PUB COMPANIES: FOLLOW-UP REPORT
Business, Innovation and Skills Committee remains firm in its resolve
to see real reform in the pub industry
The Report, which is published today, sets out the Committee’s assessment of the pub industry’s proposals for reform. It concentrates on the new BBPA Framework Code of Practice, revised guidance from RICS and a number of other related developments.
The Report sends out the following warning to the industry:
“The industry must be aware that this is its last opportunity for self-regulated reform. If it cannot deliver this time, then government intervention will be necessary. We do not advocate such intervention at this stage, but remain committed to a resolution to all the problems discussed in this Report and those of the 2004 and 2009 Reports. Should those problems persist beyond June 2011, we will not hesitate to recommend that legislation to provide statutory regulation be introduced.
We urge the Government to monitor the success or otherwise of industry initiatives for reform and to keep the possibility of a reference to the Competition Commission firmly on the agenda. We also urge the Office of Fair Trading to look more carefully at the issues involved as it responds to CAMRA’s super-complaint for the second time. The serious imbalance in power between pub companies and lessees that has prompted this Report and the two earlier ones must be a matter of deep concern to policy makers who are working to ensure that markets work fairly to the benefit of consumers.
The pub industry has been found wanting now on two occasions by committees of the House of Commons. If it fails to deliver on its promises by June 2011, it should be in no doubt what the reaction will be.”
The Report acknowledges the real possibility that the developments prompted by this Report and the Committee’s 2009 Report on Pub Companies has the potential to correct the serious imbalance of power in the commercial relationship between pub companies and lessees.
The Report welcomes the progress being made by RICS to address the shortcomings of its existing guidance on valuations. However it concludes that “ the acid test of its success will be the extent to which the new guidance provides clarity on valuations and the principle that a tied tenant should be no worse off than a free of tie tenant.”
The Report also concludes that the BBPA Framework Code of Practice “appears to be a modest step in the right direction” and expects the major pub companies to “treat it as an absolute de-minimus requirement and to significantly build on it with their own Codes”.
However, the Report states explicitly that “
“The successful policing of the Codes will be vital to the success of these reforms. We give a cautious welcome to the BII’s role in policing the Codes of Practice. The BII must act as an impartial arbiter in this area and is in the best position to administer accreditation for codes and to oversee and monitor compliance. However, we clearly state the need for the BII to demonstrate the necessary authority and impartiality to be effective as a policeman for the industry. The success of all of the reforms proposed by the industry hinges on the credibility and effectiveness of the BII.”
Furthermore the Report concludes that “unless the BBPA can prove beyond doubt that the Codes of Practice are legally binding, incorporating the Code into the lease would be the only remaining option. The Committee recommends that the Codes should be incorporated into the actual pub leases.”
Business, Innovation and Skills Committee membership is as follows:
Chairman: Peter Luff (Con) (Mid Worcestershire)
Roger Berry (Lab) (Kingswood)
Mr Brian Binley (Con) (Northampton South)
Mr Michael Clapham (Lab) (Barnsley West and Pen.)
Mr Lindsay Hoyle (Lab) (Chorley)
Miss Julie Kirkbride (Con) (Bromsgrove)
Anne Moffat (Lab) (East Lothian)
Mark Oaten (Lib Dem) (Winchester)
Mr Lembit Öpik (Lib Dem) (Montgomeryshire)
Ian Stewart (Lab) (Eccles)
Mr Anthony Wright (Lab) (Great Yarmouth)
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