Trade split on beer tie ‘break’

By Gillian McKenzie

MPs back market rent only option for tied pub tenants

PROPOSED legislation which could effectively ‘break’ the beer tie has divided opinion across the industry.
‘New clause two’, which was tabled by Greg Mulholland, chair of the All-Party Parliamentary Save the Pub Group, states that pubcos with 500 or more pubs and at least one tenanted or leased pub, will have to offer a market rent only option, meaning the tenant would be able to purchase beer and other products from any supplier. It will be added to the pubs code in the Small Business, Enterprise and Employment Bill after 284 MPs voted in favour; there were 269 votes against.
Measures outlined in the Bill will currently only apply to premises licensed under the Licensing Act 2003 (England and Wales); however, campaigners for pubco reform north of the border have called on the Scottish Government to match Westminster’s proposals.
Lynn Adams, who runs The George bar in Hamilton and is a long-standing campaigner for pubco reform, welcomed the inclusion of a market rent only option. “I am delighted after all these years the beer tie will effectively be broken,” she said.
“It will give tenants more financial control over their business. It’s a great result; and if we can carry it forward to Scottish tenants it will be an excellent result.”
CAMRA chief executive Tim Page also welcomed the new measure, saying it will “empower licensees to choose between a tied agreement and a market rent only agreement that will allow them to buy beer on the open market”.
However, pubcos have criticised the amendment.
David Forde, managing director of Heineken, which owns Star Pubs & Bars, said the change would “make it more difficult for people to enter the market and own their own pub”.
“If enacted, the market rent only option would effectively break the beer tie, threaten vital investment and damage pubs,” said Forde.
Punch Taverns said, should it become law, the amended Bill would have “significant adverse consequences” for pubs.
“We believe that the amendment would be likely to have the effect of reducing pub investment, reducing consumer choice and exposing tenants to higher fixed rents, reduced levels of support and greater risk of failure,” it said in a statement.
BBPA chief executive Brigid Simmonds said: “There are serious legal and competition issues which must be faced as it rides roughshod over what are previously agreed contracts, and creates an unworkable two-tier market.”