Business Secretary Vince Cable today set out proposals in a consultation for the code of conduct, which contains mandatory rules for all pub companies with more than 500 pubs, in a bid to improve the relationship between them and their tenants.
Cable said the code, which will be backed by a 'powerful' adjudicator, could save tenants £100m a year and would stop pub companies abusing the beer tie.
"Pubs are small businesses under a great deal of pressure, many of which have had to close. Much of that pressure has come from the powerful pub companies and our plans are designed to re-balance this relationship," he said.
"Pubs play a valuable role at the heart of our communities and we urgently need a change to help them survive and become profitable. These plans will do just that and could save pub tenants £100 million per year by making sure that pub companies charge their tenants fair rents and beer prices."
Under the proposals, tied pubs would be able to:
- Sell independently picked guest beers pubs
- Be fairly and lawfully treated by pub companies
- Be no worse off than free-of tie pubs
- Be charged fair rents and beer prices, with the possibility of open market rent reviews
The move, suggested because Cable said self regulation 'wasn't working' would also mean that publicans who feel they have been unfairly treated by their landlords will be able to complain to the adjudicator who would have power to enforce the code, investigate breaches and deal with disputes.
Robert Downes, spokesman for the Forum of Private Business, said the code was the first 'step towards fairness' for the sector.
He said: “Reform to the pub sector is long overdue and we are delighted to see a consultation published today for an adjudicator in the sector. This development should help restore the balance of power.
"Many publicans are trying to run businesses with both hands tied behind their backs due to the models they are forced to follow, so it’s really pleasing to see at the heart of the consultation that a tied licensee will not be worse off than the free of tie licensee. This is key to ensuring publicans have more autonomy to make their businesses a success."
Kate Nicholls, strategic affairs director at the Association of Licensed Multiple Retailers said the consultation was welcomed. “What the sector as a whole needs more than anything is certainty and stability going forward if we are to secure long term investment and sustainability. It is vital that this issue is grasped and dealt with as quickly as possible to deliver a once and for all solution to something which has bedevilled the industry for too long," she said.
Brigid Simmonds, chief executive of the British Beer & Pub Association, said: “It is vital for our members that the tied house model works well for both partners, so we are fully prepared for the model to be tested. It is one of the best small business partnerships, for shared investment, shared business development, and job creation, which makes it good for the pub sector and Britain’s pub-goers."
Of the 50,000 or so pubs operating in the UK, 48 per cent are tied. If the proposed threshold for the code remains the same, the code would apply to Enterprise Inns; Punch Taverns, Greene King, Admiral, Star, Marston’s, Wellington, Trust Inns and Spirit.
The consultation will run until 14 June and can be seen here.