The way forward

Now that the Trade & Industry Select Committee has finished its investigation into the pub companies, what steps can the industry take to build a better relationship? Tom Sandham reports.

Whatever the trade thinks of the Trade & Industry Select Committee's pubco investigation, the decisions stand. Now the dust has settled though, there is an urgent need to consider what it all means and how things can change before it gets thrown out from the drip tray.

This is admittedly a tough charge with the impending licensing reform commanding much of the trade's attention. And there will also be a wait before the Department of Trade & Industry through the Office of Fair Trading (OFT) formally responds to the report.

Committee chairman Martin O'Neill has suggested this process will take six to eight weeks although the OFT has responded by saying there is no statutory timescale. Either way each point will be considered very carefully and written advice will need to be given to the committee before anything is made public.

Elsewhere, a speedy response is in everyone's interests, including the pubcos, which are in the spotlight now more than ever.

Dominant market position​

Many feel the pubcos were let off the hook by the committee - the central issue of the beer tie remains after all - and this was something most tenants wanted to end. The committee also found there was no case to answer over the accusation that pubcos held a dominant market position. But there are 33 other recommendations and conclusions from the committee which need to be addressed.

Many of these focus on the relationship between pubco and tenant and it is hoped that the findings will eventually lead to improvements.

David Bishop, deputy head of parliamentary affairs at the Federation for Small Businesses, gave evidence during the first committee session representing the views of licensees.

"We share the disappointment of tenants that the beer tie still stands and understand that these are only recommendations," he says. "But there are some decent points on the rent issues and we expect this area of the the business to become genuinely transparent.

"As well as pushing the pubcos to act on this, we will be watching very closely and taking advantage of their submissions now they are public. If a pubco has said it is doing something correctly in its submission and we find it hasn't been, we can now take them to task on it."

Nick Bish, chief executive of the Association of Licensed Multiple Retailers, agrees on the opportunities offered to the industry.

"This is a defining moment in the post-Beer Orders pub industry," he claims. "We recognise the tensions in the business relationship between pubcos and their lessees, but even more strongly believe the relationship should fundamentally be one of mutual benefit.

"Pubcos have the duty to take the lead in this and the resources to do so."

Whether pubcos accept that duty is another matter but at least pressure is being applied.

Closer monitoring​

Nick Stafford, commercial director at the Society of Independent Brewers, adds that his organisation will be approaching the OFT itself to ask it to have a closer look at the beer and pub industry.

The OFT came under fire from the committee for its definition of the pub market as a whole, which the committee was not satisfied with. The committee in turn recommended that the organisation accurately define the market and establish mechanisms for monitoring it closely, along with the distribution market for beer.

Meanwhile, the trade hopes a warning for the British Beer & Pub Association over its code of practice will also result in quick changes, although the BBPA will be dealing with licensing reform as a priority in the short term.

Pubcos will, at this stage perhaps, be relieved as share prices look to have come out of the experience relatively unscathed, but bosses will know better than anyone that there are challenges ahead.

How they deal with those challenges remains to be seen, but cynics may glean a small amount of reassurance from Mr O'Neill's protestations that if they aren't seen to be doing something, legislation might become the only answer.

Is the number up for the AWP tie?​

Among the more positive points for licensees is the news that the committee wants an end to the tie on AWP machines. A small victory perhaps, but it could represent big savings for some publicans.

"We expect immediate action on this," declares David Bishop, deputy head of parliamentary affairs at the Federation for Small Businesses. "We want it to be resolved by April this year.

"It will make a big difference for tenants and could save them as much as £5,000 a year, so we want to see things happening. soon."

But Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations, said this victory should not divert attention from other more important issues.

"The AWP machine tie is one issue but it's imperative that we address how rent is decided and that licensees are earning a decent living," says Mr Payne "We must get this right first and that is what we must look at now."

What happens now?​

So what next? Here are the reactions of some of the key figures who gave evidence to the Trade & Industry Select Committee:

• Stephen Oliver, managing director at the Union Pub Company:​ "Our immediate response will be to go through each recommendation and look at our own practice. Where we might fall short we will address these issues and have evidence should the government look at pubcos again. I'm also benchmarking what we do against other organisations such as the Financial Services Authority. It's true the findings could have been much more draconian for pubcos but we certainly won't be filing this and hoping it goes away."

Martin Rawlings, director of pub and leisure at the British Beer & Pub Association:​ "Criticism of the code of practice was not entirely fair. No doubt if there had been no code in place we would have been open to more serious criticism. We can't do anything on it immediately though, as we have the little issue of licensing reform to contend with."

Nick Bish, chief executive of the Association of Licensed Multiple Retailers:​ "In spite of there being no fundamental shifts in the arrangements, there are still 33 recommendations that need to be addressed. Very many of these look at improving the quality of the relationship between landlord and tenant. The job at hand is now to improve that relationship and for pubcos to help licensees to understand what pubcos are getting right."

Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations:​ "We need to look at ways to get a code of practice written into agreements. If a tenant is not happy with the rent there needs to be a cheap, independent way to have it looked at. But most importantly, we need a good relationship between the licensees and the top tier so that if there is a problem with a business development manager it doesn't stop an argument being resolved."

Alan Dunton, licensee of the Kings Head in Llandudno, North Wales:​ "I'm hugely disappointed with the findings, they are as bland as I ever feared they would be. I don't see where we go from here. The single most important issue was to look at the financial relationship and it has not addressed this. The only major financial recommendation