Published on Liberal Democrat Voice By Ed Davey MP | Published 28th November 2011 – 9:54 am

My announcement last week on pubs hasn’t won me or the Government three cheers from the likes of CAMRA or Fair Pint. Yet I believe it is a notable success for tenants and lessees across the country – and time will prove it so.

For the pubcos have till Christmas to make their Codes of Practice legally binding – so tenants and lessees can enforce their rights – and they know that if they don’t, Parliament would be very happy to make it legally binding for them.

Coupled with the other reforms we negotiated from the pubcos and brewers, real change has arrived, and that is good news for all pub lovers.

For despite all the changes to drinking habits in recent years, pubs still play a crucial role in the lives of so many communities and so many people. I know in my own constituency how groups formed in pubs – from football teams to quiz teams – are part of society’s glue. One pub alone in Surbiton has helped give birth to community activities such as the world famous Surbiton Ski Sunday and resurrected the local legend of Lefi Ganderson, the Goat Boy of Seething Wells. And it sells great beer!

Pubs are special places, and they play a special part in British life.

So why has my announcement been greeted with “disappointment” by campaigners? Why will those amongst our own ranks who’ve worked so hard for change – like Greg Mulholland and Martin Horwood – not be ecstatic?

I think it’s because I’ve only delivered half of what they wanted. For the demands of campaigners were essentially for two things: first, government regulation of the pub industry, with a new regulator to enforce it; and second, either an end to the tie entirely or a free-of-tie, open market rent option to be legally required to be available to all tenants and lessees.

While I’ve not delivered government regulation, I have delivered a self-regulatory regime so much stronger than the past, that it looks and feels like a law – but it’s actually been delivered, and at least two or three years faster than an Act of Parliament would have done.

First, the industry’s Code of Practice must be made legally binding – and we’ve agreed how that will be done. That’s the self-regulatory version of a statutory code.

Second, rather than simply relying on the courts to oversee these new legal rights, a new independent mediation service will be set up, to which tenants and lessees can go, to enforce the Code, and its decisions will be binding on the pubcos. A regulator in all but name. Plus they can still go to the courts.

Third, the pubcos have agreed to strengthen their Codes of Practice in a range of critical areas – so, for example, on rent assessments, they must now comply with the independent guidance from the Royal Institute of Chartered Surveyors.

And a new Pub Advisory Service will be established, to support and advise would-be lessees and tenants, to make sure they know what they are letting themselves in for, and a three-year rolling accreditation process will monitor and check Codes and compliance.

We’ve made it clear to the British Beer and Pub Association and a range of other players on the landlord side, that we expect this whole package to be introduced at speed.

So why haven’t I acted on the issue of the tie?

Essentially, because I believe the tie issue is more complex than the campaigners’ demands suggest. And because I am tackling the problems that concern them in a different but more targeted way, that will bring relief sooner.

I’ve always been worried by the tie – primarily because I had assumed it must be interfering with competition and was against the interests of consumers. That’s why I, like others, was keen for our independent competition authorities to consider the matter. Competition authorities that had taken on BAA and the supermarkets, to demand and get action, on behalf of consumers.

Yet the Office of Fair Trading’s investigation concluded that consumers are well-served by British pubs. That there is choice. That a wide variety of beers are widely available.

So the issue of the tie thus moved from being an issue of competition, to an issue of fairness in the relationship between the pubcos and brewery landlords, and their tenants and lessees – an issue of their commercial relationships, that they agree between themselves.

When you examine where those relationships have gone wrong, it quickly becomes clear that the real problem is not with the traditional tied tenancy, but with the fully repairing and insuring leases – mostly but not exclusively used by the pubcos. These “FRI” leases have been at the root of the vast majority of the most serious unfairnesses that I have seen and read about.

That’s why my solution targets those FRI leases – and leaves alone the traditional tied tenancy model, used successfully and in the most part amicably by local and regional brewers alike. It’s the business model, not the tie, that has caused the problem, and that’s where the Code of Practice will now be strengthened.

So to those Lib Dems and those campaigners who may decide to argue that this is a “sell out”, I have to disagree in the strongest possible terms. I met a range of people, during this work, from all parts of the industry and all sides of the argument. And listened to the views of key campaigners like our own Greg Mulholland, even if I didn’t always agree with them. As a result, we have achieved a balanced package, to preserve what is best about the industry, and to clean up what has at times been quite outrageous.

The truth is we have got the pubcos to agree to things they never expected they would have to sign up to. Tenants and lessees will now have a means to enforce the Code when a landlord is in breach. And because we have achieved a quick solution, bringing certainty to the industry, I believe we will now see a boost to investment that everyone so desperately needs.

* Ed Davey is the Minister for Employment Relations, Consumer and Postal Affairs in BIS