Comment: Publicans feel the draught

THE shock abandonment by MPs of the centuries‑old beer tie between pub groups and their tenants is probably the third biggest shake-up in the drinks sector after the Beer Orders of 1989 and the smoking bans in 2006-07. It is seismic for the industry from high street to village green.
Martin FlanaganMartin Flanagan
Martin Flanagan

With the added pressure on consumer spending of Britain’s extended downturn, it is estimated 10,000 pubs have put the shutters up (not a few turning into restaurants, coffee shops or supermarket convenience stores) in the past decade. That’s about one in six of Britain’s taverns.

The big tenanted pub groups, such as Enterprise Inns and Punch Taverns, as well as their trade body, the British Beer & Pub Association, are spitting feathers.

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They point out the UK government’s own research suggested the scrapping of the tie between owner and pub landlord could force as many as an extra 1,400 pubs to call it a day, with the loss of 7,000 jobs.

Under the tie, tenants are committed to buy beer from the firm that holds their lease at above market prices in return for subsidised rent, some investment in the premises and other benefits.

But it is clearly a highly contentious issue. Many tenants are sardonic about the pub operators’ warnings of further closures and job losses if the tie is broken, claiming it is the uneconomic terms foisted on the tenants which have sent many to the wall.

Government plans to allow publicans to challenge rental prices had specifically ruled out a rent-only option in the legislation that would let the tenants buy beer on the open market. But late Tuesday evening MPs voted 284 to 259 in favour of adding the option to the Small Business, Enterprise and Employment Bill.

It was almost like the MPs were a jury disregarding the judge’s (government’s) direction to it on what issues were up for decision.

It is being hailed as a stunning victory by anti-pub group campaigners, including the Camra real ale group and the Federation of Small Businesses.

The pubs giants contention that the tie remains a low-cost way for people to realise their dream of running their own pub cuts little ice with its opponents. Fine in principle, exploitative in practice, sums up the view of those campaigning for change.

Whether one agrees or not, there will certainly be big repercussions for the industry.

BoE rates split goes into fourth month

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The two members of the Bank of England’s monetary policy committee voting for a rate rise in recent months look more than ever to be whistling in the wind.

Too much economic data gainsays Ian McCafferty and Martin Weale.