During the session, the committee will review the operation of the pubs code and the performance of the PCA. It will look at the existing statutory framework to see if it is working as was intended and whether disputes between tied tenants and pub-owning businesses (POBs) are being resolved in a satisfactory manner.
Call for evidence
Ahead of the session, the committee has asked POBs and the representatives of tied tenants to send them written evidence on their experiences of the code and the PCA.
The committee has specifically asked for submissions on whether the pubs code is providing clarity and fairness in the relationship between POBs and tied tenants? And if this is not happening, what changes do stakeholders think are required?
The committee has also asked POBs and tied tenants to tell members how effectively the office of the PCA is ensuring compliance with the code and how well the office is arbitrating in dispute cases. The deadline for sending written evidence is Friday 8 June 2018.
This latest evidence session follows vocal criticism of the pubs code and the PCA from campaigners representing tied tenants. POBs have also expressed serious concerns about how the code is working, with two major companies, Greene King and Ei Group, disputing the legality of recent PCA advice on the market-rent-only (MRO) option.
Pubs still closing every week
MP Rachel Reeves, chair of the BEIS committee, said: "Two years on from the establishment of the PCA, pubs are still closing on a weekly basis. We want to check whether the legislation parliament introduced is working as it intended. When there is an imbalance in the relationship between a large company and small suppliers or tenants, it is essential that the regulator has the powers and commitment to prevent any abuse.
"We also want to check that both sides have confidence that disputes are going to be resolved quickly and that tied tenants have a genuine opportunity to make a good living from running pubs, which are a vital part of many communities up and down the country."
Mixed feelings from campaigners
Commenting on the evidence session, pubs code campaigner Dave Mountford said: “Having met with Rachel Reeves last year and raised with her our obvious concerns regarding the performance of the PCA, we are clearly pleased that the committee, that has driven this issue for so long, has agreed to look again at the PCA.
“We are, however, frustrated that it would appear to be a limited investigation that is unlikely to expose the wider spread abuses that are currently prevalent, as the POBs do everything to avoid the legislation. We feel that both tenant representative bodies and POBs should be given the opportunity to expand on what otherwise may be a narrow remit.”
Fellow pubs campaigner, Chris Wright from the Pubs Advisory Service, said: “As we predicted, by the BEIS not accepting our proposals, the POBs are now proposing terms that no competent tied tenant would accept even if the MRO rent was reflective of open-market rental value. There is no existing opportunity to rewrite the agreement, yet that is what the POBs insist on doing under MRO."
Wright said that the inconsistency with the code should have been fixed by section 47 of the Small Business, Enterprise and Employment Act. He added: "It seems indefensible that the PCA and the BEIS Minister Greg Clark haven’t closed off the loopholes and instead created an ever-increasingly bizarre set of excuses to plough on with their novel trade specific system of arbitration.”
The BEIS Committee is a cross-party group of MPs set up to scrutinise the work of the government's BEIS department.