Statutory code consultation: the pub trade responds
Mike Benner, Campaign for Real Ale chief executive
“It is fantastic news that the Government is pushing ahead with these desperately needed reforms. Introducing Guest Beer and Market Rent Only options will deliver fair market rents and ensure licensees are able to buy beer at competitive prices. These reforms, coupled with an industry watchdog with real teeth, are urgently needed to help safeguard the future of many thousands of valued community pubs.
“The large pub companies have been given repeated opportunities to deliver effective self regulation but have failed to do so. CAMRA is delighted that after nine years of self regulation failure the Government has decided to act.
“Guest Beer and Market Rent Only options promise to be a major boost for Britain’s thriving independent brewery sector as well as the pub sector. Over 1,000 small brewers who are currently locked out of supplying local pubs will now be able to make their beers more widely available to pub customers.”
Brigid Simmonds, British Beer & Pub Association chief executive
“It is vital for our members that the tied house model works well for both partners, so we are fully prepared for the model to be tested. It is one of the best small business partnerships, for shared investment, shared business development, and job creation, which makes it good for the pub sector and Britain’s pubgoers.
“BBPA members are determined to tackle problems where they exist, as we have been doing, through the system of self regulation that the industry has set up.”
Greg Mulholland MP, All-Party Parliamentary Save the Pub Group chairman
“It is good news that the consultation on the desperately needed statutory code of practice for pub companies has been announced and great news for publicans that it will enshrine in law the principle that a tied licensee must not be worse of than a free of the licensee.
"The Coalition Government have rightly recognised that the large pubcos systematically take more from pub profits than is fair or sustainable which prevents licensees making a decent living and has closed thousands of pubs. The consultation is open to everyone and we need all those who have suffered from this - licensees, smaller brewers who can't afford to sell their beer to pubcos and communities who have seen their pubs run into the ground - to take part.
"The Government are right to accept the view of the select committee who did four exhaustive reports into this issue and concluded that legislation was necessary and they also should accept the key select committee recommendation which is that the new code must include the option for licensees to pay fair market rent only, alongside the choice of tied agreements.
"It is right that the family brewers will not be covered by the new code which will apply to all companies with 500 or more pubs. It is the larger pubcos where the vast majority of the disgraceful overcharging and in some cases abuse has taken place and they have distorted and exploited the traditional tied model.
"It is time for a fair deal for our local pubs and a fair deal for the licensees who run them. That means pubco publicans must have the choice to pay market rent only and I hope thousands of people will write to BIS to say this, as the future of thousands of British pubs depends on it."
Kate Nicholls, Association for Licensed Multiple Retailers strategic affairs director
“We welcome the publication of the Government’s consultation. What the sector as a whole needs more than anything is certainty and stability going forward if we are to secure long term investment and sustainability. It is vital that this issue is grasped and dealt with as quickly as possible to deliver a once and for all solution to something which has bedevilled the industry for too long.
"We have been warning of the need to properly rebalance the risk and reward element of the model since 2008 and have worked tirelessly to try to achieve that – through mediation, through tough negotiation and through self-regulation – but were frustrated in our attempts to deliver real and meaningful change until the 11th hour. While some pub companies and brewers have responded positively and work hard to support their tenants, collectively they delivered too little too late. Today’s announcement could have been avoided if they had heeded our advice and taken more note of lessee proposals for reform.
"Some of these issues are by no means unique to the pubco sector – upward only rent review, quarterly advance rent payments, conflicts of interest at rent adjudication and contracted out terms are also frustrating investment in the high street and eating and drinking out more generally. We will be working to get a fairer deal for all lessees to unlock the potential for wider growth.”
Simon Clarke, Independent Pub Confederation
"The Independent Pub Confederation (IPC) welcome the Government's confirmation that the consultation has begun on what will be a statutory code seeking to deliver fairness for pubs and more importantly that the Government have reiterated their commitment to enshrine the principle that the tied licensee should be no worse off than if they were free of tie in law.
"Delivery of this principle remains the key and Government has proposed that one solution is a 'free-of-tie option' to be offered to licensees allowing them to simply pay a fair 'market rent only' and be able to purchase the beers their customers want on the open market rather than at the inflated price dictated by their pub owning company.
"It is currently proposed that the statutory code, and therefore the free-of-tie (market rent only) option, applies to companies with more than 500 pubs. This seeks to ensure that the small family brewers are not directly effected by the statutory codes provisions.
"IPC support the Government's consultation as the proposal is not an attempt to abolish the beer tie but to seek to ensure it is operated fairly."
David Hawksworth, Federation of Licensed Victuallers Associations
"We sense corporate lobby input into the construction of the consultation document and will strive to ensure that basic BIS concerns and actions are not lost sight of. Our letter to Vince Cable covers the FLVA principle points, but we see version 6 of the Code of Practice as the starting point as the BBPA and its members are the only signatories to this. The FLVA refused to sign version 6 of the code.”
Tim Hulme, BII (British Institute of Innkeeping) chief executive
“Anything that helps stop unfair practice is good.
“While the voluntary code was beginning to produce clear results, if there is to be a statutory code, then what we need is smart legislation that does not hinder our members’ from running their businesses nor adversely impact pub-owning companies that operate tied agreements, the vast majority of whom we believe conduct their businesses in a fair and equitable manner.
“Through the consultation, we look forward to representing our members’ views on this issue and on the tie, which we believe when applied appropriately is inherently a good thing for pubs.”
Dave Mountford, GMB representative for tied pubs
"These pubcos charge sky high rents to pay interest on financially engineered debts which are held mainly by bondholders in offshore tax havens. To meet these unsustainable payments pubcos increased the price of a pint by £1 more than justified by inflation and tax increases. This has priced pubs out of the market and they have closed in droves.
"The time has come to end this rigged market and replace it with an open free market. Short shrift should be given to the vested interests defending the bondholders who will brand this as “red tape”.
"So the test for tied tenants is whether this code is drafted in such a way that it will bring down rents to the same level as free-of-tie pubs.
"GMB want to ensure that pubcos are not allowed to put up rents by the backdoor by overcharging for products tenants are tied to buy from them.
"GMB tied pub tenants will study the draft code and make a response to BIS.
"GMB political department will also keep in touch with MPs to ensure that the code that emerges from the consultation does the job needed to stop pubs closing. GMB will also assess how the union should gear up to represent members at hearings with the powerful Adjudicator."
Enterprise Inns
“We note the Government’s announcement and look forward to contributing to the consultation process. We work with thousands of successful publicans who recognise the benefits of the tied pub business model. It provides them with a low cost of entry giving them the opportunity to run their own business, and they receive the investment and support of a national pub company.”
Punch Taverns
“We will be looking at the contents of today’s announcement in detail, but we remain confused by the Government’s attitude to pubs. This year’s Budget provided much-needed support to Britain’s pubs but the Government is now proposing a state-backed pubs quango. A founding commitment of the Coalition was to reduce regulation, but ministers now seem intent on wrapping Britain’s pubs in red tape.”
Marston's
"Marston’s is aware of the process and is taking part in the consultation."
Star Pubs & Bars
"We welcome the Government's confirmation that they have no plans to abolish the tied pub business model, which we believe continues to offer an important lower cost route into pub ownership.
"Our business success depends on the sustainability of our lessees, and we have already made significant progress in increasing the quality and range of support that we offer them to help to grow their businesses, adopting the spirit & letter of the current voluntary code and investing in the fabric of our great British pubs. This is evidenced in our recent announcements underpinning the launch of our Star Pubs & Bars business in November 2012.
"We will be considering the detailed consultation document over the coming weeks and will submit a full response to the consultation, making clear our views on the proposals."
Spirit
"Spirit will fully contribute to the consultation. We recognise that it is well intended to ensure a continuing strong pub sector and we aim to use this process to outline and improve the understanding of what we see as the real benefits of the tied model and the value of and progress made through self regulation."
Greene King
“Greene King is proud of our reputation and of our relationship with our licensees, the vast majority of whom stated, in an independent survey, that they value their tied agreement with us.
“Greene King currently owns 1,300 tenanted, leased and franchised pubs across the UK and was the first pub company to introduce a Code of Practice in 1998. We have continuously evolved our licensees’ support package since then to reflect changing economic conditions, ensuring our success is closely aligned to that of our licensees without the need for the relationship to be defined in law.
“As a responsible pub business, Greene King believes a statutory code is unnecessary and would ultimately be to the detriment of the UK pub industry. We will contribute fully to the consultation outlining our position that responsible self-regulation is in the best long-term interests of both licensees and landlords.”
Pubs Advisory Service
"The Pubs Advisory Service has seen the consultation announcement and recognises the great opportunity for anyone connected with the trade to make a difference by getting involved. We shall adjust our advice to new tenants entering the trade and will advise them to consider the BIS announcement amongst all the other important considerations they have to make before taking on a pub. The prime principle that a “tied licensee should be no worse off” based on a Market Rent Option (where a tenant pays a market rent and is able to purchase their products for sale in the pub from any source) is welcomed as it goes a long way towards ensuring people are going to be getting a fair deal when starting up a pub business for the first time.
We are glad that the proposed code includes clear references to services such as ours and that pub companies ensure (pre contract) that tenants have “taken proper independent professional advice
"We are also supportive on raising standards to all new trade entrants with pre-entry training."
