Cable proposes fair deal for struggling pub tenants

PUBS struggling to pay rent or beer prices tied to the major pubcos could each save thousands of pounds a year if a new Government Code of Practice is introduced to govern the sector.

The move comes after Business Secretary Vince Cable slammed the pubcos for failing to get their house in order.

Ministers said they wanted to ensure that pub tenants are treated fairly by pub companies and have estimated that the new proposals could save tenants around £100m per year. The Code would contain mandatory rules for all pub companies which own a certain number of pubs. In particular it would stop pub companies abusing the beer tie, which obliges tenants to sell certain types of beers often at high prices.

The Department of Business, Innovation and Skills said it received many complaints about the current restrictions and has launched a consultation seeking the view of those in the industry as to whether the Code is fair.

As of September last year there were approximately 50,000 pubs in the UK and 48% of these are tied. If the proposed threshold for the Code remains the same, pub companies that have 500 or more pubs that will fall under the guidelines would include Midland-based Enterprise Inns; Punch Taverns; Marston’s; and Spirit.

The Code would see the appointment of a new Adjudicator who would have the power to enforce the Code, investigate any breaches, and deal with disputes through possible 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 £100million per year by making sure that pub companies charge their tenants fair rents and beer prices.”

He said 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,” he added.

Under proposals the Code will ensure 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.
 
BIS said if pubs felt they were being treated unfairly or there had been a breach of the Code, they would be able to complain to the Adjudicator who could then investigate and arbitrate the dispute for them.

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