Pubs vote ‘means better prices’

GREG MULHOLLAND: His proposal gained the support of a majority of MPs.
GREG MULHOLLAND: His proposal gained the support of a majority of MPs.
Have your say

A VOTE by MPs to reform the historic “beer tie” between tenants and pub companies will make it easier for customers to afford a pint, according to two Yorkshire pub operators.

Matthew Jones, the managing director of Jones Bar Group, and Christian Townsley, the director of North Bar, believe the move will mean a better deal for customers and landlords. However, Enterprise Inns, Britain’s biggest pub landlord, warned that the vote could result in a fresh wave of closures and major job losses. Enterprise Inns said the successful Commons rebellion “threatens to have serious unintended consequences for publicans and the industry at large”.

The British Beer and Pub Association (BBPA) said the vote was “hugely damaging” and that the Government’s own research showed it would result in 1,400 more pubs closing, with 7,000 job losses. But the Campaign for Real Ale (Camra) said the change would secure the future of pubs, helping them to stay open and ensure the cost of a pint remained affordable. It was also backed by the Federation of Small Businesses (FSB).

The vote saw the Government suffer its first legislative defeat - by 25 votes - as Tory and Liberal Democrat MPs rebelled against the Coalition to support an amendment to the Small Business, Enterprise and Employment Bill. It will mean pub tenants tied to big companies being able to demand a “market rent only” (MRO) agreement from them. Currently, tied pubs exclusively buy alcohol products from the parent company in return for reduced rent on the premises and other benefits but there are widespread concerns and complaints about the abuse of the practice by big firms. Liberal Democrat MP Greg Mulholland, who proposed the reform, said it would “simply bring back market forces into a sector that frankly has become grotesquely anti-competitive”. Mr Mulholland stressed that his market rent only plans would come in gradually over five years.

It would only be triggered at key points in the cycle of a lease or tenancy, such as rent reviews, lease renewals or on the sale of the title of a property, or if there was a major change in prices or circumstances such as a cheaper pub opening next door. This period would then be followed by two potential periods of negotiation between the pub and the larger owning company with an independent surveyor to adjudicate over any differences in opinion. But Simon Townsend, chief executive of Enterprise, which has 5,500 pubs, sounded a grim warning. He said a Government review had rejected the “market rent only option” as damaging to pubs, communities and the wider industry, and would lead to “widespread pub closures, significant job losses and reduced investment in the sector”.

However, Mr Jones, the managing director of Jones Bar Group, which operates nine outlets from seven venues, said: “We would never enter a brewery-tied agreement again until the abolition of the beer tie is brought in. I totally agree with CAMRA that there will be more chance of pubs surviving without such agreements. The only people to lose out would be the breweries themselves. However I’m sure, as purely property landlords, they would still turn a significant profit. Had we not had the support of our freehold sites we would have been bankrupt a long time ago.”

Mr Townsley, of Leeds-based North Bar, added: “This is an historic development that has the potential to enable hard working landlords to see better margins and earn an income slightly more in line with the many hours they work.

“Not only will the change be beneficial to landlords, but it will mean that customers get better choice at better prices.”