The Government has announced this week that it is to consult on proposals to set up a statutory code and independent adjudicator to regulate the relationship between pub companies and their tenants.
A spokesman for the Department for Business, Innovation and Skills (BIS) has said that there is “complete political will” to introduce a statutory code and adjudicator following four select committee inquiries into the issue.
However, the Opposition says that the Government faces a major challenge in getting the legislation for a statutory code of practice right, as there needs to be a ‘free of tie’ option, so that landlords can buy their beer from wherever they want to.
It is estimated that 23,500 of Britain’s 50,000 pubs are run on “tied” agreements, which can force publicans to buy beer at 50 per cent above market rates and pay “excessive” rents on the pubs they run.
The consultation follows a letter sent in December by Business Secretary Vince Cable to parties involved with the self-regulation deal that was agreed between the Government and the British Beer & Pub Association in late 2011, which Dr Cable said was not far-reaching enough, while campaigners say that self-regulation has been “a farce.”
However, the pub industry has greeted the news with dismay and has raised concerns over how the statutory scheme would be funded, although the large pub chains have agreed to contribute to the consultation process.
The proposed Code will be based on the existing Industry Framework Code but will be strengthened to include a ‘fair dealing’ provision, and the new adjudicator will have the power to fine large pub companies if they are found to be exploiting their tenants.