The national campaign for reform of the unfair pubco model, the Fair Deal for Your Local campaign coalition, are behind a New Clause that has been tabled to go into the Small Business Bill. If passed, the New Clause will put the much needed ‘market rent only’ option on to the statute book.
The Government has committed to introducing a statutory code of practice for the large companies that will enshrine in law the long accepted but largely ignored principle: that the tied licensee should not be worse off than a free of tie licensee – but as currently drafted, it is unclear how the plans would stop the large pubcos continuing to charge hugely inflated prices and excessive rents to their tenants.
The campaign coalition is calling on MPs to vote for a cross party New Clause at the report stage of the Small Business, Enterprise and Employment Bill that would introduce the market rent only option for tenants of the large pubcos, who own more than 500 pubs, with this applying only to companies that own 500 or more pubs, applying to their leased, tenanted and franchised pubs only.
The Fair Deal for Your Local campaign is backed by 10 organisations, including CAMRA, the Federation of Small Businesses, the Forum for Private Business, trade unions and licensees organisations
The market rent only option is the only sure way to the problem of unregulated rip off prices and high rents charged by the large indebted pubcos that has prevented thousands of licensees from making a living and has damaged and closed thousands of pubs up and down the country. It is the solution proposed by the cross party business Select Committee, chaired first by Peter Luff MP now by Adrian Bailey MP after four comprehensive and damning reports into the behaviour and business model of the large pub companies, something that remains an issue despite claims of ‘self regulation’ by the pubcos and their lobbying organisations.
The cross party new clause has been tabled by Greg Mulholland, Chair of the Parliamentary Save the Pub Group, Adrian Bailey, Chair of the BIS Select Committee and Brian Binley, a member of the Select Committee and President of the Save the Pub Group with support from MPs across the house.
The new clause lays out the basic process and shows that the market rent only option is a simple, cheap to administer and market based solution that at certain trigger points would simply give licensees the choice as to whether to pay a fair rent only or stick with a tied agreement. This choice would force the large pub companies to ensure that their tied agreements – where tenants pay marked up prices for beer and other products and services – are competitive, fair and attractive to tenants.
The new clause also opens up the possibility that the Secretary of State, through the pubs code, may choose to allow the large pub owning companies who brew beer – Marston’s, Greene King and Heineken to still insist on their brands being sold in their leased pubs. The idea is that such brewing pub companies could still insist on their beer being available, but that the tenant would be free to buy it from anywhere, in other words they would get it at free trade pricing. There would thus be no possibility that a brewing pubco’s pub would not sell that brewery’s beer, which was never the purpose of the campaign for pubco reform – which has always been about tackling unfair tied agreements with both sky high beer prices and excessive rents.
The market rent only option would come in gradually, at renewals, rent reviews, change of terms or change of ownership of the pub. This would enable sustainable pub owning companies to evolve their tied models and ensure they are fair and attractive and work for the small and large businesses alike.
All the small ‘family’ brewers would be excluded as the statutory code would only apply to companies who own more than 500 pubs.
Unlike the parallel rent assessment process currently proposed in the Bill, the market rent only option requires little Adjudicator participation, so reduces cost and workload. The operation of a market rent only would have no cost to the Government or the taxpayer. The option would simply need to be laid down in legislation through the statutory code and with statutory guidelines on how the market rent assessment should be carried out, linked to Royal Chartered of Surveyors (RICS) guidance. .
The Fair Deal for Your Local campaign has 212 MPs formally signed up as supporters of the campaign and the market rent only option.
So now the Fair Deal for Your Local campaign is calling on Britain’s pub lovers, licensees and all who believe in fair business practice to write to their MP telling them to ‘Vote for the pub, not for the pubcos!’.
Comments from those backing the Fair Deal for Your Local campaign:
Greg Mulholland, Co-ordinator of the Fair Deal for Your Local campaign and Chair of the Parliamentary Save the Pub Group:
“I am delighted to table this important new clause with Adrian Bailey, Chair of the BIS Select Committee who proposed this solution to the pubco scandal, long-term pub supporter and President of the Save the Pub Group Brian Binley and pub supporting MPs across the House. MPs up and down the country know from their own constituencies that pubco publicans have been treated badly and charged unfair and unrealistic rents and rip off prices for beer, that their own MP could buy much cheaper.
“It really is time to resolve this issue once and for all and the only sure way to do this is to include the market rent only option for pubco tenants in the measures being introduced. The market rent only option, as clearly laid out in the new clause, is reasonable and gradual and simply provides an option to tenants to choose at appropriate times whether to carry on with a tied agreement or to have a rental only agreement. This option will stop the abuse of the tie and will lead to sustainable companies offering real tied agreements, offering genuinely lower rents for higher beer prices, which is how the tie used to work and the only justification for charging such marked up prices for product to a company’s own business partners.
“The message from the Fair Deal for Your Local campaign is simple: only by including the all important market rent only option will we finally see an end to the unfair pubco tied model and all the damage it has done to pubs up and down the country. So MPs have a choice, support their local pubs and publicans or prop up the greedy pubcos that have done so much damage to our great national institution, the pub and allow them to continue to pubco scandal. They can then answer for this decision at the next general election”.
Adrian Bailey MP, Chair of the Business, Innovation and Skills Select Committee added:
“The overwhelming evidence that was put before the committee and my personal interactions with tenants demonstrates that the MRO is crucial to changing the relationship between the pubcos and its tenants. This could be hugely beneficial in encouraging entrepreneurial talent within the industry. This is why I am backing the New Clause.”
Tom Stainer, Head of Communications, CAMRA:
“Thousands of CAMRA members will be lobbying their MPs asking them to support pubs by voting to put a stop to the sky high rents and beer prices the big pub companies impose on their tenants. Allowing tenants tied to the big pub companies the simple choice between a tied agreement and a rental only agreement will be a big boost to the pub sector. Britain’s pub goers will be the ultimate beneficiaries of these reforms as they will keep valued pubs open, promote investment and help keep the price of a pub pint affordable.”
John Allan, National Chairman, Federation of Small Businesses, said:
“Pubco tenants aren’t getting a fair deal and this will continue unless they have the option to go free of tie, with an independently assessed rent.
“Our research showed that the ‘market rent only’ option would bring significant benefits in terms of investment, employment and consumer choice. This New Clause will give MPs the opportunity to ensure that the Small Business Bill provides a fair deal for tied pubs.”
Phil Orford MBE, Chief Executive, Forum of Private Business:
“We feel that this New Clause is important in stimulating competition within the industry, allowing pubs to sell local beers alongside national brands and helping to put pubs back at the heart of their local community. Publicans, like all small business owners, want to create a business that they are proud of, without excessive bureaucracy or restrictions on their ability to trade.”
Simon Clarke, Fair Pint Campaign:
“This New Clause provides the provision that the Bill lacks making it a coherent piece of legislation. It provides the meaningful and material reforms expected by tenants and consumers and promised by Government. By including the exemption for small family brewers this New Clause is proportionate and targeted delivering the legislative intent of the bill.”
Inez Ward, Justice For Licensees:
“The Market Rent Only option is the most pragmatic approach to the inequitable relationship between landlord and tenant. If the pubcos are acting fairly then they have nothing to fear from this option.”
Brian Binley, Member of the BIS Select Committee and President of the Save the Pub group, added:
“The end just might just be in sight for those hard pressed tenants who were promised higher returns by Pubco managers on ingoing only to find a different reality later. Rising dry and wet rent increases driven by an unstable financial model overloaded with massive Pubco debt turned the dream into a ever harder struggle for many and a nightmare for some. That’s why our amendment is so important. If we can convince enough MPs that a fair rent solution is the answer we will lesson the struggle and end the nightmares. That’s why we want you to contact your MP to convince them to support our amendment but you need to do it quickly. You do your bit and we will do ours and together we can win.”
Mark Dodds, Licensees Supporting Licensees:
The Market Rent Only option – MRO – is a simple, inexpensive and clean win win proposition that ensures fairness in the business relationship between tied lease model pubcos and their tenants.
If the pubcos really Do as they Say and thousands of tenants are perfectly happy in their business relationship with their pubco then MRO will only rarely be invoked.
1. The organisations behind the Fair Deal for Your Local campaign are:
· The Federation of Small Businesses
· The Guild of Master Victuallers
· Fair Pint
· Pubs Advisory Service
· Forum for Private Business
· Licensees Supporting Licensees
· Justice for Licensees
· Licensees Unite the Union
2. The Fair Deal for Your Local campaign website is www.fairdealforyourlocal.com
and on Twitter use @fairdeal4yourlocal and #fairdeal4yourlocal.