Pubs Code Adjudicator update

Submissions to the review into the Pubs Code closed on 22 July but before the outcome can be known, the Adjudicator, Paul Newby, has announced that he will not seek reappointment when his four year term ends next May. This may be for the best all round. Mr Newby, told the Morning Advertiser, “The introduction of the pubs code has been a major regulatory intervention in the long-established tied pub model and a business culture ingrained over many years. This has not been an easy task with significant resistance and conflict along the way. Even so, three years on, the tied-pub landscape is different compared to July 2016 when the code came into force, the principal effect being to rebalance the relationship between pub tenants and their regulated landlords, giving tenants greater control over their business and the opportunity to make better informed decisions and the best choices for them. I am proud to have played my part in that.

Nik Antona, CAMRA’s National Chairman, commented, “As the first person to hold the role of PCA, we recognise the challenge of the new legislation and awful track record of behaviour by pub companies Newby took on when he was appointed. He and his deputy, Fiona Dickie, have made progress pushing pub companies to waive confidentiality on decision notices so that pub tenants finally have access to vital information when in disputes with their pub owning company. Unfortunately, it is clear that the pubs code is failing. It needs immediate reform to allow Mr Newby’s successor to deliver on the intended aims of the code and to finally get a fair deal for tenants. We hope that this will be an outcome of the current statutory review.

The chief executive of the Forum of Private Business, Ian Cass, said, “If anything, the situation has worsened during the past three years, with the PubCos using practices to circumvent the Market Rent Option that would not be tolerated in other parts of industry. In no way have we seen the Adjudicator successfully putting any pressure on the major PubCos to address the issues that materially penalise tied pubs, and it is well time that he stood aside to allow someone else to take over his role and do so. In his parting statement, Mr Newby actually acknowledges that he has not made the progress that was expected and it is disappointing that it will still be a further nine months before he formally leaves the position. We have yet to see a single PubCo genuinely apply the Market Rent Option, nor have we seen any being forced to by the PCA. Put simply, Mr Newby has completely failed to achieve the principle that ‘the tied tenant shall be no worse off than the free of tie’ and the principle of ‘fair and lawful dealing’ is further away than it was at the inception of the Code, as the PubCos use a variety of new, unfair business practices to thwart the legislation. The Forum is calling on the Government to appoint a replacement who will have the experience, integrity and understanding of the key issues, to ensure that the objectives of the Pub Code are now properly enforced and that the unfair treatment of tied pub landlords and landladies is properly addressed once and for all.

On the other hand, Brigid Simmonds, the outgoing chief executive of the British Beer and Pub Association (BBPA) (the pub companies’ trade body), said, “The evidence suggests that the Pubs Code and the Adjudicator are doing the job they were meant to do; regulating the relationship of pub operator and publican. It is still early days for a Code which had no transition period and where guidance and decision making has been slow. On that basis, this review should acknowledge that the Code is a work in progress. The Government and Adjudicator should work more closely with industry and tenants to ensure that leased and tenanted pubs remain a great way to run a business for many generations to come.

It is important that critics of the way that the Pubs Code has been applied continue to highlight the problems because the review must bring about significant changes. In the last edition I mentioned the case of publican Gary Murphy and Gary has now kindly supplied us with chapter and verse, as described on pages 18 to 21. I also mentioned that CAMRA was conducting a survey of tied pub tenants in England and Wales. Some 400 responses revealed significant failures in the Pubs Code in that 75% of tenants reported that they don’t think they are treated fairly and lawfully by their parent pub companies, while 73% felt that they were worse off than a free of tie tenant when the code is supposed to guarantee parity. Furthermore, one in five tenants who have legal rights under the Code was completely unaware of the Market Rent Only option which is a key component of the legislation allowing them to buy beer on the open market. Here is Nik Antona again, “We wanted to gain an accurate picture of the views of tied licensees in England and Wales. The Pubs Code Adjudicator currently relies on pub companies to audit licensees’ opinions, which we believe has skewed responses. It’s clear from our survey that there are significant failures with the current Pubs Code. With a new Prime Minister and Cabinet, the ongoing review is the first chance for the new Government to show that they will be taking positive action to support tied pub tenants and consumer choice.” The results of the CAMRA survey have been submitted to the Government to feed into the review. You can read the full submission on the CAMRA website at www.camra.org.uk/campaign-resources. Readers who support CAMRA’s position here could assist by writing to their MP to draw their attention to what CAMRA has had to say.

I also mentioned the situation as regards dilapidations, the end of lease assessment of repairs. A particularly strange case has come to light, concerning the Fox & Duck in Petersham. The case has been reported in the papers, including the Financial Times, so I will just give a short account here. The tenant, Priti Biswas, has held an Ei Group lease since 2006 and the pub is managed for her by her daughter Louisa and her partner Colin. The situation became somewhat sinister in 2017, two years before the end of the lease, when Ei claimed that the family wanted to re-assign their lease and submitted a dilapidations bill for £248,000. Louisa insists that no such request was ever made and took her dispute to the Pubs Code Adjudicator in November 2017. As Louisa commented, “We could probably build a new pub for what they wanted in dilapidations. We’d like to go down the MRO (market-rent-only option) route or buy the place but I’m convinced Ei want us to leave so they can put their own manager in or develop the site for residential property.

The family maintain that Ei had not previously mentioned any problems and had only ever had one inspection. Deputy Pubs Code Adjudicator, Fiona Dickie, intervened and there was a protracted dispute over what records had been kept and which notices has been served although the PCA could not adjudicate because some of the events predated the introduction of the Pubs Code. The family also engaged their own surveyor. The bill was subsequently revised to £110,217, 44% of the original, being £86,000 for the works inclusive of VAT plus fees. Having backed down on the dilapidations, Ei Group then issued a Section 25 notice refusing the family a new tenancy despite their wish to stay on. The matter continues although a spokesperson for Ei Group said, “These allegations are completely unfounded and we reject any accusation of improper behaviour.”
Tony Hedger