Pub companies: follow-up - Business, Innovation and Skills Committee Contents

Memorandum submitted by the British Institute of Innkeeping (BII)


  BII fully supports the recent RICS report and its recommendations. RICS has long been accepted as the key professional body in terms of rent setting and rent review and BII will expect pub company codes to abide by guidelines set out in the RICS code.


  BII has called for fairer rent setting, greater transparency and more protection, training and support for new and existing entrants. BBPA, whilst unable to address the full Business and Enterprise Committee (BEC) report agenda, was able to address certain aspects and felt able to make some improvements in the areas of transparency and protection/support for both new entrants and existing lessees/tenants. As these improvements are a step forward, BII welcomed them, and agreed to monitor them through the BII Benchmarking and Accreditation Services (BIIBAS) scheme and company codes of practice.

  BII must stand up for what is, or could be, good for the industry, and these new commitments will make life much better for new entrants as well as improving the rent review position for existing lessees. We will hold BBPA members to this commitment through a public website which will make visible pubcos' performance against their new codes, once they have been benchmarked. This will help prospective lessees make an informed choice about leases and who to take a lease from.

  BII's signing of the agreement has prompted much debate within the industry, mostly played out through the trade media. However, we stand firm by our decision as we believe the improvements will benefit the industry as a whole.

  There are many who feel that the industry agreement contains actions that are merely good practice and they should be happening anyway. BII can sympathise with that view but the reality is they are not happening now and probably would not happen systematically unless confirmed in writing. Hence, we wanted the commitment detailed in a binding agreement which not only captures that best practice but indeed goes further in many areas.

  We are now working with the BBPA in order to translate the signed Heads of Terms into a new Framework Code of Practice. We are aware through ongoing communications with the pub companies that they are in the process of working on their individual codes of practice and incorporating the new commitments.

  The BIIBAS scheme will become even more crucial as the BBPA has made it compulsory for all its members to have their codes accredited by the middle of 2010. BIIBAS is currently being strengthened and we are introducing a series of measures to increase availability, transparency and monitoring of codes.

  We see that the more effective BIIBAS is, and the more we can help to prepare newcomers to the industry, the better life will be for everyone. However, in extreme cases where tenant/landlord relationships have reached a major breakdown, the newly introduced Pubs Independent Rent Review Scheme (PIRRS) will be available to help negotiations reach a satisfactory conclusion.


  PIRRS is another cross industry initiative which has been established by the ALMR, BBPA, BII, FLVA and GMV. The scheme is currently available in England and Wales and operates by providing a transparent, legally binding, capped fee alternative to rent review arbitration.

  The scheme must be opted-into by both Landlord and Tenant, who, in applying to use the scheme, must agree to differ from the current terms of their rental agreement via a Deed of Variation. The tenant then selects an independent Valuer from the PIRRS panel to proceed with their case.

  The independent Valuers have each been nominated by one of the establishing board organisations. The Landlord must accept the Tenant's chosen independent Valuer. Once the case is passed to the Valuer by the PIRRS administration team, the capped fee is paid by both Landlord and Tenant directly and the PIRRS personnel have no further involvement in the case. The scheme's processes and procedures are evaluated post case closure.

  The PIRRS is currently piloting its first case and aims to begin accepting cases from 1 December 2009. The scheme will also launch in Scotland as soon as possible.


  BII was not able to sign the IPC's manifesto document but it does welcome the organisation's creation and the focus it will bring. BII's remit is narrower than that pursued by other groups in the IPC. That said, there will be times when BII members' interests and industry interests are best progressed through a common voice and in those instances it is right for BII to support. We will also work with the IPC in campaigning on common issues such as health, anti-social behaviour and mandatory conditions.


  As a professional body, it is right that BII is the first stop for the fresh-faced coming into the industry. We are currently working with industry to develop two new qualifications; namely an introductory training unit to ensure newcomers fully consider their legal and operational responsibilities even before they've signed on the dotted line and a unit to ensure all BDMs/BRMs are trained to a minimum acceptable standard. This will give newcomers the chance to take on a tenancy or lease fully aware of what they are signing up to and ensure a consistency of support across the industry from BRMs/BDMs. Both initiatives address key points raised by the BEC report. Furthermore, BII will be here to coach and guide them through every step of their career in licensed retail.

  BII sees this as the complete professional framework of support: introductory training for those considering coming into the trade; a portfolio of qualifications and support services to assist their every need throughout their careers; benchmarking and monitoring of pub company codes of practice through BIIBAS; and PIRRS to step in as a last resort if a problem develops and negotiations reach an impasse.


  With the recent announcement of the new rateable values, licensees up and down the country are being hit with further increases to their overheads. Some BII members have reported rate increases in excess of 100%, and even higher rises have been mentioned on the trade press online forums. We are putting in place a widespread package of support for BII members, including a roadshow of events, a Q&A and live forum available via our website and an expert helpline for people to call with their individual queries.

  We mention this because it is just one of the many economic pressures imposed on operators in the industry. It should not be forgotten that they also have the imminent VAT increase to accommodate.

20 November 2009

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