Pub trade plan a half-measure, says FPB

THE Forum of Private Business (FPB) has described the government’s report into unfair practices in the pubs industry as “hugely disappointing”.

The Department for Business, Innovation & Skills is proposing to beef up the industry’s own code, but to keep the sector self-regulating as opposed to introducing a watchdog to ensure that landlords are treated fairly.

It proposes the introduction of full repairing and insuring leases (FRI), which should improve concerns over charges for rent, insurance and dilapidation. It also suggests a conciliation service to mediate in disputes and the introduction of an advisory service for tenants.

The government said its changes would abolish upwards-only rent reviews in the sector and introduce more transparency over the calculation of dilapidations and gambling machine revenues.

However, Knutsford-based FPB has said that the proposals do not go far enough. It had called for an end to the “tied” contract between pubco and tenant, which means tenants are forced to buy their beer from their landlords. It also argued that rents for pubs should be set on the open market.

The FPB’s senior policy advisor, Phil McCabe, said: “This is clearly a case of indulging market failure at the expense of thousands of small businesses – significantly more tied pubs are closing compared to free-of-tie pubs, many of which are actually opening their doors.”

Research from CAMRA has showed that since December 2008 some 3,216 tied pubs have closed, while 425 new free-of-tie pubs have opened.

Consumer minister Edward Davey argued that its measures give the industry more certainty.

“The advantage of this self-regulatory approach is that it will deliver these reforms much more quickly than could be done through legislation. I am confident that the industry will lose no time in fulfilling the commitments it has made.”

Similarly, Paul Wells of the Independent Family Brewers of Britain argued that the measures would be welcomed by smaller brewers as it “lifts the cloud” hanging over brewers tied contracts and traditional brewery tenancies.

“In my view many family brewers will now increase investment into their pubs because of the support the Government has announced for the traditional brewery tenancy agreement and the beer tie.”

Yet McCabe argued that given the industry’s history of self-regulation, it was “utter madness” to trust that things would improve.

Greg Mulholland, chairman of the Save the Pub group, said tenants would view the report as a “pubco stitch-up.”