Statutory code bill publication sparks concern about ‘lack of clarity’

Unlike the Government’s response to consultation on the issue, the Small Business, Enterprise and Employment Bill does not contain a draft version of the code.

The section relating to the pubs code runs to just 12 pages of the 230-page report, which also tackles issues such as zero-hours contracts.

It sets out the Government’s intention to ensure “all provisions of the Pubs Code are consistent with the principle of fair and lawful dealing by pub-owning businesses in relation to their tied pub tenants”. It also requires large pub-owning business (defined as one that “immediately before the Pubs Code comes into force…. was the landlord of 500 or more tied pubs”) to provide parallel rent assessments in "specified circumstances".

The bill commits the Government to act within the next 12 months.

Term time​

As expected, the bill defines the term of the adjudicator as four years with no one able to serve more than two terms. The secretary of state is also granted the power to appoint a deputy adjudicator as part of the bill.

The bill has already been criticised by the British Beer & Pub Association, whose chief executive Brigid Simmonds said: “The definition of a pub is a concern; the inclusion of tenancies-at-will and franchises on the face of the bill and within the scope of the code, would be unwelcome. Tenancies-at-will are temporary agreements, and would mean that in many cases, pubs would be closed if they faced the full range of provisions of the Code on a short-term basis. Under the current Industry Framework Code, on which these proposals are based, these temporary agreements are specifically excluded.

“Leaving the code itself to a later date is no surprise but will create uncertainty for many businesses, particularly since the draft is lacking clarity and imposes huge burdens on small businesses. We will certainly be vigilant towards new proposals creeping into the plans, through secondary legislation, or unexpected and unwelcome changes imposed on the industry at a later date. 

“In particular, we are disappointed that the bill itself does not specify the proposals that have been ruled out by the Government, such as mandatory free-of-tie or guest beers. This does add to business uncertainly for the entire sector.”

No power​

Fair Pint campaigner, Simon Clarke,was also concerned about the lack of detail in the bill. He said: “Fundamentally it does not seem to confer any powers to the adjudicator to actually deliver the Government commitments so I think this bill will fall down at the committee stage if not before unless there are some serious amendments.

“I just don't see how the parallel rent assessment, with no adjudicator’s powers to determine tied rent, can deliver tied tenant no worse off. Equally, if I have an issue of a clause in my lease being unfair - what are they offering to do about that if it transpires to be true?

“Even with these apparently gaping holes there appear to be a fairly complex and time consuming (possible expensive) process being outlined to determine what the tenant already suspected but offer no remedy for the tenant.

“The market rent only remains a relatively cheap, efficient way for tenants to make their own decisions. It should be the tied terms that dictate the future of the model not the ability to restrict choice and forced over pricing.”

Helpful​

However, Kate Nicholls, strategic affairs director at the Association of Licensed Multiple Retailers, said the bill provided "some helpful clarity on the way in which the Government intends to proceed".

She added: "The focus on rent calculations, transparency of information provided by the pub company and the ability to request an review in exceptional circumstances is also to be welcomed. That for us remains key, and we are pleased that the bill commits ministers to act within the year.

"We do, however, want to understand how the code will apply to short term temporary agreements and to agreements entered into before the bill’s provisions take effect. This is hinted at but not set out in any detail on the face of the bill. And of course, the devil remains in the detail of the code’s actual clauses, which will only be determined at a later date. The draft published by BIS is a good overview, but there is much work still to do to ensure that it delivers statutory regulation at least as comprehensive as the current voluntary code."

Speed​

Tom Stainer, head of communications at the Campaign for Real Ale, said: "We are pleased at the speed with which the Government is moving to deliver new protections for Britain's tied pubs and the publicans who run them. These reforms represent substantial progress in ending the scandal of excessive rents and high beer prices which have forced many pubs to close."

"The bill itself contains many positives. These include a requirement that tied agreements are fair and lawful and that tied publicans should be no worse off than if they were free of tie. The Government has also acted to try and prevent companies 'gaming the system' by rebranding tied agreements as franchises or increasing the use of very short term agreements in order to escape the provisions of the code.

"Whilst we are disappointed that the legislation does not include market rent only and guest beer options we are confident that these can still be achieved. Ultimately, requiring the large pub companies to provide tied publicans with these options is going to be the simplest means of ensuring fair play."

Zero-hours contracts​

The bill sets out the Government’s intention to regulate zero-hours contracts but stops short of the crackdown many in the hospitality industry feared. A ban on the use of exclusivity clauses in contracts which do not guarantee any hours is proposed along with an ‘anti-avoidance’ provision.

Nicholls described the proposals as “balanced and proportionate action to tackle abuses of these arrangements”.

She said: “For many working in licensed retail, temporary and casual contracts offer a flexible method of working, particularly for those combining work with study.”

“We are glad that the Government has decided against imposing costly bureaucracy and regulation which would have stifled our sector’s fantastic track record of job creation.”