Labour and Tories not keen on fresh pubco laws

Top politicians from the two biggest parties have given a cool response to calls for new laws to shake-up the pubco model.

Business Minister Gareth Thomas said the Government's view that there are "difficulties" imposing a legal code of practice in the pubco/tenant relationship "still holds". However, Thomas said he'd "reflect on" calls from MPs for the beer tie to be reformed.

Meanwhile, Conservative Shadow Solicitor General Jonathan Djanogly said new laws forcing change to the pubco model would be a "last resort", but "if regulation becomes necessary, we should act".

They were talking during a debate on pub ownership in Parliament.

Thomas said the 2004 Trade and Industry Select Committee (TISC) report into pubcos recommended that a statutory code of practice for the sector should be imposed if the voluntary code was considered ineffective.

"The Government's response was that we saw difficulties in imposing terms and conditions in an area subject to commercial arrangements and where existing legislation would not allow us to impose such a code.

"That view still holds, but I will reflect further on the ideas proposed today by [MPs]."

Djanogly, who sat on the 2004 committee that investigated pubcos, referred to the Office of Fair Trading's decision not to investigate pubcos in 2005 after a preliminary study.

Djanogly said: "Clearly, it is a matter for the OFT and the Competition Commission. At this stage, we should respect their judgment on the matter.

"As we have said on many occasions, legislation should be a last resort, not a first resort, especially when it has the potential to create a regulatory burden on business. The current economic situation renders that a particularly salient issue."

He added: "We are hopeful that the market will develop in a transparent and competitive manner and that pubcos and breweries will work hard to ensure that, when a tie forms part of a lease, it is appropriate, and that the tenant as well as the freeholder derives benefit from it."

Selby MP John Grogan had earlier said the long-term lease needs to be looked at, but he defended the tie as a low-cost way for people to enter the trade.

Djanogly said Grogan "made a solid case on the issue, but I also accept that if regulation becomes necessary, we should act".

Meanwhile, Djanogly proposed a "revenue neutral" system of alcohol tax, where tax would fall on lower-strength products and rise on higher abv drinks, as an alternative to the "blunt instrument" of minimum pricing.