Trade can't sit back and wait for inquiry

I am writing this piece as I sit at my desk in my London flat. I feel compelled to add that the flat is rented and all the furniture is provided either by my landlord or by me out of my salary.

The only people to have had as bad a few weeks as MPs are pubco and brewery bosses.

The tax was not axed and a Parliamentary Committee produced a scathing report on the operation of the tie.

Just as MPs have to recognise that life will never be quite the same again so does the industry. On tax it is arguable that a fundamental mistake was made by teaming up with cider, wine, whisky, and vodka producers.

When David Cameron attacked the tax rise in his Budget response he referred to "beer duty" not "alcohol duty". Any Government faced with massive public spending deficits in the years ahead will not be able to contemplate decreasing the overall tax take from alcohol. They might be persuaded to rebalance taxation away from beer onto whisky and spirits, which have received favourable treatment from two Scottish Chancellors in a row.

Any new tax campaign should also seek a Government commitment that it will seek to persuade the European Commission to allow lower rates of duty on draught beer.

As a job creation measure, a temporary 5% rate of VAT on pub and restaurant food (now allowed by the European Union) might be an idea whose time has come by the 2010 Budget.

As for the report on the tie, it may be that given all that is going on in national politics the Government does not respond until after the summer recess or even after an earlier than expected general election.

The pub and beer industry should use this period wisely. It may be tempting to wait and see if there is a Competition Commission inquiry then argue that the tie does not significantly impact on the market in terms of price and choice.

But there is a unique opportunity in the coming months to try and get a consensus on reform of the operation of the tie.

The latter course of action could well be the one that would enhance both shareholder value and political support in the long run.