Could ailing pub industry be saved by a code of conduct?

RUSSELL and Rosie East bought the freehold to the Talbot Arms in Settle from pub company Enterprise Inns back in 2011. It cost them in the region of £170,000 – and the same again to carry out much-needed improvements.

“We took out the old bar and it had the joiner’s name and the year 1983 engraved on it,” says Russell. “The pub had been closed for a couple of years when we bought it and was desperate for an update. We had it rewired, put in new plumbing, the lot.”

The revamp has paid off. The pub is now a popular place to meet, eat and drink in the North Yorkshire town and has garnered glowing reviews online. Having recently put it on the market, Russell and Rosie hope – and deserve – to make a tidy profit.

Crucially, however, having been a tied pub for many years with obligations to the pub company it was leased from, the couple have spent the last four years running it on a freehold basis.

“I wouldn’t have been happy to take on a tied pub,” says Russell. “In fact I would never have gone near one.

“It just hamstrings you and doesn’t allow you to maximise your profits. Every year it seems they put your rent up and you’re also paying around 50 per cent more to buy your beer from them than you would in the free trade. I think it’s pretty scandalous.”

With up to 29 pubs closing on a weekly basis, many say it is now time for a seismic shift in the industry.

Yesterday saw consultation close on a new code of conduct which campaigners say could breathe new life into the ailing pub sector.

They hope it will establish what is called the ‘market rent only’ option, which would allow tenants of the largest pub companies the right to ask for an independent assessment of their rent without the existing tie obligations, then be able to pay this to the pub owning company.

Alternatively they could opt for a fair tied agreement with a lower rent being offered in exchange for higher beer prices. The code is set to start in May.

Perhaps unsurprisingly, the large pub companies say this move could end up doing more harm than good.

“The tied model gives you a very low cost entry to running your own business,” insists Brigid Simmonds, chief executive of the British Beer and Pub Association, which represents them. “If you want to run a major franchise you would probably need £250,000 before you can even start. If you want to run a pub it’s £20,000.”

She also argues that it provides a vital route to the market for brewers, while warning that the £200m investment put into premises by pub companies could dry up.

For Yorkshire MP Greg Mulholland, however, the point of no return has been reached. He is adamant that landlords must be given the chance to opt out of the tied system if the industry is to overcome its challenges.

“If landlords are able to take a fairer share of the profit they make then we will see a more stable and sustainable pub sector,” says the Liberal Deomcrat MP for Leeds North West.

“The pub companies say this system has been in place for 400 years but that’s nonsense. It dates from the 1990s when property firms started buying up pubs in a get-rich-quick scheme. Charging more than the market price for beer is extraordinary, and they’ve got away with it for too long.”

Mr Mulholland says the draft code caused “uproar” when it was published last year as it was an attempt to “water down” the market rent only option.

As such, he says he and his fellow campaigners will be putting pressure on the Government over the next few months to ensure they honour the historic vote in November 2014 which saw MPs agree to break the tie.

“We will accept nothing less than the Government abiding by the commitment it has given and the will of both houses of parliament.”