Industry reacts to new statutory pubs code

Industry reacts to new statutory pubs code
The Pubs Code must be in place by May 2016
29/10/2015 - 13:38
The Government has today announced a new statutory Pubs Code setting out exactly how the ‘market rent only’ option will work.

Business minister Anna Soubry made the announcement in the first of a two-part consultation on the new Code that will implement the principle that a tenant tied to a business owning 500 or more tied pubs should be no worse off than a free-of-tie tenant.

It is believed that up to 13,000 tied tenants in England and Wales will be protected by the Code. A second stage of consultation will be published next month covering the remaining components.

Soubry said: “Pubs are the lifeblood of so many of our towns, villages and high-streets, playing a vital role supporting our local economies. It’s not right that some tied pub tenants are unfairly overcharged by their landlords and the Pubs Code will help ensure they get a fair deal.

“I’m looking forward to hearing from pub companies and tenants on these important proposals to put the industry on the strongest possible footing.”

The pubs and beer industry has welcomed the Government’s move and pledges to work closely with the Government in their request for the views of pub-owning businesses, tenants and their representatives.

Brigid Simmonds, chief executive of the BBPA, said: “There is a large amount of detail to be studied in these proposals, but I do welcome that the Government appears not to be proceeding with parallel rent assessments, which we always argued strongly would be too costly and complex to operate.

“We also welcome proposals to allow for an MRO waiver in return for a significant capital investment. Over £200 million is invested by BBPA members in their leased and tenanted pub estates, each year. It is essential that this investment continues.

Kate Nicholls, chief executive of the ALMR, said: “This has been a polarising debate and the ALMR has continually emphasised a pragmatic and moderate approach. We have been working closely with BIS over the summer to ensure a workable solution for businesses and to secure investment across the sector, from both landlords and other sources, to secure funding for lessee investment and will continue to make the case in these consultations.
 
“Following this we hope that Government will set out the details of the Code implementation in a timely fashion to provide the sector with some degree of certainty going forward, particularly for those going ahead with rent reviews.”

Tim Hulme, CEO of British Institute of Innkeeping, said: "The BII welcomes the release of the first draft of the pubs code, but we admit to being taken aback by the unexpected condition around the Parallel Rent Assessment. We will be working hard during the next phase of consultation to see what's behind the change and what it will entail.

“What is most important during this changeable, uncertain period is that we ensure our members are best placed and well informed to take advantage of a market rent only option and to understand the costs and benefits of it. This option will give our tied members the freedom to buy drink wholesale on the open market and the safeguards that protect a tenant against landlord price increases are fundamentally important. What is essential is that all tenant groups collaborate effectively during this next round of consultation to ensure we establish the best possible outcome for our members."

Steve Kemp, lead officer of pub workers union GMB, added: “It is nearly a year since Parliament voted for legislation to give tied pub tenants a market only rent option with freedom to buy drinks wholesale on the open market.

GMB hope that the intention of the consultation is to implement that principle and not to water it down. GMB will study the proposals and members will respond to the BIS request for views."

The Small Business, Enterprise and Employment Act requires the Pubs Code to be in place before the end of May 2016. It is currently recruiting a Pubs Code adjudicator, who will enfore the code.

The Department for Business, Innovation and Skills is asking pub-owning businesses, tied tenants and industry representatives for their views. A response form can be completed here: https://www.gov.uk/government/consultations/pubs-code-and-adjudicator-market-rent-only-option-and-rent-assessments

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