The pubco model is "outdated" and the existence of the tie is hastening pub closures — that was the message to MPs in the first hearing of the Parliamentary probe into pub companies this morning.
Three anti-pubco campaigners hit out at different aspects of the status quo and said pubcos had not improved their treatment of tenants since the last probe by MPs four years ago.
The anti-pubco voice is being heard at the first session of the Business and Enterprise Committee inquiry into pubcos. The 11 MPs are looking at how pubcos have acted on recommendations from the 2004 Trade and Industry Select Committee report into how they treat tenants.
Clive Davenport of the Federation of Small Businesses kicked off by saying 99% of member licensees said the situation with pubcos hadn't changed since 2004.
MPs highlighted the figure of 35 pubs closing per week and the campaigners disputed claims from the British Beer and Pub Association (BBPA) that the majority are free-of-tie. High rents were cited as one reason for tied pubs closing.
Accountant Brian Jacobs pointed to figures from a survey by the Fair Pint campaign, showing that unlike assurances from pubcos, 28% of pubco licensees still have upward-only rent reviews. In addition, 58% face RPI increases.
"If rents go up at RPI and turnover goes down, only one thing is going to happen - pubs will close."
He added: "The basic problem is that pubco valuers and arbitrators basically ignore the value formula, which says the tied tenant shouldn't be worse off financially than if they were free-of-tie. It's as simple as that."
BDMs
Business development managers (BDMs), much-criticised in the 2004 report, were also slated in the session.
A Fair Pint survey said 51% of tenants never or hardly ever saw their BDM and campaigner Paul Daly said: "Today the general law of BDMs is they are there to collect debt. There's no partnership with the pubco and the tenant."
Daly - who has one Enterprise lease and ones one free-of-tie pub in East London - cited a pub in Crouch End, North London, where a "heavy handed" BDM wouldn't even let a licensee move their python unit.
The three-month cooling-off period for new tenants also came under attack.
"Three months is nothing," said Clive Davenport of the Federation of Small Businesses. "You don't even know where the nooks and crannies [of your pub] are."
Davenport highlighted a survey of FSB members that showed 94% backed the removal of the beer tie. "It's an outdated model," added Daly. "It's over; it's not a case of 'if'. It's 'when'."
BBPA
The BBPA's offer of being an intermediary in pubco/tenant disputes was also criticised, with campaigners arguing that BBPA does not represent tenants. It was highlighted that BBPA said it has no yet be called as a broker.
One MP Mike Weir said he was "surprised" that the three did not call for a independent consumer protection regime for tied tenants.
"When push comes to shove the whole problem exists around the tie," said Jacobs.
When pressed, Jacobs said he could not give any examples of pubcos deliberately misrepresenting trading figures for in-coming tenants.
• Read more on the inquiry: 'Rent reviews stacked against tenants'.