The Pubs Code and the Adjudicator

The Pubs Code comes into effect on 1 June 2016. The code only applies in England and Wales and affects approximately 13,000 tenants of the six largest pub companies.

The legislation creating the Pubs Code was contained in the Small Business, Enterprise and Employment Act 2015. The legislation only outlined the general principles of the Code and the role of the Adjudicator. The sponsoring Department, The Department for Business, Innovation and Skills, will reveal more details of the Code and its operation once it has analysed the responses to two consultation exercises it carried out in October and December 2015. The Code will be laid before Parliament by way of secondary legislation.

It was thought necessary to introduce the legislation creating the Code mainly due to the perceived disparity in negotiating power between individual tenants and the major pub groups. As the Bill progressed through Parliament, Members succeeded in increasing the scope of the proposed powers of the Code. Probably the most important change to the Bill was to introduce the Market Rent Only (MRO) option. This would give tenants greater flexibility in how they operated their pubs by allowing them greater choice on the level of their ties to the pub owners.

During the two consultation exercises, fears were expressed by some Members and tenant groups that the draft regulation published in the consultation document, did not provide as much protection to tenants as Members had envisaged it would. With the Code due to come into operation by late May 2016, concerns have been raised that the Department’s final decision on the precise powers in the regulation will only become known very shortly before the Code comes into existence.

These concerns have been further heightened by the recently announced appointment of Paul Newby as the first Pubs Code Adjudicator. During his career as a Chartered Surveyor Mr Newby has personally worked on a number of projects with several of the major pub companies. Furthermore the partnership he worked for is likely to continue to work closely with these companies. Concerns have been expressed that this will create conflicts of interest in his new role when acting as an arbiter between tenants and these companies.