Regulators, mount up!
We don’t yet know what the ‘smoking gun’ evidence was that persuaded the Government to U-turn against its only recently restated support for self-regulation. But one suspects that ministers’ open invitation for tenants and lessees to report their experiences of pubco abuse resulted in a pretty full mailbag at the Department for Business, Innovation & Skills.
What we do know is that there will now be a statutory code and an industry adjudicator — OffPub, or some such — governing the behaviour of pubcos with more than 500 tenanted/leased pubs. Our back-of-a-fag-packet calculation suggests this might cover around 15,000 outlets. But why that particular cut-off? Will franchises count? Is a compulsory free-of-tie option in scope or not?
There are still plenty more questions than answers at this stage, as you would expect at the beginning of a consultation programme. But hopefully, as the mists clear, something sensible and workable will emerge to ensure pub tenants and lessees have the proper protections they deserve, while not causing unintended consequences.
I’ve been challenged by some people in recent weeks about why the PMA under my editorship has appeared to be so anti-statutory regulation. You’ll have to forgive this business journalist of nearly 20 years his natural cynicism about the effectiveness of Government involvement in commercial affairs. In my experience, Government intervention to solve one problem almost inevitably causes others.
The last time parliament deployed regulation on the operation of pub companies based on the size of their estates — with the Beer Orders of 1989 — the effect was to create the very ‘property pubcos’ that parliament is once again seeking to regulate. But most of you don’t need that history lesson.
This parliament’s pubco legislators — Lib Dems all, by the way (the Tories have been very quiet) — will be judged on their interpretation of the consultation, the solution they impose on the sector and its repercussions.
If you believe some campaigners, who claim that the behaviour of pubcos is the primary cause of pub closures in the UK, we can all look forward to pub numbers stabilising as a direct result of the forthcoming regulation.
If you believe others, who point to the state of the economy, improvements in home entertainment and predatory supermarket pricing as other more significant trends working against pubs, maybe a new law governing pubcos won’t be the hoped-for Panacea.
Whatever your view, I would suggest that you engage with the consultation process and ensure your representations are concise, genuine, heartfelt and well-evidenced. This is a once-in-a-generation opportunity for all pub industry stakeholders to contribute to the creation of a fit-for-purpose, well structured, suitably organised and fairly managed tenanted and leased pub estate.
And then once Cable and his business ministers have congratulated themselves that they have saved Britain’s licensees from the worst machinations of the evil pubcos, we
can quickly remind them they have also badly failed those same licensees by getting greedy with their tax take on the sector.
