Fair Pint welcomes follow-up pubco inquiry

June 25, 2008: The Parliamentary Business and Enterprise Committee has announced a follow up inquiry into pub companies following pressure from the Fair Pint campaign.

In 2004 the Trade and Industry Committee published a report on pubcos in which, most notably, it concluded that:

l No one pubco holds a dominant position within the market;
l Small brewers may be disadvantaged by the requirements set by pubcos;
l The cost of beer ties are usually balanced by the benefits available to tenants;
l Splitting the wholesaling and property functions of the pubcos, by removing the beer tie, could lead to the national brewers having a virtual monopoly on the wholesaling of beer, as before the Beer Orders.

It recommended that:

l The British Beer and Pub Association code of practice should be urgently updated to cover: rent reviews; the role of business development managers; complaints and dispute procedures; disclosure and the availability of information; and the taking of legal and professional advice by prospective tenants.

In response to the report, the British Beer and Pub Association revised its Codes of Practice Framework on the Granting and Operation of Tied Tenancies and Leases, which forms the basis for individual companies' own codes of practice.

The Business and Enterprise Committee, in re-visiting this subject, is interested in whether the conclusions of its predecessor still stand and how its recommendations have been applied. The key questions are:

l Has the Licensing Act 2003 had an effect on competition within the market?
l To what extent have revisions to the framework codes of practice met the committee's concerns?
l To what extent are the codes applied by the pubcos?
l Is there a need for further regulation of the industry?

Chairman of the Committee, Peter Luff MP, said: "In December 2004 the Trade and Industry Committee concluded that "if the industry does not show signs of accepting and complying with an adequate voluntary code then the Government should not hesitate to impose a statutory code on it.

" We are aware that some progress has been made. This brief inquiry is intended to find out whether the developments have been adequate."

The Fair Pint Campaign, set up earlier this year, was established to highlight the plight of the thousands of tied pub tenants who are struggling due to the behaviour of their landlords. A growing number are going bankrupt, having sunk their life savings into an unviable business model.

Fair Pint relishes the opportunity to puts its case to the parliamentary committee. Brian Jacobs, a member of the steering group of the campaign, said: "The recommendations of the 2004 committee were welcomed across the industry, as they were aimed at breathing transparency into the profit and rent equation, and ensure that the tied tenant is not worse off than if they were free of tie

"However, the major pubcos and the British Beer and Pub Association (BBPA) have only paid lip service to these recommendations.

“Whilst we would welcome any solution that puts tied tenants on a level footing with their free of tie counterparts, we believe that the only viable option for the committee is to recommend that the Government bring forward legislation to remove the tie from all leased pubs, with the exception of those that are tied to brewers who own up to 500 pubs.

“Since 2004, pubcos have shown that they cannot be relied on to voluntarily undertake the committee’s recommendations. Therefore a statutory solution must be sought.”

Flying in the face of the 2004 committee, Fair Pint says the pubcos have failed to be open with their tenants about the way in which their rents are calculated. Upward only rent reviews are still in place in many lease agreements, it says, creating huge difficulties for many tenants under current market conditions and exposing pubcos’ claims, that they work in partnership with their tenants, as risible.

Similarly, says Fair Pint, the pubcos have not removed the tie on fruit machines (AWPs), through which they receive a percentage of profit, as well as royalty payments from the suppliers.

A Fair Pint spokesman said: "The disdain with which the pubcos view their tenants was betrayed by Ted Tuppen, chief executive of Enterprise Inns, in a meeting with city analysts in May. During the meeting Mr Tuppen described the MPs that had signed an Early Day Motion supporting the aims of the Fair Pint campaign as 'moronic'".

The Business and Enterprise Committee invites written memoranda, on the above points and any other related matters on which those submitting evidence may wish to respond. These should be sent, as an MS Word document, of no more than six pages, by e-mail to becom@parliament.uk with a single hard copy sent to the clerk of the committee by September 29, 2008.

The committee membership is as follows: Chairman Peter Luff MP (Conservative, Mid Worcestershire), Adrian Bailey (Labour, West Bromwich West), Roger Berry (Labour, Kingswood), Brian Binley (Conservative, Northampton South), Michael Clapham (Labour, Barnsley West and Pen), Lindsay Hoyle (Labour, Chorley), Mark Oaten (Liberal Democrat, Winchester and the Meon Valley), Julie Kirkbride (Conservative, Bromsgrove), Anne Moffat (Labour, East Lothian), Mike Weir (Scottish Nationalist, Angus), Anthony Wright (Labour, Great Yarmouth).