.

The minister at the time, Ed Davey, instead chose a path negotiated between the Government and British Beer & Pub Association (BBPA), representing the pubcos and brewers, much to the dismay of the lessees, tenants, small brewers and consumer groups — the Independent Pub Confederation (IPC).

Only two foreseeable seeds of recovery were sown: the BBPA’s framework code of practice and the Royal Institution of Chartered Surveyors’ (RICS) guidance on rent assessment.

The RICS guidance notes are a toothless tiger, interpretation is confused and enforcement impossible, as compliance is not mandatory upon members, let alone pubco operatives.

The BBPA has said there should be no expectation for its code to contain provisions that would enforce alteration of the commercial relationship between pubcos and their lessees — it follows that rebalancing risk and reward must be achieved by an alternative means.

With another imminent release of a code containing no meaningful changes that will assist lessees, and restrain pubcos and brewers from taking more than their fair share of a pub’s profits, it is hard to see what the Government is waiting for. Self-regulation is doomed to failure.

From my discussions with ministers and MPs it seems clear that many, even after almost eight years of select committee inquiries, still think the BBPA’s framework code will make a difference to lessees and put the sector on the road to recovery.

First we should embrace what has been the bread and butter of pubs — beer. This won’t be achieved by over-pricing products to the consumer, undermining profits of tied pubs, which represent more than a half of those in the country, and limiting choice.

The glacial rate of progress in the sector suits those bleeding it dry and this is all achieved by delayed publication of relatively immaterial codes, and diversions like supermarket pricing.

Simon Clarke is licensee of the Eagle Ale House in Battersea, south London