Campaign for Pubs

Campaign for Pubs welcomes long overdue Pubs Code Adjudicator investigation and fine for Star/Heineken but urges meaningful action to stop pubco abuse of tenants

The Campaign for Pubs, the national grassroots campaign group representing pubs, publicans and pub-goers, has welcomed the announcement by the Pubs Code Adjudicator that Star Pubs and Bars (owned by Heineken) have been fined £2 million for a series of “serious and repeated” breaches of the statutory Pubs Code, but has called for further meaningful action to stop ongoing abuse of tenants by pub owning companies. The Campaign points out that a fine alone will not lead to the behavioural changes required and does not provide any redress for the great many pubs affected.

The Pubs Code Adjudicator (PCA), Fiona Dickie identified twelve breaches of the Pubs Code. These related to cases where Star tenants had sought to exercise their legal right to access the Market Rent Only (free-of-tie) option, but they were then forced to sell “unreasonable levels” of Heineken products. This includes ninety-six licensees who asked to go MRO, but were told that all the keg beer they sold, had to be Heineken brands.

The PCA also found that Star, one of the largest of the regulated pubcos, with thousands of pubs and bars across the UK, insisted that its own Code Compliance Officer must “ensure the code is interpreted to the commercial benefit of Heineken UK”.

The Campaign for Pubs have welcomed the investigation, the first decisive action by the Pub Code Adjudicator’s office, since it was established in 2015/16, but have made clear that these breaches, focused only on stocking requirements and represent just the tip of the iceberg when it comes to breaches of the Pubs Code. The Campaign for Pubs is a member of the British Pub Confederation, formed as the Pubs Code legislation was being introduced. From the outset the Confederation organisations have been supplying huge amounts of evidence of tenant mistreatment and Pubs Code breaches by the regulated pubcos, all of which have been ignored up to now.

The way the Code is breached extends far beyond just stocking requirements and of even more concern – and something so far not addressed at all by the PCA – is the systematic way pubcos thwart tenants from accessing their legal right to a Market Rent Only agreement and an independent rent review, which Parliament intended should happen within 120 days from triggering the process. Also the PCA has up to now ignored the systematic way so-called ‘dilapidations’ are use to abuse and threaten tenants, who are hit or threatened with huge bills if they seek to change their agreement.  Plus, despite being sent evidence to prove it, the PCA has taken no decisive action to stop the multi-million pound scandal whereby tenants are charged and given rent assessments based on casks of beer being 72 pints, when in reality ullage means that the amount that can be sold is less, usually 68 pints.

The Campaign is now seeking to meet with Fiona Dickie, to discuss how all this endemic behaviour can be stopped and to actually allow tied tenants to exercise their legal right to go free-of-tie and access an independent rent review, in a reasonable timescale, as was envisaged by the UK Parliament when it brought in the law.

The Campaign for Pubs is ideally placed to comment on this matter because Campaign Director Greg Mulholland was the MP that personally pursued the Market Rent Only option into law in Parliament.

The Campaign have also pointed out that Star Pubs will have undoubtedly saved more than the £2 million they have been fined, through thwarting the efforts of so many tenants seeking to exercise their statutory right to the Market Rent Only (free-of-tie) option. This means more action is needed to provide those tenants with redress, and a strengthened Code is required to stamp out such behaviour in future.

The investigation, conducted by the second Pubs Code Adjudicator, Fiona Dickie, follows the wholesale failure of her predecessor, Paul Newby to take any such meaningful action despite having been informed of this issue in 2016. The Campaign maintains that he allowed serial breaches of the Code and ignored the way many tenants were being treated by the regulated pubcos he was supposed to regulate. As pro-pub campaigners warned, Mr Newby has now gone back into pub property, showing the farce of appointing someone with a clear conflict of interest, a lesson that must be learnt by the Government in future.

The Campaign for Pubs are also calling for a statutory right to an immediate rent review for all pubs, to tackle the fact many pubs are facing wholly unreasonable rent levels, considering the Government restrictions and reduced trade. So far, neither the Pubs Code Adjudicator nor, the Government have done anything effective to tackle the rent crisis facing many pubs, including those being charged excessive levels of rent by the pubcos regulated by the PCA.

The announcement of the fine for Star comes at a time when the Scotland Parliament is also considering introducing a Pubs Code Adjudicator for Scotland. Star Pubs and Bars and their trade association, the BBPA, have been heavily lobbying MSPs and the Scottish Government giving the impression that their tied model is a benign partnership, but the ruling by the English and Welsh Adjudicator blows this out of the water and exposes the ruthless reality of how they treat some tenants and the huge imbalance that still exists between pubcos and the licensees actually running pubs.

The Campaign for Pubs and the British Pub Confederation support the Tied Pubs Bill being introduced by Neil Bibby MSP and are urging the Scottish Government to look at the facts, not the well-funded propaganda, and to legislate to allow Scottish tenants to have access to an independent rent review and the right to go free-of-tie. The Campaign for Pubs and the British Pub Confederation are also urging Scotland to learn from the mistakes made with the English and Welsh legislation and Code and introduce a simple, statutory right to go free of tie within a specified time period.

Greg Mulholland, Campaign Director of the Campaign for Pubs and Chair of the British Pub Confederation (and the person who led the Fair Deal for Your Local campaign for the original legislation that introduced the Pubs Code) said:

“We welcome that the new Pubs Code Adjudicator has now formally found what we have been telling her predecessor and office since the Pubs Code began, that some pubcos, in this case Star Pubs and Bars, are routinely and seriously breaching the Pubs Code, as well as denying their tenants the right to access a genuine Market Rent Only agreement.

“We urge similar action in all such cases, not just the ones that have been looked at here and we also urge the PCA to announce action to stop the way the large pubcos, including Star, are currently charging excessive rents on pubs struggling with restricted levels of trade and discriminating against tenants who have exercised their legal right to go free-of-tie”.

Gary Murphy, Campaign for Pubs PCA Liaison Officer said:

“This is only the tip of the iceberg of Pubs Code breaches and the reality is that Star Pubs and Bars has probably saved itself money with the fine as thousands of tenants have not been able to achieve a Market Rent Only/free-of-tie agreement as a result of such obstruction. This systematic obstruction must be stamped out or pub-owning companies will continue to do so, whether they get fined or not”

Paul Crossman, Chair of the Campaign for Pubs and a Star tenant (at the Swan in York) said:

““The Adjudicator has confirmed that hundreds of pubs will have been disadvantaged by this unacceptable behaviour by Star Pubs and Bars. There is now a huge question regarding redress for those affected. Not just those who have been subjected to these anti-competitive stocking requirements in their MRO agreements, but also the many other tenants who will have been deterred from pursuing MRO at all.

It is worth noting, given current circumstances, that Star’s antipathy to MRO remains so great that they have actively denied MRO tenants any rent reduction at all throughout the entire Covid crisis, in stark and telling contrast to the support they were eventually persuaded to extend to tied tenants.

“Part of the reason Campaign for Pubs was formed was to challenge the systematic historic and ongoing abuse of pub tenants by the industry’s biggest players. This behaviour is absolutely endemic and institutionalised. The Pubs Code has been openly gamed by these companies, who have always behaved as though they were confident they would go unchallenged by the PCA’s office. This ruling by Fiona Dickie is welcome but very late in arriving given that the issue was raised with her predecessor back in 2016. We can only hope that it finally represents the start of meaningful action by PCA to stop pubcos breaching the Pubs Code and denying small business tenants their statutory rights under it.”