Pub Companies - Business, Innovation and Skills Committee Contents

Written evidence submitted by Justice for Licensees

Justice for Licensees would like to thank the Business, Innovations and Skills Committee for the opportunity to be able to submit evidence with reference to the Government Response.


Justice for Licensees (JFL) is a campaign group, initially borne out of the need to discover whether the questionable practices of the pubcos were prevalent across the companies and the country. JFL, through its campaigning, has in excess of four hundred and thirty thousand members and supporters, these consist of tied licensees, free of tie licensees, managers, ex licensees, employees of the industry and consumers. We are very proud to be one of the founding members of the Independent Pub Confederation (IPC). JFL fully supports the findings and recommendations made in the Business and Enterprise Committee 7th report—Pubcos 2008-09 and the Business, Innovation and Skills Committee reports of 2009-10 and the subsequent 10th report of 2010-12.


We are disappointed with the government response, we are disappointed and frustrated that they have reneged on their pre-election promises (1 & 2) and with the apparent failure of ministers to engage with all stakeholders. Tackling the symptoms of the imbalance in power and financial reward for risk taken, without resolving the underlying causes offers only short term relief, ultimately government will have to address the underlying cause. Lack of competitiveness in conjunction with a raft of questionable practices and a certain lack of forward thinking have led to an imbalance in the market resulting in the evidence that the select committees have witnessed. It is, without doubt, the licensees, their customers and the pubs of this land bearing the brunt of the cost.


—  (i)  We welcome the governments clarity in declaring the principles it has followed:

—  That the OFT has found no evidence of competition problems that are having a significant adverse impact on consumers and therefore the Government is not minded to intervene in setting the terms of commercial, contractual relationships.

—  That legally binding self-regulation can be introduced far more quickly than any statutory solution and can, if devised correctly, be equally effective.

—  (ii)  Competition law has three main elements and in particular:

—  Prohibiting agreements or practices that restrict free trading and competition between business.

—  (iii)  It is apparent that the tied model is based upon a prohibitive agreement which restricts free trading. We believe that the OFT and now the Department for Business, Innovations and Skills have failed to account for one of the main elements of competition law and that is competition between business. It would appear that the ability of tenants/lessees to be able to compete in the open market place may well have been overlooked somewhat? Due to over-renting and artificially inflated product lists competition between business has been severely restricted and restriction of competition should not be acceptable to any right thinking individual.

—  (iv)  Using the government's statistics 28,800 pubs operate under the tenanted/leased model which equates to 51.8638573743922% of the market, we believe that it would be ill-conceived to think that the brewers do not over rent or overcharge for their products, we believe that this produces a dominant market share.

—  (v)  It is not beyond the wit of man to realise that in business, any business, costs have to be passed on to the end consumer, to suggest that manipulation of the rental system in conjunction with artificially inflated prices in a dominant market place will not significantly impact adversely on the consumers is questionable to say the least. It is incumbent upon this government to resolve this underlying cause, until this is addressed sufficiently the suffering and misery witnessed will continue and grow exponentially.

—  (vi)  We understand that under European law the tie is legal, however the principles that the government bore in mind in determining the most appropriate course of action was "That the OFT has found no evidence of competition problems that are having a significant adverse impact on consumers" and not the legality of the tie. We believe that there are competition problems between business which will undoubtedly have a significant adverse impact on the consumer and that is incumbent upon this government to resolve this underlying cause. We believe that it is totally unacceptable that this government rely on a principle which is open to question.

—  (vii)  We fully support a quick and effective resolution, people's lives and livelihoods and the wonderful icon that is the Great British pub are at stake here. That said the resolution must be effective and we are not convinced that the proposals put forward will be effective. This government are relying on an Industry Framework Code, written by the very people who have been found to be wanting (3), to prevent the ills that are so apparent (4,5 & 6), we would welcome much further transparency on the following:

—  Why does the government think that the majority of stakeholders in this industry(7) refused to endorse the Industry Framework Code?

—  Do they not find it questionable that the only bodies to sign up are the bodies that have been highlighted throughout the 4 reports (8)?

—  Would this government allow criminals to write the penal reform code and implement said code? What's the difference?

—  We would like full transparency of all and every "industry" meeting, telephone call and correspondence which the government has based its decision upon.

We appreciate that we require much further transparency from the government before reaching a final conclusion.

Conclusion to date

If conclusions have been drawn on principles that are questionable and on an imbalance of input then those conclusions are open to question and have no right to influence such an important issue.


—  (i)  We are bitterly disappointed that government have failed to take into account business closures when using closure statistics to form their conclusions. There are many business closures that do not reach the criteria for pub closures because the pub does not close because they have a management company or tenant sat by waiting to move in, however that business closes in exactly the same way as if the pub had closed. It is incumbent upon this and any government to do their utmost to get to the truth of the matter, until they address this underlying issue they will be at a disadvantage in securing the correct proposals that will protect the innocent and bring about the fairness and justice that many are striving for to protect the British Pub.

—  (ii)  We are unsure why the minister would appear to believe that this industry is calling for abolition of the tie in its entirety (9), that is not the case at all (10) and would welcome further transparency on how he reached this conclusion.

—  (iii)  We would welcome further transparency why a FOT option with an open market rent review would be so detrimental to the industry when the majority of stakeholders feel it is the way forward and the pubcos have stated quite categorically that the majority of their tenants are indeed happy with the tie and any dissent is due to a vocal minority (11). If it is the case, that the majority are indeed happy, then the pubcos have nothing to worry about as the majority will remain tied, if the pubcos have been somewhat economical with the truth on this issue then what other truths have they been economical with? Perhaps more importantly if there is a level of discontent that means that sufficient number of tenants choose to go FOT as to jeopardise the pubco business, then does this not show the level of discontent within the estates?

—  (iv)  We are pleased that the committees and the government have realised that "significant reforms are needed quickly", we believe whole heartedly that the committees have identified the areas for significant reform but are bitterly disappointed that this government have failed to heed their own Select Committees.


We believe that the government proposals will fail to significantly address the right balance of risk and reward in the relationship between tenant/lessee and landlord. We have to ask the obvious questions, what is the point of years and mounting costs of endless investigations if the government choose to cherry pick rather than what is right, fair and just? How can the government ever expect to be trusted if they renege on their own promises so easily?


We would welcome full disclosure on exactly how this government reached the conclusion that Brulines equipment is not in use for trade. We are aware of QC opinion which believes that the equipment is in use for trade.


It is apparent that whilst the RICS improved guidelines are to be welcomed, they are open to manipulation. It is imperative that this government ensures that RICS re-word the improved guidelines to prevent manipulation and abuse.


We are pleased that the committees and the government have realised that "significant reforms are needed quickly", we believe whole heartedly that the committees have identified the areas for significant reform but are bitterly disappointed that this government have failed to heed their own Select Committees.

—  An Industry Framework Code is of no use whatsoever if it fails to address the underlying causes which have brought about years of suffering and misery and years of government investigation and suggestion of resolution.

—  PICAS is of no use if it can be manipulated by those with a conflict of interest.

—  A three year re-accreditation of codes is of some use if and only if the codes address the underlying causes and any loopholes that may become apparent are closed to prevent further abuse.

—  PAS must provide full disclosure on all aspects of this industry, warts and all, failure to do this will not prevent the atrocities that we have witnessed.

—  A strengthened Framework Code can only be welcomed if it has the full support of the majority of stakeholders, licensees included!


Whether the government proposals will address the significant reform that all have identified is required will depend entirely on whether this government will ensure that underlying causes are addressed with all due haste. To date the government have failed to address the underlying causes, they are treating the symptoms and not the disease.

1 December 2011

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Prepared 11 January 2012