Government report slams pubcos

MPs have called for a dramatic overhaul of the UK pub industry to help bring a halt to the “alarming” rate of closures.

In a strongly-worded report, the Business Select Committee criticised the large pub companies which run the majority of the UK’s watering holes, saying self-regulation had failed.

The committee said that pubcos should now be subjected to statutory regulation.

MPs criticised the much-maligned “beer tie” system under which landlords have to buy alcohol from a pubco, which campaigners have argued has pushed up the price of a pint.

The report said: “The purpose of this inquiry into pub companies was to assess whether or not the industry had delivered on its promise of meaningful reform.

“As with previous inquiries, modest improvements have been made. However, the fact that it has taken a number of select committee inquiries to prompt these improvements demonstrates the deep-seated problems which lie at the heart of the industry.

“While the new codes of practice are a step in the right direction, they only address a limited number of areas.

“In many areas we do not believe that there has been a genuine commitment to reform. Many of the potential benefits of the new code, which were identified by our predecessor committees, have been undermined by a process of implementation which can only be described as half-hearted.”

The report went on to accuse the British Beer and Pub Association (BBPA) of being “impotent” in enforcing its own timetable for reform and MPs said the supposed threat of removing the membership of pub companies who did not deliver was “hollow”.

The BBPA responded with a strong statement of its own.

Chief executive Brigid Simmonds said: “We are deeply disappointed with this report. We believe we have demonstrated to the Select Committee that significant progress has been made by BBPA member companies which operate tied tenancies and leases, and we reject the Committee’s calls for a costly statutory code.

“This would pile more costs onto pubs and lead to more closures – something we hope ministers will consider carefully when they come to look at these recommendations.

“Furthermore, we have continued to develop proposals to strengthen self regulation, building on what we have already done as an industry; the pub company codes of practice, the low cost arbitration service for tenants and lessees and the business advice already offered by the BII.

“Tied pubs continue to offer a low cost means of entry for self-employed pub entrepreneurs.

“The new codes, together with the pre-entry training now required by our members, ensures that would-be licensees have a clear understanding of what it takes to run a pub.

“BBPA members have invested some £265 million into supporting the leased and tenanted sector over the last year at a time of unprecedented economic pressure.

“It is a combination of the smoking ban, economic recession and the 35% increase in beer taxation which the industry has endured since March 2008 which are the real reasons why pubs are closing.

“We call upon the government to recognise these economic pressures and ease the burden on pubs.

“The pub sector needs less tax and less regulation, not more, if it is to continue to create jobs and sustain much needed economic growth in our communities.

“We look forward to discussing with government how this is progressing before they respond to the Select Committee report.”