FSB: Pub Company Code of Practice not working

Almost seven in 10 tenanted pubs think a new Code of Practice brought in to give them a fairer deal will not improve their relationships with the Pub Companies (Pubcos) that own them, new figures from the Federation of Small Businesses (FSB) show.

Tenanted pubs have long paid inflated beer prices and have high rents imposed on them by Pubcos. Since 2004, Parliamentary Committees have regularly expressed concerns over these industry practices. Last year the Business, Innovation and Skills Select Committee advised that a revised Code of Practice should be put in place to help give tenants a fairer deal, as they were being crippled by high rents and beer prices.

But new statistics show that nothing has changed and the code does not work. In a survey of FSB members who run pubs, 69 per cent said they do not think the new code will improve the business partnership with their Pubco. In reality, it places additional responsibilities and financial burdens on the tenant. Of those that have signed their Pubco’s Code of Practice, half thought it was intended to be a legally binding contract for both sides. Yet the Code of Practice is only meant to act as an agreement between both parties to help improve their relationship and offers pubs no security from bad deals. The FSB wants to see small firms offered protection by making it a law.

Flow monitoring equipment – which measures pints pulled – frequently gives incorrect readings. The FSB is concerned that Pubcos are threatening to penalise tenants for buying beer outside of their tie when they are not, by writing the use of flow monitoring equipment into the Code of Practice.

The Government has promised to take legislative action if the relationship between Pubcos and their tenants has not improved by June this year. While this will go some way to easing the pressure put on tenants by their Pubco, the FSB is calling on the Government to:

. Ensure the Code of Practice written by an independent body is put into law, which: provides tied tenants with the option to become free of the tie; an open market rent review; and an option for selling a guest beer

. Ensure the Code of Practice is written and overseen by an independent body that sits within the new competition body in the interim period before it is written into law

Clive Davenport, Trade and Industry Chairman, Federation of Small Businesses, said:

“For years now, lessees of tenanted pubs have been telling us they are being crippled by both high beer prices and rent which have to be passed on to their customers to survive. Things looked set to improve when the revised Code of Practice was put in place. But our members have told us that it isn’t working.

“There are still 25 pubs closing every week. The closure of a pub does not just affect tenants and their families, but the wider community. Tenanted pubs are still not getting a fair deal from the Pubcos that own them – seven in 10 do not think the Code of Practice will improve anything. The Government must fully enforce a Code on the industry and ensure it is overseen by an independent body. Until then we could see the pubs at the heart of our communities disappear forever.”

ENDS

Notes to Editors

1. The FSB is Britain’s leading business organisation with over 210,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk

2. The FSB surveyed 163 pub owners from 7 February to 21 March 2011 and received 74 responses.

3. The British Institute of Innkeeping Benchmarking and Accreditation Services Ltd (BIIBAS), runs a scheme under which Pub Companies can apply to have their Codes of Practice accredited, as a clear and transparent declaration of the business relationship being offered between the landlord and lessee/tenant and also benchmarked against the criteria established by the current British Beer and Pub Association (BBPA) Code of Practice. The new Pubco Codes have been updated over the past year on the request of MPs on the Business, Innovation and Skills Committee. Research shows that 85 per cent of the UK’s tenanted and leased pub estates now have Codes of Practice that have been accredited by BIIBAS.

Contacts

Prue Watson: 020 7592 8121/ 07825 125695 prue.watson@fsb.org.uk

For regional FSB contacts please go to www.fsb.org.uk