During 23 minutes of a speech in the House Mulholland said he would expose the “cold, brutal, harsh economic reality of this model.”
'Reckless, irresponsible capitalism'
Mulholland said: “Perhaps a better title for my speech would be, “The Great British Pubco Scam”, for this whole sorry saga is a tale of one of the worst examples of reckless, irresponsible capitalism this country has ever seen—a get-rich-quick scheme for a greedy few that has marred lives and closed thousands of pubs and that has caused losses of billions for the UK economy, pension funds and the Treasury."
He said it was the "tragedy" of the beer orders that created a loophole was exploited by many individuals such as Hugh Osmond, Roger Myers and Guy Hands, which enabled the formation of pubcos such as such as Punch Taverns, Enterprise Inns, Unique Pub Company and Admiral Taverns.
He said: “Those at the helm had little if any connection to the sector and very little empathy with it. Everyone wanted a piece of the action, and they all piled in to make money, with little interest in the pubs, the people who ran them, the communities that used them or the wider economic impact.”
A key part of the so-called scam was “mis-selling”, Mulholland told the House. He described the situation as being akin to “loan sharks”, with pubcos misleading tenants, offering attractive terms of entry and often initial discounts, but without the “cold, hard, unsustainable reality” of what would happen in the future.
Double-overcharging
He said the “key to the scam” is double-overcharging where the pubcos get two rents - the dry rent for the property and the wet rent from selling beer at “inflated prices.” He also said that beer flow monitoring equipment is used through “intimidation”, to threaten tenants and provide calculations for “buying-out fines.”
He also raised the issue of the chosen property valuers of large companies.
Conflict of interest
“It also helps them to have their own man inside the Royal Institution of Chartered Surveyors (RICS) writing the valuation guidelines for the properties in their sector so that they can be applied in their favour," said Mulholland.
"Yes, it is Enterprise Inns’ very own national rent controller, Rob May, who has been overseeing the process since 2005. At one time he was the chairman of the valuation party.
"Despite the obvious conflict of interest, the interpretation of the new guidance is still controlled by the group that Mr May participates in. Select Committees and the Government have identified that there was confusion in the interpretation and application of the new RICS guidance, and despite requests even from the Department for Business, Innovation and Skills, RICS has simply referred the matter to Mr May’s group. Did the Secretary of State and his officials know that?”