The reforms, hammered out by the British Beer and Pub Association (BBPA) and government officials, mark a controversial continuation of self-regulation for the pub industry, which has been accused of allowing pubcos to exploit their tied-tenants.
According to the BBPA, today’s legally binding deal to reform the Pub Industry Framework Code of Practice, and the industry’s resolution procedures, will overhaul how pub companies deal with their tenants in the event of a dispute.
The measures are a response a highly critical report on pubcos from MPs on the Business Innovation and Skills Select Committee was released in September. The practice of tied-tenancy, where tenants are forced to buy products from the pub company at ‘inflated prices’, according to the Campaign for Real Ale (CAMRA), came in for particularly strong criticism.
Threat of statutory regulation
The report, which also blasted the BBPA for failing to reform its code of practice, had threatened the pub industry with statutory regulation.
However the BBPA has sidestepped government threats to appoint a statutory adjudicator, and has instead negotiated a deal to implement stricter, legally-binding regulation on its members.
BBPA chief executive Brigid Simmonds said: “Small businesses are under immense pressure. There will always be a place for tied pubs as a low cost means of entry for self-employed pub entrepreneurs and we recognise that would-be and existing licensees need support and a clear understanding of what it takes to run a pub.”
But the Forum of Private Business slammed the new proposals. “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.
CAMRA, meanwhile, said the deal between the government and BBPA was ‘too weak to save Britain’s pubs’.
Mike Benner, CAMRA’s chief executive, said: “The government has been cavalier in rejecting the recommendations of the Business Select Committee and instead putting its faith in the ability of the very companies accused of malpractice to finally put their house in order. The lack of any formal public consultation on this package of measures is truly remarkable and suggests a failure of government to listen to all interested parties including the consumer."
Key to the reforms is the provision of a new arbitration service, the Pub Independent Conciliation and Arbitration Service (PICAS), for disputes other than rent, to which all lessees and tenants can appeal. Funded by BBPA members, the new service will complement the existing low-cost PIRRS arbitration service which relates only to rents.
Other reforms include, the enhanced provision of independent expert business advice for tenants, and a more robust accreditation process for company codes of practice, which would require re-accreditation by the British Institute of Innkeepers.
The reforms also make the code of practice legally binding for the first time, with reference to it now included in all lease and tenancy agreements.