So, when I stepped into the role last May, many of my plans – like those of everyone in the trade – had to take a different course. I had to focus on how the pubs code could promote the interests of tenants during the pandemic.
Twelve months on pubs are reopening, and we are treading cautiously but with optimism that better times lie ahead.
This seems a good time to remind myself and the industry what the PCA is here for, and also to recommit to what I want to achieve as regulator and to bring the change that Parliament intended.
Why is there a pubs code and what is my brief?
Parliament introduced the pubs code because for many years serious concerns had been raised about the relationship between large pub companies and their tied tenants. MPs recognised that problems occur due to inequalities of bargaining power in these relationships and wanted to ensure that tied tenants can get a fair share of the business reward.
It is important to note that the powers that I have are those set out by Parliament and the Secretary of State. The pubs code applies to pub companies with more than 500 tied pubs in England and Wales. It applies to the relationship those pubs companies have with their tied tenants and licensees – or their prospective ones. So free-of-tie tenants or tenants of the sub-500 pub companies are outside my remit.
I have to deliver and enforce the pubs code as it is, and not as some may argue it should be.
For example, I have heard calls for the PCA to require backdating of market rent only (MRO) terms to disincentivise delays in the MRO process, but that isn’t in the legislation, and I cannot compel it.
And I can only investigate a pub company behaviour that is covered by a specific code duty. Fundamentally, the code promotes transparency and good business practice in key areas.
But where I have powers, we are making progress.
Day to day my small but dedicated team handles intelligence about whether pub companies are meeting their code duties, monitors compliance and works with the code compliance officers where there are issues.
And we are getting results for tenants because the pub companies know I can investigate them when I suspect there has been a breach of the code. No pub company wants that.
I am always ready to use my investigatory powers when it is the right thing to do, but I look first whether there are other regulatory actions I can take short of a full-blown investigation which can bring benefits for tenants and changes in pub company practices. I’m now doing more to publicise those successes.
Take for example the impact on pub company behaviour since I launched my investigation – the PCA’s first – and found 12 code breaches in relation to stocking terms offered by Star Pubs and Bars in its MRO tenancies. Recent pubs code action stories show how Star has made changes in other areas of its business after I stepped in to tell them my compliance concerns.
Other PCA Powers
My other powers include giving advice to the industry about the pubs code (such as how it applies) and formal guidance about steps that pub companies need to take to comply with their duties.
An example is statutory guidance issued in April 2019 on how pub companies should comply with their code duty to account for beer waste in a profit and loss statement at rent review, giving greater transparency to the tenant.
The other thing I must do by law is to provide an arbitration service to resolve pubs code disputes between tied tenants and their pub companies. The PCA cannot represent tenants in their case or provide legal advice. To ensure maximum transparency for the industry we seek party consent to publish arbitration awards. We have recently started publishing anonymised summaries too.
My team is steadily increasing the amount of straightforward information we give to tenants.
We want to improve our web presence and we’re expanding on social media. There is much is being done to communicate with tenants in the way they have told me they want.
Raising awareness of code rights isn’t a soft approach to regulation; it’s an essential part. The code is detailed and wide ranging. If tenants don’t know what the code can do for them, they won’t assert their rights when dealing with their business development manager, they won’t bring concerns to their code compliance officer, and they won’t bring me information that will help me regulate and enforce the code.
Tenants must also know that I am here, that I am independent of the pub companies as well as the Government, and that I am ready and willing to take action to enforce their code rights.
This column is intended to aid industry understanding about the pubs code and its impact. Nothing in it should be understood as a substitute for the pubs code legal framework.