The Business Skills and Innovation Committee (BISC) has warned that pub companies have until June 2011 to introduce major reforms or face statutory government regulation. It said it stood fully behind its recommendations from 2009 and warned the industry faced its “last opportunity for self regulated reform”. In a statement it said: “We conclude that, if real reform is not delivered, legislation to provide statutory regulation should be recommended. “The pub industry has been found wanting now on two occasions by committees of the House of Common. If it fails to deliver on its promises by June 2011, it should be in no doubt what the reaction will be.” The report added: “We would be more confident of such an outcome if the record of the pub companies in addressing issues of legitimate concern was better than it is. “All the recommendations and conclusions in this new report should be set against this general background. We have grave doubts about the industry’s willingness to do enough voluntarily to prevent statutory or regulatory intervention.” BISC said it welcomed the progress being made by RICS to address the shortcomings of its existing guidance on valuations. However it concluded that: "The acid test of its success will be the extent to which the new guidance provides clarity on valuations and the principle that a tied tenant should be no worse off than a free of tie tenant." The report also concluded that the BBPA Framework Code of Practice "appears to be a modest step in the right direction" and that it expected the major pub companies to "treat it as an absolute de-minimus requirement and to significantly build on it with their own Codes". Peter Luff, the MP who chairs BISC, said he believed pub companies were on probation and had “absolutely” not been let off the hook. He told the Morning Advertiser: "If the pubcos think think they have got off then they are in for a rude awakening. Luff added: “The Competition Commission inquiry might find in favour of the current system and take four years. "We could have been heroes and said it is all rubbish and refer it to the Competition Commission — that would have been great for my image. "But I didn't think that would have made a real difference." Following the publication of the updated BISC report the British Beer and Pub Association BBPA said it was determined to address the issues raised head on. The industry body said: “Companies will apply both the letter and spirit of that code in their own individual company codes within the next few months. This will deliver greater transparency to prospective tenants and lessees, more information, training and a low cost independent rent review panel for existing tenants and lessees. These are the essential building blocks for a new and constructive relationship. “We invite wider industry groups to positively engage with, and work in partnership on, this programme for change and improvement.” The organisation added it would be prepared to meet with BISC again at any stage to discuss the progress of self-regulation. Separately the Morning Advertiser, the trade newspaper and sister title of M&C Report, has revealed that the Liberal Democrats would “radically reform” the beer tie. Don Foster, the Liberal Democrats’ licensing spokesman, said the tie seemed “one sided” and “out of control”. The Independent Pubs Confederation (IPC) welcomed the updated report into pub companies saying it was “right and proper” its earlier recommendations remain on the table. Kate Nicholls, the IPC’s secretary, said: “There is a clear direction that they must be addressed in full before the threat of a Competition Commission investigation can be lifted. “This chimes exactly with the evidence presented by the IPC to the Committee and justifies our assertion that the Framework and RICS actions are insufficient in and of themselves.” She added the IPC believed that the BBPA framework left three-quarters of the Committee’s recommendations unaddressed. “We would urge them to work with us now to tackle the outstanding issues,” added Nicholls. “Only then can we step away from our call for the government to intervene to ensure a robust legislative and regulatory framework to deliver the free and fair market we demand.” The Campaign for Real Ale (CAMRA) also welcomed the report and added it wanted the Office of Fair Trading (OFT) to “look more carefully” at the issues involved as it responds to its super complaint for a second time. Simon French, a leading City analyst with Panmure Gordon, this morning said he believed shares of the two major pub companies would respond positively following yesterday’s putting on hold the threat of legislation. He said: “We believe the share prices of Enterprise Inns and Punch taverns will respond positively today given the risk of immediate government intervention has receded. “However we would recommend selling into strength given the ongoing regulatory risk from the re-opened OFT investigation into the beer tie and the Eu block exemption renewal.” Reiterating a sell recommendation of Punch and ETI he said tenants still faced operational headwinds including, “the consequential impact on their cash flows and the corresponding pressure on pubco finances. In particular, we believe that the imminent rise in beer duty, rising RPI-linked rents, beer price increases and a possible further increase in VAT pose substantial risks to tenant profitability.” Geoff Collyer, of Deustche Bank, said he believed that the regulatory cloud over the industry should be lifted, “hopefully for good”. Despite predicting further anti-pub company criticism and irritation of the main companies involved he added: “We hope that from here the industry will be allowed to get back to the day job of recession and supporting worthwhile licensees."