Tied pub tenants to have more freedom under new bill

A member's bill to improve the position of tied pub tenants in Scotland has begun its passage through the Scottish Parliament.

Introduced by Neil Bibby, Labour MSP for West Scotland, the bill would establish a Scottish Pubs Code to govern the relationship between pub-owning businesses and their tied tenants, and a Scottish Pubs Code Adjudicator (SPCA) to apply the code.

It sets out that the code must apply three principles: 

• that there is fair and lawful dealing by pub-owning businesses in relation to their tied pub tenants; 
• that tied pub tenants should not be worse off than they would be if they were not subject to any product or service tie; and
• that the tied agreements offer a fair share of risk and reward to both parties.

Similar legislation was passed for England & Wales in part 4 of the Small Business, Enterprise and Employment Act 2015, but that only applied to tenancies of businesses that owned 500 or more pubs, whereas all tied tenants in Scotland would be covered. Also, while there is a similar requirement that the code includes provision to give tied tenants the ability to opt out of tied arrangements if they wish, and instead pay a fair and reasonable market rent for their pub premises, this would be an automatic right rather than being subject to various conditions and trigger points, as in the 2015 Act.

Introducing his proposal in the consultation that preceded the bill, Mr Bibby said that times were tough for the pub trade as a whole, but many tied tenants encountered additional problems through restrictive conditions and contractual disputes with their owners.

He commented: "In bringing reform to this sector, I want to give tied tenants the ability to opt out of tied arrangements if they wish, and pay a fair and reasonable market rent for their pub premises. I want tied pubs tenants to be free to source and purchase products as they see fit and to have the flexibility they need to react to changes which affect their business in this competitive and often crowded market.

"My proposal does not force an end to tied arrangements in the pub industry. If some feel that the tie is working well, then nothing need change. However, those who feel it is not working for them or their business will have the option to do something about it."

Click here to access the bill and related documents.