A new independent pubs Adjudicator will be set up by the Coalition Government to help struggling landlords suffering from unfair practices in the industry, Liberal Democrat Business Secretary, Vince Cable has announced.
The Adjudicator will enforce a new statutory Code, which will oversee the relationship between publicans and large pub companies (pubcos). It will ensure publicans get a fair deal on rent and the prices they pay for beer.
Commenting, Jo said:
"Pubs are a cornerstone of our community and many have been struggling in recent years in East Dunbartonshire, like the Cross Keys in Milngavie.
"For too long, large pub companies have been taking more than their fair share of the profits of their publicans and made life harder still for our locals.
"With Liberal Democrats committed to building a stronger economy, in a fairer society, it's great credit to Vince Cable that he has taken action where the Labour Government had so abysmally failed."
Chair of the All Party Parliamentary Save the Pub Group, Liberal Democrat MP Greg Mulhollandhas long campaigned for a fairer deal for pubs. Welcoming the move, he said:
"This is great news for pubs, pubco publicans and customers and is a huge boost in terms of the Coalition Government delivering the promise to be a pro-pub Government. This will at last enshrine in law that a pubco licensee is no worse off than a Free House licensee.
"The latest attempt at self-regulation has been a farce. There was a deliberate attempt to avoid the central problem of pubcos taking more than is fair from pub profits and that is why it's a great credit to Vince Cable and the Coalition Government who have finally taken the necessary action.
"Liberal Democrats will be continuing to work in the Coalition Government to ensure tied pubco licensees can take their fair share of the profit and have a much brighter future."
Commenting further, Business Secretary, Vince Cablesaid:
"Some pubcos are exploiting and squeezing their tenants by unfair practices and a focus on short-term profits. This has led real hardship for some publicans, who are going to the wall as they struggle to survive on tiny margins.
"While the Labour government oversaw three Select Committee reviews into these problems, they only acknowledged the need for action in their last few months in office. The Coalition Government is now taking action.
"Last year we gave the pubcos one last chance to change their behaviour but it is clear that the self-regulation approach was not enough so we are changing the law.
"These measures will give hard-working publicans a fairer chance at running their pub so they can continue to serve their communities."
- The proposed Adjudicator will have the power to investigate and deal with disputes between pub companies and publicans and have the power to impose fines in certain cases.
In particular, the proposed Code would prevent abuses of the beer tie, which obliges publicans to sell particular types of beer. It would enshrine the fundamental principle that 'a tied licensee should be no worse off than a free-of-tie-licensee' which will ensure a level playing field is maintained in the pub sector.
- The proposed Adjudicator will be based on the model of the widely-welcomed Groceries Code Adjudicator, and will have the power and function to:
arbitrate individual disputes between large pub companies and publicans;
carry out investigations based on complaints that have been received, during which they could require information from pub companies;
impose sanctions where an investigation finds that a pub company has breached the Code – including, in the case of severe breaches, financial penalties;
publish guidance on when and how investigations will proceed and how these enforcement powers will be used;
advise pub companies and publicans on the Code;
report annually on his or her work; and
recommend changes to the Code.
- The proposed Code will be based on the existing Industry Framework Code but will be strengthened to include an overarching 'fair dealing' provision, as well as the principle referring to the beer tie which states that 'a tied licensee should be no worse off than a free-of-tie-licensee'. This will be particularly important for rents, as the consultation will propose that guidance issued by the Royal Institute of Chartered Surveyors be interpreted in light of this principle.
- The Code is expected to apply to all pub companies which own more than 500 tied leases, exempting smaller companies so that only those with the greatest market power are targeted. This is due to evidence indicating that smaller companies have been behaving responsibly, although this will be explored further during the consultation.
- The Government will launch the formal consultation process on the proposed Code and Adjudicator in the spring.