Five-point action plan for beer tie reform

The new Independent Pub Confederation (IPC) has issued a five-point action plan for Government to make the beer tie fairer for tenants.

The IPC, which counts Fair Pint and the Association of Licensed Multiple Retailers among its members, wants Government to take the following steps:

• Refer the leased pub sector for investigation by the Competition Commission.

• Exempt any landlord with a brewing capacity, and who falls below 1% of the market, from regulatory interference over the tie. "Any landlords issuing long, fully repairing and insuring leases to be required by legislation to offer their lessees a genuine choice of whether to be tied for beer and to give them the right to buy one guest beer, sourced direct from a small brewer." This will "leave the tenanted estate of the smallest regional and family brewers unaffected".

• Removing ties on fruit and quiz machines from agreements.

• Introduce an independent statutory code of practice to uphold the principle that the tied tenant should be no worse off than if free of tie, "and to ensure that landlords act in a way which is fair and transparent".

• Revise the rent and rate calculation models- in consultation with lessee representatives — to "ensure estimates of profits adequately reflect operating costs". "Reference should be made to industry benchmarked standards, to the proper disregard of tenant's improvements and goodwill and the abolition of Upward Only Rent Review clauses."

Ignored​

IPC, which formed at the end of the mediation process last month, said these proposals are in line with recommendations from this summer's damning Business & Enterprise Committee's report, and its predecessor from 2004. IPC said the requests had been "ignored".

IPC said: "The UK Pub Industry is facing an unprecedented crisis. The pubs hardest hit have been traditional community outlets and those pubs run by self-employed lessees of the major national pub owning companies.

"Two thirds of all closures this year have been in the tenanted and leased sector. Most of these lessees are in tied relationships with their landlords. Tied lessees are therefore at a significant competitive disadvantage because of the way in which the tie  is exploited by the pubco landlords and super-regional brewers to drive higher prices for beer and rents.

"A recent OFT inquiry found that, at best, consumers were 8p a pint worse off visiting tied pubs but this was based on only a partial analysis of the market.

"The IPC estimate that the price differential is considerably higher than this.

"The IPC believes that the Government now needs to intervene to ensure an efficient, fair and free market in the pub sector."