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Pub landlord 'ties' to be tackled
The Government has announced long-awaited plans to tackle complaints about landlords "tied" to large pub companies, but came under attack for not doing enough to stem the number of closures.
Around 28 pubs are shutting every week, with campaigners warning that one of the main problems is the system under which landlords have to buy supplies from a so-called pubco.
Publicans say they are struggling to make a decent living because of the system, with more than half earning less than the minimum wage.
Ministers said the plans would protect thousands of publicans from unfair treatment.
But campaigners, and a number of landlords, said the measures did not go far enough and should have included the right for tenants to buy supplies on the open market.
One landlord who is facing eviction from a pubco-pub said he could buy a keg of beer for half the price from his local cash and carry.
Deputy Prime Minister Nick Clegg and Business Secretary Vince Cable announced that the Government will give publicans new rights under a statutory code, and set up an independent adjudicator with the power to resolve disputes.
The adjudicator will enforce the new code, arbitrate disputes, carry out investigations into alleged breaches and impose sanctions on pub-owning companies if they fail to comply.
Mr Clegg and Mr Cable visited a pub in central London to mark the announcement, posing for photographers with pints of beer.
Mr Clegg said: "F or too long, landlords who are tied to larger pub companies have struggled to make ends meet.
"The self-regulatory approach hasn't worked, so these new rules will give fairer treatment for landlords so that they can keep your local pub going strong."
Mr Cable said: " Far too many landlords feel their income is squeezed by big pub companies. So today we are taking action to make sure they get a fairer deal.
"The introduction of a statutory code will make sure that tied tenants get an accurate assessment of how better off they could be and the new independent adjudicator would make sure pub companies are forced to act to redress the situation if they aren't behaving responsibly."
Under the new code, the Government said pub landlords will benefit from fairer rent assessments, while tied tenants will be given the power to request a rent review if they have not had one for five years.
For the first time, tied tenants will also have the right to review the information pub-owning companies have used to decide to increase rents.
Ministers believe this greater transparency will allow tenants to see what information their landlord has used in calculating the rent, and decide whether an increase is fair.
There will be additional protection for tenants whose pub-owning company owns 500 or more tied pubs.
The Government held a consultation a year ago on the pubco system, which attracted a huge response from the industry.
Steve Kemp, of the GMB union, said: "Self-regulation has been rejected, which is to be welcomed but we regret that the free-of-tie option has been ruled out.
"The system now is that interest payments on the huge pubco debts have to be paid each week before the tenant pours a pint and regardless of whether s/he can make ends meet or not.
"To pay these sky-high rents, a pint of lager is on average 80p per pint higher and ale is 65p per pint higher than justified by inflation and like-for-like changes in taxes since 1987.
"This is pricing pubs out of the market and they have closed in droves."
Camra's head of communications Tom Stainer said: " With 28 pubs closing a week it is vital that publicans, who are on the frontline of keeping our valued community pubs open, are given protection from heavy-handed business practices from the big pubcos.
"Publicans could see the price they pay for beer fall by up to 60p a pint if the adjudicator forces the big pubcos to match open market prices. A 60p a pint saving would be a huge boost in the battle to keep pubs open and could lead to cheaper pub prices for customers.
"While we urge the Government to go further by introducing guest beer and market rent only options for tied publicans, today's announcement is great news for publicans and pub-goers alike.
"Over the last decade many thousands of pubs have been lost as big pub companies have squeezed them out of existence with sky-high rents and beer prices."
Andy Slee, central operations director at Punch Taverns, one of the biggest pubcos, said: "We hope that today's announcement will bring an end to a long period of uncertainty for the sector and we now want to work with all parties to continue to build a long-term sustainable future for British pubs.
"Whilst self-regulation provided pub tenants with protections greater than commercial tenants elsewhere, we remain committed to making the best of the Government's proposals."
Toby Perkins, shadow small business minister, said: "T he changes do not include a free-of-tie option or the genuinely independent rent reviews which Labour and campaigners have been calling for. It is also hard to see what the parallel rent assessments will actually deliver and how these proposals will prevent the large increase in pub closures seen in the last year.
"Labour will work with the Government to get the code on to the statute book as quickly as possible, but will press ministers to ensure it has sufficient teeth to make a genuine difference for publicans, safeguards the future of the industry and delivers the real change publicans have been calling for."
Brigid Simmonds, chief executive of the British Beer and Pub Association, said: " While we welcome greater certainty and clarity after such a long period of debate, we are disappointed that the Government is seeking to introduce potentially costly legislation, with the disproportionate costs of a statutory adjudicator, rather than supporting the existing, and evolving, system of self-regulation.
"Partnerships with entrepreneurial tenants and lessees give them the opportunity to run a pub with very little capital investment, and BBPA members are committed to supporting lessees and tenants. Proposals that dilute the support pub companies can give to these entrepreneurs are unwelcome.
"Capital investment (some £200 million per year) and transfer of value through reduced rents and a range of operational support is hugely important to a pub company's ability to sustain jobs and successful community pubs.
"The Government's own impact assessment shows that these proposals will close at least 52 pubs with the associated hundreds of job losses.
"A self- regulatory system costing around £100,000 per year will be replaced with a statutory adjudicator costing nearly £2 million per annum and, as highlighted in the impact assessment, these additional costs will be passed on to consumers in the form of higher beer prices."
Ron Piper, who runs the Sir John Barleycorn pub in Hitchin, Hertfordshire, is being taken to court by Punch Taverns over rent arrears and faces eviction.
He told the Press Association: "I am glad the Government has done something, but it has fallen well short of what was needed.
"A free-of-tie option should have been included. I can buy a keg of beer from my local cash and carry for around £75, but I have to pay £145."
Punch announced it was selling five pubs - all freehold outlets in central London - to Manica Properties Limited for £9.7 million. The agreement is expected to complete on June 30.
"The consideration will be satisfied in cash. Net disposal proceeds will be used to reduce debt and reinvest in the estate.
"For the financial year ended 17 August 2013, the pubs being disposed of generated earnings before interest and tax of £0.5 million. As at 1 March 2014, the pubs had a book value of £4.4 million," said Punch.
John Allan, chairman of the Federation of Small Businesses, said: " We still believe further reforms need to be considered to prevent unreasonable rent increases and unsustainable beer price rises.
"These include a mandatory free-of-tie option with independently assessed rent as well as the introduction of guest beer rights, an area of disappointment in the Government's response. We will urge all parties to consider these in their manifestos for the next general election."