Plan to free pubs will tie hands of those who want to open one – Brian Davidson

The Scottish pub plays an invaluable role at the heart of local communities, ­providing numerous social benefits whilst also playing a major role in our economy. Pubs alone contribute £1.15 billion to the Scottish economy every year and employ more than 45,000 people across the country.

Friends enjoying a drink in the pub

However, the industry faces many challenges, from changing consumer habits, to recruitment shortages and the pressures posed by taxation and regulation that disproportionately impacts our sector. These factors have contributed to a mounting ­pressure on pubs in recent years. Over the past 10 years alone, 20 per cent of Scotland’s pubs have closed.

Against this backdrop, the Scottish Beer & Pub Association applauds efforts to support pubs. However, the Tied Pubs (Scotland) Bill, recently introduced to the Scottish Parliament by Neil Bibby MSP, will have the opposite effect. Far from helping Scotland’s pubs, this bill poses a real danger to the future health and ­sustainability of the sector, and as such it should not be allowed to ­proceed into law.

To survive and thrive, Scotland’s pubs are changing. But change, to widen a pub’s food offer, or modernising to appeal to changing consumer tastes, requires significant investment.

Brian Davidson is President of the Scottish Beer & Pub Association

Under the leased and tenanted model, a pub landlord will rent the pub from a pub company or ­brewery, and most tenants will enter some form of supply agreement for beer, also known as the “tied-pub” arrangement. In turn, the pub company or brewery invests in the future of the pub – often through significant sums of money which would be otherwise unavailable if an individual doesn’t have personal wealth or access to lending.

Another benefit of the model is its accessibility to individuals, or ­families, who may want to run a pub. Pub companies are instrumental in widening access to the sector by offering an affordable means of running a business. It is up to ten times cheaper for an individual to start running a leased and tenanted pub than it is to buy a freehold, which would be beyond the means of most.

Without pub companies offering an entry point into the sector, many would-be pub entrepreneurs would be unable to enter the sector, and running a pub would become the preserve of those inheriting a family business, or who are independently wealthy. We believe that Mr Bibby’s bill fundamentally misunderstands the Scottish pub sector, the benefits that the leased and tenanted model offers, and the serious impacts that removing this element of the sector will have.

Due to the inclusion of a “Market Rent Only” (MRO) option that includes no pre-requisite or qualifying circumstances to be trigged, the Tied Pubs Bill creates significant disincentives for pub companies to invest in their estates. In practice, this would mean a total collapse in investment, and the potential withdrawal entirely of pub companies from the market.

Paul Togneri, Scottish Beer & Pub Association.

Indeed, the policy memorandum accompanying Mr Bibby’s bill concedes that the proposed legislation risks pub closures, and may also lead to fewer pub tenancies for those that wish to enter the pubs sector.

In 2016, the Scottish Government commissioned independent research into the pubs sector, which found that no part of the sector was at a significant disadvantage and ­concluded that no legislative action was required in Scotland. It is ­curious therefore, that Mr Bibby first announced his intention to ­legislate prior to these findings being ­published, and now discards these findings without explaining why.

Mr Bibby’s bill appears to be a ­solution looking for a problem, seeking as it does to replicate in Scotland legislation that was introduced in England and Wales in 2016. However, the two markets are very different, with leased-and-tenanted pubs making up a far smaller percentage of the Scottish market, and the industry already operating an effective Scottish Pubs Code, with measures in place to ensure that any issues are resolved in a fair and timely manner.

We believe pubs need action which helps, not hinders the sector. As an industry we are working hard to rise to the challenges our sector faces, and would encourage MSPs to take action on vital issues such as business rates, skills policy to help ­protect the ­longevity of our vital sector, and pressing Westminster for lower beer duty.

Scotland’s economy benefits from a thriving beer and pubs sector. If this bill is passed, however well intentioned it may be, it will have a profound impact on pubs and the local communities to whom they provide a vital service. The sector needs to be supported with balanced policy interventions, not damaged by ­misguided and flawed legislation.

Brian Davidson is President of the Scottish Beer & Pub Association