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The Commons Business, Innovation and Skills Committee publishes its tenth report of this Session which looks at the relationship between pub companies and their lessees.

Comments from the Chair

On publication, Chair of the Committee, Adrian Bailey MP, said:

"The deep-seated problems within the pub industry, and in particular the relationship between pub companies and their lessees who run pubs, have been the subject of repeated scrutiny by Parliamentary select committees. Our report is the fourth report on those problems over the past seven years.

Each report challenged the industry to deliver meaningful reform. On every occasion the industry was found wanting. The third report in 2010 delivered a final ultimatum to the industry: eighteen months to show that they were working successfully within the voluntary code. That has passed, and the evidence is that they are not.  The message now can only be: three strikes and you’re out.

We are firmly of the view that statutory regulation should only be used as a last resort, but we can only conclude that industry self-regulation has failed.

We fully realise the implications of our recommendations and we have not come to this decision lightly. But we see no other alternative for an industry which has failed to put its own house in order. 

Pubs are businesses, and they need to be able to succeed as businesses, but they are also at the heart of our communities, and we are losing them at an alarming rate. The position of the previous Government - endorsed by the current Government - was that if we so recommended, it would consult on how to put the Framework Code on a statutory footing. It is now time for the Government to act on that undertaking. In its response to our report, the Government must set out the timetable for that consultation and begin the process as a matter of urgency."

Report Conclusion

The following are extracts from the committee's report;

"The purpose of this inquiry into pub companies was to assess whether or not the industry had delivered on its promise of meaningful reform. As with previous inquiries, modest improvements have been made. However, the fact that it has taken a number of select committee inquiries to prompt these improvements demonstrates the deep-seated problems which lie at the heart of the industry. While the new codes of practice are a step in the right direction, they only address a limited number of areas. In many areas we do not believe that there has been a genuine commitment to reform. Many of the potential benefits of the new code, which were identified by our predecessor committees, have been undermined by a process of implementation which can only be described as half-hearted.” (Paragraph 154)

"The BBPA (British Beer and Pub Association) has shown itself to be impotent in enforcing its own timetable for reform and the supposed threat of removing the membership of pub companies who did not deliver was hollow. The voluntary withdrawal from the BBPA by Greene King, which has suffered no reputational loss as a result, clearly demonstrates that fact. Furthermore, while the BII (British Institute of Innkeeping) may be seen to have done an adequate job in accrediting the new codes of practice, it is clear to us that its enforcement role is fundamentally undermined by a lack of meaningful sanctions for non-compliance. Given the high number of breaches allowed before sanctions would be applied we believe that "naming and shaming" and subsequent withdrawal of BII accreditation is insufficient." (Paragraph 155)

"Intransigence on both sides remains at the heart of the matter and is highlighted by the lack of real progress, over a wide range of issues, highlighted in this Report.  The Business, Innovation and Skills Committee's 2010 Report gave the industry a final opportunity to address these issues. It is an opportunity that has been wasted. Reform has proceeded at a glacial pace and only as a result of dogged scrutiny by Parliamentary Committees. This latest attempt at reform has failed and we neither have the time nor the patience to continue along this path. We therefore conclude that the reforms do not meet the test set by our predecessor committee." (Paragraph 156)

"The position of the previous Government - endorsed by the current Government - was that if we so recommended, it would consult on how to put the Code on a statutory footing. It is now time for the Government to act on that undertaking. In its response to our report, the Government has to set out the timetable for that consultation and begin the process as a matter of urgency. We further recommend that the consultation includes proposals for a statutory Code Adjudicator armed with a full suite of sanctions. Considering the amount of evidence gathered by us and our predecessor Committees this should not be a lengthy process; and given the Government's undertaking to us we do not anticipate any meaningful delay. Furthermore, we caution the Government that offering a compromise of non-statutory intervention would be a departure from its undertaking to us and would not bring about the meaningful reform that is needed." (Paragraph 157)

"We have not come to this decision lightly and we are firmly of the view that statutory regulation should only be used as a last resort. However, our hand has been forced and we see no other alternative for an industry which has for too long failed to put its own house in order." (Paragraph 158)

• Report: Pub Companies
• Inquiry: Pub Companies
• Business, Innovation and Skills Committee website