Pub Companies - Business, Innovation and Skills Committee Contents

Further written evidence submitted by Greg Mulholland MP on behalf of the All Party Parliamentary Save the Pub Group

I am writing to you on behalf of the All-Party Parliamentary Save the Pub Group following the successful BIS Select Committee this week to inform you of contradictions in statements made by Ted Tuppen regarding his compliance with RICS guidelines.

David Rusholme, Director of Valuation at the Royal Institution of Chartered Surveyors, confirmed at the first Select Committee last week that RICS guidelines mandated "the tied tenant should be no worse off than the free of tie tenant."

Guidance 7.18 reads "The tenant may compare its own property with the circumstances of being free of a supply tie and consider the profit achievable under those circumstances."

7.19 states, "The REO may have regard to the fact that free houses are available in the market. Therefore, it could expect to make an increased profit as a result of being able to buy products in the open market and not at the prices charged by the supply tying landlord or its nominated supplier."

And Guidance 7.21 confirms, "Comparability between public houses held on different lease terms and with different supply terms is problematic, particularly between the tied and non-tied sectors. There is nothing within this guidance that should result in rents in one sector being set at any advantage or disadvantage to another."

At the second hearing this week, Ted Tuppen stated that he agreed with the way rents were assessed by RICS and that all Enterprise Inns rent assessments were in accordance with RICS guidance. However, Mr Tuppen also disagreed with the principle that the tied tenant should not be worse off than the free of tie tenant.

It must follow then that Mr Tuppen does not, in fact, agree with the way rents are set by RICS, and that Enterprise Inns rent assessments do not conform to these standards.

The statements made by Mr Tuppen and other pubcos heads, illustrate a sad reality that these companies either can't or won't implement the Select Committee's directives to avoid government intervention. Enterprise Inns has had over a year to act in accordance with new RICS guidance, and they have failed to do so. Now is the time for a statutory code to correct this market abuse.

8 July 2011

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Prepared 6 October 2011