Mediation: a cathartic process for all involved

Pubs need the freedom to succeed — ALMR chairman Nick Bish looks at the pub world post-mediation.

A lot of water has gone under the bridge in the last 18 months — since Parliament first asked for opinions about the pubcos and their leases.

There was tightly-written evidence and passionate public hearings and the outcome was the BEC Report, which effectively created the agenda for debate, and crucially it was a challenge to try to reconcile the apparently irreconcilable.

Mediation was proposed so that all the parties could try to reach agreement rather than having a settlement imposed on them, presumably to the disadvantage of one side or the other. This was an ALMR initiative and, so obviously we are desperately disappointed that it could not reach a satisfactory published solution.

Given the complexity and sensitivity of the issues under consideration, it was always going to be a big ask to hope that everything be resolved in one go, but that does not mean that we are back to square one. On the contrary, despite the remaining stark differences we are now in a position of greater clarity than ever before and have the basis to move forward to the answers. The trade is by no means "back at war with itself" but actually has a much more solid foundation from which to negotiate a better deal for tenants. This itself will underpin industry stability.

If the agenda is the BEC Report, then much progress has been made to improve the level and degree of transparency of information provided to lessees at rent setting and review. The brand new RICS report for the valuation of property and the rent setting/review process certainly qualifies as the best place for an industry code of practice for all these issues, but there is also a singular opportunity for company codes to go further and enhance the reputation and competitive edge for pubcos.

The individual companies have it in their gift to address the raft of issues that are outside the remit of national codes. They can get to grips with the gritty financial issues that will start to improve the profitability of individual businesses, to stem the tide of unnecessary closures and thereby ease the relentless pressure on them. This realisation is a posi-tive outcome of mediation and, although quite limited now, offers a good deal for the future — provided it is closely monitored by the BII's accreditation panel.

The Independent Pub Confederation (IPC) is another great outcome. For a very long time the observers of our industry have criticised us for not having a coherent voice and indeed we have beaten ourselves up too. Now there are 10 groups contributing to a common agenda. The group includes the consumers' voice with CAMRA, the craft brewers with SIBA as well as the core champions for lessees. This extends to the articulate and passionate pressure groups (Fair Pint and Justice for Licensees) with the Federation of Small Businesses and Unite in there too. This cannot be dismissed as a tiny, vocal minority — the views of 25,000 lessees are speaking in concert, supported by consumers and small brewers.

Rents​

This consensus may first be dealing with leases and rents — and we will work with the BII accreditation panel to make sure that these codes of practice really do meet these new standards — but there is no reason why IPC cannot speak on wider issues on a bigger stage on behalf of all the individual operators. The mandatory code and satellite sports broadcasting spring to mind as early subjects for attention.

Throughout this process — for all of 2009 — ALMR has remained constant in its belief and public statements that there is no problem with the beer tie in principle, just with the way that in some cases it is operated. We have always recognised that the tied arrangement can confer very real benefits to lessees in some circumstances — most notably the traditional Independent Family Brewers of Britain (IFBB) model and approach — and we would not wish lessees to lose the chance to benefit from it. But lessees need a more transparent deal from the outset and a fairer share of divisible profit. We believe, never straying from the view, that it is individual companies that can unlock a new deal, and it was a huge pity that we couldn't reach that goal via mediation.

Mediation was a cathartic process. It forced us all to look again at the real issues and to come up with practical suggestions — sometimes through gritted teeth, but better a self-propelled answer than a divisive judicial verdict that was to be celebrated or deplored depending on your point of view. Mediation has become a catalyst for ongoing dialogue, collective and individual negotiation on the issues that remain on the table — namely how do we truly develop and implement a pub rental model that delivers a fair and maintainable profit to the average tenant and by extension a business system that works for investors and brewers, pubcos and multiples and the swathe of other businesses that rely on us for their success. And not forgetting our ultimate paymasters — the pub-going public who deserve a better deal too!