Abolishing the beer tie would be terrible news for British pub-goers
THE British pub is much-loved, but they have experienced a difficult few years. Changing consumer tastes and the challenging economic environment of recent years have made life tough for pub landlords and companies like Punch.
We are now on the road to recovery. At Punch, we were planning to invest over £400m over the next ten years in our community pub estate, we are providing a better deal for our tenants, and we have in place the right training and support for our tenants so that they can offer what consumers want. We have also concluded our financial restructuring, which creates a strong financial base for our business.
All of this progress is now at risk because of an ill-thought-through amendment that was voted through in the House of Commons on Tuesday.
The amendment would effectively abolish the beer tie that is at the heart of our business model. The beer tie means we are able to offer lower rent to our tenants, in exchange for them committing to buy beer from us. No publican has to sign up with us. They could rent a pub on the open market for a much higher price, and take their chances buying beer and other drinks from brewers and suppliers but have the risk of high fixed rent.
But tens of thousands of publicans choose a tied relationship because it gives them access to running their own business, using an asset that is worth on average £500,000 with low cost of entry.
Earlier this year, after a long public consultation process, the government accepted these arguments. Ministers were concerned by the government’s own independent economic research, which showed that undermining the tie would lead to the closure of even more British pubs than we have seen in recent years.
None of this powerful evidence appeared to be of any interest to those MPs who voted for an amendment that will cut investment and jobs in pubs across Britain, and plunge our sector back into uncertainty.
I hope that, as the legislation continues to make its way through Parliament, the House of Lords will have more concern for investment and jobs in the pub industry. The uncertainty that Tuesday’s vote has created is just bad news for pubs and the British beer drinker.