Pubco insider: MRO waiver for investment "is worthless"

On the face of it the code defines the way thousands of publicans and landlord companies interact on a day-to-day basis, but it will also also have an impact on the people those pubs employ and the communities they serve.

Getting it right is critical. For that reason, all sides should applaud the brave decision of the Secretary of State, Sajid Javid for withdrawing the Code when it became clear that drafting errors could potentially penalise publicans.

But the regulations contained other significant errors.

Improvement

At a time when, according to MCA Tenant Track, publican/pubco relations showed a sixth successive year of improvement, we need clear unambiguous guidance from Government which avoids argument and lengthy dispute.

Here’s an example. The code offers protection to publicans against the imposition of a significant price increase on products they are contracted to buy. Everyone supports this protection but drafting errors in here would have been disastrous. I have never heard calls for Government to set beer prices or stop promotions and short term support to publicans yet that is exactly what the initial draft would have done!

Why? Because any short term price reduction could have been used as the basis for an MRO trigger in the future. I am surprised regulations saw the light of day before such a basic error was spotted.

Similarly, the hitherto unknown “Producer Price Index” sought to set prices based on a random sample of beer sold to pubs and supermarkets. One big brewer I spoke to said they had been asked to provide Producer Price Index data on two products in the last three years. Both of which had been sold to a supermarket.

Flawed logic

The same flawed logic also applies to other drinks categories such as cider, wines, spirits and soft drinks. Mistakes will negatively impact on publicans and suppliers, to whom Pubcos provide a crucial route to market

Pubcos also fought for the right of publicans to be allowed to waive MRO trigger beyond five years in return for significant investment in their pub. Everyone but the foolhardy accept that investment in pubs is critical to them continuing to thrive in an ultra-competitive leisure market.

We are baffled that the “Waiver for investment clause” is essentially worthless and will restrict the kind of transformational projects that have rejuvenated pubs and created thousands of jobs across England & Wales. Sadly, the question remains. If not Pubcos, who will invest in the Great British pub?

Delay

This is not about dragging our feet over implementation, it is critical that Government makes good their mistakes for the good of all stakeholders. Not least the Adjudicator who has the job of applying the rules in what is bound to be an emotional environment.

Having taken the brave decision to withdraw the regulations I hope BIS reintroduces a code all sides we can all stand behind. After years of rancour and untold Government time, that’s the least that the Great British Pub deserves