If the tie goes, regionals suffer

Members of Parliament aren't flavour of the month at present and you'd think they would engage their brains before opening their mouths and uttering total nonsense.

And yet there was one MP, in a brief debate on the tie, telling the Commons that "the tied house system should have gone out with the Corn Laws".

How about a little historical accuracy? The tied house system didn't exist at the time of the Corn Laws. An act of 1815 cut back on the import of corn in an attempt to help British farmers and to restrict the manufacture of gin, which was cheap and causing social havoc; one sign outside a London gin shop declared "Drunk for a penny, dead drunk for twopence".

The Beer Act of 1830 was introduced to counter what MPs at the time thought were two evils: cheap gin and the power of licensing magistrates to control the supply of liquor. MPs wanted to break the stranglehold of the magistrates and encourage the consumption of healthy beer rather than gut-rot gin.

The act allowed any householder to turn his or her premises into an ale house in return for an annual fee of two guineas. Duty on beer was also abolished. The Rev Sydney Smith, a leading writer and political campaigner, said the power of the licensing authorities was "One of the most enormous and scandalous Tyrannies ever exercised upon any people". But this attempt at a total free market proved to be a disaster. With cheap grog shops open on every street corner, people went on a drunken rampage.

A few days after the law came into effect, the good reverend had to admit: "Everybody is drunk. Those who are not singing are sprawling. The sovereign people are in a beastly state."

Several acts were quickly introduced to remedy the situation. In particular, the Wine & Beerhouse Act of 1869 placed all retail outlets back under the control of the licensing justices. Licences were strictly controlled and curtailed and as a result thousands of grog shops — known at the time as Tom and Jerry Houses — went bust. They were snapped up for a song by a new breed of commercial brewers who had made their fortunes first from porter and, towards the end of the 19th century, from a new type of beer called pale ale.

The brewers were anxious to maximise their profits. They wanted to cut back on "vatted beers" such as porter, stout and India pale ale, which were stored in casks for several months. They were keen to bring in "running beers" that were ready to drink after a brief secondary fermentation in cask.

Running beers had only a short life once a cask was tapped. They had to be sold quickly and the brewers needed retail premises. Tom and Jerry Houses came to their aid and the tied house system was the result. If MPs don't like the tie, they have only themselves to blame.

It was Parliament that introduced the 1830 Beer Act and it was Parliament's belief in the sanctity of a complete free market that led to the development of pubs directly owned by brewers.

Disaster​

That's enough history. Let's consider the call for an end to the tie today. It would be a disaster. In particular, it would hasten the end of the regional brewers and strike a devastating blow at cask beer, the only beer style showing any slight growth.

Take, for example, two leading regional brewers in different parts of the country: Daniel Thwaites of Blackburn and Charles Wells of Bedford. Thwaites owns more than 400 pubs. The Charles Wells Pub Co, the retail arm of Wells & Young's, owns 250 pubs. Sixty per cent of Thwaites pubs serve cask beer, while 245 of Wells' 250 outlets serve real ale.

These pubs are the backbone of their business. Take away their pubs and they would think the game wasn't worth the candle.

If they were forced to turn their pubs into freehouses, tenants would switch to heavily discounted beers — mainly lager and keg beer — from the global giants. Cask beer would go into free fall.

The opponents of the tie should take a close look at the United States, where the tie is illegal — brewers cannot retail beer. As a result, the big brewers have sweetheart deals with distribution companies. Each company handles the products of just one brewer — other brewers cannot get on their trucks.

It's a restraint of trade that hampers smaller independent brewers. It means the likes of Anheuser-Busch, which brews 90 million barrels of beer a year, mainly Budweiser, along with Coors and Miller, have an unchallenged power in the beer market that leaves Britain's global brewers panting with admiration.

Breaking or relaxing the tie here would have a similar result. The beer giants would get bigger while regional brewers would wither on the vine.

Sir Winston Churchill once famously said that democracy is an imperfect system — the problem is that all the alternatives are worse. Substitute "tied house" for democracy. Are you listening, Westminster?