One in eight tied pubs are struggling to survive because of the beer prices charged by their pubcos, according to a new Federation of Small Businesses (FSB) survey.
A survey of the FSB's tied licensee members found one in eight said they are paying up to 50% or more for beer compared to those free-of-tie.
The group has called for action, including an ombudsman to resolve pubco/tenant disputes and a statutory code of conduct on rent reviews, in its submission to the Office of Fair Trading for its new investigation of the tie trigger by the Campaign for Real Ale's "super complaint".
The survey found 85% said high beer prices imposed by the pubco is a problem for their business and 73% backed a complete removal of the tie.
In addition, 87% said the tie is a problem for their business and nearly 80% said transparency in rent reviews is an issue.
The FSB urges the Government to:
- Abolish the tie where it does not give tenants the opportunity to make a fair profit
- Create an independent ombudsman who will support and advise tenants in conflict with their pubco that cannot be resolved
- Enforce fully transparent rent reviews through a statutory code.
Clive Davenport, FSB trade and industry chairman, said: "Tenanted pubs are being crippled by high beer prices: one in eight tenants are paying 50% or more for their beer because of the inflated prices imposed on them by the pubco.
"This then has to be passed onto the customer for the pub to survive. Three quarters of tied tenants said they would support a complete removal of the tie, so we must see change. The tie must be abolished.
"Pubs are closing at a rapid rate and if action is not taken now, the great British pub will become extinct - leaving the next generation unable to visit a traditional pub.
"The dramatic number of pub closures is not only affecting the tenants and their families, but the wider community - 24,000 people lost their jobs over the past year.
"Tenanted pubs are not being given a fair deal from the Pubcos that own them: nearly one in six say they do not receive enough business support and a further seven out of ten are left to their own devices once the contract has been signed.
"The FSB is calling on the Government to introduce an independent ombudsman and a statutory code to ensure transparency at rent reviews. Without urgent action, we could see the pubs at the heart of our communities disappear forever."