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Brigid Simmonds appears at BIS Select Committee: Pub companies – a note

On 12/06/13 by Brigid Simmonds (Chief Executive)

Brigid Simmonds, 9.30am, 11th June 2013

I gave evidence to the BIS Select Committee yesterday and although you can watch the session online, I thought the below note covering my responses would be useful for members to have to hand.

Brigid Simmonds told the Committee that self-regulation is working, and while the implementation of Version Six of the Code had taken time, meaningful change had been incorporated. She quoted previous Minster Ed Davey who understood the industry’s concerns and had not proposed intervention.

On the 500 pub threshold proposed by the Government, Mrs Simmonds said it should include leased and tenanted pubs only, as otherwise, pub companies with managed estates would be paying for an adjudicator they could not use. Free-of-tie companies should not be covered, she said, as their relationship with their tenant was no different to other landlord/tenant relationships, and franchises should also be excluded.

She agreed that smaller companies should not be covered, as long as the 500 threshold did not distort competition. Asked if companies might seek to undermine the threshold by dividing their estates between new companies, Mrs Simmonds said this would not be easy to do, and no discussions had taken place with BBPA members on this.

Mrs Simmonds was questioned on delays in the introduction of Version Six of the BBPA code. She said it needed to be right and not rushed, and explained how this was being implemented. Adrian Bailey however suggested that it was industry foot-dragging that had precipitated Government action.

There was a discussion over the legally binding nature of the Code, with some committee members raising concerns that both Punch Taverns and Enterprise Inns had disputed this point in legal proceedings. Mrs Simmonds was absolutely clear the code was legally binding.

On the consultation proposals, she said she accepted the principle of fairness which had been enshrined in Version 5 of the BBPA code. On the principle of 'no worse off' for tied tenants, she said that needed to be done to explain the benefits of a tied tenancy.

She went on to set out the main concerns arising from the difference between current self-regulation and the proposals. On free-of-tie, there was a concern over what would replace industry buying power. On guest beer provision, current beer choice in the tied sector was already huge, and on the gaming machine tie, there were concerns that its removal would remove the expertise needed to maintain its profitability. On flow-monitoring, she said that it was a useful management tool and should not be banned simply because the technology had not existed before.

Asked about the new arbitration services set up under self-regulation Mrs Simmonds said it was a great system and it was moving forward, with a new governance board. While funded by BBPA members it was completely independent and low-cost. She pointed out that inquiries through the system should be resolved without coming to either PIRRS or PICAS, and that was how the system should work. The BBPA would continue to operate the system even under an adjudicator, though there were issues with funding, and there were concerns that the adjudicator would replicate the current system. She went on to say that the whole of the high street was currently suffering, and more free-of-tie pubs were closing than tied. While there were historic problems, you could obtain a pub for as little as £30,000, and pre-entry training had been introduced.

Mrs Simmonds was asked about ALMR benchmarking which indicated that tied pub rents were greater as a percentage of turnover. Mrs Simmonds said she had not looked at this, but that SCORFA was worth between £6,000 and £10,000 per pub. She also referred to investment in capital infrastructure, and there was further indirect financial support through discounts and rent reductions. There were concerns this would not be forthcoming from banks. We would be throwing the baby out with the bathwater if we ditched the tied system, she said.

On levels of rent, Mrs Simmonds said they had come down, 6% in the last year. She agreed to provide recent average increases/decreases from rent reviews.

Asked if pubcos were properly sharing information to tenants before they take on a lease or tenancy, Mrs Simmonds said that the code was hugely comprehensive in this respect and not much more information could be given.

On pub closures, she was asked if she supported comments from Ten Tuppen and Jonathan Paveley including that thousands of pubs were at risk. Mrs Simmonds said she agreed there was real concern that pubs would close, due to guest beer and free-of-tie options. She was pressed to provide the evidence and said that while some information on this was commercially sensitive, the BBPA would be submitting evidence on this to DBIS.

On licensee incomes Mrs Simmonds said the BBPA had written to CAMRA and asked for details of their recent survey.

She was asked to respond to comments from Ted Tuppen that a legal challenge to the proposals in the European Courts could take place. Mrs Simmonds said that he had been misquoted, and while there were no plans and no BBPA discussions had taken place, this could not be ruled out. The BBPA wanted to work with the Government and had meetings scheduled with the Government.


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