Pubs code adjudicator and pubcos slammed by MP

Adrian Bailey, MP for West Bromwich West, spoke at a Westminster Hall debate on the legislation of the pubs code on 24 January, and said he was "hugely concerned" about how the pubs code legislation – designed to give tied pub tenants a market-rent-only (MRO) option – was being implemented.

He said Newby's impartiality, the speed at which awards were given, and the ways pubcos were using their powers to "frustrate MRO negotiations", were of concern.

Bailey said Newby had a "quite obvious and transparent conflict of interests", and that he had done nothing to divest himself from these.

"Given that the confidence in his commitment and impartiality is crucial to earning the trust of pub tenants, this must be a matter of huge concern," he said.

"I think if we look at the opportunities that he has had over the past 18 months, he might have been able to demonstrate how effective he has been. If you do look at his performance, it would be an understatement to say the implementation and progress made under his supervision falls short of the level needed to achieve the legislative objectives."

Culture of the industry

Newby's message to pubcos claiming he would take "regulatory action if needed" was raised by Bailey. This message followed the publication of the compliance handbook, which Newby created as a result of his "deep concerns" over how some pubcos treated tenants applying for MRO.

"Well, we have been operating for 18 months, there is overwhelming evidence that this is necessary, and I think it’s a reasonable question to ask why, given the level of evidence, he has not done this already? Instead, he has published a compliance code for pubcos, which quite frankly should have been done much earlier."

Bailey also mentioned Newby's letter to the Business, Energy & Industrial Strategy (BEIS) select committee chair MP Rachel Reeves, where he said it was his aim to "reshape the culture of the industry".

"To date there is absolutely no sign of this," he told MPs.

"The pubcos are intransigent, they have enormous resources at their disposal, to change the prevailing culture, a much tougher approach is needed.

"The PCA is running out of time, and I believe it is time the Government sought a replacement."

Unreasonable

Bailey also discussed "only some" of the devices allegedly used by pubcos to "frustrate negotiations".

"[Pubcos] include processes in their negotiations with the tenants designed to push up costs and include conditions not commonly found in tied tenancies.

"Another is the insistence by the pub companies of having brand new tenancy agreements, rather than a deed of variation (DoV) to existing tied tenancy. This enables pubcos to introduce new terms and requirements not historically found in free-of-tie agreement, but that introduce substantial additional upfront costs.

"Others are deposits and advanced rents designed to make an MRO unaffordable.

"Then there are unreasonable, unexpected and novel improvements of dilapidation requirements, including things like a new roof, new pumps, resurfacing of car parks, patios as well.

"These are just some of the strategies used by pubcos to circumvent the spirit of the law."

Make it clear

Bailey suggested two key adjustments to the legislation to overcome the issues he raised.

"The first is to ensure the definition of MRO makes clear the right of a tenant to pay an independently assessed market rent, and only that rent, to the pubco.

"The second, DoV must be allowed with the only changes being the severing of tied terms, and the rent being independently assessed.

"Those two things would go a long way in addressing the key grievances raised so far."

In conclusion, Bailey said: "I have been involved in this issue for a long time. I know there are many members who have been equally committed.

"I pay tribute to my predecessors, and the many campaigners of the voluntary groups who have been dedicated that we do drag these companies kicking and screaming by whatever legislation necessarily to confront their responsibilities as operators of important community facilities that play a vital role in so many people’s lives.

"I will not rest until it’s done. I hope the Government will work with me to achieve this."

The Morning Advertiser​ has contacted the PCA for a response.