Pub tenants and landlords have united to express disappointment and frustration that the Tied Pubs (Scotland) Bill has passed Stage 2 in the Scottish Parliament today. This is despite the Economy, Energy and Fair Work Committee’s Stage 1 report concluding that the Bill was not necessary and after a joint letter has been sent from over 150 Scottish pub tenants affected by the Bill to the First Minister appealing for her to dismiss it.
The members’ Bill by Neil Bibby MSP proposes a Statutory Pubs Code for Scotland which would materially impact the relationship between pub tenants and their pub owning landlords. The Bill seeks to interfere with existing commercial arrangements and has been dismissed by both pub tenants and pub owning businesses alike as unnecessary and damaging.
Emma McClarkin, CEO of Scottish Beer and Pub Association said, “This is a sad day for the leased and tenanted pub sector in Scotland. Despite efforts from tenants and pub owning businesses alike, our parliamentarians are simply not listening to them and seem determined to push through a Bill which will have a long-term detrimental effect on the fabric of Scottish pub sector. The Bill affects nearly a fifth of Scotland’s pubs and is neither required, nor is drafted in such a way as to benefit either tenants or our member companies. In just 24 hours tenants running 155 pubs across the country rallied together to write to the First Minister to express their dire concerns about it. At a time when pubs in Scotland are fighting for their very survival, they need their Parliamentarians to support them, not do anything to hinder their recovery. Parliamentarians should be focusing on the reopening and recovery plan. Of course, we will work constructively with the Scottish Parliament and Mr Bibby to agree a workable solution if the Bill does pass into legislation, but we do so with a heavy heart knowing the real threat Scottish pubs face as a result of it.”
The leased and tenanted tied pub model operates as a partnership between the pub owning company and the pub tenant. The business model which has operated successfully for generations, seeks to share the financial risk and reward of running a pub business in partnership. The pub tenant benefits from taking on a highly invested pub at the expense of the landlord and a reduced rent, in return for long term shared success of the business. For many pub tenants this route to running their own business is the preferred way, giving them the peace of mind of expert guidance and advice from a partnership, as well as financial security. The average start-up costs for a tenanted pub are £30,000 compared with a staggering £300,000 for one which is independent, whilst pub owning companies have supported tenants to the tune of £6million through rent cancellations and reductions during the Covid-19 pandemic. But pub owning businesses have regrettably been given no choice but to largely pause investment for now whilst so much uncertainty surrounds the sector, as a result of the Bill.
One of the biggest disputes in the Bill centres around the Market Rent Only provision which would allow tenants to break leases part way through, with no notice and having already received financial investment from the landlord, thereby introduced security of tenure by the backdoor and impacting not just on pubs but all commercial property in Scotland.
Speaking about the Bill Simon McLeod, who operates multiple leased pubs including Tannahills and Tea Gardens Tavern in Paisley, said: “This just isn’t the right time to be considering legislation that is only going to stifle our recovery. The focus now from MSPs should be on revitalising the industry and the timing of this Bill is really not good. I think it’s unwise and we should be concentrating on the economy.”
With so much uncertainty as a result of the Bill, pub owning businesses have largely paused investment into the Scottish pub sector. Pub tenant Struan Robertson who operates Balavoulin in Aviemore said “It’s not even Covid that’s brought this investment to a halt, it’s the Tied Pubs Bill.”
Craig McLaughlin who operates 30 pubs across Scotland says of the Bill if it progresses into legislation, “It’s taking a sledgehammer to crack a nut and I could see swathes of my business chopped away from underneath my feet. There may be some sites that should be a market rent only option but that’s a negotiation they should have between two parties, I don’t think it should be legislated for.”