Small Business, Enterprise and Employment Bill

Written evidence submitted by Robert Feal-Martinez (SB 02)

Pubs Statutory Code of Practice

Bio: My name is Robert Feal-Martinez, I recently retired as a front line licensee after over 27 years. During that time I have been a Manager, Tenant, Lessee and Consultant.

In addition to this I am a former BII Regional Secretary, during which time I undertook consultations with Local Authorities on the Licensing Act, Smoking Ban and other industry specific issues. I am a qualified Trainer and Assessor

I was founding Chairman of Freedom to Choose, a pro-choice group against the imposition of the smoking ban. I am totally against non-evidenced or false evidence based Legislation.

I have spent many years 'fighting' the pubco's and have assisted other lessee's and licensees both as a BII Secretary and on my own account. I am well known by the pubco's for my outspoken comments about their activities and am fully aware that they need to change.

Having said that you may well be surprised as to my views expressed in this document:

Part 4:

1. a) The Government has decided there is a need for such an Adjudicator but it is unclear whether this will be in parallel with PIRRS, PICAS and the PGB. I believe that from a slow start the aforementioned bodies are starting to have an effect on the attitude of the pub companies. It is unfortunate that a lot of misinformation has been presented to BIS, and has been believed, when a little investigation reveals in most cases a totally different story. That is not to say there are genuine cases. However the ones hitting the media are not all they seem.

b) There have been personal attacks of a quite relentless nature against those expressing alternatives views to that of certain MP's and anti pubco campaigners. Many of us believe such attacks led to the untimely death of Bernard Brindley, the then Chair of the PGB.

c) The Adjudicator in my view should be a place of very last resort in so far as a specific complaint against a pubco is concerned, complainants should not be allowed to 'drip feed' the Adjudicator. Any complaint should have properly passed through the PGB before being subject to further Adjudication. Any appeal against the Adjudicator should be about process, not the complaint itself.

d) I would suggest a realistic time limit be placed on the conflict resolution process prior to going to the PGB, with independent mediation as part of the process, something that can resolve disputes (I have undertaken a number of such cases that had been deadlocked involving the big Pubco's, acting primarily for the tenant, but from an objective view point).

2. a) It has always been my view that rather than the very 'messy' current system of Lease Agreements and Codes of practice where a breach of the Codes is not by law a breach of the Lease is neither practical or sensible, the Code should be incorporated as part of the lease and thus will provide Civil remedy. Of course the Code would necessarily apply to both parties unlike now where it only applies to the Pubco's conduct. Evidence of failed Civil litigation should be a factor considered before referral to the Adjudicator, especially if the PGB etal concur with the litigation outcome, as we saw in one such case referred to the BIS committee

b) One major complaint from the anti pubco campaigners I agree with to a degree is the lack of openness in the current PGB process in so far as the detail of decision process. It has to be said that the rules of the process are clear, but perhaps they need to be changed to allow the Committee full disclosure on public media criticism by either party.

c) What we have seen to date is lessee's going to the press with 'their side of the story (usually relaid to MP's)' in the full knowledge the Pubco won't comment on individual cases and the PGB can't.

3. a) Campaigners have called for what has been known as the Primary Principle (PP),parity between non and tied pubs together with a Market Rent Option (MRO). Frankly neither of these options would be fair or equitable with the current crop of lessee's and leases.

b) In my view the reasons should be quite clear. Lessee A takes on a free of tie lease at a higher rent to reflect the lack of tie. Lessee B on the other hand takes on a tied lease with a lower rent, in the full knowledge they will pay more for their beer. It has become common to describe this as Wet and Dry rent which adds further distortion and confusion. The wet rent is not rent at all it is cost of sales, the lessee should adapt his sale price to account for the greater purchase price to achieve the appropriate gross profit margin to allow the business to be profitable.

c) To simply say as the PP does, that tied lessee's should be no worse of than free of tie lessee's ignores the myriad of factors affecting profitability, and the unfairness of changing the tied lessee's terms because they don't like the deal they signed, bluntly would they be asking for such a change if they were out performing all the other free of tie pubs in the area. Indeed on the PP basis free of tied pubs could request an arbitration because another free of tie pub was making more money.

d) The MRO is also an impossible thing to deliver as a collective formula on rents, I have asked those who advocate this, some experienced surveyors and accountants how this could be achieved in the large number clearly that would be required and they cannot tell me and suspect they couldn't tell BIS either. There is simply no like for like with pubs, except of course perhaps concept estates which are usually managed anyway, but even they would likely have different cost bases across the country.

4 a) I also believe it would be counterproductive and a disaster for the smaller brewers who operate merely tied tenancies to be included in the Statutory Code. Their margins and profitability are volatile and any increase in base overhead would likely close pubs or worse still close breweries, like wise expecting the brewers to offer a guest provision which would likely be the breweries bestselling lager, such as Carling or Fosters. I know from personal experience when a Unique tenant I opted for my best selling cask beer as my guest ale, coming on the same dray but directly invoiced by Courage. Unique did not like that at all.

b) It also has to be said that in all my 27 years in the Industry I have heard just a handful of complaints either from brewers or tenants about misconduct either way. Where there have been the odd genuine issue it has been resolved without a lengthy and expensive process.

c) In short there is no justification for including genuine small brewers in this process.

In conclusion, as I have intimated I do not see a valid reason for the introduction of the Adjudicator at this time. It would be my contention that the legislation should be put in place with a delayed date to be decided by the Secretary of State if after a real trial of the PGB process is shown to be really failing subject of course to my observations in 2b being implemented.

Finally the Government has got to search it's conscience as to whether it is their role to interfere with the free market at the behest of one side of a so called 'Business Partnership', when the OFT and the EC have consistently decided the market is not being foreclosed to the detriment of the consumer at large, and as one of those consumers I have to say choice is certainly not a problem, even in Scotland where I now live.

What would happen next, McDonald's franchise holders wanting sell Burger King products.

Thank you for taking the time to read this. I have always wanted fairness in my industry, but granting what some campaigners want, I believe would be a disaster leading to more job loses and pub closures. That mustn't be the outcome, we have lost over ten thousand in seven years. I am happy to further respond should you have any specific questions.

July 2014