Government consultation document unveils plans for new code of practice

The government has unveiled plans for a code of practice for pub companies backed by a “powerful” adjudicator in new consultation documents released today.

The code would contain mandatory rules for all companies owning more than 500 pubs and aims to ensure that “a tied tenant should be no worse off than a free-of-tie tenant”.

In the consultation document the government says that it “seeks to support a healthy, thriving and diverse pubs sector.”

Adding: “One longstanding issue in the sector is that, for many years, serious concerns and numerous complaints have been raised about the relationship between large pub companies and their tenants. The focus has been on tied pubs and the share of reward gained by pub owning companies, for example through large unjustified rent increases.”

Under the proposals put forward in the consultation, if tied tenants feel there has been a breach of the code, they will be able to complain to the adjudicator who can then investigate the dispute. The adjudicator would have the power to enforce the code and deal with disputes through sanctions and fines.

Business Secretary Vince Cable said: “We gave pub companies every chance to get their house in order. But despite four select committee reports over almost a decade highlighting the problems faced by publicans, it is clear the voluntary approach isn’t working.

“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 rebalance this relationship.

“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.

“The new proposals could also allow tied pubs to have independently picked guest beers and help the growth of small beer and ale manufacturers across the UK.

“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.”

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.

“BBPA members are determined to tackle problems where they exist, as we have been doing, through the system of self regulation that the industry has set up.”

Employment relations and consumer minister Jo Swinson added that she felt the government’s proposals would put a farier system in place. She said: “We are committed to stamping out abuse of the beer tie and helping British pubs to thrive.

“It has been a huge concern of mine that pubs, often the hub of our communities, are closing down at an alarming rate. What is also shocking is that the figures show that almost half of tied pubs earn less than £15,000 a year, and struggle to make ends meet because of rising beer prices and rent.

“I have heard about a variety of unfair practices such as large unjustified increases in rent, and am clear that this sort of behaviour is not good enough.

“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.”

Dave Mountford, of the GMB union, said: “The test for tied tenants is whether this code is drafted in such a way that it will bring down rents to the same level as free-of-tie pubs.

“GMB tied pub tenants will study the draft code and make a response to ensure the code that emerges does the job needed to stop pubs closing.”

The consultation runs until 14 June and details are available on the www.gov.uk website.