Examination of Witness (Question Numbers
54-59)
BBPA
8 DECEMBER 2009
Chairman: Welcome. We all know who you
are so we can dispense with the usual formality of introductions.
When your colleagues representing the pubcos appeared here last
time the trade press described it as a Spanish inquisition. That
was not our intention. We are after the truth. Although Mr Darby
is one of my constituents I am afraid that will not prevent me
being a dogged searcher after the truth today. The Committee is
disappointed that the industry did not respond more fully to the
2004 report and that we have to have these evidence sessions at
all. I agree with the industry that there are other very important
questions facing the future of British beer and pubs that need
to be addressed, but this issue just will not go away; it simply
has not addressed it. Almost the central question for us today
as a committee is one that may provoke a titter in the public
gallery, namely: can we trust you? I do not feel that we can and
you need to persuade us otherwise. The reason is that the reaction
by your industry to our May report was so bitterly disappointing.
Let me quote what a few people have said. Enterprise Inns only
recently described the Committee as being ill-informed and said
the report was based upon hearsay rather than evidence. I reject
that absolutely. Shortly after the report came out on 13 May Enterprise
Inns said that, "The Committee has chosen to focus upon a
highly emotive, and we believe unsubstantiated, allegation of
systematic and widespread abuse by pub companies of their licensees."
We think it is very well substantiated. The former head of Punch
Leasing Division, Deborah Kemp, who to be fair is no longer in
the industry, talked about the stage being monopolised by a minority
group of bigoted and ill-informed MPs egged on by a small number
of self-interested pressure groups. Mrs Simmonds, you yourself
said of the OFT response to the recent CAMRA inquiry that the
industry had a clean bill of health. I do not believe that even
the most benign interpretation of the OFT report is that the industry
is given a clean bill of health. The result of the OFT decision
was disappointing, but it was not a clean bill of health. Giles
Thorley, the man who misled this Committee when he gave evidence
about flow monitoring equipment, described us as a "kangaroo
court". Brulines said they were considering legal actions
over claims made in the report. This is the kind of thing we are
dealing with. I cannot remember the exact words but they said
that at best it was irresponsible and at worst scandalous and
the Committee was very lucky to have parliamentary privilege "after
writing this trash. But I take heart from the fact that very little
credibility will be given to them, given the current furore over
their expenses." Brulines are wrong about that. Enterprise
Inns' Ted Tuppen said, "Without parliamentary privilege,
we would be considering action." If that is what Mr Tuppen
has written it is not an idle threat. Being bullied, threatened,
intimidated and slagged off is hardly an encouraging response
from the industry to what was a very serious and well received
report. That is the background to today's session which makes
your task more difficult than it need have been. I ask the first
question.
Mr Hoyle: Chairman, I think the witnesses
ought to reply to what you have just put.
Q55 Chairman: Mr Hoyle is absolutely
right in his comment, but my first question gives them precisely
that opportunity. No major improvements were made following our
2004 report. Why should we not believe that that will be the case
again after all I have said to you.
Mrs Simmonds: Thank you for that
introduction. In sitting here the British Beer and Pub Association
is not in any way complacent; we take the criticisms of this Committee
very seriously. We have worked extremely hard in the past few
months to come up with a new industry code that we believe gives
greater detailed financial information to both prospective and
actual tenants when rent is reviewed. It provides accredited training
for both business development managers and prospective tenants
and above all we have PIRRS which will allow lessees and tenants
to take concerns about their rents to that independent scheme
which is already up and running. We are not in the slightest bit
complacent. We genuinely believe that there is a sea change and
hope that during the next hour we will have the opportunity to
talk about any concerns you have and how we will tackle them.
Q56 Chairman: Your answer to my fundamental
question which overhangs the whole session—why we should
believe the same thing will not happen again—is what? Members
of the industry including quite senior people within the BBPA
said to me they had not realised the codes were not being followed
and they were shocked by many aspects of the report. I have had
some very encouraging and helpful discussions in private with
many senior figures in the industry. That is why I take the comments
I have just quoted so badly. I believe that most people in the
industry think we have put our finger on some important issues.
How can we trust you this time?
Mrs Simmonds: The overriding and
important part of this is transparency. We must be open and honest
with our tenants; they have to understand how the system will
work in future and must have a low-cost process by which they
can take action if they believe that the rent set is not the right
one.
Q57 Chairman: Do you believe that
the kind of response given to our report last time round by some
high profile people in the industry is a helpful way to engage
in public debate?
Mrs Simmonds: I do not think it
is in the slightest way helpful. At the end of the day we have
to come up with something that will work better. We need a system
whereby everyone can understand how it works and an industry code—we
have sent a draft to the Committee—to which all our members
are committed in terms of its implementation and new company codes
which will be accredited by BII. I am aware that the British Institute
of Innkeeping has written to you separately on exactly how that
will work and I am very happy to discuss that in due course today.
Q58 Chairman: I have seen the code
and I agree that it is a great improvement on what has gone before;
it has many things in it that I welcome. When do you expect it
to come into force? It has not been approved yet by the BBPA;
it awaits formal approval?
Mrs Simmonds: It has not been
approved by the BBPA, and it must also be approved by the FLVA
and BII who are co-signatories. We hope to have that done by the
end of the year. We will then go through the process of bringing
all the individual company codes into alignment with the overarching
industry code. All of those codes will have to be implemented.
We have said we expect to have the majority of those codes fully
implemented by June of next year. We may need additional time
particularly for some of the smallest tenanted individual company
codes to be taken in.
Q59 Chairman: I have talked to some
of the small regional brewers who are concerned about the compliance
costs of the code for which I have some sympathy. It is easy for
Enterprise and Punch to throw resources into these codes; it is
much more difficult for small family brewers to cope. You are
talking about extra time for enforcement of the codes. There are
many fewer problems with the smaller regional brewers. Is it a
matter of lighter codes or just extra time to bring them in?
Mrs Simmonds: We have to make
sure that the code is applicable to a brewery tenancy and a fully
leased pub. If you have a full repairing lease that is very different
from a three-year tenancy. It is a matter of making sure that
your practice is one that is reflected in the company code.
Mr Darby: Having chaired the BBPA
working party in response to your report I should like to give
a little background. I have been Marston's Pub Company's managing
director for only a year. Prior to that I was in charge of our
beer company and therefore operating in the free trade, so I have
had experience dealing with free trade customers for six years:
supermarkets and effectively non-tied customers. I come from an
arena where you win business only if you do a good job for your
customer. When I took over as managing director of Marston's Pub
Company it was striking that the then existing industry relationships
highlighted by the BESC report were simply not sustainable. It
does not make good business to have unhappy relationships with
your tenants. We as a business do care about the tie. We own five
breweries and we have a lot of people employed in them and ensure
we have successful, viable businesses with people employed in
breweries and in delivering beer and so forth. But we recognise
that you have to earn the tie. In the working party that I chaired
there were a number of people including me who were new to the
industry, for example Roger Whiteside at Punch. Here is a group
of people on the working party who recognise that some very serious
concerns are raised by the BESC report and they have to do a substantially
better job this time than it did post the TISC report. Do not
forget that the working party included not only Enterprise, Punch,
Marston's and Greene King but also a cohort of small family brewers
including Stephen Gould from Everards and Fullers. This was an
industry-wide group that was determined to make a difference.
I give you my reassurance that having chaired that group with
my reputation being on the line those people absolutely want to
make a difference and are determined to ensure that the new code
is established and properly conducted in the trade, not least
because fundamentally that is good for business.
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