MPs vote to scrap forced ‘beer-tie’ pubs

MPs have voted in favour of scrapping the UK’s forced ‘beer tie’ pub model, effectively ending landlords’ obligation to buy beer from their owners.

MPs today voted in favour of giving landlords the option to forgo an obligation to buy beer from their owners.

The current arrangement means pub landlords are required to buy beer from the company – either brewery or ‘pubco’ – that owns their establishment.

However that could soon be set to change after MPs voted this afternoon 284 to 269 in favour of introducing a new clause to the Small Business Bill adding a “market rent only” (MRO) option for tied pub tenants, which would free landlords from the obligation of buying beer from their owners.

Amendments to the Bill, which still have to go through the House of Lords before they are given Royal Assent, will apply to large pubcos who own more than 500 pubs and their leased, tenanted and franchised pubs.

Opponents of the beer-tie model, who argued that it put publicans at an unfair disadvantage by limiting their stock choices and stifling competition, have today welcomed the vote.

Paul Kenny, the GMB’s general secretary, said: “MPs have voted for a clause that shows that the market rent only option is a simple, cheap to administer and market based solution that at certain trigger points would simply give licensees the choice as to whether to pay a fair rent only or stick with a tied agreement. This choice will force the large pub companies to ensure that their tied agreements – where tenants pay marked up prices for beer and other products and services – are competitive, fair and attractive to tenants.”

John Allan, national chairman of the Federation of Small Businesses echoed Kenny’s sentiment’s adding: “It is a historic day for tied publicans who look forward to a more open and competitive marketplace. The freedom to stock a wider range of beers will provide a boost to local economies while giving consumers greater choice.”

Tim Page, the Campaign for Real Ale’s chief executive, called it a “landmark” vote which would help to secure the future of UK pubs.

He said: “Allowing over 13,000 pub tenants tied to the large pub companies the option of buying beer on the open market at competitive prices will help keep pubs open and ensure the cost of a pint to consumers remains affordable. The large pub companies will no longer be able to charge their tenants prices up to 60 pence a pint higher than open market prices.”

However while many are celebrating what they see as a positive step forward for the British pub industry, the British Beer and Pub Association (BBPA), which represents Britain’s brewers and pub companies, have branded the amendments “hugely damaging”.

It argues that the beer-tie model has actually contributed to the slowing of the closure of leased pubs and that its abandonment risks “a return to far higher closure rates.”

Brigid Simmonds, BBPA chief executive, said: “This change effectively breaks the ‘beer tie’, which has served Britain’s unique pub industry well for nearly 400 years. It would hugely damage investment, jobs, and results in 1,400 more pubs closing, with 7,000 job losses – as the Government’s own research shows.

“There are serious legal and competition issues which must be faced, as it rides roughshod over what are previously agreed contracts, and creates an unworkable, two-tier market. I hope Parliament will rethink as the bill continues its progress.

“On the issue of family brewers remaining outside the scope of the Code, we have always taken the view that their inclusion is not necessary, provided that this does not result in a distortion to competition. As the Government is now saying it will not include these smaller companies it needs to ensure a level playing field throughout the legislation.”

Changes to the bill still have to be approved by the House of Lords before it can be formally introduced.