BISC’s pubco report: the trade’s view

Evidence: Senior industry figures gave their submissions to the BISC inquiry

The damning criticism from the Business, Innovation & Skills Committee (BISC) report into the pubco-tenant relationship has put the industry firmly into the spotlight. The report claimed industry self-regulation had failed and there should be a statutory code of practice for tenanted pubcos.

BISC chairman Adrian Bailey said that the “deep-seated” problems between tenants and pubcos have not been sufficiently addressed. The committee conducted hearings questioning senior members of the trade and called for submissions as evidence. Here are a selection:

The licensee who sparked the original select committee hearing in 2004 called the pubco debate the “slowest avoidable train wreck in our history”.

Enterprise Inns lessee Mike Bell, of the Portbello Gold in Notting Hill, west London, said his Freedom for Pubs Association (FFPA) believed pubs must be owner-run and that the tie had long since ceased to be the valid tool it once was.

“This has been going on since 2004 and it’s the slowest avoidable train wreck in our history,” he said.

“FFPA sees a world of owner/publicans who will be able to borrow to improve their pubs, to close the price gap between
pubs and supermarkets and diversify into other areas such as microbreweries and stores, but we cannot do it without your help.

“Government must act one way or the other — procrastination is not an option.”

A project accountant from Enterprise Inns wrote to express his dismay at the way the company was being portrayed by MPs.
Mark Beckett, formerly financial controller at the pubco from 1991 to 2006 and now a project accountant with the firm, wrote in a personal capacity.

“The picture being painted of Enterprise Inns bears no resemblance to the organisation that I have had the pleasure to work for for almost 20 years,” he said.

“The organisation is, and always has been, professional, honest and well-managed and I am immensely proud to have played a very small part in the development and success of the company.

“We are very lucky to have incredibly talented and committed publicans running most of our pubs. In the majority of cases we are able to work closely with these publicans to deliver mutual success.

“Our business needs our publicans to be successful.

Beckett added that claims the pubco had made no progress were “nonsense”.

Pub operator Paul Wigham, who operates 32 pubs on various tenancies and leases in the south-east of England under
the company Orange Sun Bars, admitted he was disappointed at the pace of change.

“Pubcos naturally wish to protect profits and are, therefore, reluctant to see dramatic movements that would impinge upon these,” he told the committee.

Wigham welcomed recent changes and expressed support for the Royal Institution of Chartered Surveyors (RICS) guidance, which gives clarity on some rent valuation issues.

He backed the concept of a code of practice framework but believes the British Beer & Pub Association is not the appropriate body to control the framework, “given its interest conflicts”.

London brewer and retailer Fuller’s urged the committee to “not tinker further with the livelihoods of good businesses” and to address any further problems with individual companies rather than the industry as a whole.

Fuller’s said it acknowledged there was a need for change in the pub industry and that the code of practice had driven
positive reform.

A recent survey of tenants, which was carried out by the company, showed that a total of 71% are happy with the training support they receive, 95% agree or strongly agree they are happy with the relationship with their BDM (business development manager), 85% say the BDM has a good understanding of their business and 98% believe that their BDM acts with honesty and integrity.

“We urge the committee not to tinker further with the livelihoods of good businesses, such as Fuller’s that have been in existence for more than 165 years, to achieve headlines they seek elsewhere,” it said.