A loophole in the legislation has forced the Department for Business Innovation & Skills (BIS) to postpone the code’s introduction, originally due on 26 May. BIS expects it to be in place ‘this summer’, with the Publican’s Morning Advertiser (PMA) understanding it will likely be finalised by the end of June.
Following the announcement of the delay, the British Pub Confederation called on the ‘big six’ tenanted pubcos — Enterprise, Punch, Greene King, Admiral, Marston’s and Star — to honour the original implementation date and prevent tenants with rent reviews from missing out.
Admiral, Enterprise, Star, Punch and Greene King all told the PMA they were awaiting more information from BIS before making concrete plans. Marston’s had yet to respond by the time the PMA went to press.
Why the code was delayed
The British Beer & Pub Association said that the draft offered tenants the right to trigger a review which could lead to a MRO agreement if the price of beer supplied rises by 3% above the Producer Price Index — an ONS measure that includes both off-trade and on-trade and at present stands at -1.9%.
The BBPA said the Government had made the right decision in recognising that more work was needed on the final draft. Chief executive Brigid Simmonds said: “We believe that using this index is fundamentally flawed and could be construed as anti-competitive.”
The code was delayed due to ‘technical drafting errors’ regarding protected and unprotected tenancies, which led to fears that as many as half of qualifying tenants would be ineligible for the MRO option.
But the British Pub Confederation has disputed the need for a delay and claimed the right to the MRO option was supported in the legislation.
No need for delay?
The group has written to business minister Anna Soubry, spearheaded by Clarke and its chair, Greg Mulholland MP, claiming BIS ‘wrongfully’ pulled the code.
The letter states the Confederation cannot “guarantee that tenants will not seek to take action” from any resulting losses resulting from the delay, and asks if BIS plans to compensate tenants.
It also asks BIS to publicly request the big six pubcos honour the original date.
“If the pub-owning companies agree to do this, it would save the Department not only embarrassment and entirely justifiable criticism for failing to adhere with its own legislation and abide by its clear commitments to tenants and the sector as a whole and would avoid any potential legal challenges for this failure from those who would otherwise, so unfairly, miss out,” the letter concludes.
The PMA is waiting for a response to the letter from BIS.
British Pub Confederation campaigner and Enterprise licensee Si Clarke said the decision on whether to honour the original date should be a “no brainer” for the pubcos.
“Why wouldn’t they do it? Licensees have been expecting the 26 May to be the date for such a long time,” he said. “They should come out and say ‘we will give the MRO option to anyone who has a rent review after that date’. It would be fair.”
British Pub Confederation chair Greg Mulholland MP called the decision to delay the code “extraordinary”.
He said: “Tenants who may now lose the right to use the code and trigger the MRO option will be dismayed considering the clear date is laid down in law. BIS will need to consider compensating any tenant who is now denied the right to trigger the process and the right to have a market rent only lease.”
A spokesman for BIS said: “It is important to get the pubs code right for both tenants and pub owning businesses. We need to amend a small number of technical errors and will lay revised draft regulations as soon as possible.”