Statutory code for pubs: Demand for action grows

By Luke Nicholls

- Last updated on GMT

Related tags: Public house, Government

The new code of conduct could save publicans in tenanted pubs £100m a year
The new code of conduct could save publicans in tenanted pubs £100m a year
The debate over a Statutory Code of Conduct for pubs, which proponents argue would improve the pubco-tenant relationship, has taken another turn this week, with a number of individuals, companies and industry bodies speaking out about the issue.

First came the voice of the people. On Tuesday, our sister title M&C Report​ revealed that a total of 96.2 per cent of respondents to a survey on the statutory code agreed that the Government should regulate.

The survey, part of the Government consultation, found 6,729 people to be in favour of Government regulation, with 269 responses (3.8 per cent) against it.

The overwhelming majority (95.5 per cent) of people believed that a statutory code, which would contain mandatory rules for all pub companies with more than 500 pubs, is the appropriate way to tackle problems between pub companies and tenants.

Act now

On the same day, the Business, Innovation & Skills Committee (BISC) wrote to Business Secretary Vince Cable urging the Government not to delay​ in introducing a statutory code of conduct for the pubco/tenant relationship.

As reported by another of our sister titles, the Publican's Morning Advertiser, the letter from BISC chairman Adrian Bailey MP​ says the Government needs to ‘act, and act now’. Bailey asks for Cable’s response to the report by 8 January 2014.

Bailey said: “It is for the Government to assess the evidence and legislate accordingly. However, despite the fact that it has had six months to consider the views of the industry, it has done neither.

“If the Government continues to drag its feet there is a serious risk that there will be insufficient parliamentary time left to establish a statutory code.”

Pubco critic

Then, yesterday it was announced that Jenny Willott MP – an outspoken critic of pub companies – will replace fellow Lib Dem MP Jo Swinson as the junior business minister charged with overseeing the proposals for a statutory code.

In a statement issued earlier this year, when the Government released its statutory code consultation,​ Willott said: “I fully support the Government’s proposals to introduce a statutory code for pub companies and an independent adjudicator to enforce this code.

“Self-regulation has clearly not worked so far, with many pubs being exploited and squeezed to the point where they are no longer financially viable.

“Too many pubs have closed in recent years, often ripping out the heart of local communities.”

Willott, who takes up her new role tomorrow (20 December), will be responsible for deciding whether and how to introduce a statutory code for pubcos. Her predecessor, Swinson, had said the Government would respond to the recent consultation on the proposals in the New Year.

In the above video, Swinson and Camra’s chief executive Mike Benner discuss the Government's proposals for establishing the Statutory Code.

Loss of sales

Earlier today we heard a voice of the pubcos. M&C Report, reported that the Kent-based brewer and pub operator Shepherd Neame claims a mandatory free-of-tie option would ‘destroy the basis of the traditional tenancy’ and ‘almost certainly’ result in the closure of its brewery.

“The (perhaps intended) consequence of this proposal would be to reduce investment in pubs, which generates substantial local economic benefit, and consequential loss of new job creation,” said the company.

“The loss of operational support would result in declining loss of sales and viability of public houses. At best, this would result in lesser quality pubs less likely to achieve the licensing objectives and contributing less to the national economy.

“At worst, it would result in large scale closure of pubs and loss of community benefit to the detriment of the social well-being of the nation as a whole. An unintended, but entirely foreseeable consequence.”

Government consultation

Earlier this year, Business Secretary Vince Cable set out proposals for the consultation on the Code of Conduct, which contains mandatory rules for all pub companies with more than 500 pubs in a bid to improve the pubco-tenant relationship. 

The consultation ran between 22 April and 14 June but the BIS Committee, which first recommended action in 2011, insists the Government must now bring forward the Bill ahead of the next Parliamentary session in spring 2014.

Under the Code, tied pubs would essentially be able to sell independently picked guest beers in their pubs, be fairly and lawfully treated by pub companies and be charged fairer rents and beer prices, with the possibility of open-market rent reviews.

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.

But just this morning, the Publican's Morning Advertiser reported that Greene King it would reduce the number of tied pubs within its estate to become exempt from the proposed statutory pubco code. Read more about that here.

Related topics: Business, Legislation, Pubs & Bars

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