Pubs Code Regulations 2016

The Pubs Code etc. Regulations 2016^[1] were introduced by the UK Government as part of the Small Business Enterprise and Employment Act 2015.^[2]

The aim of the new statutory power is to regulate the relationship between pub tenants and the larger pub owning companies (pubco's) which rent the pubs and sell tied products (the beer tie).^[3] The code will be live on 2016/05/26 and will enshrine the right of a tied tenant to take a free of tie rent option, officially called the Market Rent Only (MRO option). Note: Only tenants from pubco's who have more than 500 pubs are covered by the new code provisions.^[4]

The Regulated Pubco's: Greene King (includes Spirit Pubs whom they own), Marstons, Stars & Bars (Heineken), Admiral Taverns, Punch Taverns, Enterprise Inns

Background: It was deemed necessary to regulate the business relationships as an imbalance of power and bad business practices had been identified by several business select committees which had looked into the problems in the tied pub sector since 2004 the evidence supplied from tied pub tenants proved that the letting of tied pubs was unfair and in need of reform.^[5] A large survey from CGA Strategy showed some 2/3rd's of tied tenants were earning very little from their pubs. Despite clear recommendations by the select committees to create statutory powers and re-balance "risk and reward" the government initially opted for a self regulatory approach, this was announced in Nov 2011^[6] by the then Minister and Under Secretary of State Ed Davey MP.

A package of self regulation was proposed by the pubco's this was to include an Independent Framework Code (IFC)^[7] and for all pub companies offering a tied rent to have a company code, a rent review scheme (PIRRS)^[8] and a dispute resolution service (PICAS).^[9] The government also wanted to see the creation of a Pubs Advisory Service^[10] to help new entrants to the pubs trade with independent advice.^[11]

The pubco's were unable to create enough meaningful change to the letting of pubs under self regulation, pubco's were represented by a weak trade body (BBPA)^[12], members rules were ignored leading to at least two of the Pubco's having no company code despite clear promises to Government to do so. At the same time pressure from campaigning Tenant groups in 2013 under the Fair Deal for your Local banner^[13] meant further scrutiny from government was inevitable and the government held a new consultation, once again looking into the relationship between tenants and their pubco's. This time carried out by the Business Innovation and Skills department^[14] and not select committees as had been done in previous years. The outcome of that consultation was that the Government concluded from the 8000 responses that self regulation had failed to make enough progress since 2004 (when first offered to the select committee) and a new statutory pubs code was required.^[15]

New Clause 2 (MRO) The government established two principles for the draft bill that was to be voted on 1) that a "tied tenant would be no worse off than a free of tie tenant" and 2) that a pubs code would "level the playing field" The draft bill had no clear mechanism as to how this would be achieved. A back-bench MP Greg Mulholland^[16] (who had helped lead the Fair Deal for Your Local campaign) proposed a new clause to the draft bill to rectify this. On 18 November 2014 New Clause 2, was added to the Bill^[17] the vote to include the measure of an MRO option signaled a historic defeat for government by some 283 votes to 258.

The Pubs Code has to have an Adjudicator and one was appointed by the BIS on 2016/03/10^[18] The current adjudicator is a Mr Paul Newby who was a director of Fleurets^[19] his appointment is not without acrimony as he previously acted for the very same pubco's during his time at Fleurets as he is now meant to regulate.^[20]

References

[1] ttps://www.gov.uk/government/publications/pubs-code-and-adjudicator/pubs-code-and-adjudicator

[2] ttp://www.legislation.gov.uk/ukpga/2015/26/contents/enacted

[3] ttps://en.wikipedia.org/wiki/Tied_house

[4] ttp://www.morningadvertiser.co.uk/Legal/Legislation/MRO-option-for-pubs-FAQs

[5] ttp://www.parliament.uk/business/committees/committees-a-z/commons-select/business-innovation-and-skills/inquiries/parliament-2010/pub-companies/

[6] ttp://www.libdemvoice.org/ed-davey-writes-glass-half-full-or-half-empty-25997.html

[7] ttp://www.beerandpub.com/industry-briefings/pub-industry-framework-code-of-practice

[8] ttp://www.beerandpub.com/industry-briefings/pub-independent-rent-review-scheme

[9] ttp://www.beerandpub.com/industry-briefings/pub-independent-colliation-and-arbitration-service

[10] ttp://pubs.expert/information/about-the-pas.html

[11] ttp://www.morningadvertiser.co.uk/Operators/Other-operators/Pubs-Advisory-Service-undermined-by-lack-of-pubco-support

[12] ttp://www.beerandpub.com/

[13] ttp://gregmulholland.org/en/page/fair-deal-for-your-local

[14] ttps://www.gov.uk/government/organisations/department-for-business-innovation-skills

[15] ttps://www.gov.uk/government/consultations/pub-companies-and-tenants-consultation

[16] ttp://www.parliament.uk/biographies/commons/greg-mulholland/1540

[17] ttp://www.publicwhip.org.uk/division.php?date=2014-11-18&number=82

[18] ttps://www.gov.uk/government/news/pubs-code-adjudicator-appointed

[19] ttp://www.fleurets.com/about.html

[20] ttp://www.ft.com/cms/s/0/e3ae15f6-e6c0-11e5-a09b-1f8b0d268c39.html#axzz46mJjR6Wm

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