BBPA confirms it will not challenge MRO in pubs code

By James Wallin

- Last updated on GMT

Related tags: Pub, Public house, Beer

Brigid Simmonds
Brigid Simmonds
The British Beer & Pub Association has confirmed it will not seek to overturn the inclusion of a mandatory market rent only option in the pubs code, and accepts it will now become law.

However, the group is urging the Government to include a clause allowing tenants to make an assurance with their pub company that in return for investment they will not seek an MRO option for a specified period of time.

BBPA chief executive Brigid Simmonds told the Publican's Morning Advertiser​, sister magazine, M&C Report she also wanted assurances that brewing pub companies would have the right to insist tenants do not buy their competitors’ products.

She that although the pubcos were considering legal action she thought such a costly and time-consuming option would only be used as a last resort. Simmonds reiterated her calls for a third duty cut, saying it is the best way to “restore some of the confidence that the MRO debate has shaken within the industry”.

On the future for tenanted pubs following MRO, Simmonds said: “There will be an evolution of the tenanted pub model. We will see more managed pubs and inevitably fewer tied pubs. But I still think it will lead to pub closures.

“I agree with what many of the analysts say that you are not going to see the same investment in pubs if the pub companies think their tenants will go free-of-tie in five years’ time.” Simmonds said the BBPA was also seeking to ensure the threshold of 500 tied pubs was retained and said removing “true franchise deals” and temporary agreements of less than 12 months from the code was also a priority. Andy Slee, external affairs director at Punch, told M&C Report the company would not make any decisions on future operating models until the bill had gone through the House of Lords.

He said: “There is a huge amount to digest and to discuss. What is being suggested is a seismic change to the industry. What the Government have said is that they want to make it workable so we want to understand exactly what that means.

“We are also still talking to them about Tenancies at Will, which remain in the code despite very clear arguments being presented to the Government that it is illogical and unhelpful for all concerned.”

Asked how the company’s relationship with tenants would have to change if MRO was introduced, Slee said: “We would have to work harder at communicating the benefits of the tie. We are making headway on this, particularly at our roadshows, but it would be incumbent on us to make it more widely known how much support is available to tenants.”

BBPA chairman Jonathan Neame also spoke about the pubs code at last night’s joint BBPA/All-Party Parliamentary Beer Group reception in Parliament.

He said: “The BBPA has consistently argued during this time that the tied business model has stood the test of time, was evolving fast and would continue to evolve; that there were many and varied reasons, such as lifestyle changes, that had caused the challenge to licensees AND pub owners in recent years; and that statutory intervention was inappropriate for fear of the unintended consequences. We all remember the Beer Orders you see … and seen the impact of that unfold over 20 years.

“But we recognise that this House has now supported an alternative thesis and has voted for radical change.

“Let me re-assure those here tonight, in case there is any idle speculation on this point, that the BBPA is NOT seeking to overturn the MRO and realise that this will now become Law.

“However, we do have a few pleas: “1. The Bill, as drafted, is not perfect and we would like to see some, relatively - emphasis on relatively, before I set hares running! - minor amendments, to provide greater certainty for those investing in the sector. I recognise that pub owners are not the most loved beasts in the jungle, but the fact is that they do invest in the region of £200m in to the tenanted pub sector every year is surely to be welcomed and encouraged.

“They are saying that the current drafting is too uncertain for them to continue to do so at the same level. This is not scaremongering, but genuine. Whether you believe this is a hiatus or becomes a long term reduction, I call on everyone to work constructively together to make amendments to give them more confidence to do so, without changing the substance of the MRO.

“2. Please do not tamper with the 500 pub limit, as this will cause huge uncertainty and potential damage to the Family Brewers.

“3. If the duty and other tax cuts have stimulated confidence, then the New Clause 2 has reduced it. Thus we will redouble our call to the Chancellor to give us a hat trick of duty cuts in the next budget and hope for your support!

“4. From all sides of the debate I think there is a recognition that tied pub partnership CAN – and in our opinion DOES - work for mutual benefit of pub owner, licensee and consumer. But the gauntlet has been thrown down to "Prove it!" Our challenge and my hope is that over the next few years, the benefits and successes of this business model -of which there are many, - will become apparent once again.

“5. What the campaigners have achieved is remarkable and unexpected. But, for all the apparent polarisation of this debate, this industry is unique in that the needs of brewer, pub owner, licensee and consumer are aligned and necessitate a close working relationship.

“Whilst there are some that will advocate driving a further wedge between participants, I think the majority will see the benefits of finding a path to reconciliation and so establish modern, professional, transparent business partnership that stimulates existing licensees and attracts the next generation of entrepreneurs to our sector.

“Given the importance of this debate, can I also express the hope that we move to a more constructive dialogue about the issues rather than the personalities, that we aim to defuse this current atmosphere of hostility.”

Related topics: Other operators, Licensing law

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Pubco debate. A little late ?

Posted by John Rackham.F.B.I.I.,

I am reading all of the professional comments re.The forthcoming Pubco debate and HMG's version of regulation.
As i read Greg Mulholland's statement there will be two versions of a mandatory code. One CORE CODE, to give ALL PUBS SOME COVER, and an ENHANCED CODE, to give the MRO/FOT option to pubcos with over 500 outlets. I understand that this is designed to protect the SMALL BREWERS, but i am concerned where the figure of 500 comes from ?
This is of particuler importance to me as i am a 21 yr full repairing leaseholder with Marston's ,who have five breweries and nearly two thousand pubs, and yet believe that they will fall below the 500 threshold, because due to making changes within their estate the number of their tenants/leaseholders has fallen, BY DESIGN
I have personally asked Marston's for a written guarantee that they will include me and my agreement within the Enhanced Code, giving me the full cover. They have declined.
If they in fact manage to come in below the threshold it would leave me as the only pub in Lichfield without the MRO/FOT option. Surounded by Marston's Retail Franchise Agreements/ two Freehouses recently sold by Marston's/ two wetherspoons and Punch and Enterprise leases.
It is inconceivable that this was the intention of this regulatory process and i have been in touch with HMG's committee via Nigel Goulty/ Tony Bray to make this point. They are keeping in touch.
My concerns have also been forwarded to Fair Pints Greg Mulholland, and TP/MA for their perusal.
I have proof that Marston's set out to dodge this threshold.
i.e A statement by Ralph Findlay in May 2013 in TP/M And again two weeks ago.

John Rackham.F.B.I.I. and vice chair of the West Midlandw/South Wales region.
I am also on the B.I.I. PICAS panel.
The Kings Head. Lichfield, Staffordshire.WS13 6PW
07985257658
johnrackham@hotmail.com

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Feeling-Martinez out Objectively

Posted by karl harrison,

The Bill contains both prime principle and MRO - which it should. Fool-Martinez (who can't possibly be offended as he isn't writing in this blog) got it all wrong as usual. IO, OO, ho ho - its all seasonal and its open season. I recall being in the Commons with a well known political, er , consultant at the time that Fair Pint tore up an ill conceived campaign bing peddled by Robert Humphries' and the BBPA. Neame and Findlay were in full flow for the benefit of Giles Thorley until they lost. I was going to leave and the political, er consultant, said to me "Leave? No darling, this is politics and we've won - let's get in there and gloat". Or maybe I'm just making it up. Who really knows. Dry evidence from boring libertarians anyone? Where are Statler and Waldorf when you need them. I remember the good old days.

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Mr Feal-Martinez

Posted by Objective Observer,

Mr Mountford, I think we can conclude that you think everyone who disagrees with you is Mr Feal-Martinez.

Rather than make such ludicrous statements why not comment on the content of my post.

Do you believe new entrants or existing lessee's can now do away with extra due diligence in the run up to the new SC and MRO.

I believe they should be extra vigilante, given the multitude of unknowns as things currently stand.

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