MPs have criticised the Government for failing to get tough on pub companies accused of forcing hundreds of community pubs to close.
Pub companies that own the majority of Britain’s pubs – so-called pubcos – have come under fire for imposing a beer tie, the arrangement by which licensees are contractually obliged to purchase beers, wines and spirits through the company rather than on the open market.
MPs claim it has forced many licensees out of business as they are unable to make their tied businesses viable, and yesterday demanded a statutory code of conduct which would allow licensees freedom over where to buy their drinks.
But the Government has rejected those calls in favour of a self-regulatory regime which it insists is “appropriate and effective” and means action can be taken now rather than having to legislate.
Leeds North West MP Greg Mulholland, who chairs a House of Commons Save the Pub group, said the Government had “misjudged and mishandled” its response to an earlier select committee report which called for statutory action, a call backed by MPs yesterday who also called for an independent review of the situation in the autumn.
“If that review shows what the vast majority of those in the pub trade and in the House of Commons believe, that the Government-backed British Beer and Pub Association reforms will do nothing to deal with the fundamental imbalance between pubco and licensee, then we will expect the Government to belatedly make good on its promise and introduce real reform which means a statutory code of practice with a genuine free of tie option with open market rent review,” he said.
Adrian Bailey, chairman of the Business, Innovation and Skills select committee said there was “obviously something profoundly wrong within the industry” with closures around the country.
“There is now a huge volume of evidence to show that the business relationship and the business model governing the relationship between the pub licensees and the pub companies that own the pubs is crucial to this,” he said.
Tory Brian Binley said: “The Government’s proposals for a legally binding voluntary code are not good enough.”
But Business Minister Ed Davey said: “What we’ve delivered instead is a self-regulatory regime so much stronger than in the past, the results of commitments made by the pubcos. It obliges them to comply with the code and it’s been delivered at least two or three years faster than an Act of Parliament would have done.”
Bradford MP David Ward said: “The pub industry is in desperate need of reform. It is far too strongly weighted in favour of big pub companies and against their tenants. Pub landlords in Bradford are going out of business every week as a result of unfair practices.”