Further written evidence submitted by
Fair Pint Campaign
I am writing to you ahead of the Committee's evidence
session with the Minister for Consumer Affairs, Ed Davey, where
he will give evidence on the Government's response to your Select
Committee's report on Pub Companies.
We hope you share our concerns and that you will
do everything you can to persuade the Minister that he needs to
review his decision. As the leading tenants' voice in the debate
we are particularly concerned that we have not been consulted
and our view has not been represented. The Government's response
is a totally inadequate response to the problems affecting the
sector identified by the multiple reports on the tied pub sector
which have been published by the Committee and its predecessors
since 2004.
In response to the Select Committee's report published
in 2009, all three main political parties promised intervention
to help tied pub businesses benefit from fairness in their tied
relationships with the companies who own their pubs if the industry
was not able to make meaningful change on a voluntary basis.
Your Committee's report published earlier this year
made it clear that voluntary codes of practice drawn up by the
BBPA, the representative voice of the pub owning companies and
brewers had done little to solve the problems faced by tied publicans.
In light of this, we are bitterly disappointed by the decision
of the Government to renege on these manifesto commitments and
come up with a response that is clearly driven by the interests
of pub owning companies rather than tied lessees and tenants.
The pub sector employs tens of thousands of people
in the UK and plays an important role in our economy. Individual
pub businesses rather than the pub owning companies (who employ
relatively few people to manage their tied estates) create the
vast majority of the employment in the sector. In the context
of the current economic situation, it seems nonsensical for the
Government to have considered the interests of these large property
interests more important than the problems faced by individual
pub businesses.
The Government's proposal to make the existing industry
codes of practice legally binding is clearly in the interest of
the pub companies rather than lessees and tenants. The codes are
BBPA and pub company creations which tenant representatives have
made clear are unacceptable. As they stand, they seem to confer
onerous terms on their licensees and offer very little in return.
Making these legally binding will risk making the problems faced
by tied lessees and tenants worse than even the current situation.
Many of the improvements that the Government believes
it has negotiated with the BBPA and pub companies are already
agreed practices. Examples include price matching on insurance,
which has happened for many years but still denies publicans access
to meaningful competition in insurance as they can't take their
business elsewhere. The Government has agreed clarity in the treatment
of machine income which is accepted practice and is already in
the codes of practice. Meaningful change would have been ending
the machine tie, something that every select committee report
since 2004 has called for. The Government response also highlighted
as an improvement the non-enforcement of upward only rent reviews
which was something agreed by the industry years ago as was the
fact that rent review assessments must comply with RICS guidance,
which is something which is simply commonsense and is already
included in codes of practice.
In their response, the Government has focused on
fully repairing and insuring leases, but it is clear that the
abuses in the system are not confined to FRI leases and abuses
do occur under tenancies as well as leasehold agreements. The
risk is that a code of practice that solely focuses on FRI leases
will simply lead to pub companies transferring their property
to tenancies rather than longer FRI leases.
We believe that tenant as well as pub company representatives
must agree any code of practice and this code of practice should
be put on a statutory footing. We also believe the tied model
needs to justify its fairness by allowing lessees or tenants of
companies owning more than 500 pubs the freedom to sell free of
tie guest beers and the option to choose to switch to a free of
tie agreement with a rent set by an open market review.
Fair Pint believe that the Government's response
offers no solution to the ongoing problems faced by the industry
and in many cases will make things worse by making codes of practice
which introduce new onerous restrictions on leases legally binding.
The focus on FRI leases will encourage pub companies into offering
alternative brewery type tenancies, usually short, non-assignable,
unprotected agreements that will do nothing to encourage new entrepreneurial
flair and investment into a failing industry.
The Government has at best been deceived, and at
worst duped. We fear that the upshot of the Government's response
is for them to offer-up a series of empty promises which will
do nothing for the plight that so many tied tenants find themselves
in. We hope that our voice and our views can be heard by the Minister
and his decision can be reviewed sooner rather than later.
5 December 2011
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