My announcement last week on pubs hasn’t won me or the Government three cheers from the likes of CAMRA or Fair Pint. Yet I believe it is a notable success for tenants and lessees across the country – and time will prove it so.
For the pubcos have till Christmas to make their Codes of Practice legally binding – so tenants and lessees can enforce their rights – and they know that if they don’t, Parliament would be very happy to make it legally binding for them.
Coupled with the other reforms we negotiated from the pubcos and brewers, real change has arrived, and that is good news for all pub lovers.
For despite all the changes to drinking habits in recent years, pubs still play a crucial role in the lives of so many communities and so many people. I know in my own constituency how groups formed in pubs – from football teams to quiz teams – are part of society’s glue. One pub alone in Surbiton has helped give birth to community activities such as the world famous Surbiton Ski Sunday and resurrected the local legend of Lefi Ganderson, the Goat Boy of Seething Wells. And it sells great beer!
Pubs are special places, and they play a special part in British life.
So why has my announcement been greeted with “disappointment” by campaigners? Why will those amongst our own ranks who’ve worked so hard for change – like Greg Mulholland and Martin Horwood – not be ecstatic?
I think it’s because I’ve only delivered half of what they wanted. For the demands of campaigners were essentially for two things: first, government regulation of the pub industry, with a new regulator to enforce it; and second, either an end to the tie entirely or a free-of-tie, open market rent option to be legally required to be available to all tenants and lessees.
While I’ve not delivered government regulation, I have delivered a self-regulatory regime so much stronger than the past, that it looks and feels like a law – but it’s actually been delivered, and at least two or three years faster than an Act of Parliament would have done.
First, the industry’s Code of Practice must be made legally binding – and we’ve agreed how that will be done. That’s the self-regulatory version of a statutory code.
Second, rather than simply relying on the courts to oversee these new legal rights, a new independent mediation service will be set up, to which tenants and lessees can go, to enforce the Code, and its decisions will be binding on the pubcos. A regulator in all but name. Plus they can still go to the courts.
Third, the pubcos have agreed to strengthen their Codes of Practice in a range of critical areas – so, for example, on rent assessments, they must now comply with the independent guidance from the Royal Institute of Chartered Surveyors.
And a new Pub Advisory Service will be established, to support and advise would-be lessees and tenants, to make sure they know what they are letting themselves in for, and a three-year rolling accreditation process will monitor and check Codes and compliance.
We’ve made it clear to the British Beer and Pub Association and a range of other players on the landlord side, that we expect this whole package to be introduced at speed.
So why haven’t I acted on the issue of the tie?
Essentially, because I believe the tie issue is more complex than the campaigners’ demands suggest. And because I am tackling the problems that concern them in a different but more targeted way, that will bring relief sooner.
I’ve always been worried by the tie – primarily because I had assumed it must be interfering with competition and was against the interests of consumers. That’s why I, like others, was keen for our independent competition authorities to consider the matter. Competition authorities that had taken on BAA and the supermarkets, to demand and get action, on behalf of consumers.
Yet the Office of Fair Trading’s investigation concluded that consumers are well-served by British pubs. That there is choice. That a wide variety of beers are widely available.
So the issue of the tie thus moved from being an issue of competition, to an issue of fairness in the relationship between the pubcos and brewery landlords, and their tenants and lessees – an issue of their commercial relationships, that they agree between themselves.
When you examine where those relationships have gone wrong, it quickly becomes clear that the real problem is not with the traditional tied tenancy, but with the fully repairing and insuring leases – mostly but not exclusively used by the pubcos. These “FRI” leases have been at the root of the vast majority of the most serious unfairnesses that I have seen and read about.
That’s why my solution targets those FRI leases – and leaves alone the traditional tied tenancy model, used successfully and in the most part amicably by local and regional brewers alike. It’s the business model, not the tie, that has caused the problem, and that’s where the Code of Practice will now be strengthened.
So to those Lib Dems and those campaigners who may decide to argue that this is a “sell out”, I have to disagree in the strongest possible terms. I met a range of people, during this work, from all parts of the industry and all sides of the argument. And listened to the views of key campaigners like our own Greg Mulholland, even if I didn’t always agree with them. As a result, we have achieved a balanced package, to preserve what is best about the industry, and to clean up what has at times been quite outrageous.
The truth is we have got the pubcos to agree to things they never expected they would have to sign up to. Tenants and lessees will now have a means to enforce the Code when a landlord is in breach. And because we have achieved a quick solution, bringing certainty to the industry, I believe we will now see a boost to investment that everyone so desperately needs.
* Ed Davey is the Minister for Employment Relations, Consumer and Postal Affairs in BIS
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36 Comments
To be honest, I think it’ll probably be necessary to put a cap on the number of venues a pubco can own. There’s not really enough plurality in the pub market.
Surely a mediation service can’t enforce anything. That’s not the role of mediation. Mediation aims to resolve differences by agreement where there’s a difference of opinion or bad blood.
All sounds good to me. An evidence-based approach to some complex issues. Who is paying for the mediation service and the advisory service? The general taxpayer, or the pub industry? I assume it’s the taxpayer. So we’re creating two new public sector bodies. I can accept that this is necessary, but how about creating one body, with specialist staff to carry out the different functions? That way, it will only have one Chief Exec, one communications department, one set of offices, etc. Be it one body or be it two, may it please not insist on having its work overseen by a ‘council’, whose members (and chairman) are paid. This is a chance to create public sector bodies on a much less bureaucratic and labour intensive model than has previously been the case.
I feel that the last attempt to sort out the pub trade (in the 1980s?)- which over a decade or so replaced Big Brewers by Big Pubcos – was a great disappointment. So it is hopeful to see a more incremental approach, hopefully with monitoring of outcomes.
to quote the Rt Hon gentleman “I believe the tie issue is more complex than the campaigners’ demands suggest.”
Given the quality of those submitting evidence to the BIS and their professional qualifications and standings its quite patronising to say people don’t understand, as if you have some higher knowledge or special insights? Given that this is your view and seeing as you have the platform Mr Davey please explain what the complex issues are on here for all to see so we can understand the crucial points that were essential to know in reaching your view.
Unfortunately Mr Davey, you seem to have missed the point quite spectacularly.
You were known to be saying publically earlier this year that you didn’t want to legislate, effectively making the whole select committee process a total waste of time and money. You have ignored the recommendations of said committee, which contains MPs far more experienced and knowledgeable on the sector than you. You have ignored the thousands of tales of woe of people who have lost lives, families and shirts because of the rapacious actions of these greedy accountants and middlemen.
You flatly refused to meet the IPC following the committee hearings, and instead allowed Simon Townsend of Enterprise Inns and his employee and placewoman at the BBPA Brigid Simmonds to pour oil in your ear so they can keep their gravy train on the tracks a little while longer.
You had a real opportunity to make a change for the better in an industry that deserves better, that is one of the few things Great Britain can be proud of these days, and you failed.
Categorically your “plan” will fail. I say that as someone involved in the industry, who has dealt with Enterprise Inns first hand and seen how devious and underhand and vicious and spiteful they are and can be. All you have done is ensured that pubco bosses will cream a few more million in salary and bonuses whilst more lessees go to the wall.
As a politician you ought to be representing the people vs big business, not the other way round. No doubt you will bury your head in the sand and to be honest, I doubt this will even be published, but mark my words Mr Davey, you have failed.
Lots of listening Mr Davey but little reading, if you’d taken the time to properly read the BISC report that landed on your desk you’d see it didn’t ask for abolition of the tie, so why did you bring abolition up in your response? Only BBPA spin that line – and they represent pubco’s.
No-one in IPC called for abolition and what the report said, signed off with cross party support, was that if pubco’s are so convinced (as they remain) that the tied option was so good for pubs then they would have nothing to fear in offering a free of tie option at rent review, when any leaseholder could see the wonderful benefits of tied lease options and compare them to the alternative.
You didn’t read your select committee properly and your response is shameful – and this blog of yours underwrites that view. Failure to read reports is maladministration. Seeing as you don’t follow the committee at all will you now move to disband all BIS committees and save future costs for those running and attending them?
Your position is half empty – can we have a top up please?
Mr Davey,
oh I forgot, could we expect to see you publish the full details of private meetings held between your dept and the pubcos and or their paid representatives? ….in the name of transparency?
Mr Davey, the pub you mention is the Lamb in Surbiton interesting its a great pub NOW the owners have managed to buy it off Punch Taverns who were desperate to get shot of it!
I think you’ve shown how little you understand this sector, the owners had multiple BDM’s and barriers to growth from their former business partners, now they are free they can really fly and you seem to enjoy the result (freedom to choose great beers that you and many others like)! If the arrangment of being tied was as good as you let us all believe in your response to the BISC then why didnt the lamb stay with Punch?
Devils Advocate:
…that’s a great contribution on behalf of thousands of self employed people! Let’s see if Mr Davey will start to listen!
I am beginning to understand how the Egyptian people feel about their unrepresentative government!!!
Mr Ed Davey MP and Under-Secretary, you appear to have arrived quite late in this matter. You appear to have overlooked the findings of not one but four Select Committee Inquiries into Pub Companies. Your Parliamentary colleague Greg Mulholland has made sterling efforts in recognising the many and varied problems existing in the Tied-business model as operated by the likes of Punch, Enterprise and others. He has not allowed the smallest skein of wool to be pulled over his eyes. Adrian Bailey, Chair of BISC had made some deep-rooted recommendations which follow on from Peter Luff’s findings at the previous Select Committee. You, and your fellow Government Ministers had previously pledged to stick to the last Government’s plans which backed the Select Committee. I see nor hear any tangible reason why this should not be so. It has taken FOUR Select Committee hearings to get this far – at each one, the pub companies have been found wanting. What possible benefit is to be derived from further prevarication and the polite request for further self-regulation by these errant pub companies? How many more “retail partners” – 60% of whom are said to be making less than £15,000 per year – will be left insolvent or be bankrupted by this pernicious business practice, and at what cost to the Treasury? Nobody has heard of an ex-tied licensee who when bankrupted did not owe thousands of pounds to HMR&C. Who do you suppose would have benefited financially from their demise? We are not talking hundreds this applies to thousands, and the longer that any Government prevaricates with additional self-regulation, the worse the situation will become. More recent history will show the effects of self-regulation – look no further than the banking sector. I urge you to reconsider.
Mr Davey
You have totally missed the point and I suspect willfully. The new ‘Code of Practice ‘ is a joke that only reinforces the obligation of the lessees to the landlord, does nothing for the entrapment of the ‘tie’ and allows venal organisations like Enterprise to carry on destroying our industry for their own personal gain.
Shame. You had a real opportunity to bring about meaningful change with all party support and you bottled it.
Perhaps your lords and masters in the Tory party heirarchy…..? After all campaign contribution time is coming around again.
I fear, in typical Lib Dem fashion, we risk making the best the enemy of the good. As somebody who enjoys their pint as much as the next man I don’t always recognise the doomsday scenario that sometimes get painted by, doubtless well meaning, campaigners. There clearly issues that need resolving about how the industry works, however in my area there is a diversity of pubs who serve a wide range of beers to happy customes. What Ed seems to be trying to do looks like a perfectly reasonable and moderate way to try and iron out some injustices in the system whilst not throwing the baby out with the bath water. Is it to much to ask to see whether or not the new – significantly changed – system works, before condemning and criticising it?
This is a definite improvement on the status quo and something that will make an immediate difference. As Mr Davey says the important thing is to fix the FRIs. This proposal does that. This will make for a much fairer industry.
This is a complex issue. There are clearly some very strong feelings from people who’ve been at the wrong end of the issues Mr Davey is trying to address. But the question here is how to address those issues most quickly and effectively. Breaking the tie would require primary legislation, which would take a good few years – leaving all of the problems unaddressed during the legislative process, and some of them unaddressed at the end of that process.
By going for an approach that tightens up the code and makes it legally enforceable within a matter of months, Mr Davey has achieved more, more quickly than the superficially attractive “magic bullet” solution of legislation to break the tie.
It will never be enough for those who saw only one solution to the problem, and felt this was not it. But the fact is that the new, legally enforceable code will be in place, and offering protection and support to tenants and lessees within months. Legislation couldn’t have achieved that. Everybody thinks “there should be a law against that” when they don’t like something. But legislation and regulation is not always the best answer – certainly not the fastest. I think Mr Davey’s doing himself an injustice when he talks about a glass half full. He’s got the round in early. The champions of legislation would still be loudly advancing their purist position long after time was called on far too many tenants and lessees who will now be covered by the solution he’s delivered. A good, liberal solution, cleverly delivered by one of our most competent ministers. Three cheers.
To my mind this is a sensible proposal. Self regulation can be a far better solution than government intervention. Not only is it cost effective but the ownership self regulation bestows on all the parties involved results in greater commitment to making it work. I also commend Ed for looking objectively at the evidence – something that is difficult to do given the passions the issue has clearly arisen. Well done Ed for navigating your way through this.
@ Alan, go and speak with Greg M he will put you straight, no one called to break the tie suggest you go and read the BISC report first and please don’t use the it’s complicated there are many intelligent people who spent hundreds of hours dealing with the various committees we would all very much like Mr Davey to explain what is so complicated himself
@ happy drinker what area do you drink in as I’m fairly sure many people could demonstrate how pubco’s have shaped your happy haven too just like Mr Davey highlighted his local. So after seven years and many different committees the last one calling for legislation this poor reply from HMG was coming off the back of massive failures of self regulation, the sector and its people are angry alright as they have tried it out already and it failed, net result so far is abuse of leasees massive frauds breaches of COP’s millions owed to the HMRC, LocalAuthority NDR’s , thousands of licensees on tax credits and @ 1000 insolvencies a year and you think they should give it another go….no thanks.
It’s always good to have two sides to a story.
Mr Davey’s view is generally in line with the thoughts of the British Beer and Pub Association and the British Institute of Innkeeping – both of whom derive income streams from the very pub companies who are being investigated by Select Committee for the fourth time in nine years.
Against the Government response, and in support of the current BIS Committee, we have countless lessees and tenants (past and present) who have become victims of the pubco ‘low cost entry’ model, together with :-
CAMRA
The Independent Pub Confederation
Fair Pint
Federation of Small Businesses
Association of Licensed Multiple Retailers
Guild of Master Victuallers
Society of Independent Brewers
Forum of Private Business
GMB
Unite the Union.
Can they all be so wrong to support the recommendations of the fourth Select Committee in this matter – who the Government had previously pledged to support, also?
What Mr Davey has done for long suffering tied lessees is akin to creating a framework for Christians to sue the Lions after they have eaten them. Once again politicians fail the people they purport to represent by kow towing to the corporate. A very poor show.
The people supporting the Government’s position above quite clearly are not from the chalk face of the pub industry. If they were, their position would be less academic. But their tone of balance in support of self regulation against the more vociferous justifiable outrage of those being shafted points to another, more satisfactory way forward: IF, as they say, the apparently weak government response leads to swift change without regulation; there is nothing to prevent implementing legislation now while applying the rigours they assert will produce results immediately.
Given the performance of tied pubcos to date – Do a belt and braces: enforce as Davey says now and at the same time move hard on implementing statutory regulation.
Will this help keep my local pubs open and beer flowing? Yes, I think it probably will – and it is enough of change to be worth being given a chance. As liberals (which I would suggest none of the organisations listed by Oh Drearie me are) direct state interference in an industry must only be a last resort, not a first one.
Mr Davey,
I write as just one of those thousands of publicans trapped in a menacing long term pubco lease!
The pubcos in question, i.e. the pub property companies without any brewing interests, are inflicting untold damage to the fabric of the once great British pub trade! Successive Select Committees have found the business model of these outfits to be harmful to the pub trade!! These outfits DO NOT do anything economically useful in the country yet are able to rake in millions of pounds simply by the commercial exploitation of thousands of the self employed.
We are asking the government to remove the pubco barriers to progress in the pub trade, so that we can start trading freely in a free market economy. Only that way, will thousands of small business begin to thrive, grow and go on to create wealth and jobs in their communities!!
Our case has been proven beyond doubt before FOUR successive Business Select Committees! Please reconsider your response! Thank you!……on behalf of thousands of small businesses!!!
TO: Allan Smallwood
Mr Davey has got a very simple and straightforward job to do here.
All he has got to do is to listen to: the Business Select Committees RECOMMENDATIONS. The last FOUR Select Committees have done all the hard work for him. and the long suffering pubco Lessees have been patiently waiting putting all their trust in the government to set the pub trade FREE!!
There is only ONE right solution and that is what the BISC have recommended.
To: Suzie Winter
Can you tell us if you have a pub business, or what your interest is in this subject?
I am a publican.
The only people who are ecstatic with Ed’s initial response are those in the pay of the pubco outfits!
The pubcos have been given since 2004 to self regulate and reform and it has been an ignominous failure, obviously otherwise following Select Committees would not have been able to find as they have! In 2004 the pubco were told to write COP’s and yet in 2009 they are told to re-write them as the previous codes are somewhat lacking, in 2010 the codes are re-written and still they are somewhat lacking. And the cost of this exercise into self-regulation, the loss of thousands of licensees livelihoods and homes, loss of revenue to the treasury, illness and suffering and very sadly even death!!!
Considering past history does the minister really think that they are going to self regulate or will this have to be revisited again and again as per the last 7+ years? How much human misery is it going to take before change takes place, why has there had to be so much human suffering already, this is people’s lives being played with here, is this really the fairness and justice that was professed so loudly prior to the elections?
As a publican who has operated traditional tenancies, FRI leases and a freehouse, I can, with the knowledge that comes from bitter experience, assure Mr Davey that he has spectacularly failed to understand the pub industry. This is not really surprising given his refusal to talk to any licensees while swallowing the line of the pubcos’ organisation, the BBPA, hook line and sinker. Despite the government’s response talking about consultation with the industry, Mr Davey has absolutely refused to do so. He has not consulted beyond the organisations that represent the pubcos and come out with a cosy deal that might well have been written by the BBPA itself. It’s clear that he hasn’t even spoken to the publican of his favourite local so what hope of the rest of us to get a hearing?
The current Codes of Practice are written as a series of loopholes, take a look at http://www.greenekingpubs.co.uk/code-of-practice.php for an example and find me the clause that states that ‘We will not lie to you, bully or steal’. The entire town may be knocked down around your pub, but while you are still standing, the pubco will only ‘consider’ a rent reduction and are well within the terms of the Code to do nothing at all if they don’t want to! Mr Davey’s pitiful response will not prevent a single pub closure, small company collapse, personal bankruptcy, lose of home and break-up of family and all the other little tragedies that characterise the pub industry under the control of these leeches. He has ignored years of collected evidence often given with fear of repurcussions. That is why thousands of licensees (and not just campaigners!) are bitterly disappointed, feel abandoned and betrayed by the government and yes, Mr Davey, regard you very much as having ‘sold out’!
I don’t know how many MPs have operated tied pubs: I have but it’s some time ago.
I believe it’s not the tie in itself that is causing the problem. It’s the advent of the pubcos who based their model on exploiting property values and not on the product itself: ie beer. Before (and since) the advent of the pubcos, breweries very succesfully operated tied houses, and still do today.
We see today the pubcos as victims of their own failed practises: Punch are divesting 2,000 pubs and Enterprise 500.
Campaigners for greater fairness, and the BIS Select Committee have rightly and totally run out of patience with the pubcos, and recommended bringing in statutory regulation and a regulator.
But the pressure they have put on has finally brought the pubcos kicking and screaming to the table – AND put the pressure on government to get a resolution. Very well done them.
Today, I understand the Code of Practise has already been adopted by about 98% of the industry, and the government (ie Ed Davey) has found a way to make the Cope of Practice legally binding (including on the terms of existing contracts). They also negotiated strengthing to Code in terms of fully repairing leases, which must now comply with the RICS requirements.
So in practice this Code of Practise will be legally binding by Christmas. Why wait for several years to introduce statutory legislation when you can give the protection now?
I agree strongly with Lorely in that BISC has completely run out of patience with the pubcos. With good reason: the likes of the foul-mouthed Ted Tuppen, boss of Enterprise Sins, sorry, Inns, has refused time after time after time to offer any meaningful reform, and has just flung abuse at the Select Committee rather than tackling the issue. Some of his comments amount to a contempt of Parliament, and I hope the Select Committee hasn’t finished with him yet.
I disagree with Lorely (and Ed), though, about the role of the tie. Yes, the pubcos based their business model on exploiting property values rather than running successful businesses. But their business model (and that of some major breweries such as Greene King, and Fullers, both of whom notably back the Government’s response) is now broken; and in turns it breaks the back of the publicans who are restricted in trading.
Those publicans – the intended focus of BISC – will not be protected by voluntary codes of practice which are broken in spirit and deed on a daily basis (where they even exist, as the existing lessees I have spoken to have not seen them introduced into their world). They will carry on being ripped off to the tune of 30-70% extra costs on every drink they buy under the tie (ever wondered why most Enterprise/Punch/Fullers pubs are so much more expensive? That’s why.)
(Incidentally, on the subject of Fullers and Greene King, the so-called Independent Family Brewers of Britain who support this compromise, are an exclusive outlet – how long did they refuse entry to Cains? – and a vested interest in that their, generally bland, beers are the bulk of what supplies pubco pubs against the genuine competition from the creative and spectacularly successful microbrewery sector.)
Neither does anyone but, unfortunately, Ed and his civil servants believe a word said by the discredited BBPA, spin doctors for the untrained likes of Tuppen. I am concerned at the remarks of Tony Leonard above. I’m also concerned that a publican held over the cosh by their pubco is not going to be able to afford £200 for a mediation service effectively set up to pubco rules.
Susie, you know me; what is your interest in this issue?
It should be for Liberal Democrats to stand up for small business and entrepreneurship. I fear that Tory influence in the Government has led to a solution that leaves the big guys with their foot still firmly over the throat of the little guys (and girls). I respect Ed as a colleague, but he has got this very wrong, and I fear the response of the Select Committee will say so, in terms.
@ Lorely…..because none of the IPC and its members voted for the COP written by the BBPA…thats why…if you want to know why the IPC and its members didnt vote for the COP then suggest you got to Portcullis house on the 6th Dec for 10.30am when Mr Davey makes an appearance there will be many people their to fill in the gaps in your knowledge. Ed has asked this industry to swallow a code of practice drawn up by the most discredited body in the UK and then said the self same can police it too…no thanks
The Governments response puts the final nail in the coffin for thousands of tied publicans who have been clinging on to their businesses for the last few years. The light at the end of the tunnel has been extinguished and the industry thrown back into darkness with no material changes being offered to resolve the issues suffered by the pub industry.
The Government policy to help small business is a distant memory, greed of big business prevails and once again, their executives arrogance and complaisant attitude to due process being rewarded and the small businesses and consumers having their faith in democracy shattered. The BBPA have managed to pull the wool over the Governments eyes in a last ditch effort to keep the gravy train on the tracks a little longer. Despite several urgent requests for a meeting by the Independent Pub Confederation, the Government failed to meet any of these industry or campaign groups representing tenants and consumers before cooking up their desperately inadequate response with the BBPA which is demonstrated by its one sided nature, failing to address any material issues.
It seems the Business Ministers, Vince Cable and Ed Davy, have missed the point entirely, paid lip service to the select committees recommendations, and their own promises and manifesto commitments, and effectively demonstrated that the last seven years of inquiry was a pointless and time consuming exercise. The select committee undertook an in depth detailed examination of the industry. The Government promised they would rely and act upon the committee recommendations. The ineffective response amounts to a U turn on their commitments and policies. If Messrs Cable and Davy are going to make their own decisions on behalf of Government, with an inquiry of their own, regardless of the select committees recommendations, then they have demonstrated that the process of All Party Parliamentary Inquires is a waste of taxpayers money and MP’s time.
Rather than resolve the industries issues the response has merely fueled the fire of discontent, the war rages on in an industry that desperately needs material reform before it can begin to unify and rebuild once again. The future of the Great British pub remains bleak.
The prisoners are to write their own penal code, again, and have now managed to convince Government that they should be judge and jury of its implementation ! The suggestion of the BII as any kind of industry umpire will be laughable to many publicans given past performance and only supported by the parties pulling their strings.
All publicans should be forever grateful to the MP’s and Ministers who took the time to fully consider the naked truth of the industries problems, sadly the democratic process has severely let the pub industry down. The Government response appears to fly in the face of select committee recommendations and undermines their very purpose which must be a huge disappointment to those members who worked so hard over the past years to come up with a sensible solutions.
How Mr Davey sees denying the industry stability, imposing further onerous terms on publicans under the guise of enforceable codes and encouraging brewery style tenancy agreements, which are inherently short, usually nonassignable and deny a right to renew, as being a potential boost to investment is beyond most industry experts. Banks will not lend, entrepreneurs will not enter and existing tenants and lessees will continue to fail.
The things that just flashed passed, was the point, and Government missed it.
There’s Dave. He had a ‘misunderstanding’ with his pubco.
Like many tenants, Dave’s pub was badly hit by the downturn. With turnover plummeting, he found it increasingly difficult to keep his nostrils above the waterline.
He contacted his pubco. They carried out a P&L assessment and advised him to sell the lease on.
Desperate to assign before going under, he eventually managed to find a buyer; no small feat given the market. A nominal fee was agreed and Dave passed on the contact details of the prospective purchaser to his BDM.
Dave waited patiently for the pubco to provide a survey and for things to progress; however the weeks passed but nothing happened. Eventually in desperation, Dave contacted the buyer to be told that he’d lost interest and wouldn’t be pursuing the matter any further.
This struck Dave as a little odd. After all, when they’d met he’d seemed very enthusiastic; making it abundantly clear he wished to proceed with the purchase. Several months later with the pub hemorrhaging money, Dave had no option but to surrender his lease.
Needless to say he paid a heavy price; the pubco retaining both his fixtures and fittings and deposit, citing loss of earnings.
Not content with that, they placed a £25,000 injunction on his house.
A week after moving out of the pub Dave returned, to find the ‘buyer’ standing on the other side of the bar. He’d moved in the day after Dave left.
The new tenant revealed that the pubco had advised him not to pursue his interest; suggesting he wait until they’d repossessed the outlet, thereby enabling him to get it “premium free”.
He went on to explain that the BDM had offered him a “take it or leave it” deal; one which obliged him to purchase fixtures and fittings as well as cover all “reasonable costs” incurred by the pubco.
On the face of it, the deal seemed reasonable as no premium for goodwill was paid. It appeared mutually beneficial to both parties; of course it wasn’t.
Drafting a new agreement enabled the pubco to remove those irksome little clauses, such as guest ale provision and guaranteed barrelage discounts. It also allowed them to raise the rental premium to a level which more adequately reflected the trading potential of the outlet.
Just as importantly, they were not required to undertake a survey or carry out repairs. The arrangement also absolved them of all the legal costs associated with a lease transfer.
Of course they weren’t required to market the property either; saving themselves a tidy sum in agent’s fees. After all, Dave had already found a tenant for them.
Dave’s experience illustrates one rather unpalatable fact. There is often little incentive for pubcos to adopt a proactive stance when it comes to lease assignments.
In fact it is often in their interest to obstruct and delay; knowing full well that time is of the essence for many struggling tenants.
Like some predatory beast, they are content to merely sit back and wait for the tenant to go under, secure in the knowledge that rich pickings await.
And what of Dave?
He’s lost everything and is due to appear in court shortly, unsure as to whether or not he will be able to keep his house.
Now I’d like to say that the experiences of Simon and Dave are isolated incidents; unfortunately all the evidence is to the contrary.
If you want to speak to Dave – you have my e-mail and I have loads of documentary evidence to substantiate my claim!
Ok so seeing as the doubters have now been silenced can we politely ask that the lib dem membership on this site who really give a damn about pubs contact Mr Davey as a matter of urgency (he is in front of the BISC on tues) and tell him his proposals won’t save the pub trade and he must implement the recommendations of the BISC. Thanks in advance.
I take it Ed Davey doesnt give a toss about the Select Committee wishes, representing the will of the people!!
So Ed Davey is not in favour of representative governement then?
The pubcos do not do anything economically useful, In fact the pubco business model has proved to be highly damaging to the pub industry!
So Ed Davey is not worried about national economic well being of our industry either?
Can I ask all those who voted for Mr Ed Davey to justify their actions now?
….and what has the Minister for ‘EMPLOYMENT RELATIONS, CONSUMER AND POSTAL AFFAIRS got to do with the Pub industry anyway? Could someone explain that please?
Doesnt he sound more like the man from the OFT back offices?
Ed, look at the parallels to be drawn with the banking markets. What happens when they self regulate? What happens when they write their own codes? What happened when they went bust, did it affect those at the top? How much money has been striped from publicans to pay shareholders and CEOs?
History will show that you are out of your depth on this matter. There is no shame in admitting this. PWhy not revisit the statistics you appear to rely on and demand the churn figures before you make sweeping comments on closures? Why not review the previous actions of the OFT who appeared to allow the rapid expansion on the pubcos? Interesting that they are allegedly reviewing price fixing on ebooks whilst you have a situation of overinflated price lists for pubs which only tied tenants pay with no legal protection on the prices charged. To say your actions were disappointing would be kind. The poor position of trying to save the tax payers money is frankly insulting as every time a pubco bankrupts a business community jobs are lost and dole queues get longer. The very idea that companies with vested interests can give a seal of accreditation is fanciful and I ask that you view parallels with the triple A ratings of derivatives as we all know what happened there.
i run a pub in the midlands and yes the code of practice is good.But my pubco enterprise inns charge me 1300 pounds a week rent plus insurances and im tied to every thing. Cant you all see what they are doing to us all i dont make a living its hell.I cant leave cause i tried to hand my notice in and they know i cant pay the rent so im buying in and getting big fines for that. I dont know who to turn to they said if i leave they will still charge me six months rent plus 3 months loss of trade to them. Im on the verge of having a breakdown ive put all my life savings into this pub plus my business partner put all hers in. Its a big pub over heads massive but with smoking ban people losing there jobs we cant afford to stay here. We just want out but i feel im being black mailed either way if i stay i cant pay the rent or afford to pay there tied prices on beers and if i leave ive still got to pay 6 months rent at 1300 plus charges and fines for buying beer in then 3 months loss of trade. I have tried calling my area manager but he just shouts and makes me feel like i have no choice to stay i rang enterprise asked for the big bosses number but no body would give me.They just said they would leave him a message to call me back that was 4 weeks ago heard nothing. We are just getting in deeper with them every day and they know this and im screaming out for help or what to do next but dont get any where with them. Next they will be after my house and my son lives there with his young family and pays his way in life he works hard but its in my name. It effects everyone my staff who will have to sign on plus me my family no where to live but they dont care. Them up to something as a few months ago before we got into big debt with the pubco, we owed them 200 pound and they sent baliffs in to get money. We paid it other wise they were chucking us on the street. But now i owe them 10,000 pounds plus fines now for over 4 weeks the area manager we arent sending baliffs out dont be hasty and leave. I just dont get it do they want me to keep running debts up with them i could go on for ever theres so much going on and im sorry just reading what your trying to do for pubs could you please please help me ring them for me or write to them my number is 07731719525 my pub address is the cavalier tennyson way kidderminster dy103yt my area managers number is 07831281498 his name is john i really need some help i did write a letter to gordon brown a few years ago bout way pubs were but he just sent me info on small business help line but that was no help yours norma taylor