Pub companies: follow-up: Government Response to the Committee's Fifth Report of Session 2009-10 - Business, Innovation and Skills Committee Contents


Appendix 1: Government Response


1. The Government very much welcomes the Report and wishes to pass on its gratitude to the Committee for all their hard work and diligence over the past few years in arriving at such a valuable Report.

2. The Business, Innovation and Skills Committee Report makes a number of recommendations to the pub industry, the Government and to the Office of Fair Trading.

3. We very much hope that industry accepts the challenge that it has been set and works together in an effective and constructive way. In particular there is a special emphasis on the British Beer and Pub Association (BBPA) and the British Institute of Innkeeping (BII) in making sure that the Framework Code and the subsequent accreditation process works within the proposed timescales in a way that it is mutually beneficial to those across the whole industry. The Independent Pub Confederation (IPC) and the Royal Institution of Chartered Surveyors (RICS) also have a key role to play in ensuring a successful outcome.

4. You will be aware that the Government announced today a support package to provide practical help to community pubs during this difficult trading period. The package includes business support, industry standards and consumer choice and community and local authority action. The support measures included in the industry standards and consumer choice sections address the recommendations made to Government on Brulines and the effectiveness of the BBPA Framework Code. Please find attached a copy of the communication for your information. On the specific recommendations made to Government our response is as follows:

Recommendation

"The accuracy of data from flow monitoring equipment and the analysis of that data are highly contentious issues. Flow monitoring equipment could be a helpful tool, for both pub companies and lessees but only if it is reliable and has the confidence of both sides. Clearly this is not the case at the moment. We recommend that the Government, through the National Measurement Office, urgently clarifies the position of beer flow monitoring equipment in relation to the Weights and Measures Act 1985. Such equipment must be included under the Act for calibration and verification purposes". (Paragraph 69)

5. It is right that monitoring equipment of this type should be accurate and reliable. Government is clear that the industry should voluntarily ensure that all such measuring equipment is calibrated by the National Measurements Office. However should the industry fail to do so within a reasonable timeframe this will result in Government prescribing the equipment to ensure fairness.

Recommendation

"The industry must be aware that this is its last opportunity for self-regulated reform. If it cannot deliver this time, then government intervention will be necessary. We do not advocate such intervention at this stage, but remain committed to a resolution to all the problems discussed in this Report and those of the 2004 and 2009 Reports. Should those problems persist beyond June 2011, we will not hesitate to recommend that legislation to provide statutory regulation be introduced". (Paragraph 158)

6. In its support package communication Government has made it very clear that it accepts the Business, Innovation and Skills Committee recommendation for the effective operation of the British Beer and Pub Association Code of Practice on tenancies and leases. This is further backed up by a clear statement that Government gives the industry until June 2011 to improve. If the Business, Innovation and Skills Committee concludes by then that the Code is not working as well as it should we will consult on putting the Code on a statutory basis with effective enforcement. The Code of Practice should also incorporate a beer/non-beer tie option for tenants with a commitment that the Government will act if the industry does not. In addition the industry should introduce voluntary provision for tenants to offer a guest beer outside the traditional beer tie as part of the code with Government action to introduce an order if industry fails to act.

Recommendation

"We urge the Government to monitor the success or otherwise of industry initiatives for reform and to keep the possibility of a reference to the Competition Commission firmly on the agenda. We also urge the Office of Fair Trading to look more carefully at the issues involved as it responds to CAMRA's super-complaint for the second time. The serious imbalance in power between pub companies and lessees that has prompted this Report and the two earlier ones must be a matter of deep concern to policy makers who are working to ensure that markets work fairly to the benefit of consumers". (Paragraph 160)

7. Government will be doing what it can to encourage the various parties to work together over the coming weeks and months with the objective of reaching a situation where further government intervention is unnecessary. We intend to monitor progress at regular intervals.

8. At this stage the Government has not ruled out a reference to the Competition Commission.

9. The Office of Fair Trading (OFT) is consulting on its findings in response to the super-complaint lodged by CAMRA in July 2009. The OFT is inviting parties to comment on its findings.

10. The OFT will consider parties' responses to the consultation, including additional evidence as may be put forward as part of parties' representations, and pursue such further investigation as it considers appropriate, before publishing its final views regarding the super-complaint. 

11. The OFT's examination of the beer tie following CAMRA's super-complaint will continue to focus on whether effective competition is delivering choice and value for consumers.


 
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