Over the last year the Parliamentary Save the Pub
Group has received 30 serious and detailed complaints from individual
tied pub lessees. These have been received just since June 2010,
in which time the new Codes of Practice should have been in place.
This is a further demonstration that the new Codes of Practice
have not improved the situation for licensees. Given that the
Group has not sought individual complaints this is likely to represent
only a tip of the iceberg of ongoing malpractice in the tied pub
sector made possible by a gross imbalance of power.
A summary of the 30 complaints are attached. These
are submitted in an anonymous format as we have not had time to
seek permission to forward the full details supplied by individual
lessees. Given that several of the complaints relate to intimidation,
bullying and abusive behaviour it is likely many lessees would
be reluctant to make their complaints public.
In oral evidence to the Select Committee by Neil
Robertson of the BII, he stated that the BII had received only
28 serious complaints which he regarded as a "remarkably
small number". It is not apparent that any of the 30 serious
complaints received by the Save the Pub Group were also submitted
to the BII.
The Save the Pub Group has forwarded individual complaints
to the complainant's local MP to take up on their behalf as well
as suggesting they contact the Fair Pint Campaign for assistance.
The Group has not advised complainants to contact the BII as it
is unclear what actual assistance they can provide. Additionally,
a number of lessees have expressed a lack of confidence in the
BII to handle complaints fairly as they are financially dependent
on the pub companies and have no history of representing or providing
advocacy for lessees.
I hope the attached summary of correspondence helps
dispel the possible impression given by Neil Robertson that there
are few serious complaints from tied pub lessees.
||Correspondence Received||Description of Complaints
|1AA||West Yorkshire||2010 June
||The pubco withdrew discounts on beer from the tenant, so they were forced to buy beer at higher prices. The tenant subsequently got behind with the rent and cannot afford to pay these higher prices. The pubco will not work with the tenant to resolve the issue, because of a dispute between Brulines and the tenant.
||The tenant had to pay for their own repairs, staff, equipment and decoration, and was faced with rising prices set by the pubco. The tenant feels they had no support from the pubco and was simply told to "call it a day" when their money ran out.
||The tenants invested £50,000 into the pub but have made losses due to the high rent and beer costs. The tenants were told to sign for a new rent level without negotiation or discussion because "it was the only deal they were going to get." The tenants state that the rent is unsustainable and unrealistic.
||The tenant has improved the sales and reputation of the pub and has steady sales. However, the rent and prices charged by the pubco has meant that the tenant hasn't drawn a wage for two years. The tenants were not informed that paying rent weekly rather than monthly would mean they were charged £3,000 extra a year.
||The tenant is earning minimum wage and only just surviving. They have had no help from the pub company in the prior two years, and more recently no help with regards to a sale. The tenant attempted to organise an off-site beer festival to promote the pub. Breweries felt they were not able to deliver to the tenant because of the tie (even though the festival was off-site) and they feared being struck off the SIBA list.
||The tenants estimate that if they could purchase beer on the open market, they could pay three times their current rent and make more profit. The pubco have refused to negotiate a fairer deal
||The tenant states that the better the pub does, the more they are penalised
||The pubco have taken 50% of turnover which has left the tenant unable to pay the bills, unless they personally work for nothing. The tenants are almost unable to continue but still have 15 years remaining on their lease and if they leave the pub, they will be liable for 15 years rent.
||The tenants experienced unannounced inspections by the pubco and Brulines, who went behind the bar and intimidated staff, questioning them without permission. The pubco has imposed a significant rent increase, and the tenants were also informed (with no previous knowledge) that, after five years of their lease; they would now be fully tied on wines, spirits and minerals.
||The tenants personally invested £70,000 to redevelop and bring the pub up to legal standards, but are making no money for themselves because of the high rates charges by the pubco. The tenants state that they are forced to stock inferior products, but pay premium prices. Also, because of the tie, they cannot compete with other pubs.
|1AK||North West||2010 October
||The tenants are suffering heavily following a steep rent increase combined with a full tie, and the business viability is in question. The tenants also own the freehold to three other pubs which not experiencing these problems.
||After increasing trade, winning numerous awards and accolades and raising £10,000 for charity, the rising cost of rent and wet stock (the pubco take over 70% of takings) has resulted in the pub becoming unviable. The tenant's debt to the pubco increased to £6,000, and a missed direct debit caused the pubco not to release an order, giving the tenant no way to make the money. The tenant recently walked out of the pub with no money.
||The pubco sent two bailiffs, unannounced, to the tenant's pub to demand thousands of pounds of rent. The tenant states that they were undergoing rent review and that rent had been paid according to income.
||Following the recession and subsequent fall in turnover and increase in costs and VAT, the tenants have struggled with rent. The pubco mentioned a free of tie option, but the suggested rent increase was too high for consideration, and would have necessitated outperforming the rest of the market by 10%. The tenant requested information about a free of tie option alongside an open market rent review but was told the figures for this were unavailable.
||The tenant states that the pubco is "pulling the wool over people's eyes" with regards to the free of tie pricing options currently available. All apart from one ale and one cider are still tied; products are subject to a tie release penalty fee and the pubco estimate their resultant loss of earnings and adds this to the rent.
||The pub is subject to significant disrepair including broken steps and unpainted walls/window frames which has not been dealt with adequately by the pubco. The pubco has refused to engage with the tenant in a reasonable and mature manner.
||The tenant reports that the pubco "mis-sold a tenancy lease," fabricated information, offered little support and will not respond since the tenants handed in their notice.
||The pubco offered to complete much-needed repair works if the tenants agreed to a further tie. The tenants agreed but the pubco then refused to carry out the repairs. The tenants had to close the pub and were left in debt.
||The pubco forced the rent up by 54% over a 20 year period, and the tenant has been subject to attempts to more than double rent at rent reviews. This sharp increase in rent meant the tenant was forced to sell his house to cover his debts.
||The tenant reports that, due to the beer tie, they are under legal obligation to buy from the pubco which is costing 100% - 200% more than readily available from wholesalers. The pubco has consistently failed to deal with the tenant's complaints and concerns.
||The tenant had a good business and busy pub but was defeated by high rents and beer prices imposed by the pubco. The sale of the pub "fell-through," and the tenant has now been forced to sell his house to cover £40,000 of debt.
||The tenants are consistently losing money. The BDM has informed them that there is no chance of being offered a free of tie option, and that the pubco will not reduce the rent or increase the discount.
||The tenants have had numerous different area managers. The tenants invested in a pub after they had been relocated, only to find that the current regional manager had intervened to prevent progress six months previously; in effect the tenants had been subsidising the building with their savings and acting as unpaid caretakers and restricted from full trading opportunities.
||When renewing the lease, the pubco sought to impose an annual rent that was higher than the pub's overall profits.
||The tenant has been forced to relinquish his lease after being priced out of the market. Free of tie pricing options were only offered to him in conjunction with an unsustainable rent.
|2AA||West Midlands||2011 July
||The tenants report that they were charged a £75 penalty for a late order, because the pubco didn't ring to receive the order. Due to these "bully boy tactics", the licensee intends to leave the pub as soon as his lease expires.
||The pubco stopped the tenant trading for being one week behind on the rent (the first late payment in seven years). The pubco then charged the lessee a significant penalty for loss of trade. The tenant was also never provided with a contract despite multiple requests.
||The tenant requested to go free of tie with an open market rent review, but was informed that any free of tie rent proposal would be accompanied by a new 20 year lease, and would fall outside the scope of the pubco's Code of Practice. Any increased profit for the licensee would be recovered by the pubco through a tie release fee.
||The tenant reports that the behaviour and actions of the pubco has cost them at least £300,000.
||The tenant reports a large loss despite a huge effort, because the pubco makes a fortune taking so much money
||The tenant reports he is paying extortionate rent and doesn't receive appropriate discounts. For example, buying Strongbow at even the highest discount from punch is £110 plus VAT, while the open market price is just £64 plus VAT.