BISC statutory code hearing: BII chair says licensees should have choice over tie

Bernard Brindley was speaking at the Business, Innovation and Skills Select Committee evidence hearing into proposals for a pub industry statutory code to regulate the relationship between pub companies and their tenants.

Committee chair Adrian Bailey asked if Brindley thought a mandatory free-of-tie option should be enshrined in the code. "I think the lessee would need to be made aware of the extra costs that they would be burdened with, and if they understood the advantages of the discounts then they would make a judgement whether to go free-of-tie or tied," Brindley replied.

"I've been in both situations. I've been a tied lessee, I've been a free-of-tie lessee so I understand the equations of both sides. You make a business decision. You work out yourself what your barrelage is, what your discounts are and you do that equation. It's a business decision and a personal decision."

Bailey said: "You seem to me to be agreeing that ultimately that it is the tenant that should have the right to make that decision based on their own knowledge and their own commercial judgement."

Mixed feelings​
When asked about a fair dealing provision where a tied tenant should be no worse off than a free-of-tie tenant, Brindley said: "I have very mixed feelings on that. I could also put it back to you that the free-of-tie tenant should be no worse off than the tied tenant. There's some [pub companies] who offer the free-of-tie lease and those lessees are also suffering.

"The other thing that I would find difficult is how you would account the tied tenant being no worse off than the free-of-tie tenant. In my personal experience... you would have to put a value on it. There's an argument for both sides.

"I think it's a reasonable principle but the difficulty I have is: how do you analyse the figures as to where the tied tenant should be no worse off than the free-of-tie tenant? You can't compare apples and oranges."

Brindley added that he has a real concern with the initial rents set by pub companies. "I have reservations as to how fair maintainable trade is assessed," he told the committee. "If that figure is the correct figure, I would then propose that the fair maintainable trade be capped in an agreement."

On having a threshold of pub companies with more than 500 pubs to be impacted by the statutory code, Brindley said he disagreed and that there should be no threshold.

He also defended industry attempts at self-regulation, saying that it hadn't had enough time to be seen to be working.

About the Pubs Independent Conciliation and Arbitration Service (PICAS), Brindley refuted claims that it has not been successful. He agreed that not enough licensees know about the service, and said that more needs to be done to get that message across.