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RNS Number : 8447C
Dept for Business Innovation&Skills
22 April 2013
BIS Ref: P/2013/134
22 April 2013
NEW PROPOSALS TO HELP STRUGGLING PUBS GET A FAIR DEAL
Pubs struggling to pay rent or beer prices could save thousands
of pounds a year each, thanks to a new Code of Practice and the
backing of a powerful Adjudicator, under proposals announced today
by Employment Relations and Consumer Minister Jo Swinson.
Ministers want to make sure that pub tenants are treated fairly
by pub companies and hope that the new proposals will save tenants
GBP100 million per year. The Code would contain mandatory rules for
all pub companies who 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.
Under the proposals a new Adjudicator would have the power
to:
-- enforce the Code
-- investigate any breaches, and
-- deal with disputes through possible sanctions and fines
The proposals are contained in a consultation published today.
The Code will apply to those pubs which own over 500 pubs, to focus
on the part of the industry where almost 90 per cent of complaints
are received. The consultation seeks views on whether this is a
fair threshold.
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 GBP100million 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."
Employment Relations and Consumer Minister Jo Swinson 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 GBP15,000 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.
"This month is also Community Pubs Month with some great work
going into helping community pubs. Alongside the recent beer duty
discount announced in the Budget, these plans will support the pub
industry and the role pubs play in building a stronger economy in
our local communities."
Under 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.
If pubs feel that they are being treated unfairly or there has
been a breach of the Code, they will be able to complain to the
Adjudicator who can investigate and arbitrate the dispute for them.
They will have the power to enforce the Code and impose fines on
pub companies if the breach is severe.
Notes:
1. The consultation is available to view online at
https://www.gov.uk/government/consultations/pub-companies-and-tenants-consultation
and will run until 14 June.
2. The beer tie refers to a condition in a lease which requires
a tenant to buy beer through the pub owning company, rather than on
the open market. Traditionally this involves a discounted property
rent, the 'dry rent', and above market prices for the beer, the
'wet rent'. This means that tied tenants have less choice and
flexibility with regard to how they run their pub. There are other
ties in operation but beer accounts for the vast majority of
sales.
3. The meaning of pub tenant in the consultation is the same as
pub licensee - a term used in previous government publications on
the topic.
4. There are approx 50,000 pubs in the UK and 48% of pubs are
tied (as of September 2012).
5. If the proposed threshold for the Code remains the same, pub
companies that have 500 or more pubs that will fall under the Code
would be; Enterprise Inns; Punch Taverns; Green King; Admiral;
Star; Marston's; Wellington; Trust Inns and Spirit.
6. Self-regulation has been tried since 2004, including the
introduction of an Industry Framework Code of Practice and an
independent arbitrator and advisory service, but evidence suggests
it has not worked. There have also been four BIS Select Committee
reports on the matter since that time.
7. To strengthen the evidence of any action the Government might
take, the Government will also commission independent research and
analysis of the impacts on both gross and net pub closures and
employment levels. This analysis will be based on as much robust
evidence as is available.
8. Community pubs month was launched by CAMRA on 1 April, and
follows the success for last year's event in which 6000 pubs
nationwide held events and promotions.
This information is provided by RNS
The company news service from the London Stock Exchange
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