Written evidence submitted by LSO Ltd |
Thank you for informing me that we have the opportunity
to respond to the Government Response.
I am extremely disappointed. As the report pointed
out this is the last in a series of Select Committee reports in
which time after time the AWP tie has been recognised as of no
benefit to the leaseholders and recommended to be removed. Each
time the Landlords ignore the recommendation.
This time the report recommended to government to
legislate the scrapping of the AWP tie. There is no reference
to this in the Government response. The only reference to AWP
is in regard to calculating rent reviews. If there was no tie
then machine income would have no relevance to rent reviews as
it would be private information retained by the leaseholder. But
there is no mention of removal of the AWP tie.
I have already submitted evidence to the select committee
before its recent deliberations. However since the publication
of the recent sessions and in light of the recommendation to remove
the AWP tie I contacted both Punch and Enterprise. At the select
committee it became clear that several of the Landlords do offer
some Free of AWP tie leases. I asked for details of their existing
free of AWP tie pubs in the M25 area so that I might be able to
tender individually to supply. I wanted to offer leaseholders
true free market options. I was refused any information or indication
as to the location of these houses under the auspices of "consumer
confidentiality". How is this a positive response to offering
leaseholders true free choice? It serves to illustrate the obstacles
that the Landlords put up in this process - that was highlighted
again in the committee report.
I was also advised by Punch that they had recently
reviewed their supplier list and I was not on the approved list.
This was revealing, as in February I had approached Punch to be
considered for nomination. I was told at that time that they had
sufficient suppliers but if a review in the future was made they
would keep my details on file. Clearly a review has taken placebut
without my knowledge or consideration. This does nothing but reinforce
the notion that the tied AWP system is a closed shopallowing
a mechanism to source extra revenue from leaseholders via an exclusive
arrangement that benefits only nominated suppliers and the Landlords.
To be on the nominated list you have to pay a premium per site
to the Landlord. Once nominated you have to use a Landlord recommended
rent list to offer leaseholders. This allows an extra sum to be
levied by machine suppliers to "cover" the premium paid
to the Landlord. So the nominated supplier doesn't lose out but
the Landlord gains extra revenue at the expense of leaseholder/tenant
as the increased rent supplement collected by the operator funds
the premium paid to be on the nominated list. Then of course there
is the Landlords share of machine income. In the Free trade where
publicans have freedom to choose supplier there is no share and
rents are a product of a competitive market placenot a
fixed scam. Free trade rents are generally 20% lower than the
list system offered by nominated companies. It is also worth remembering
that to be able to supply AWP in the UK an organisation has to
undergo a rigorous process of application with the Gambling Commission.
So any argument that allowing "other" suppliers to supply
lowers standards should be taken in that context.
For me personally the scrapping of the tie would
open up the market place for me to supply. However I am but a
small player so in the greater scheme of things I would have little
influence. However the principle of improving freedom of supply
for consumers is very important. By removing the tiethe
leaseholder would have a wider choice of supplier and be considerably
better off financially. The machine supply business is very competitive
and this competition drives performance and machine profitability
for both supplier and customer. This would impact positively on
the business overall and result in making the viability of the
pub more securewhich is good for the general community.
So this is an important issue for the general consumer.
I would urge the Government to revisit the report
from the select committee and add in the legislature to force
freedom of tie on AWP.
30 November 2011