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GMB Welcome PM Statement On Pubs

Wednesday, April 2, 2014

GMB Welcome Prime Minister Statement That Government Is Looking For Fair Outcomes For Tied Pub Tenants

Option 3 in the statutory code will offer tied tenants the ability to buy products from the open market and pay a fair market rent for the building says GMB

GMB, the union for tied pub tenants, responded to an exchange today (2ndApril) at Prime Ministers Questions on new laws on tied pub rents.

The details of the exchange are as follows:

Greg Mulholland (Leeds North West) (LD):

The Chancellor’s cut in beer duty is great news for Britain’s brewers, as it will allow them to invest, but it will do nothing to help the 20,000 pubs tied to large companies. He has got rid of the fuel duty escalator, the beer duty escalator and the alcohol duty escalator; will the Government now tackle the pubco problem by getting rid of the pubco price escalator?

The Prime Minister:

I thank my hon. Friend for what he said about the cut in beer duty, which is the second in a row in the Budget. It is about making sure that the industry creates jobs and about supporting our pub trade. It was noticeable that straight after the Budget Marston’s announced 3,000 additional jobs. We want to look very carefully at what is happening in tied pubs and at the activities of some pub companies. It has been debated in the House. We are looking very closely at what more we can do to make sure there are fair outcomes for Britain’s publicans and Britain’s pub goers.

In April 2013 Department for Business, Innovations and Skills published a draft statutory code for tied pubs for consultation which closed in June. There was an overwhelming and unprecedented response from tenants and the public supporting statutory regulation for a free market for products and fair rents.

GMB is campaigning for Option 3 the “freedom option” in the statutory code. This offers tied tenants the ability to buy products from the open market and pay a fair market rent for the building. See notes to editors for text of option 3.        

Steve Kemp, GMB lead organizer for tied pub tenants, said “This reply shows the issue of a new law is a live issue and this is welcome.

GMB is campaigning for Option 3 in the statutory code. This will offer tied tenants the ability to buy products from the open market and pay a fair market rent for the building.

Interest payments on the huge pubco debts have to be paid each week before the tenant pours a pint and regardless of whether s/he can make ends meet or not. That is why Enterprise was seeking a 42% increase in rents.

To pay these sky high rents a pint of lager is on average 80p per pint higher and ale is 65p per pint higher than justified by inflation and like for like changes in taxes since 1987. This is pricing pubs out of the market and they have closed in droves.

The common view that shareholders in the pubcos own a pub business is wrong. In fact the shareholders don’t own a pub business; they own a holding company which invests in and manages incomes from pubs- these are called pub securitizations.

These securitizations are the infernal machine that is closing pubs across the country. It is the same infernal machine that drove Southern Cross care homes to the wall.

GMB and others have campaigned for many years for Parliament to legislate to free pubs from this infernal machine before it destroys them all.

This statutory code is likely to be our one chance to save local pubs. This campaign exposes the Orwellian world where the pubcos say that regulation to ensure a free market is "red tape". What Tosh.”


Contact Dave Mountford GMB representative for tied pub tenants on 07792 198 954 or 07794 021212 or Steve Kemp 07730 898102 

Notes to editors

What option 3 says

 “Option 3: Mandatory free of tie option with open market rent review

All pub owning companies with over 500 pubs would have to offer a free of tie option with open market rent review. This would apply at the next rent review point for current leases and for all new leases. Each licensee would be able to choose to be either tied or free of tie. This is in addition to the statutory code and adjudicator from option 2.

The rent in the free of tie offer would have to be based on Royal Institute of Chartered Surveyors guidance. This would ensure that there was a genuine free of tie option rather than one involving an unrealistically high free of tie rent.”

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