By Daniel Hunter
Pubs struggling to pay rent or beer prices could save thousands of pounds a year each, thanks to a new Code of Practice and the backing of a powerful Adjudicator, under proposals announced today (Monday) by Employment Relations and Consumer Minister Jo Swinson.
Ministers want to make sure that pub tenants are treated fairly by pub companies and hope that the new proposals will save tenants £100 million per year. The Code would contain mandatory rules for all pub companies who own a certain number of pubs. In particular it would stop pub companies abusing the beer tie, which obliges tenants to sell certain types of beers often at high prices.
Under the proposals a new Adjudicator would have the power to:
- enforce the Code
- investigate any breaches, and
- deal with disputes through possible sanctions and fines
The proposals are contained in a consultation published today. The Code will apply to those pubs which own over 500 pubs, to focus on the part of the industry where almost 90 per cent of complaints are received. The consultation seeks views on whether this is a fair threshold.
Business Secretary Vince Cable said: "We gave pub companies every chance to get their house in order. But despite four select committee reports over almost a decade highlighting the problems faced by publicans, it is clear the voluntary approach isn't working.
"Pubs are small businesses under a great deal of pressure, many of which have had to close. Much of that pressure has come from the powerful pub companies and our plans are designed to rebalance this relationship.
"Pubs play a valuable role at the heart of our communities and we urgently need a change to help them survive and become profitable. These plans will do just that and could save pub tenants £100million per year by making sure that pub companies charge their tenants fair rents and beer prices.
"The new proposals could also allow tied pubs to have independently picked guest beers and help the growth of small beer and ale manufacturers across the UK. The Government is committed to building a thriving pub sector. The industry represents many small businesses, employing hundreds of thousands of people across the country."
Employment Relations and Consumer Minister Jo Swinson said: “We are committed to stamping out abuse of the beer tie and helping British pubs to thrive. It has been a huge concern of mine that pubs, often the hub of our communities, are closing down at an alarming rate. What is also shocking is that the figures show that almost half of tied pubs earn less than £15,000 a year, and struggle to make ends meet because of rising beer prices and rent.
“I have heard about a variety of unfair practices such as large unjustified increases in rent, and am clear that this sort of behaviour is not good enough.
“These proposals will put a fairer system in place and will make sure that tied pubs are no worse off than free-of-tie pubs. For the first time if pubs feel they are being treated unfairly by their landlords they will be able to complain to a powerful new body.
“This month is also Community Pubs Month with some great work going into helping community pubs. Alongside the recent beer duty discount announced in the Budget, these plans will support the pub industry and the role pubs play in building a stronger economy in our local communities.”
Under proposals the Code will make sure that:
- pubs are fairly and lawfully treated by pub companies
- tied pubs are no worse off than free-of-tie pubs
- pub companies charge fair rents and beer prices, with the possibility of open market rent reviews
- tied pubs could have the option of a guest beer, picked independently, which could help the growth of small beer and ale manufacturers in the community.
If pubs feel that they are being treated unfairly or there has been a breach of the Code, they will be able to complain to the Adjudicator who can investigate and arbitrate the dispute for them. They will have the power to enforce the Code and impose fines on pub companies if the breach is severe.
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