Breaking the code: has pressure on PCA Newby reached boiling point?

By Michelle Perrett

- Last updated on GMT

Newby: adjudicator has called for calm
Newby: adjudicator has called for calm

Related tags Pca Paul martin newby Public house Arbitration

The introduction of the pubs code and subsequent selection of Paul Newby as pubs code adjudicator represents a big change for the large pub companies. It’s been a roller-coaster ride so far but what will happen in the future?

It has been a long, dramatic journey with twists and turns, political intrigue, threats of legal action and even parliamentary debates.

No, it’s not Donald Trump’s Twitter account, it is the birth and early stages of the pubs code overseen by pub code adjudicator (PCA) Paul Newby.

And the pubs code drama looks set to continue despite Newby’s recent calls for reconciliation with his critics last month. In an open letter to his detractors, Newby urged them to “put hostility aside” and meet with him for “a constructive discussion”.

The letter is the PCA’s latest attempt to alleviate the escalating row, which has seen his position debated in the House of Commons and a motion to reopen the appointment process supported by MPs in January.

Frustration across the trade

Campaigners’ opposition to Newby’s appointment at PCA has been vociferous. They claim Newby will not be an independent adjudicator because of his history with licensed trade agent Fleurets. However, there has been frustration across the industry about a perceived lack of clarity around the code and the slow progress of the PCA to conclude arbitration cases between pubcos and tied tenants.

Another indication of wider industry confusion is that even Greene King’s lawyers felt inclined to write to the Secretary of State for Business Greg Clark to ask him to clarify stocking rights under the pub code and how it will affect market-rent-only (MRO) option agreements.

In his open letter, Newby emphasises that he wants to see the pub industry thrive as well as ensure that tied pub tenants have a fair deal.

He says he took on the PCA role with a mission to make a difference and that his 30 years as a chartered surveyor means he understands that the pubs code is the result of legitimate concerns raised over many years.

“This open letter is an invitation to my critics to work with me to turn a vision of a better future for tenants into reality today,” he says.

He admits that the “scale of the task facing us is large” but made it clear he believes there is confidence in the process. He says the response of tenants he has met has been positive. For example, in the first six months, the PCA received 121 referrals for arbitration and the number continues to rise.

However, Newby highlighted the negative impact his opponents’ campaign has had on his organisation.

“A great deal of PCA effort and resources is spent responding to campaigners who opposed my appointment and seek every opportunity to criticise,” he says, adding that he was “bitterly disappointed” by their behaviour.

He also hit back at accusations that the arbitration process has been too slow, claiming the organisation has “limited influence” on the speed as the parties in dispute are in control of that.

He reveals that he has been working on information from tenants, MPs and representative organisations to ensure there is “good intelligence”. But says because the code is relatively new, many of the issues raised are the first of a kind and will take some time to resolve.

While he accepts, as PCA, he has the power to carry out investigations, he also made it clear that he wants to achieve cultural change and ensure the system works for tenants.

“That’s why I have repeatedly invited those who have not been sure about working with me as PCA to meet for constructive discussions about what we can achieve together,” he says.

“My invitation remains open. Let’s put hostility aside to make sure that the new rights and protections under the code work.”

Campaigners’ swift response

However, the response from the campaigners has been swift and not what the PCA may have hoped for.

Campaigners still consider his background as a chartered surveyor, one that has represented pubcos in the past, to be a major obstacle in his ability to fulfil the job role.

One of Newby’s strongest critics, the Pubs Advisory Service (PAS), responded with an open letter of its own. It accused the PCA of initiating the hostility and says that his mission to make a difference was “laughable”.

The PAS letter reads: “We do not consider constructive discussions can be held by an individual with such clear and undisputed conflicts of interest. This is not a ‘compromise’ situation.”

The PAS warned that if Newby remains in office “the criticism towards him can only escalate”.

The letter claimed that unless there are radical changes “more and more tied tenants will be forced to give up their option for MRO, while they wait for the PCA to make decisions and act on their behalf”.

Even the Forum of Private Business has backed the PAS letter.

PAS managing director Chris Wright says that the problems are piling up and tied publicans will be demonstrating outside of the PCA’s head office in Birmingham on Wednesday 15 March.

“We, like many tied tenants, have sought to use the PCA in good faith but it has been found wanting at almost every step,” Wright argues.

“When unresolved matters were referred to the Department for Business Energy & Industrial Strategy, they too were reluctant to clarify issues and seem to have little understanding of the legislation.”

The chair of the British Pub Confederation (BPC) and MP for Leeds North West Greg Mulholland has also consistently opposed Newby’s recruitment. He has accused Newby of trying to “curry favour” by publishing “a meaningless open letter”, which he describes as “a pathetic and cynical, but inept, PR exercise”.

The crux, says Mulholland, is that Newby is failing to deal with systematic breaches of the code and instead is trying to turn his role into one of a private arbitrator.

“If Mr Newby wants to show he has any integrity, rather than indulging in glib PR exercises and making misleading claims about tenant satisfaction that simply don’t exist, he should accept that he hasn’t got the confidence of MPs or tenants and that he should do the honourable thing and resign,” he adds.

The MP revealed the BPC it is due to meet with the Minister for Small Business, Consumers & Corporate Responsibility Margot James to discuss its concerns. 

Licensees add their voices

Now licensees on the front line are adding their voices to calls for more communication and help from the adjudicator’s office.

Lee Worsley, director at the Kings Arms, Portesham, Dorset, who claims to have signed the first MRO agreement within the Punch estate, says he has reached an impasse over whether there needed to be a deed of variation or a new lease to complete the agreement. But despite repeated calls to PCA he received scant clarification from Newby’s office.

He says: “We completed on a new MRO agreement earlier in February – but with zero support from the PCA, in fact, quite the opposite. It was only the code and the willingness of the two parties to try and follow it that meant we reached a conclusion.”

While it seems that the calls to end hostilities are unlikely to have any impact, Newby’s view has received some industry backing with the British Beer & Pub Association (BBPA) agreeing the industry needs to work together to make the process work.

Brigid Simmonds, chief executive of the BBPA, responded to the PCA’s open letter by agreeing there is a need for a constructive dialogue with the adjudicator from all parts of the industry.

“Those with concerns should give the system a chance to demonstrate that it works,” she says.

But the BBPA admits there still needs to be some clarity on elements of the code.

“There is also important work to be done on guidance, so there is a clearer understanding of how the new code will work in practice, as we’ve seen in recent weeks with the issue of stocking rights, to give just one example,” Simmonds says.

Simmonds adds: “Understanding how arbitration works in practice is also important. This is an area where a dialogue is vital. I am certainly committed to that dialogue, and I have found the adjudicator to be equally committed.”

Association of Licensed Multiple Retailers chief executive Kate Nicholls also suggests that the PCA should be given more time to make a difference.

“The introduction of the PCA was intended to introduce a sense of stability to the sector. Thereafter, the important thing now is that an adjudicator is in place and cases are addressed within a system that runs smoothly, enabling licensees to plan accordingly,” Nicholls says.

“The priority is that, on key legal points, the adjudicator is able to get on with the business of being an adjudicator.”

Rejection of the olive branch

As the row rumbles on, questions remain about the future of the PCA? It would seem attempts to end hostilities have fallen on deaf ears. While Newby has held out the olive branch, it has been well and truly rejected, with campaigners continuing their demands for more action over arbitration, clarity and for him to be removed from the role.

The constant battles over the pubs code and lack of perceived action is taking its toll on the process. But can cultural change really be achieved by the PCA? And is it time for some more decisive action from the organisation? Perhaps it is time to appoint an adjudicator to mediate between Newby and the campaigners to resolve any outstanding issues?

Whatever the solution, the current situation cannot continue and there needs to be action to ensure that tenants are being treated fairly.      

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