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The pub industry adjudicator: what could it mean for you?

The Government has announced plans to bring in an independent adjudicator in the pub industry to rule on issues such as rents and beer ties.

Why is this happening?

The Department for Business, Innovation and Skills said the proposals are being put forward to tackle what it sees as unfair practices in the pub industry, such as high rents and the prices which publicans have to pay for beer.

The proposed adjudicator will have the power to carry out investigations and impose financial penalties.

The plans come after years of campaigning against the perceived power that ‘pubcos’, which own thousands of pubs and bars across the country, have over their landlords.

Business Secretary Vince Cable has said he also wants to establish a new statutory code, enforced by the adjudicator, to look at the relationship between pubcos and publicans.

What does this mean for licensees?

For publicans who are subject to the ‘beer tie’ – which oblige them to buy their beer from the pubco rather than on the open market – the prospect of potentially lower beer bills will be welcome.

The Campaign for Real Ale – Camra – has claimed that licensees subject to a beer tie have to pay up to 50% more for their ale than if they bought it on the open market.

The organisation has also claimed that beer ties and high rents are amongst the factors in the increasing number of pubs shutting down.

What does this mean for pubcos?

With around half of all UK pubs owned by pubcos, the proposals are likely to bring in quite a change to the way the country’s pubs operate.

The British Beer and Pub Association (BBPA), which represents pub companies and brewers, has said it is disappointed that the Government had not given self-regulation of the industry more of a chance. Vince Cable has said he gave pubcos a last chance at self-regulation last year, but they had not grasped it.

The BBPA is also worried that the introduction of a statutory body and a statutory code will present pub companies with an increase in red tape and bureaucracy which will hamper the way they do business.

It is urging more of a “light touch” approach to regulation, arguing that altering the current business model will put increased costs on pubcos which could then be passed on to customers.

When will this be brought in?

At the moment, these are just proposals which have been put forward by the Government.

A formal consultation on the proposed measures will be launched in the spring when people from all sides of the industry will get the chance to have their say.

However, there appears to be broad political support for the move – the announcement of the proposals occurred a scheduled House of Commons debate called by Labour on a statutory code of practice for pub companies.

Further information

If you would like more information on any of the issues raised in this update or on any aspect of licensing law, please get in touch.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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