UK plans pubco crackdown

9th January, 2013 by Gabriel Stone

UK business secretary Vince Cable has received a mixed response to new proposals designed to protect landlords from “unfair practices” by pub companies.

UK business secretary Vince Cable

UK business secretary Vince Cable

Announcing plans to establish an independent adjudicator, Cable also outlined his intention to draw up a statutory code, saying that attempts last year to encourage self-regulation had fallen short of the necessary measures.

The new code will cover issues including rent and the price publicans pay for beer, as well as having the authority to deal with disputes between pubcos and their landlords and impose fines. It is expected to apply only to pubcos which own more than 500 tied leases.

In particular, the code aims to prevent abuses of the beer tie, which forces landlords to stock certain brands. The move is designed to support the principle that there should be a level playing field across the UK’s tied and free pubs.

Stressing the “real hardship” facing many UK pubs, Cable remarked: “Some of this is due to pubcos exploiting and squeezing their publicans by unfair practices and a focus on short-term profits. Four Select Committee reviews since 2004 have highlighted these problems.

Announcing the plan ahead of a debate taking place in Parliament today on the issue, Cable argued: “It is clear that the self-regulatory approach was not enough.”

Instead, he insisted: “A change in the law is now needed to shift behaviour,” adding: “I hope these measures mean publicans are given a fairer chance at running their pub, which in turn will help them grow their businesses instead of losing them.”

There was a mixed response to this announcement from the pub sector, with the British Beer and Pub Association describing itself as “disappointed” by the decision to abandon self-regulation.

Jonathan Neame, chairman of the BBPA, commented: “It is disappointing that self-regulation has not been given a proper chance to work, after all the hard work from the BBPA, ALMR, FLVA, BII, and other industry colleagues on Version Six of the Code of Practice.

“However, today’s announcement does at least provide some clarity and certainty over the direction of policy. In the consultation, we will be urging the Government to ensure that any statutory process is light-touch and cost-effective, to protect consumers from bearing the brunt of unreasonable additional costs.

Meanwhile, the news was welcomed by the Campaign for Real Ale (CAMRA) whose chief executive, Mike Benner responded: “Over 3,500 tied public houses have been lost since the start of 2009. Many of these will have been lost as a result of excessive rents and by being forced to buy beer at up to 50% above market rates.”

As a result, Benner continued, “CAMRA fully endorses the Government’s wish to ensure that tied publicans are no worse off than free of tie publicans.” He also cited a 2011 report by the Institute for Public Policy Research which suggested that 46% of tied publicans earn less than £15,000 per year in contrast to 22% of free of tie publicans.

A formal consultation on these proposed measures is due to launch this Spring.

 

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