Publicans who are currently tied to large pub companies say they are struggling to make a decent living, and more than half say they are earning less than the minimum wage.
Deputy Prime Minister Nick Clegg and Business Secretary Vince Cable today (3 June 2014) announced that the government will give publicans new rights under a statutory code, and set up an independent adjudicator with the power to resolve disputes.
The adjudicator will have powers to enforce the new code, arbitrate disputes, carry out investigations into alleged breaches and impose sanctions on pub owning companies if they fail to comply.
Deputy Prime Minister Nick Clegg said:
British pubs are often the centre of our community, a place where we meet friends, watch sport and enjoy a Sunday roast – they are a national treasure and the envy of the world.
They also contribute billions to our economy every year. But for too long, landlords who are tied to larger pub companies have struggled to make ends meet – over half earning less than the minimum wage.
The self regulatory approach hasn’t worked, so these new rules will give fairer treatment for landlords so that they can keep your local pub going strong.
Business Secretary Vince Cable said:
Local pubs and their owners play a vital part in vibrant local communities right across the country, as well as making an important contribution to the economy.
Far too many landlords feel their income is squeezed by big pub companies. So today we are taking action to make sure they get a fairer deal.
The introduction of a statutory code will make sure that tied tenants get an accurate assessment of how better off they could be and the new independent adjudicator would make sure pubs companies are forced to act to redress the situation if they aren’t behaving responsibly.
Tied tenants have to buy beer from their owning company, and usually pay a higher price for it. This should be balanced out by the subsidised rent or other benefits they may receive from their pub company, but this may not happen and rents can be too high. Under the new code, pub landlords will benefit from fairer rent assessments.
Under the reforms announced today:
- all tied tenants will be given the power to request a rent review if they have not had one for 5 years
- For the first time, tied tenants will also have the right to review the information pub owning companies have used to decide to increase rents. This greater transparency will allow tenants to see what information their landlord has used in calculating the rent, and decide whether an increase is fair
- there will be additional protection for tied tenants whose pub owning company owns 500 or more tied pubs. If they cannot agree a tied rent with their pub company, these tenants will have the right to request a ‘parallel free-of-tie rent assessment’ to show whether they are worse off than their free-of-tie counterparts. Having this information will give tenants the information they need to negotiate a better, fairer deal with their pub company
- tied tenants will have the right to choose whether to be tied for gaming machines
- tied tenants will be able to report breaches of the code to a new independent adjudicator who will also arbitrate on rent disputes. The adjudicator will have the power to provide redress where the code has been breached. The adjudicator will also be able to launch investigations into allegations of systemic breaches of the code and to impose sanctions – including financial penalties – if it finds the code has been breached
Notes to editors
- In January 2013 the government announced it would consult on introducing a Statutory Code of Practice and an adjudicator, based on the model of the Groceries Code Adjudicator, to arbitrate disputes, carry out investigations and impose sanctions where a pub owning company had breached the Code. An 8 week consultation was held between 22 April and 14 June 2013. Responses to the consultation were published on 13 December 2013.
- Publicans were surveyed by the Campaign for Real Ale (CAMRA), with more than half, 57%, of those in tied tenancies saying they earned less than a National Minimum Wage equivalent salary of £10,000 a year.
- Tenants will pay a £200 fee to the Adjudicator for a parallel free-of-tie rent assessment.