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

Memorandum submitted by Justice for Licensees


  RICS have held their forum and produced a somewhat viable report and yet they have still failed to act. There is no justification for hesitancy. The TRVG have not been brought to task over the manipulation of the rental system and the pubcos continue to abuse said system. Companies such as Greene King and Enterprise Inns are telling their tenants that the RICS report means nothing that it is business as usual. Since the release of the BEC report there has been murmurings but no change whatsoever, tenants continue to face rent increases in a time when the market just will not sustain those increases and so tenants continue to lose everything and the pubcos continue their churn. UORR's still remain as part of the contract as do upward only RPI, until those issues are addressed as part of the contract they will remain open to interpretation and abuse. The pubcos made promised to your committee that upward only rent reviews would be removed by Deed of Variation and this has not happened. Non-binding side letters have been issued by Enterprise Inns. The formulation for the rent must be completely transparent and form part of the contract and if comparables are to be used then there is substantial need for a national register of rents, to ensure that the tenants have the information required and do not have to rely on the evidence of the pubcos.


  The BBPA have produced their agreement which does little to address the concerns of the BEC report, it is nothing more than a suggestion that BBPA members may take part in more normal business practice. It is difficult to understand why it has taken two parliamentary investigations to instil action! The BBPA agreement is not legal and binding. Pubcos can leave the BBPA whenever they so choose (Greene King prime example) and therefore the agreement is open to abuse. Part of the BBPA agreement addresses training for incoming tenants, JFL sits on the steering group for this training. To date JFL is far from impressed with the manifesto put forward, it fails on core issues and two hours training is far from enough to address the issues of naive new-comers to the trade. The steering group are fully aware of the concerns of JFL and we await the outcome. JFL is aware that the BBPA have lobbied MP's with their agreement and hailed it as the answer to the problems within the trade, the agreement is far from the answer they portray and will do little to protect tenants, it fails miserably in addressing the prime concerns of the BEC report. Who is going to monitor adherence by the members of the BBPA, not forgetting that the BBPA failed to acknowledge the problems that the tied sector have faced for many years? Should the pubcos choose to leave the BBPA then who is going to ensure that the current debacle does not continue? The BBPA and its members have made promises before and have not carried them through. This looks like a repeat of the same.


  In essence the PIRRS scheme could be a good idea if progressed correctly. It would appear however, that the proposed scheme may already have been the subject of pubco manipulation. The PIRRS website went live a couple of weeks ago and then was removed. On the site there were some surveyors who were noted as declaring no interests eg Fleurets and yet they act for the pubcos, this is not a good sign. The integrity of the PIRRS system has been called into question by these actions. In reality, if the RICS is to fully and properly implement the findings of its recent report then there is, in principle, no need for the PIRRS scheme to be in place.


  The formation of the IPC will be good for tenants and for the trade. They represent the voice of the Publicans which is something that this trade has lacked in previous years.


  From a tenants perspective it would appear that it is business as usual for the pubcos, despite the numerous press releases stating the opposite. Tenants continue to feel abused, exploited and bullied by their alleged business partners, in fact the levels of discontent have risen considerably since the findings of the BEC report. The pubcos are continuing to fail to address the issues and concerns of the tenants, they continue to increase rents, they continue to use Brulines as a weapon despite it's obvious inadequacy, they continue to increase the cost and severity of the tie, they continue to fail to help struggling tenants, they continue with the churn, they continue to instil the view that they are benevolent business partners, they are failing to self-regulate and they are failing miserably in transparency and honesty. In fact the situation within the pubco model had deteriorated instead of improving.


  The pubcos have failed in self regulation as they failed in 2004. The BEC report was one of the finest pieces of investigation that this trade has seen, despite the mumblings of the pubcos and yet every action of the pubcos that the report highlighted continues unabated by the pubcos. It is absolutely imperative that the government act now to protect current tenants and immediately commence a full and complete investigation of every aspect of the pubco model by a totally independent body. The pubcos must go before the Competition Commission with all due haste, if the pubcos have done no wrong then surely they will welcome this to protect their name? This will give all sides the chance to clear the issues once and for all and tenants, pubcos, consumers, trade bodies and the government should welcome the opportunity to lay to rest the issues that have dogged this trade for many years.

18 November 2009

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