Labour’s Shadow Small Business Minister Bill Esterson MP said,

“Yet again, the Conservatives have shown a marked reluctance to support tied pub tenants. It’s clear that the newly appointed Pubs Code Adjudicator, Paul Newby, has a conflict of interest because he is the director of a firm that represents the major pub owning companies. The Royal Institute of Chartered Surveyors rules mean that pub tenants will have very strong grounds for objecting to his involvement with the new Pubs Code.

There are also serious questions for the Minister, Anna Soubry about Mr Newby’s appointment. The Ministerial Code on Public Appointments makes clear that she should have considered whether he had a conflict of interest before appointing him.

The government should withdraw Mr Newby’s appointment, and replace him with someone who has the confidence of pub tenants.”

Paul Newby’s appointment was announced by BIS Minister, Anna Soubry, during an intervention in the Third Reading debate on the Enterprise Bill on Wednesday 10 March.

Mr Newby is a director at Fleurets, a firm of Chartered Surveyors whose client list includes Punch Taverns and Enterprise Inns, since 1995.

Mr Newby’s past involvement with some of the UK’s largest pub companies has raised doubts over his impartiality in a role that will require him to investigate major pub companies and act as an independent arbitrator between pub tenants and their landlords.

ENDS

Notes to Editors

The Pubs Code Adjudicator was created as part of the Small Business, Enterprise and Employment Act 2015 to arbitrate between pub tenants and pub landlords, and to investigate systemic problems in the pubco industry.

Paul Newby’s CV at Fleurets can be viewed here:

http://www.fleurets.com/cvs/PGN.pdf

Text of the letter Bill Esterson sent to Anna Soubry is below:

Dear Ms Soubry, 

Further to your announcement in the Chamber on Wednesday 9th March during the Enterprise Bill Report Stage debate, and in light of the Urgent Question raised on Thursday 10th March, the pub tenant landlord community has raised a number of concerns over the impartiality of the new Pubs Code Adjudicator, given his involvement at a senior level with the company Fleurets. 

As Adjudicator, Mr Newby will be responsible for providing impartial arbitration between tenants and pub company landlords. Yet he has spent many years acting on behalf of the very pub companies this role will require him to scrutinise and investigate. 

You will be aware that this is not just a matter of whether Mr Newby is competent, or whether he is impartial. It is also emphatically not about Mr Newby as an individual. It is a matter of whether he will have the trust of tenant landlords, and whether or not the appointment of someone who has spent much of his career working with pub companies, undermines tenants’ confidence in his impartiality so much that his position is not tenable.

A question was put to you on Thursday, in which you were asked whether Mr Newby will leave his post at Fleurets before taking up the post. I would like to reiterate that question and also ask whether he has or will promptly divest himself of any Board positions or shares which associate himself with that company or with any other which derives income from pubcos. 

Mr Newby is a member of RICS and according to their Code of Conduct, members have a duty to declare any possible conflicts of interest. The Code of Conduct also says that where parties have concerns over the arbitrator’s potential conflicts of interests, they are able to object to them considering the case. 

The RICS Code of Conduct raises a number of potential conflicts of interest for Mr Newby: 

The dispute resolver regularly acts for one of the parties to the dispute; 

The dispute resolver’s firm currently has, or has had, a significant commercial relationship with one of the parties or an associate of one of the parties; 

The dispute resolver has within the relevant past served as an adviser for one of the parties or an associate of one of the parties, or has previously advised or been consulted by the party or an associate of the party making the appointment in an unrelated matter, but the dispute resolver and the party or the associate of the party have no ongoing relationship; 

The dispute resolver’s firm has within the relevant past acted for one of the parties or an associate of one of the parties in an unrelated matter without the involvement of the dispute resolver. 

A number of pub tenant groups who include members of RICS, have raised the above with me and have said that any of them are grounds for tenant landlords to reject the Adjudicator’s involvement in their case. We would then seem to have an Adjudicator who will potentially be unable to carry out his role.

I would be grateful for your views on this. 

In July 2014, BIS published a policy paper: ‘Groceries Code Adjudicator – Conflicts of Interest policy and register of interests’ to deal with the issue of conflicts of interest and circumstances under which the GCA would be disqualified from considering a case. The paper states: 

“Organisational relationships between the Adjudicator and organisations which are or may be affected by the work of the GCA are normally regarded as a disqualifying interest. The most likely such relationships are: (a) directorships or equivalent positions with high-level responsibility for governance and performance; (b) elected positions in government at local or national level; © senior paid or unpaid roles with charities and not-for-profit organizations; and (d) consultancy or advisory roles, whether remunerated or not. 

[…] 

The significance of organisational relationships diminishes over time. Normally organisational conflicts are regarded as spent after two years. In the absence of complicating factors, members who were formerly partners in firms providing professional services to any party to an activity, arbitration or investigation are not considered to have a disqualifying interest if two years have elapsed since they left the firm, provided that they have no continuing financial interest in or relationship with the firm.” 

I understand that no equivalent paper has been published in relation to the Pubs Code Adjudicator. Can you confirm whether such a paper will be published and whether it will also include the two year rule? 

It concerns me that if the equivalent paper is published after Mr Newby begins his work, as happened with the Grocery Code Adjudicator, and if he is found to have had disqualifying interests, then we may face a situation where he is not only unable to arbitrate in many cases, but the decisions he has already made are subject to challenge. 

The issue of whether you had met Mr Newby before he was appointed was also raised with you yesterday in the House. According to the Code of Practice for Ministerial Appointments to Public Bodies, Ministers are permitted to meet candidates at the final stage of the appointments process. Can you confirm whether you met him prior to his appointment? 

The Code of Practice also states that conflicts of interest ‘that would call into question their ability to perform the role’ should be taken into account by the panel. What advice did you take about possible conflicts of interest and will you publish that advice? 

And given the concerns raised about Mr Newby by pub tenants, will you now accept that he is unable to fulfil the role of Pubs Code Adjudicator and will you replace him with an Adjudicator who will command the confidence of the whole pubs sector? 

Yours sincerely 

Bill Esterson MP 

Shadow Minister, Business Innovation and Skills