Pub Companies - Business, Innovation and Skills Committee Contents

Written evidence submitted by Simon Daws

I wish to submit the following as evidence to the latest consultation as regards the Pubco Enquiry.

My evidence relates to:

—  Request for a Free of Tie and Open Market Rent Review Process.

—  Upward only rent reviews.

—  Leases outside the Codes of Practice.

—  Tied v Free of Tie supply prices.

—  Licensee Surveys.

1.0  I am a BII Member and lessee of two Enterprise Inns pubs. My ownership of the Royal Oak commenced in 2000, at that time being leased from Whitbread Pub Partnerships. I conduct all my relations with Enterprise Inns in a business like and formal manner, and I see my Regional Manager four times a year. My other pub, again located near Cheltenham is called The Gloucester Old Spot and is leased from Enterprise Inns also.

1.1  I recently asked them to permit me to go free of tie in both pubs, and have an open market rent review to establish a workable and fair financial relationship under which I could take my business forwards. In some part this is to test the creedence of their claims to offer Free of Tie deals and to have removed upward only rent increase clauses.

1.2  In the light of the ongoing BISC Enquiry I feel my request reflects the industries' wish for greater freedom and transparency for Licensees, but it would appear that my reasonable request has not received equal treatment.

1.3  Enterprise have made it clear to me that should I wish to make a free of tie rent proposal, that it would be considered under a new 20 year commercial lease and would fall "outside the scope of the Enterprise Inns Code of Practice". Contrary to evidence and promises given in the last BISC session, it also stipulates upward only rent reviews. I have since spoke with my RM and Simon Townsend face to face about this issue and Enterprise Inn's position has been verbally reinforced.

1.4  Now, either these firms, do or do not operate under a Code of Practice as accredited by, my Professional Body the BII. How can they operate peacemeal, choosing to grant Leases as it suits them outside of this Code? An industry wide Code of Practice has to be exactly that?

1.5  What the deal they are offering really represents is exchanging the profit that they make from us in barrelage for a tie release fee, which itself then becomes subject to annual RPI increases and a five yearly review. It is robbing Peter to pay Paul, and has no measure of fairness that a rent would have using the RCIS appeal system. At no point would the "free of tie, fair maintainable rent" of the pub be established, and I would continue to be subject to any increase in the Tie Release Fee that they deemed fair on a five yearly upward only basis.

1.6  They profess to have moved on, with Codes of Practice but these fail to address the core issues of the Pubco debate, namely Pub Retailer's profitability and thus onward viability of their business.

2.0  I further enclose evidence of the inflated prices that we have no choice but to pay for their beer. I want either lower beer prices or, and better still to be released from my tie with a full and fair rent review. The difference in pricing of randomly selected beers, lagers and stouts are
2.1Free Trade Price Enterprise Price
Wye Valley HPA62.08 93.3931.3150.4
Amstel103.49138.93 35.4434.2
Heineken109.99151.95 41.9638.1
Guinness109.99145.91 35.9232.6

3.0  Simon Townsend of ETI, professes that most of us "opt for the low rent - higher beer price option". I want neither and I have opted for neither, I want fair rents and fair supply prices for beer.

4.0  I also wish to contest Enterprises use of "Licensee's Surveys" which they have engineered to profess that by saying "Yes I have received my Code Of Practice" actually means that I am happy with it. I was very candid in the way that I answered their loaded questions and the committee should ask to see a transcript of these questions to understand that The Pubco's interpretation thereof is dishonest.

20 June 2011

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Prepared 6 October 2011