Comment: Greg Mulholland MP on the pubcos’ double ‘rip off’

As someone who was critical when the Government got it wrong, I must also lead the praise when it has done the right thing. Vince Cable has shown his belief in small business and that he cares about pubs and Jo Swinson has been like a breath of fresh air, naturally engaging with people and genuinely listening. [I am sure she will give the Publican’s Morning Advertiser (PMA) that interview now!].

Well done also to the superb work done by Adrian Bailey, Peter Luff and their select committee. Their professional evidence gathering, research and scrutiny exposed the problem and their solution is largely the one now being pursued.

Huge credit must go to the organisations that have pursued this issue, the Independent Pub Confederation as a whole and especially Fair Pint, the Campaign for Real Ale, the Federation of Small Businesses, Justice for Licensees, Guild of Master Victuallers, Licensees Unite and the GMB; and also to all the current and former licensees up and down the country who have spoken out on this. For once, your many individual voices have been heard.
Crucial information​

I am also very proud of the central role that the Save the Pub Group has played in this and the fact that, once again, one of our meetings got on the record new, crucial information that proved in many ways to be the last straw for the last chance for self-regulation. It seems that many of us are actually not too shabby when it comes to winning friends and influencing people.

So the last, last chance for self-regulation has gone. Even as the BBPA (British Beer & Pub Association) and pubcos faced the news, they must have realised that the whole thing was in tatters.

Yet on hearing the news they said (I suppose they had to) that they regretted that self-regulation had not been given enough time to work! Is eight years (and counting) not long enough? I wonder how long would have been needed? No doubt, another year after the codes were finally in place, then it would have been nearly time for the next general election.

The truth is they only have themselves to blame. The progress since November 2011, for the solution that we were told had been chosen because it would be swift, has been just as glacial as the BBPA’s previous attempt to bring forward meaningful self-regulation.

Indeed, if the Government manages to proceed as intended, we will have a statutory code before the pubcos would have even adopted their own new codes. Even now, version six of the framework code is still not signed off (despite the odd PMA headline saying it would be signed off before the end of the year) and there was clearly an impasse, so we had already slipped beyond the 20-month timetable that Brigid Simmonds had revealed at the Save the Pub meeting in December.

Even more critical, of course, was the admission that the BBPA had no role in tenant profitability, which in effect meant that the November 2011 solution, in particular the clear instruction of the Department for Business Innovation & Skills (BIS) to engage in dialogue and create meaningful reform, including risk and reward, had been a red herring. There was no way back from this.

We (including a former cabinet minister and the current responsible shadow minister) set out to ask tough questions, especially of the companies that did indeed remain “on probation”, to use Vince Cable’s words, and to see if self-regulation was delivering what BIS ministers had said that it must. It was not. Nor could it.
Scrutiny wins through​

So, it has to be said, the PMA editorial of 13 December got it wrong. To compare a celebration (and incidentally one that should have been in a pub, not city offices) of a welcome but modest funding increase to an excellent organisation with a rigorous, select committee-style hearing into a contentious business issue is just daft.

I am delighted to toast every positive pub initiative, but the job of MPs — on the select committee and the Save the Pub Group — has been to rigorously hold to account the companies criticised again and again since 2004 and to keep the issue on the agenda. We succeeded. We didn’t ‘force’ anyone to say anything, we asked questions and pushed for answers. Now we have managed to change the law. You don’t do that through drinking Champagne and being jovial with everybody.

Indeed, had I not pursued a freedom-of-information request on a party colleague in 2011 when he got it wrong and did it wrong, we would not be here. It was doggedness and scrutiny that is leading to a change in the law, in a way backslapping never could.

So, the first step has been delivered. We are to have a statutory code and an adjudicator. That is agreed. The challenge is now how the Government delivers its explicit commitment to ensuring that the tied licensee is not worse off than free of tie. Which means, in simple (rather than ‘industry’) language, that there must be an equivalent earning potential for those on any tied agreement and those on a free-of-tie lease or tenancy.

In other words, that the double rip off of higher beer prices and higher rents will be outlawed.

The easiest way to deliver this remains the market rent-only option (otherwise known as the genuine free-of-tie option, with open-market rent review). This remains on the table. There may be other ways, but any mechanism must stop the overcharging that has damaged so many pubs.
Business model change​

It is right that the family brewers have been excluded. They too must have seen the writing on the wall considering the farce over version six and they have nothing to fear as long as they offer fair terms, based on genuine partnership and an opportunity to make a decent living, which was always how traditional brewery tenancies worked. In the rest of the pub sector, however, the times are a-changing.

The pubcos will have to change, not just culture as some were attempting, but the actual business model. We will have to see how that affects them, but what we can say is that as long as the Government delivers what it has outlined, Tuesday 8 January will be a day that will give many tied licensees and many local communities hope for the future of their valued pub.