Government launches consultation on plans which could save pub tenants £100m per year
Readers may remember Jon Card’s recent article about how the UK’s pub industry has had to adapt to survive a tide of closures over the past decade.
Well, a number of licensees were dealt some potentially positive news today as the government launched a consultation on proposals that could save ‘tied’ pub tenants in Britain an estimated £100m per year.
Those proposals, announced in January, are a statutory code of practice, backed up by an independent adjudicator, which will govern the relationship between the UK’s largest pub-owning companies (pubcos) and their tenants.
It comes after the government said the largest pubcos which offer ‘tied’ agreements had failed to meet key commitments under the current self-regulatory system.
The proposed code will apply to pubcos which own over 500 pubs and operate ‘tied’ agreements whereby tenants must purchase their beer from the pubco, instead of on the open market. This usually involves a discounted rent for the tenant, but the government feels the pub companies have been abusing the ‘beer tie’ in some instances, for example by setting rent and beer prices unreasonably high.
Six companies were identified by the government in its initial announcement of the proposals in January – they were Enterprise Inns, Punch Taverns, Green King, Admiral Taverns, Star Pubs & Bars and Marston’s. However, this has now been extended to nine with the addition of Wellington Pub Company, Trust Inns and Spirit Pub Company.
Under the proposals, the code will make sure that:
- pubs are fairly and lawfully treated by pub companies
- tied pubs are no worse off than free-of-tie pubs
- pub companies charge fair rents and beer prices, with the possibility of open market rent reviews
- tied pubs could have the option of a guest beer, picked independently, which could help the growth of small beer and ale manufacturers in the community.
Meanwhile, the adjudicator will have the power to:
- enforce the Code
- investigate any breaches
- and deal with disputes through possible sanctions and fines
"Pubs are small businesses under a great deal of pressure, many of which have had to close,” said business secretary Vince Cable. “Much of that pressure has come from the powerful pub companies and our plans are designed to rebalance this relationship.
He added: “The Government is committed to building a thriving pub sector. The industry represents many small businesses, employing hundreds of thousands of people across the country."
Employment relations and consumer minister Jo Swinson continued: “These proposals will put a fairer system in place and will make sure that tied pubs are no worse off than free-of-tie pubs. For the first time if pubs feel they are being treated unfairly by their landlords they will be able to complain to a powerful new body.”
Along with George Osborne's beer duty cut in last month's Budget, we think this is one more thing to raise a glass to.
The consultation runs until 14 June and can be viewed at https://www.gov.uk/government/consultations/pub-companies-and-tenants-consultation