Pub companies: Follow-to the Government Response

Written evidence submitted by the Federation of Licensed Victuallers Association

The following is the Federation of Licensed Victuallers Associations comments on the Government Response as requested in your announcement 91. It should be read in conjunction with our original submission to the Committee regarding PubCo’s

Executive Summary

The FLVA broadly supports the Governments response especially with regard to the decision to move forward via a legally binding Industry Framework Code of Practice (IFC) in place of legislation but makes the point that this document needs to move away from the de-minimus basis of previous codes and needs to be far more substantive, precise and provide benefit now and in the future to all sectors of trade. This is essential if the codes are to be used as the basis for financial recompense via the PICAS model.

Within our previous submission to the Committee (copy attached for ease of reference) we support a re-balanced beer tie so welcome the response in that respect.

Observations on the Governments response.

1. Ref point 13 in Governments response re benchmarking.

The provision of the BBPA benchmarking cost data is welcomed however whilst it is noted within the body of that document that there are omissions (entertainment and provision of media sports viewing) it doesn’t give any guidance as to the level of expense which these elements may comprise, which is a very significant sum, and as such these statistics require an element of professional interpretation without which the stats could be accused of being misleading.

2. Ref point 14 in Governments response regarding progress.

We concur that progress must be rapid especially in areas of legality and dispute resolution but we feel that the opportunity to get the whole mechanism correct should allow sufficient time for all parties to explore resolutions in order that the resultant IFC is precisely that, an industry framework not just representative of part of that industry.

3. Ref Governments response regarding "the beer tie"

We support the government’s response with regard to the beer and refer back to our original submission with regard to the tie, points 23 – 27 and especially point 28 which calls for a more balanced and equitable split of the profitability brought about through the existence of the tied model.

4. Ref Governments response to Brulines

This is an area which requires much work in the strengthened IFC to protect the right of the landlord to have lease terms agreed to whilst providing safeguards for the tenant in respect of misinterpretation/error.

5. Ref Governments response to Self regulation.

We are in agreement with the key elements as detailed in point 41 i) – v) and are working closely with industry colleagues to implement these but we are concerned in respect of the phrase "collateral contract" we believe that this should be brought about via binding collateral deeds in existing leases ensuring continued adherence by the PubCo and any successors in title in the event of a sale.

6. Ref Governments response to PUBS Advisory Service.

Point 61 is agreed with, however much more input is required in respect of the provision of this advice as it needs to be far more embracing and needs to form part of the ongoing discussions of all industry partners not purely a "telephone directory" of third parties.

We see the FLVA as central to this process and facility as a tenant’s representative body as opposed to the BII industry role of Tenants educational body

7. Timescales for improvement

The 14 specific areas of immediate improvements are, subject to final detail, agreed with. However we would wish to see a more firm commitment beyond "discussing" areas of further improvements complete with timescales regarding implementation. This is an area where we have already given a commitment to work with industry colleagues to enable these reforms to be implemented.

In summary we acknowledge that much of the Government proposals satisfy the demands of our original submission to the BISC enquiry, but we are concerned that the finished article of the IFC, PICAS, or PAS will be open to manipulation by the PubCos. There must be significant input into this process by tenant/lessee bodies otherwise the result will be a PubCo/BBPA led vehicle which will ultimately solve nothing.

1 December 2011