Northern Beer Blog - Pubpaper 765 – The Government / Pub Co Deal on PubCo Tied Leases

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This week saw the release of the Governments response to the consultation into “The Statutory Code governing the PubCo / Tenant relationship”. **There will be two levels of statutory code, the core code which will apply to all pub companies and the enhanced code which will apply to pub companies with more than 500 tied pubs. *This second group includes Enterprise Inns, Punch Taverns, Greene King and Admiral Taverns among others.
The final revision of the code has dropped the option to force the large pub companies who qualified for the enhanced code to offer a free of tie option to tenants which many in the pub industry were pushing for. *Instead they will have to offer a parallel tied and free of tie rent review if requested. *However this can only be requested if negotiations have been ongoing for 3 weeks between the PubCo and the tenant with no agreement. *There is no guarantee of a rent adjustment if the pub company can show that “the tenant will be no worse off under the tied system than if they were free of tie”.
There is requirement that these tied + free of tie reviews are done in accordance with guidelines issued by the Royal Institute of Chartered Surveyors and is based on relevant market information. *The tenant also has to pay £200 if the want to request such an assessment from the adjudicator. *An independent adjudicator is being set up which will cost about £1.8m per year to commission these reviews and also to solve unresolved disputes following rent reviews. All tied pubs will have the right to a full and open rent review every five year under the core code.
If a tenant wishes to raise a dispute then an additional fee of £200 is chargeable, refunded if the complaint is upheld. *The government has warned that this new body will have “finite resources” and “will have to prioritise cases to fit the budget”. **The government also dropped the requirement that tied publicans were allowed to buy in a guest beer citing that “most tenants would just buy their most popular beer outside of the tie”. *They estimate that about 52 pubs will close due to these changes.
Let look at this from the eyes of somebody outside of the Westminster bubble. **Not surprisingly the main pub companies and their trade body the BBPA (British Beer and Pub Association) are disappointed that any legislation has been introduced, preferring self regulation, but say they will comply with the new code. *They all seem relieved that the compulsory guest beer and free of tie option has been dropped, but moan about the cost to them of the independent adjudicator paid for via levies. **CAMRA and bodies representing the tenants are disappointed that it did not go far enough, but seem relieved that there is a code being introduced.
From my point of view, the government has not had the balls to go through with the measures it seemed to promise at the start of the year. ***Greg Mulholland, one of the main campaigners at the Houses of Parliament regarding beer and pub issues, requested details regarding meetings between pub company officials and civil servants / ministers of state, as well as disclosure of documents and emails which flowed between government departments and pub company trade bodies. *All these requests were refused by the departments approached under the Freedom of Information Act.
If there is nothing to hide, then this information would have been released. *But these refusal actions and the soft options introduced into the core and enhanced code regulating the pub companies are surely linked. *They could not get away with introducing no code at all, it would have not have been tolerated by the trade. *The independent adjudicator is a body that can be controlled indirectly by government budget regarding how many cases it handles. *If PubCo’s campaign hard enough to reduce the levy paid by them, less cased can be heard against them.
The onus is on the tenant to pay for reviews and complaints, but if you are struggling to make a living under a tied tenancy then finding a possible two lots of £200 could be hard when balancing the budget of a quiet pub with high rent and beer costs. **The publican is still being screwed by the pub company, but at least they are using protection while screwing them now. **It just shows big business gets what it wants from those in power, money brings influence, influence gets you to meet the right people. *The little guy doesn’t even get in the front door.



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