Pub Industry Report: Hugely Disappointing

Tumble Down Dick, Farnborough - Closed since February 2008The Forum of Private Business is responding to today’s report into unfair practices committed by large pub companies against their tenants by calling the Government’s proposals ‘hugely disappointing’.

On Tuesday, 22 November The Forum took part in a House of Commons rally arranged by the parliamentary ‘Save the Pub’ group in which ministers were urged to heed recommendations made by the Business, Innovation and Skills (BIS) Committee and implement real pub industry reforms.

The Committee had earlier found that pub industry self-regulation has failed and recommended the Government introduce a statutory code of practice, including a condition that new license holders should be offered a free-of-tie lease with an open market rent review. Further, it called for an adjudicator to oversee this code.

In addition to pushing for a genuine alternative to tied contracts, which force landlords to buy tied products at hugely inflated prices and pay steep rents, business groups, MPs and pub representatives including CAMRA and the pressure group Fair Pint have also called for a guest beer option where tied arrangements exist.

However, despite ministers earlier agreeing to a March 2010 plan to legislate and rebalance the pub industry, today’s report fails to tackle the beer tie issue.

It argues that there is ‘little evidence to indicate that tied pubs are more likely to close’ – despite research from CAMRA showing that, while 3,216 tied pubs have closed since December 2008, 425 new free-of-tie pubs have actually opened.

Instead, the Government has decided to focus yet again on more pub industry self regulation, despite the previous failure of pub companies to set their houses in order, including strengthening the existing self-policed framework code – which it said will be made ‘legally binding’ – and introducing a pub company funded conciliation service rather than an adjudicator.

It has also unveiled a three-yearly reaccreditation process for individual company codes of practice that exist, a requirement for pub companies to follow new rental guidelines and to publish national wholesale price guidelines and an advisory body for lessees.

Criticisms have come from individuals and groups, many of which have campaigned for meaningful pub industry reforms since 2004. Pub companies have been given every opportunity to implement the necessary changes but have consistently failed to do so.

For example, CAMRA has questioned why there has not been a full public consultation to consider the measures contained in the report, which have been agreed by the Government and the British Beer and Pub Association (BBPA) – which represents pub companies. Greg Mulholland, Chairman of the Save the Pub group said tenants will view the report as another “pubco stitch-up.”

“This report is hugely disappointing. The pubco business model does not work and relies on squeezing small landlords until they have nothing left,”

said Phil McCabe, the Forum’s Senior Policy Adviser who attended Tuesday’s Save the Pub group rally.

“This is clearly a case of indulging market failure at the expense of thousands of small businesses – significantly more tied pubs are closing compared to free-of-tie pubs, amny of which are actually opening their doors.”

“Given the industry’s disastrous history of self-policing, it is utter madness to again trust that pubcos will manage themselves properly.”

He added:

“At least the Government recognises that unfair practices are being imposed by large pubcos on their tenants, and a few of the measures could be useful, but nothing less than an independent, statutory code of conduct based on an open market review and a real, free-of-tie option will be enough to save the British pub.”

The second reading of a related private members bill, the Tied Public Houses (Code of Practice) Bill will take place on Friday (tomorrow).

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