Brewery boss slates MPs over covenants

A prominent regional brewer has mounted a robust defence of using restrictive covenants in pub sales — saying MPs that want them banned "don't know what they're talking about".

It comes as three regional brewers, in their updated codes of practice for tenants, refuse to rule out applying the controversial measure, which forces change of use when pubs are sold.

Last year's report from the Business and Enterprise Committee (BEC) said restrictive covenants should be banned.

Punch and Enterprise have vowed not to use them.

Brains's new code says that, when selling a pub, "generally we would seek to prevent the property being used as a licensed outlet".

Young's says it would "not usually" sell a property with restrictive covenants, but "there may be circumstances when it would be justifiable to do so; for example, to ensure the viability of one or more other local pubs".

Manchester brewer JW Lees says it is "rarely" its policy to sell a pub with restrictive covenants.

"However, when we do so we would take into consideration the needs of the local community, and the decision would be based on helping to ensure the viability of any other licensed premises in the vicinity."

In response to the BEC's view on restrictive covenants, JW Lees's chief executive William Lees-Jones told the Morning Advertiser: "I don't think MPs really know what they are talking about.

"If you've got a suburb in a community that can sustain three pubs, the simplest thing to make the other two work is to take one out of the system.

"Now and again a pub needs to close to make others more successful."

Lees-Jones said his company typically sells one pub per year with a restrictive covenant.

He added: "We have lots of MPs who don't really go to pubs because they're in Westminster; they're very busy and very important.

"They don't realise that we have a situation of over-supply, so it doesn't matter what we get for that pub, it's good business for the pub industry to have one less pub.

"It is one thing that the BEC report fundamentally doesn't understand."

Replying to the Campaign for Real Ale's (CAMRA) "super complaint" on the tie last year, the Office of Fair Trading said restrictive covenants "can in certain circumstances give rise to competition concerns".

CAMRA's head of public affairs Jonathan Mail said: "It's clearly very disappointing that companies won't voluntarily end the use of restrictive covenants."

The previous Government vowed to ban their use and Mail added: "We will push the Government on banning [restrictive covenants].

"It's anti-competitive for a company to prevent potential rivals coming to an area."

Mail said CAMRA would also raise its concerns with the Business, Innovation & Skills Committee, which is BEC's successor.