A controversial Bill purported to address the power dynamic between lease-holding publicans and their landlords is to be debated

A Bill that looks to address the imbalance between lease holders and pub owning business landlords has started a ferocious debate within the industry.

By Jacob Farr
Thursday, 26th November 2020, 3:21 pm
Updated Thursday, 26th November 2020, 3:22 pm
The Clermiston is one of Andrena Bowles pubs in Edinburgh
The Clermiston is one of Andrena Bowles pubs in Edinburgh

The ‘Tied Pubs (Scotland) Bill’ is set to be debated by Scottish parliament tomorrow afternoon after it was introduced by Labour’s Neil Bibby, MSP for West Scotland.

It will look to introduce a Pubs Code that will aim to see Scottish industry standards fall in line with those in England and Wales.

A bill passed in Westminster in 2015, introduced a Pub Code and Adjudicator to oversee regulation in the two countries.

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The Scottish Bill will aim to do the same by addressing the alleged imbalance in power that exists in favour of big business landlords by giving more power to small leaseholders who are disadvantaged by the current dynamic.

But some critics have said that the bill will ‘kill investment in the sector when it needs it most’ and will ‘create uncertainty when the industry needs stability.’

Though supporters of the Bill have responded by saying they are merely catching up with legislation down south and that the implementation of a Code and a Scottish Pubs Code Adjudicator is supported by concrete evidence.

If the Bill is passed, it is hoped that tied tenants will have the option to request a “market-rent-only” (MRO) lease.This means that a tenant can pay the going market rate to rent a pub without having to buy products or services from the pub-owning businesses - therefore ending the tied relationship.

Bill: Neil Bibby

The Scottish Parliament website says that “...even if a tenant remains tied, the Bill provides an opportunity to sell guest beers. They will not be restricted to only selling the brand of the pub-owning business.”

This move is believed to be crucial in allowing leaseholders to react to current demand and needs without being out of pocket due to their sometimes unrealistic contractual obligations that force them to sell a certain brand of beverage.

The Parliament website goes on to detail that the Scottish Pubs Code, and decisions made by the SPCA, must be consistent with the following three principles:

1. That there is fair and lawful dealing by pub-owning businesses in relation to their tied pub tenants.

2. That tied pub tenants should not be worse off than they would be if they were not subject to any product or service tie.

3. That the tied agreements offer a fair share of risk and reward to both parties.

Colin Wilkinson, managing director of the Scottish Licensed Trade Association, said: “Reforming the tied pub sector to make it work better for small businesses is one of the most important steps we can take now to rebuild our hospitality sector.

“For too long Scottish pub tenants have been at a disadvantage to their counterparts in England. All this bill does is require pub companies to engage in fair and lawful dealing with their tenants, while ensuring that tied pub tenants should not be worse off than they would be if they were not subject to any product or service tie, and that tied agreements offer a fair share of risk and reward to both parties.

“These principles are so evidently the right thing to do for supporting small, locally owned, Scottish businesses, that we struggle to think of any reason MSP's would vote against them. We would urge all MSP's to support the bill’s passage this week in Parliament."

But Emma McClarkin, chief executive of the Scottish Beer and Pub Association has said that she feels the Bill is “not evidence based” and that it will pose “a real danger to future investment” and will be “economically ruinous” for the sector if passed.

She was joined by Andrena Bowes, who is tenant and operator of seven pubs in the Edinburgh, the Lothians and Fife, she said: “The coronavirus has devastated the pub sector and politicians should be focused on that, not wasting time on proposals which aren’t wanted and definitely not needed.

“As a tenant under the tied model, I can speak personally of its success and joint-partnership model, which sees a sharing of the risks and rewards.

“During the pandemic, my pub company has provided constant advice, support, reimbursement for unusable stock and have also reduced rent, which without would have forced us to close our doors for good.

“The news that this proposal is even being considered in light of the pandemic makes you want to cry. Hospitality businesses are begging for meaningful economic support that could save their livelihoods and jobs of their staff, and politicians are wasting time discussing technical rules which impacts a tiny minority of pubs.

“Above all, pubs need certainty, but Neil Bibby’s Bill removes what little certainty we have at this time. MSPs can give a little bit back by voting against the Tied Pubs Bill.”

Mr Bibby, said: “The Tied Pubs Bill would deliver fairness for Scotland’s tied pub tenants, more choice for consumers and action to protect jobs in the pub and brewing industries. A statutory Pubs Code providing a fair share of risk and reward to tenants would help local pubs keep more of the profit they make in the Scottish economy. It would also curb the unfair practices of those PubCos who have taken more than their fair share from their tenants for too long.

“One of the country’s biggest PubCos has just been fined £2 million by the regulator for England and Wales for serious and repeated breaches of their Pubs Code. The bosses of the big multinational PubCos who insist there is no problem here have no credibility left.

“If tied publicans in England and Wales are protected by a statutory Code then it is only fair that tenants of the same PubCos in Scotland have statutory protection too.”Stage one of the Bill’s reading will be heard today at the Scottish parliament.

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