BISC chair: Government could act on pubcos ‘within one year’

Adrian Bailey MP, chairman of the Business, Innovation & Skills Committee (BISC), also spoke about what form the code adjudicator could take in an exclusive interview with Publican's Morning Advertiser.

In its report into pubcos released today, BISC urged the Government to act on previous undertakings to make the pubco codes of conduct, which are currently policed by the industry, statutory.

It calls for a consultation, including plans for the code adjudicator, “as a matter of urgency”.

Bailey said BISC would maintain “pressure” on the Government to act.

“I have specifically asked the secretary of state [Business Secretary Vince Cable], would he agree with the position of the previous Government to implement recommendations of the Committee, and he has said yes,” said Bailey.

“He has got two months to come back to the Committee. If we don’t get the agreement that we have been promised, I think he would be in for a very tough time in front of the Committee.

“It’s difficult to think of any reason whatsoever why the Government wouldn’t be willing to do this. It’s against a background where pubs are closing day by day.

“There’s cross party support on this. The evidence is overwhelming, and it’s an easy win for the Government; there aren’t many of those at the moment.

“The Government has got a duty to intervene. The evidence is there. In legislation terms, it would not be a particularly difficult thing to do.”

In terms of a timescale for action, Bailey said: “We would expect the Government to come back within two months, outlining a period of time for a consultation and the broad themes of the consultation. We would have thought that could be done quite easily, within three months.

“Currently I can see no reason why we can’t have a Bill in place within a year but that would depend on the level of commitment from the Government.”

When asked if the code adjudicator would mirror the ombudsman in the supermarket sector, Bailey said it would be “something along those lines”.

“There are parallels here with the grocery trade. We had the imbalance of powers between the supermarkets and suppliers. Here it’s between the pubcos and the tenants and lessees.

“Already, of course, we do have a code in place but there’s no effective way of adjudicating on it.”

Bailey, Labour and Co-operative MP for West Bromwich West, said he expected the adjudicator to have a range of sanctions including naming and shaming and fines for code breaches.

Some campaigners had called for a Competition Commission investigation into the beer tie, but Bailey was cool on the idea.
He said that like the Office of Fair Trading, which has examined the tie on several occasions, the Competition Commission would look solely at competition issues.

“It doesn’t cover the area that’s the problem,” the MP said.

“The issue isn’t about competition between different pubs. It’s the imbalance between the tenant and the pub company itself and the disproportionate income that goes to the pub company as opposed to the tenant.

“The overwhelming evidence is that tenants who run these pubs survive day by day on very low income, while pub companies do very well out of them.”

Bailey added: “We [BISC and its successor committees] have been inquiring about the industry and reporting about it since 2004 — seven years.

“The recommendations from each enquiry have been very similar. Last year there were 34 recommendations and in effect only one has been fully implemented [relating to the appeal mechanism for rents, and mediation].

“The obvious conclusion is it’s not able to reform itself.”

Meanwhile, Bailey said he didn’t think the issues associated with national pubcos were “quite as strong” with family brewers.

For example, pubcos tend to have longer lease terms with more “onerous” conditions such as fully repairing leases.

However, Bailey expressed concern that some family brewers have been starting to “replicate” pubcos.