Pubco leaders have said they’ve made substantial progress to meet the demands of MPs over their treatment of tenants, and rejected claims they are continuing to “mislead” and “con” licensees. Enterprise Inns chief executive Ted Tuppen, Punch Partnerships boss Roger Whiteside and Marston’s Pub Company managing director Alistair Darby, along with British Beer & Pub Association chief executive Brigid Simmonds, were among those answering questions during an often heated hearing of the Business, Innovation & Skills Committee (BISC) for its inquiry into pubcos. BISC is investigating how the trade has responded to criticism leveled at it from its predecessor, with particular focus on the updated codes of practice, the process for setting rents, and the Pub Independent Rent Review Scheme (PIRRS). Simmonds was pressed on why all but seven pub companies missed the June 2010 deadline to have their new codes accredited, and three have yet to be accredited, and why this “slippage” wasn’t highlighted in the BBPA’s evidence. She said the “big” pubcos all made the deadline, and the BBPA wrote to BISC on 19 July saying 10 operators, which between them own 90% of the country’s tenanted and leased pubs, had their codes accredited by that date. Simmonds, who pointed out that the accreditation work cost the industry £2.6m, said: “We wanted to do it properly, and there was a lot of work to be done, and it took time.” Darby said there was a queue of pubcos waiting to be accredited when it went for its first accreditation hearing in June. Simmonds said the BBPA had written to the Committee twice about the timetable and thought the group may be called in for a meeting to discuss it further. But BISC chairman Adrian Bailey MP said: “It shouldn’t require us to have a meeting for you to conform to a timetable that has been quite clearly set out.” Bailey also criticised the lack of proper project plan for administering the codes, which was demanded by BISC’s successor committee. He called the plan included in the BBPA latest evidence “a model of non-information”. Tuppen and Whiteside were pressed about how they responded to complaints about their codes. Whiteside said one of its breaches related to providing too much information in a shadow profit and loss account, another about giving insufficient notice about a rent review, and the final one about not acknowledging in writing when a licensee gave notice during their cooling off period. Tuppen revealed that the company has hired a full time compliance officer to ensure that mistakes with its code aren’t made. He said the one technical breach to date related to the positioning of machine income. However, he came under sharp criticism when he explained details of a recent complaint from Fair Pint member and Enterprise tenant Simon Clarke, of the Eagle Ale House in Battersea. Tuppen said it was based on the “fundamental basis of how rent is calculated”. When pressed to give more details, he said it revolves around a rent dispute with Clarke. The tenant says his rent, currently £51,000, should be zero, with Enterprise offering £45,000. Tuppen said this is in line with rent reductions across Enterprise’s estate of 10% over the past two years, “as we share the pain with licensees” - he stated that average discounts for tenants have doubled in the past two years to £63. Whiteside also said Punch rents have fallen 17% over the past four years as the economic downturn took affect. Tuppen said Clarke’s business plan when he took on the pub showed that based on £51,000 rent, turnover of £7,000 per week and interest on a £16,000 loan, this leaves a profit of £40,000. Outspoken BISC member Brian Binely attacked Enterprise over rents, telling Tuppen: “The truth is I think you have been misleading incoming tenants for a long time.” He highlighted Enterprise’s interim results that said its tenants face costs of around 35% of turnover. He contrasted this to a survey, highlighted by independent surveyor Garry Mallen at last week’s BISC hearing, of 700 pubs carried out by the pubco that put the figure between 42% and 51%. Binley said Enterprise tenants have told him that “on every occasion" they were quoted costs of around 35% and “on every occasion” they were “significantly higher”. “I would read the letters but I think they would embarrass you.” The MP added: “On every occasion the tenant went in on a promise. Your middle management gave the wrong information. That’s the fact of the matter again and again and again.” Tuppen said only 137 of the pubs surveyed were Enterprise sites. He added: “I disagree completely that I have misled tenants.” Binley accused pubcos of not training business development managers to understand the updates guidance on rent setting from the Royal Institution of Chartered Surveyors (RICS). “I’ve had meetings with BDMs where their knowledge of rents is almost non-existent,” he said. Tuppen defended Enterprise’s approach, saying it employs 30 RICS-qualified individuals, or 7-8% of the work force. “There’s plenty of RICS knowledge and experience," he said. He said no rent or profit and loss account is signed off without a RICS-accredited valuer - this policy has been in place since September 2010 - although he conceded that “very few” BDMs have RICS accreditation. But Binley appeared unimpressed. “The fact someone signs them off up the line doesn’t really answer the question,” he said. “It’s the BDMs who have contact with the tenants. They are the ones that are not following the guidance. Does that disturb you?” When pressed by Bailey if Tuppen can guarantee that every rent agreement is arrived at in accordance with RICS guidance, the Enterprise chief responded by saying “yes”. Binley pressed Tuppen on whether he would visit tenants who believe the company is not abiding by its codes, and accused him of “prevaricating” when the Enterprise boss said he’ll reply to all letters from licensees within 48 hours. “I believe you are prevaricating because you want to put off further questions. Why haven’t you talked to those tenants, many of whom are distraught?” Tuppen also defended RPI-linked rent agreements, saying the “majority” of tenants prefer them to five-yearly reviews and RPI “can go up as well as down”. Elsewhere, pubcos chiefs were pressed on the impact of sanctions for breaches of the codes of practice; pubcos that receive more than a set number of upheld breaches risk been stripped of BIIBAS accreditation and be thrown out of the BBPA. Simmonds spoke of the “reputational risk” of having too many breaches. “To me that’s a far greater sanction..than removal of membership from the BBPA.” Simon Longbottom, managing director of Greene King’s tenanted division Pub Partners, agreed, saying being stripped of accreditation would be a “disaster”. But Nadhim Zahawi MP criticised the fact that the largest pubcos could have 24 unresolved major codes breaches and still keep accreditation. “It’s a bit of a joke. Potentially that’s 24 families’ lives ruined without any sanction whatsoever.” Simmonds rejected the idea of the BBPA being given powers to fine members who breach the codes. “I don’t think it’s the role of a trade association and I don’t think we should be able to fine our members.” She said it “wouldn’t help” if the codes were made statutory, saying the costs of putting such a system together would not benefit tenants. She also rejected the call for a grocery sector-style adjudicator. Simmonds added: “I think we have a very good self regulation system. My view would be that the cost of that at a time when we’re still closing 25 [pubs] a week..I would prefer the Government would concentrate on other things.” When asked by MPs, Simmonds said the BBPA was “very happy” to contribute to the RICS database of rental values against discounts, and refuted accusations that the group has refused to work with the Association of Licensed Multiple, Retailers (ALMR) for its benchmarking survey of pub operating costs. She said BBPA is expected to be in a position to provide the information in the “next few months”. However, Darby highlighted the “difficult legal position” about revealing the level of discount received by the pub company. He feared this could amount to “price collusion” and was concerned about what the Office of Fair Trading would think. Later, Tuppen said PIRRS had “made a huge difference for the good of the industry”. He joined other pubco chiefs in welcoming the idea of expanding the principle to a general mediation service. Twenty one of the 27 cases referred to PIRRS so far have been Enterprise licensees, but Tuppen said this was a “positive” thing because the company is keen to ensure tenants know the service is available. The pubco chiefs were asked to rate their performance over the past year in terms of the continuing reforms. Whiteside said: “Probably seven out of 10.” Simmonds concluded: “We have improved transparency and been a positive force for good but we’re not there yet.” At the hearing, Tuppen also revealed that Enterprise's national rent controller Rob May declined to attend the BISC hearing last week because he was on a family holiday.