Opinion: The pubs code and a question of "balance"

If we cast our minds back to January 2013, when business secretary Vince Cable announced that there would be a consultation on a pubs code and an adjudicator, the overriding principles would be of “fair and lawful dealings” and that in which “the tied tenant would be no worse off than free of tie”

These principles have created a headache for those trying to implement it because of the huge imbalance that existed - and many would argue still does - at the time.

The average difference between a tied and free-of-tie wet margin is about 15% and if you therefore take a £200,000 a year turnover wet-led boozer that equates to £30,000 a year lost profit.

Now even the most partisan pubco supporter would not try and explain £30,000-worth of Special Commercial or Financial Advantages (SCORFA) - and while I have yet seen any meaningful benefit to justify this £30,000 (showing perhaps my own lack of balance) if we use a transfer of £20,000, then this I believe reflects the argument that being tied offers you a cost-saving benefit.

No benefit

The problem arrives when you then look at what this should do to an average rent of £20,000 a year - and that is to reduce it to zero.

So a bunch of Government officials were then faced with the difficult task of arriving at a Pubs Code that delivered Cable's, and therefore the government’s, commitment of “no worse off”, while balancing the concern that this huge transfer of wealth would effectively send the the pub companies into receivership as they had, over the years, become so reliant on this income stream.

When this author asked one of the BIS team why they had inserted a clause into the code which meant tenants would only become MRO compliant if their rent went up, I was told it was to offer some “balance”.

The new business secretary Anna Soubry at more than one meeting has used the same point, wanting to do the right thing while not putting too much of a “burden on business” and “balancing” the needs of both parties.

Newby

And now we are seeing exactly the same point being made by Paul Newby in his letters to campaigners and MPs in which he states he observe the principles of the code while “balancing the needs of business”.

To me there is little argument to be made stating that an unfair system cannot be completely reformed simply because to do so would damage the perpetrator of the system – but then we live in times when banks can be bailed out despite demonstrative failings in the way they operated, so who am I to argue that point.

I would however say that after four government inquiries over 12 years, an investigation into self regulation and a consultation with all the evidence bought to support those activities – the final pubs code is actually a “punishment” as much as an attempt to provide a level of economic equilibrium.

Reform

Many campaigners I am sure would support the view that these companies have had many years to see the light, and done very little to reform the way they operate, so why should we now offer any opportunity to let them off the hook by watering down legislation that at the end of it offers a “choice”?

My hope, but also my fear - expressed to many back in 2013 - is that the threat and implementation of the planned legislation would signal the end of the current tied model. And, therefore, financially unable to change, it would be simply a question of how long and how much damage they would do before going.

So far I have seen nothing to dissuade me from that fear, and believe that any attempts from anyone to offer them further support in an attempt to re “balance” the Pubs Code would simply be extending that period further.

Dave Mountford is a pubs campaigner and former Punch tenant and now runs the Boat Inn in Cromford with his wife.​​