The PCA’s guidance, published on 10 April along with further arbitration awards, requires pub-owning businesses to provide their tied tenants with up front and accurate information on the duty paid on alcohol supplied under their tenancies as well as the saleable volumes of keg and draught cask beers they offer.
The guidance was subject to a statutory public consultation in November 2018 and will come into effect from 1 July 2019.
It also establishes the PCA’s expectation that pub-owning businesses must ensure all of their tied tenants have access to training on cellar management support and dispensing best practice alongside ongoing cellar management support so that pubs can operate to the level of business on which its rent is based.
Fair and lawful dealing
PCA Paul Newby explained: “The publication of this guidance is another step in the process of ensuring that tied pub tenants always get the most accurate and consistent information from their pub-owning businesses about the terms of their agreements.
“This information is important to enable tenants to draw up realistic business plans and to help them to realise achievable levels of turnover and profit margins.”
Deputy PCA Fiona Dickie added: “It is a further development in our mission to ensure fair and lawful dealing between pub-owning businesses and their tied tenants through greater transparency and better, clearer information being made available.”
The PCA’s guidance can be read here.
Increased complexity
Discussing the new guidance, Brigid Simmonds, chief executive of the BBPA explained: “Brewers and pub operators have always made allowances for beer wastage to account for beer that can’t be sold. The BBPA therefore supported the PCA’s proposals to make these clearer and more transparent.
“Unfortunately, in the new guidance, the PCA has increased the complexity of how allowances should be calculated and presented. This may confuse, rather than help, publicans.
“It will also lead to higher administrative costs and complexity for pub operators, who will need to modify their systems to reflect the greater detail now required.
“The new guidance acknowledges that there could be situations where third-party suppliers are unable to provide pub operators with all of the information they require.”
Phantom pint ‘disgrace’
In a letter sent by British Pub Confederation to Newby on 5 December 2018, seen by The Morning Advertiser, chair Greg Mulholland asked the PCA to investigate the ‘phantom pints’ issue and report it to the Secretary of State for the Home Department as an unfair business practice.
However, the practice of pub-owning businesses and brewers using 72 pints as the measure of casks of cask conditioned beer despite the acknowledgement by HMRC that casks do not yield this amount due to sediment and unavoidable waste, was not reported, with the office of the PCA responding that the concern could be addressed “within the existing statutory framework”.
In response to the PCA’s guidance, Greg Mulholland commented: "Some four years after it was exposed that there has been endemic charging of tenants for beer that did not exist, the pubs code adjudicator issues weak 'guidance' having refused to investigate this matter.
“This exposes more strongly than ever the way that Paul Newby refuses to tackle bad practice in the pub sector and fails to do his duty as a statutory adjudicator.
“The British Pub Confederation, on behalf of thousands of tied tenants, wrote to the PCA asking that this clear scam, which has cost tenants millions of pounds, be reported to the secretary of state, according to the legislation and also that the practice was subject to a proper investigation.
“The pubs code adjudicator astonishingly refused to do either, which is scandalous considering how much this has cost tenants. Not only have tenants been charged for beer that does not exist, they have also had inflated rents based on these artificial quantities, so this is a very serious matter, yet Mr Newby and Ms Dickie only offer 'guidance' going forward and won't investigate or even report this, which is a disgrace.
“The verdict is clear, the pubs code adjudicator is failing tied tenants and ignoring the clear will of parliament with regards to the intention of the pubs code. Not a single matter has been reported to the secretary of state by the PCA and he and his office refuse investigate clear malpractice and refuse to prevent pubcos thwarting tenants rights and instead spend months producing weak guidance and on unnecessary arbitration. We need the 'fair and lawful dealing' as laid down in the law and it's clear we need a different pubs code adjudicator for that to happen.”
Reviewing the pubs code
The Department for Business, Energy and Industrial strategy (BEIS) is set to launch a review into the pubs code to examine the period between the regulations coming into operation in 2016 until 31 March 2019.
A BEIS spokesperson told The Morning Advertiser: “We want a fair environment for pub tenants and operators, which is why we will be reviewing the pubs code.”