Beer tie ‘causing hardship’ for many publicans

The report claims that pubs are closing at a rate of 25 a week and publicans tied to pub companies have to pay 40 to 45 per cent more for their beer than independent pubs.

According to the IPPR report, around half of all the pubs in the UK are tied to pub companies.

In most cases, pub companies let out their pubs to managers who run their own business on long-term leases.

As well as paying rent, pub company tenants generally have to buy almost all of their drinks stock from the pub company.

IPPRs’ report indicates that these tied publicans are much more likely to say they are struggling financially, and they earn “significantly less” than non-tied operators.

The report also concludes that tied publicans who are struggling financially see the beer tie as one of the most significant contributing factors to their financial problems.

Rick Muir, IPPR associate director, said: “Thousands of publicans across Britain are being put under significant financial pressure by the beer tie.

“Our survey of publicans shows they have suffered worse through the recession because of this beer tie.

“The beer tie limits the commercial freedom of tied publicans, who are forced to pay more for their beer than non-tied operators.

“A recent Select Committee report shows that the higher prices tied publicans have to pay for their beer are not adequately compensated for by lower rents.

“It estimated that because of the discounts they can access, non-tied operators will make more money from their businesses.

“The Government should act to reform the way the industry operates and give publicans greater freedom from the big pub companies.”

The IPPR is calling on the Government to require pub companies that have more than 500 tied pubs and offer commercial full repairing and insuring (FRI) leases to provide greater flexibility to lessees. This flexibility should include a guest beer option and an option to become free of tie, accompanied by an open market rent review, the IPPR said.

IPPR’s new report – Tied Down. The beer tie and its impact on Britain’s pubs – is available from www.ippr.org