Business minister Ed Davey has told MPs that the Government wanted the new strengthened framework code of practice for pubcos to go further than it did by including a commitment to reform the AWP tie.
He also admitted that the Government’s Department for Business, Innovation & Skills (BIS) was “not completely correct” on its previous stance that Brulines beerflow monitoring equipment falls outside weights and measures legislation if used in trade.
Davey came in for criticism from members of the Business, Innovation & Skills Committee (BISC) today about BIS’ decision to reject BISC’s call for statutory action on the pubco/tenant relationship in favour of strengthened self regulation.
The agreement saw pubcos agree to add new measures to the codes of practice, which would be made legally binding by the end of the year. When asked if it went far enough, Davey told the BISC hearing: “We haven’t got everything that we wanted, or the ALMR [Association of Licensed Multiple Retailers] wanted.
“We got huge amounts on rent, insurance, dilapidations, training, prices lists, upward-only rent reviews, and so on. The thing that didn’t get was the full package that we would have liked to have got on AWP machines.”
“I think what some tenants and lessees undeniably wanted was a break in the tie in respect of AWP. We didn’t achieve that. We would have liked to get agreement on absolutely everything but we did manage to get commitment on important issues.”
On Brulines, Davey said previous assurances given to BISC that it didn’t fall within the Weights & Measures Act was “not completely correct”. The systems could fall within the Weights & Measures Act if used to issue fines and penalties against tenants or lessees, he said.
Davey was quizzed on why he didn’t specifically consult trade groups representing lessees and tenants, such as the ALMR and the Federation of Small Businesses, before its announcement at the end of November.
The minister said he and his officials had met groups such as ALMR and the Campaign for Real Ale over the past year and he was familiar with their views. “We felt we were negotiating fairly on behalf of tenants,” he said.
He said it was “not unreasonable” to suggest that groups such as the Federation of Licensed Victuallers Associations, a licensee trade body, would be in favour of schemes such as the Pubs Independent Conciliation and Arbitration Service (PICAS).
He also said the short amount of time given to respond, two months, meant action needed to be taken quickly.
Referring to pubco critics in the audience, BISC member Brian Binley said: “The trade sitting behind you doesn’t feel that you have dealt with this matter as an equitable process.”
Davey was questions on details of how the proposed self regulatory regime, including initiatives such as PICAS and the Pub Accreditation Service (PAS), would work during the two and a half hour session in Portcullis House.
Binley asked why the Government didn’t insist that pubcos implement deeds of variation to incorporate the new codes of practice into lease agreements to ensure they are legally watertight.
Davey said the idea was considered but it would mean c.20,000 deeds of variation, adding “significant costs” to the industry, although the minister said his legal advisors rejected the British Beer & Pub Association’s (BBPA) view that it would cost £50m.
When asked whether there would be a statement on a requirement for pubcos to offer a free-of-tie option, Davey said a report to the Department for Trade and Industry, BIS’ predecessor, found that such a move would be “anti-competitive”.
Binley replied: “Are you truthfully telling me that in a situation where a tenant or lessees goes to a new business they shouldn’t have a range of opportunities open to him? How would that possibly deny competition?”
Concluding the session, BISC chairman Adrian Bailey said: “I hope this will be the last report by the Committee but I expect it’s not going to be. This Committee is not going to let it go.”
