Living with the fallout of the Beer Orders

The heavens opened but I'm not sure it was rain that descended on my head a few weeks ago when I said in this space that not every pub in the land was having a bad time. The result was letters to this paper and emails direct to me that suggested, expletives deleted, that I had finally lost my remaining marbles and should be carted off to the funny farm in a back-to-front jacket.

I know and appreciate that many licensees are having a terrible time. I hope I have addressed the problem more recently with the tragic story of the married couple in a rural Hertfordshire pub who lost everything — home, livelihood and life's savings — when they couldn't make a living from their pub and left before they were evicted.

The owner of the Hertfordshire pub is Punch Taverns. I'm not suggesting the company is run by hard-faced villains. Neither am I suggesting that a traditional brewer with a tied estate might not sometimes act in the same way.

But I am convinced that many of the problems facing the pub trade today are the result of changes that have shifted the balance of power away from the people at the coal face — the hard-working and often shockingly over-worked licensees. Brewers, when they were responsible for most of the country's pubs, did realise they had a responsibility to their local communities. Pubs were not seen as milch-cows to be drained dry of every last penny of profit, with the shutters brought crashing down if income did not always meet expectations.

Next year we will mark — certainly not celebrate — 20 years since the publication of that notorious report The Supply of Beer, produced by the Monopolies & Mergers Commission (MMC). Its main recommendation — that the Big Six national brewers should have to turn most of their pubs into freehouses or sell them off to encourage greater competition and allow smaller brewers greater access to market — seemed on paper a sensible proposal. In reality it proved to be an unmitigated disaster.

Thumbing through my yellowing copy of the MMC report, I was struck by the brilliant note of dissent to the main conclusions written by one of its authors, Lief Mills. Mr Mills at the time was the leader of the Bank Workers' Union and, as he quoted Aristotle in the original Greek, was clearly a man of considerable learning.

It's worth quoting a few sentences of his highly perceptive remarks to show how clearly he saw the outcome of the recommendations made by the majority of his colleagues:

"There are three possible types of purchasers of the public houses that would be put on the market: existing regional and local brewers, companies outside brewing and individuals (whether existing tenants or not). Regional and local brewers may well not have the capital resources to buy significant numbers of public houses nor indeed might such purchases fit with their current and future strategies for development.

"Companies outside the brewing industry — such as leisure or property companies — may well wish to purchase the public houses, but in turn may wish to change their use and develop them as wine bars, café bars, restaurants, or even for office use. Some such companies could well regard the public houses as just pieces of real estate to be bought and sold for whatever purpose yielded the maximum return on capital employed. The companies would have no direct interest in the brewing industry as such."

Mr Mills was — to use a phrase he and Aristotle would hate — right on the button. The pubs "freed" as a result of the MMC report and the resulting government Beer Orders were first hived off to former brewery executives and quickly sold on to banks and property companies.

One of the founders of Punch Taverns summed up the new attitude to pub retailing: "We buy beer cheap and sell it dear — the difference is our profit." No question there of the community role of the pub or helping struggling licensees when business was bad. Pubs now are no different to supermarkets or petrol stations. Profit is everything.

I'm not starry-eyed about the past. I don't think there was a golden age for the pub. In many respects — quality of service, food and welcome for women and families — pubs are better today than they were 20 years ago.

But those changes were already happening and have little to do with the results of the MMC report. To use a cliché that Lief Mills would hate: if it ain't broke, why fix it. Or as he put it at the end of his dissenting note: "Warts and all, imperfections and all, the tied estate and the vertical structure that this supports, and the involvement of brewers in the free trade through loan ties, give the consumer reasonable value for money and reasonable choice. The tied estate and the loan tie should be left to continue as they are and the brewing industry should be left to change and develop as it is already doing."

If you doubt the wisdom of those words, just count the number of closed breweries and pubs over the past 20 years.