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

Supplementary memorandum submitted by Enterprise Inns

  Thank you for taking the time to meet with me last week. I found our discussions very constructive, open and frank, and I was reassured by your insightful observations on a number of the parties involved in this industry debate.

  You asked me quite specifically about the status of Codes of Practice, particularly in relation to their enforceability and therefore the degree of protection that is afforded to signatories. Enterprise's position on this is that we regard the commitments and obligations contained within our Code of Practice as being binding on both parties, and we expect the specific detail of those obligations to be taken into account by a court, an independent expert, an arbitrator, or indeed any other mediator or review body were we to find ourselves in dispute with an Enterprise tenant or lessee.

  We make our commitments clear and expect at all times to be able to demonstrate that we have upheld them. In a large organisation such as ours, gthere is a risk taht we may fall short of the standards I expect. When we are made aware of such occurrences, our first task is to correct any shortfall and our second is to review our internal controls to ensure that we understand how such a shortfall occurred and how we may prevent a reoccurrence in future.

  I thought it may be helpful to provide some of the wording which is contained in our new Code of Practice which is in the final stages of drafting. This revised Code takes account of all of the elements of the industry framework Code of Practice agreed between the BBPA, BII and FLVA and we expect to submit it for appraisal and accreditation by the BIIBAS scheme in the new few weeks.

  The following two sections of our draft code deal specifically with your point about the binding nature of the Enterprise Code.


  This Code of Practice aims to clearly describe the basis of our initial and on going relationship. Our overriding aim is for both parties to enjoy a mutually profitable, respectful and honest working relationship based on a shared commitment to abide by the responsibilities and ways of working that feature throughout this Code.

  The requirement of each party to sign this Code at the outset of our business relationship is an indication of the importance we place on strict adherence to both it spirit and content. It is not designed to replace the conditions set out in your lease or tenancy agreement, which is binding throughout the term and will always take precedence over this Code, but it is intended to play a pivotal role in the conduct of our future business relationship.

  We regard this Code of Practice as a binding agreement between us and in the event of any dispute or disagreement between us, we expect the content of this Code to be taken into account by any mediator, review body, independent expert or arbitrator, including in the unlikely event that court action may be required to resolve matters between us.

  In addition to this binding status, the Enterprise Code of Practice is accredited by the BII. Failure by Enterprise to adhere to its responsibilities and obligations may lead to the imposition of sanctions by the BII, including the possibility of removal of accreditation if we persistently fail to deliver any of our commitments.


  If you have any concerns or cause for complain or feel the provisions outlined in this Code of Practice or the Industry Code have not been followed, you should first contact your Regional Manager, who will seek to resolve the problem as quickly as possible. If you are still unhappy or can't reach agreement with your Regional Manager, you should escalate the matter to your Divisional Director, Managing Director (Operations) or ultimately the Chief Operating Officer. In the event that you continue to believe that the company has failed to adhere to its responsibilities or obligations under this Code, you may submit a complaint in writing, providing full details of the circumstances of your grievance, to the BII who will investigate matters on your behalf.

  We also spent some time discussing the role that the GMB now appear to be seeking in the pub industry and the deeply disturbing and seriously irresponsible advice that GMB is prepared to publish. We now have several examples of GMB's attempted intervention in matters between us and individual lessees.

  The most sinister of these activities relates to the existence of a "secure" website, access to which is restricted to individuals who have been "security screened". We have been shown copies of some of the information which GMB is publishing, from lessees who were at first inquisitive but now feel that they are at risk of being misled and are concerned as to the validity of the "advice" being given.

  There are three specific issues to which I would draw your attention, all of which incite tenances and lessees to breach their lease agreement.

  1.  GMB have issued a template letter to some of our lessees which claims that, by refusing to supply beer for which we have no prospect of being paid, we are in breach of the terms of their lease and this gives lessees the right to buy outside of the tie without fear of recourse or subsequent forfeiture. This advice is in direct contradiction of the clearly specified terms of every lease.

  2.  GMB have issued an advisory note directing licensees to refuse access to appointed agents such as the staff of flow-metering companies. I realise that the use of flow-metering equipment is a matter which your Committee has sought to clarify, but I am again horrified that the GMB advice is in direct contravention of the specified terms contained in each lease.

  3.  In an extraordinary sequence of events, GMB appear to have advised one lessee to claim back several months of rent under a Direct Debit Indemnity which the lessee's bank had not alternative but to honour. After several weeks of procrastination and correspondence with the lessee under the advice, we are informed, of the GMB, we had no alternative but to instigate forfeiture proceedings upon which all monies were immediately repaid. The lessee concerned has told us that he believes that he was unwittingly used as a "pawn" by the GMB to further their own agenda.

  All of this GMB activity is being widely promoted under an impression which I believe is being falsely given. I have attached a GMB recruitment flyer which states that—"Parliament has given tied tenants legal immunity in trades disputes when we are members of an independent and registered trades union. There is no doubt in our minds that pub tenants need to use this immunity to free themselves of the yoke of the pubcos and GMB agrees with this."

  I have also attached a copy of a memo issued by the Unite union (not printed here) which makes it clear that the GMB advice is flawed and false.

  A number of other parties, in particular the BII and FLVA, have made public their view that tenants following this advice may be putting their livelihoods at risk. I am also aware that the highly regarded trade advisor Phil Dixon (a former union fire-brand himself) is publishing his view that the GMB stance on these matters is both suspicious and dangerous. Anything your Committee can do to highlight your concerns as to the advice being provided by GMB would, I believe, be extremely valudable to tenants and lessees.

  I hope that my observations on the binding status of our Code of Practice are helpful, and I hope that you will be able to use the benefit of your Committee's status to provide timely guidance and advice to licensees who are potentially at risk of following GMB advice.

  Finally, I enclose a recently completed report from Investors in People (not printed here). It may surprise many members of the Committee that Enterprise Inns has recently beeen awarded Gold Status, the highest possible award from the Investors in People organisation.

16 February 2010

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