Pub firms say beer tie vote may spark closures and job losses

19th Nov 2014 07:13

It has been hailed as a historic vote that could secure the future of the British pub, but Parliament's decision to scrap the restrictive 'beer tie', which links pub landlords' rent and supplies to their parent pub companies, might have "serious unintended consequences" on the industry, according to pub groups.Enterprise Inns chief executive Simon Townsend said that the amendment to the Small Business, Enterprise and Employment Bill was a "disproportionate response" and warned of the ramifications, including job losses and pub closures.The government was defeated in a Commons vote on Tuesday with MPs voting 284 to 259 in favour of changing the Bill.The scrapping of the beer tie means 'tied pubs' are no longer required to buy supplies exclusively from their parent companies, having long complained of having to pay high prices for beer.Landlords will now be able to buy their beer on the open market and will also be allowed an independent rent review.In a statement on Wednesday, Townsend said: "We continue to believe the tie offers the best operating model for the vast majority of our publicans and [...] we take a flexible approach to all our lease and tenancy agreements and the proactive management of our wider property portfolio."He explained that a government review of the industry found that the 'market rent only' option was damaging to pubs, communities and the wider industry.But the Liberal Democrat MP Greg Mulholland, the chairman of the all-party Parliamentary Save the Pub group, described the "tie" arrangement made between a pub and its owner as an "archaic" and "extraordinary" system.A spokesperson for the Campaign for Real Ale said: "After 10 years of our campaigning, MPs have today voted to introduce a market rent only option for licensees tied to the large pub companies - a move that will secure the future of the Great British pub".The Federation of Small Businesses added that it was "a historic day for tied publicans who look forward to a more open and competitive marketplace".However, Townsend argued that government-commissioned research suggested that the option chosen would lead to widespread pub closures, significant job losses and reduced investment in the sector.Townsend said: "This amendment is a disproportionate response which proposes fundamental change that is wholly contrary to the findings of the consultation, from which the Bill was drawn up.Punch Taverns said the amended bill, if it passes in its present form, would have "significant adverse consequences" for Britain's community pubs."The Government's own research indicated that breaking the tie would be expected to result in between 700 and 1,400 more pubs closing with 3,700 to 7,000 job losses," Punch said in a statement to the stock market."Furthermore, we believe 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."