Statutory code: New entrants and investments will be the hardest hit

That is the view of Chris Jowsey, trading director at Star Pubs & Bars, speaking exclusively to the Publican’s Morning Advertiser.

The Government is currently consulting on a statutory code for the sector, which stipulates that tied pubs “are no worse off than free-of-tie pubs” with the consultation set to close tomorrow (14 June).

However, Jowsey is concerned about the knock-on effect this could have on investment and recruitment of new entrants to the sector.

He said: “I think a lot of the consultation suggests if there is a transfer of value from the pubco to the lessee that all that will be invested. I get the theory, but I think it is the problem of unintended consequences. We would be much less willing to invest because the return would be far lower for us.”

He said that lessees would find it difficult to obtain funding from other sources, such as banks, for investments in the property and entry to the market.

“The real issue is, would a lessee be able to raise those kinds of funds even if there was a transfer of value?” he said. “I think it is not a sector the banks look very favourably on at the moment, so it makes it really difficult. Whereas we have the cash, we want to invest and we are in it for the long term.

“Other people who are lending money, such as banks, probably wouldn’t take the risk that we would as we have the property. Would they be willing to lend to a lessee who hasn’t got any experience of running their own business?”

He also said that, as a business, Star Pubs & Bars is keen to keep the tie as this is the route to market for its brands. “If this gets opened up to free-of-tie I am not going to want to invest that money because the returns are not as big,” he said.  

“On one level I am really pleased the Government is interested in pubs. But I just think the proposals, as they stand at the moment, do not fix the problems, but just make them worse. I think we are all working really hard to fix some of the ills that were around several years ago.”

Star Pubs & Bars said it had invested £9m in its estate so far this year and plans to invest more than £4m by 2014.