Fair Deal campaigners press Government on ‘market-rent-only’ option

By Luke Nicholls

- Last updated on GMT

Related tags: Renting

The campaign group wants to stop the ‘exploitation’ of licensees by the large pub companies
The campaign group wants to stop the ‘exploitation’ of licensees by the large pub companies
Fair Deal for Your Local - the campaign group that demands a halt to the exploitation of licensees by large pubcos - has written a letter to Business Secretary Vince Cable insisting a ‘market-rent-only’ (MRO) option for pub tenants is a simple, moderate and gradual way of splitting profits.

In the letter, GMB (the union for tied tenants) and the nine other Fair Deal members including Camra claim that the MRO option should be included in the proposed statutory code, also quashing claims from the larger pub companies that it would cause additional red tape and increased costs.

Under the MRO option, a tied licensee can choose whether to remain in the same tied agreement and pay extra for tied products and a lower rent to compensate them, or swap onto agreement under which they simply pay market rent and acquire products from any source if they consider the tied rent is not fairly reflecting the tied product prices.

The Department for Business, Innovation and Skills has already promised that Parliament will legislate the MRO option, with tenants able to buy products on the open market and pay a fair rent for the building - the aim is to lower sky-high rent charged by the pubcos.

The letter confirms that this is not only the clear solution but also a gradual one that, as well as leading to a fairer split of pub profits, would also allow the pubcos time to adjust their model as it would come into practise over a number of years.

Social justice

Steve Kemp from the GMB National Office explained that union members are now ‘relying on the right decision to be made by Government’.

“It is time for true social justice for British publicans and the pub industry as a whole,” he said.

Other pub organisations agree, with Simon Clarke from Fair Pint adding: “The ‘market-rent-only’ option is the simplest solution - it is phased, it is self-policing, and the cost would be apportioned to the parties as already provided for in the existing leases, saving the industry money.”

Clive Davenport, the chairman of FSB Enterprise and Innovation, added: “Our research shows that nearly 90 per cent of publicans want a market-rent-only option - in other words being able to buy product free-of-tie with an independently assessed fair rent.”

The Government’s verdict should be available soon following the widespread consultation on the draft statutory code over the summer.

Download the letter from the Fair Deal for Your Local Campaign here

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1 comment

The Beer Pricing "RIP OFF"

Posted by Andrew Russell,

As someone with the great misfortune to have entered in to an Enterprise lease with beer tie 15 years ago (I bet there aren't many still in business that signed up 15 years ago) I would welcome a market-rent-only option. What is often missed in all these debates is how the Pub companies ratchet up their beer pricing throughout the term of a lease, as well as the rent, whilst at the same time removing or vastly reducing any price discounting they receive from the brewers. At the time I entered in to my lease the premium I paid for beer through my beer tie over and above the average wholesale price was around 15%. I am now forced to pay more than 60% above the average wholesale price, this is after the so called discount! passed on to me from Enterprise Inns! When you add this to the fact that when you change your product range to respond to consumer demand their is often no discount at all passed on to the lessee from these new products. The result of this formula is simple = more profit for Pub Companies, higher prices in Pubs = fewer people can afford to drink in Pubs = more Pub closures = less profit for Pub companies = higher rents and higher Beer prices and less discount passed to licensee and the merry go round starts again!
A market rent only option will prevent further escalation of this beer pricing "rip off".

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