BBPA: abolishing tie will increase pub closures

Scrapping the tie would result in higher rents, a restriction in the choice of beer and more pub closures — that's the message delivered to MPs by the British Beer and Pub Association (BBPA) ahead of the Fair Pint Lobby Day.

In a briefing sent to all MPs, the BBPA said that the tie is vital to the stability of the tenanted and leased pub sector and fundamental to the survival of family and regional brewers.

"It is often argued that without the tie, landlords would experience sharply reduced costs, through purchasing their beer much more cheaply — this is a misconception," said BBPA director of communications Mark Hastings.

"The majority of potential publicans could not afford to buy their own pub outright, as this would generally require an outlay of £500,000 or more.

"For lessees, one alternative would be to rent premises from a commercial landlord who would only have an interest in achieving the maximum rent possible for the premises.

"Commercial leases based on square footage would also see many other costs currently linked to turnover transferred to a square footage basis. A commercial lease would be full-repairing and contain schedule of works, refurbishment costs and many other costly responsibilities.

"A commercial landlord would provide no financial or other concessions to his tenant."

Rising to the challenge​

The BBPA also questioned whether brewers would offer significant discounts on beer to pubs if the tie was binned because of the smaller quantities ordered.

It said the pubcos were "rising to the challenge" in providing support for licensees in the economic challenging times by offering rents reductions, discounts and business support.

Hastings compared the pubco model to the franchise system of many fast food restaurants. "It shares many similarities with the franchise system operated by companies such as McDonalds, Dominos Pizza, Pizza Hut, Burger King, etc.

"Under this model, the person taking on the business pays an up-front lump sum, pays rent on the property and has to buy all their supplies from the parent company."

He concluded: "The tie has been operating for over 200 years. Over that time, it has supported pubs through many ups and downs in the economic cycle, and is not responsible for the current decline in pub numbers."