Small Business, Enterprise and Employment Bill

Written evidence submitted by Independent Family Brewers of Britain (IFBB) (SB 11)

Small Business, Enterprise and Employment Bill

I am writing to all MPs who are members of the Committee in my capacity as chair of the Independent Family Brewers of Britain (IFBB) which consists of 29 long established brewing and pub operating companies located throughout the UK who collectively own 2,971 tenanted and leased pubs which are each supplied with beers from their respective brewery.

We are writing to highlight our concerns surrounding the legislation currently going through Parliament as part of the Small Business, Enterprise and Employment Bill. We believed and were assured by many involved in the consultation process that as family brewers who run traditional tied pubs well, we would not be subject to any legislation as self-regulation was working effectively within our estates.

We have operated the tied tenancy model for decades – and in many cases hundreds of years. We are all fully engaged in the self-regulatory system, have developed our own company codes, and abide by the spirit and practice of self-regulation. In that respect, we agree with the Government that individual tenants require protection and advice. However we are firmly of the view that this can be achieved without bringing companies with less than 500 pubs into the scope of the Code and legislation. This Government has been committed to reducing the burden of red tape, but the diseconomies of scale that these proposals will bring will have the reverse effect and will be particularly damaging to the family brewers – who are not the focus of the complainants – and will force pub closures and reduced investment in the sector. It will also encourage companies to transfer a number of pubs from tenancy to management which is also not the aim of the legislation and will in effect reduce the opportunities for entrepreneurs to enter the pub business.

Vince Cable, speaking in Parliament on this subject recently [1] , stated that "we have no wish to create problems for the small, family-owned pubs, which are an extremely important part of the industry… (they) are already subject to the voluntary code."

Under the current system complaints are low and in 2013/14 amongst IFBB pubs there were:

1. Only two applications to PIRRS (Pub Independent Rent Review Scheme).

2. No applications to PICA-Service (Pub Independent Conciliation and Arbitration Service), which deals with behavioural issues, made by IFBB tenants.

3. Only 5 formal complaints being made about Business Development Managers, all of which were settled by internal grievance procedures without the need for outside intervention.

By seeking exemption from the Statutory Code, IFBB are not proposing to exempt ourselves from any sort of regulation regarding this issue. On the contrary, 100% of IFBB members surveyed (who represent 93.2% of the 2,971 IFBB tied tenanted and leased pubs), have confirmed a commitment to provide the funding and support for the self-regulatory system once statutory legislation comes into force - with the understanding that the level of funding may have to increase if circumstances require, provided that they are not subject to the Statutory Code. We are also committed to reviewing the Framework Code to address concerns where they exist, provided we are able to operate our businesses without the costs and red tape imposed by the proposed Statutory Code which would undoubtedly create problems for the smaller operators, against Dr. Cable’s stated intentions above.

We would confirm that if we continue to operate within the self-regulatory system the Pub Governing Body would be alerted to any dramatic increase in complaints and could recommend remedial action if required. The Government has already committed to a review within two years and any issues with smaller companies could be addressed at this stage.

In summary, we hope you will amend the legislation to exempt those companies operating less than 500 tied pubs. We will be submitting amendments to the Bill committee on this basis, and we hope you will support us in achieving the balance between protecting tenants and enabling small pub operators to operate without significant increased costs and red tape.

September 2014