Cable proposals won't stop pub closures
Added: Tuesday, June 3rd 2014
The timing is unfortunate: on the day Vince Cable and Nick Clegg announced their long-delayed proposals for reform of the pub companies, Punch Taverns announced it was selling five London pubs to a property company for £5.3 million.
The profit will help ease Punch’s debt mountain as five more pubs are turned into luxury apartments, depriving their communities of popular places to meet for a drink. Nothing in the Cable/Clegg proposals will stop this vandalism by companies that treat pubs as pieces on the Monopoly Board.
The centrepiece of the government’s proposals is the appointment of a Pubs Adjudicator who will have the power to arbitrate on disputes, carry out investigations into alleged breaches and impose sanctions on pub-owning companies if they fail to comply. The adjudicator will also have powers to enforce new rights for publicans under a statutory code.
On paper, that sounds fine. But the adjudicator will, in effect, be an Ombudsman -- and that rings alarm bells. The most powerful Ombudsman is the Parliamentary and Health Service Ombudsman who is on record as saying she only investigates between one and two per cent of complaints made to her about the NHS. In other words, around 98 per cent of complaints go in the bin.
Ombudsmen are notoriously slow to investigate and hand down decisions. In the case of pubs, by the time the adjudicator has ruled on a complaint, a publican paying a high rent and high beer prices while earning a miserable income may have given up the ghost and moved on.
The response by Cable and Clegg accepts that many publicans earn less than the minimum wage and need greater support and protection. Dr Cable adds:
“Our consultation on pub companies and tenants sought your [i.e. the trade and consumer groups] views on establishing a Statutory Code and an Adjudicator to govern the relationship between pub-owning companies and their tenants. The evidence we have received shows that, while there is widespread responsible practice in the industry, many tied tenants continue to face unfair treatment and hardship. Self-regulation has not been able to effect the step change desperately needed in the industry to ensure that all tied tenants are treated fairly.”
He says the government will bring in a Core Code to protect all tied tenants – providing them with increased transparency, fair treatment, the right to request an open market rent review if they have not had one for five years, and the right to take disputes to an independent adjudicator.
Tenants who are tied to a pub-owning company with 500 or more tied pubs will also benefit from an additional Enhanced Code that will require their pub-owning company to provide them with a parallel free-of-tie assessment if rent negotiations for their pub fail.
But Cable/Clegg have set their faces against the demand for a mandatory free-of-tie option, also known as the market-rent-only option. Cable says:
“The consultation responses raised concerns that this option would create uncertainty for pub-owning companies, which would have an unpredictable impact on the wider pubs sector.
“While the mandatory free-of-tie option had undoubted attractions, there is insufficient support to proceed with it. Our proposals for a Statutory Code and Adjudicator will therefore rebalance the relationship between pub-owning companies and their tied tenants, without pursuing this more radical option”.
That’s a Liberal Democrat rejecting a radical option!
What is also missing from this response is improved choice for consumers. In all too many pubs owned by the big companies, beer choice is restricted to bigger breweries prepared to meet the pubco demands for deep discounts. This effectively keeps independent brewers – family-owned and artisan producers – out of thousands of pubs.
As there are no proposals to relax the tie, not only will tenants not be able to offer improved choice for their customers but they will also continue to face the threat of fines and even eviction if they go outside the terms of their tenancies and bring in outside beers.
There’s a promise of jam-tomorrow in the claim that the price of a pint could fall by 60p if the adjudicator instructs pubcos to match their prices with those on the open market. Can you imagine Enterprise and Punch agreeing to cut the price of a pint by 60p? Do I detect large porcine creatures flying over the offices of the Department of Business?
