Pubcos savaged in MPs inquiry

Pubcos and the beer tie have been given a fierce mauling in front of a committee of MPs today.

Opponents of the pubcos - including campaign group Fair Pint - were giving evidence to a panel of seven MPs on the Business & Enterprise Committee, as part of a review of pubco power.

Brian Jacobs, co-founder of Fair Pint, said the beer tie was the "killer" for struggling tenants. He said an end to the tie would "open up the opportunity for more pubs to survive".

Jacobs also disputed the claim that the majority of pubs which are closing were free-of-tie.

Earlier, he declared: "The pubcos are in a mountain of debt and they are trying to service it out of a trade that is slowly imploding".

The MP-led review has been launched to investigate whether pubcos are following the recommendations of the 2004 Trade and Industry Select committee inquiry into the relationship between pubcos and their tenants.

But Jacobs said if the pubcos had adopted the recommendations there would be "less pubs closing today". He told MPs that rents were still RPI-linked. "But if turnover is going down, there is only thing that is going to happen," he said.

On the issue of tenants' relationships with business development managers, Jacobs said the "paternalistic" approach had "gone forever".

"Today the accountants have taken the pubs out of brewers and they run them like a financial vehicle," he said.

Later Enterprise lessee Paul Daly told the committee: "They (BDMs) turn up sometimes, but they are working for the man and the man tells them to collect their rent".

Daly said the beer tie was "an outdated model". He said: "It's not a question of if but when it goes."

Clive Davenport, the Federation of Small Businesses trade and industry chairman, said it was looking at what further support it could offer licensees, because it was a "dire situation".

Later the three were asked by MP Anthony Wright why a prospective licensee would enter a pubco tenancy agreement. Daly said: "They own so much of the stock, it's a law of averages thing."

Jacobs said: "The market is very narrow for free-of-tie, so you are forced into a corner if that's what you want."

The three speakers also questioned the length of the three-month "cooling-off" period that new licensees are offered by pubcos.

Davenport said: "You are still in a positive mindset, three months is nothing."

And on the issue of tenant deals on AWP income, Jacobs claimed that pubcos were keeping 80-85 per cent of the total takings from pubs. "That's not a partnership situation, that's not fairness," he said.

Punch Taverns, Enterprise Inns, the British Beer & Pub Association and Association of Licensed Multiple Retailers are all due to give evidence at the next session of the review on December 9.