In what has been hailed as a major victory for pub landlords, an amendment has been introduced to legislation currently going through parliament that could end the existence of “tied pubs” who are required to buy their beer supplies from the company that owns the pub.
It is important to note that this change has not yet come into force, and has still to be approved by the House of Lords. However, if it does pass through the Lords without further amendment, it would allow landlords to have an independent rent review and buy their beer on the open market
This amendment to the Small Business, Enterprise and Employment Bill, which put forward by Liberal Democrat MP Greg Mulholland, marks the government’s first defeat on one of its own bills since the last election. MPs voted 284 to 259 to amend the legislation.
The amendments to the legislation has been welcomed by groups including the Federation of Small Business and the Campaign for Real Ale. However, the British Beer and Pub Association has expressed its fears that the change could be damaging to the industry.
If and when this new legislation becomes law, it will bring in a new code for pub landlords. This will certainly be good news for a number of tenants of large pub companies, however, tenants of smaller pub companies will not benefit from the same protection, so there is a danger that this could result in a two-tier system. Many aspects of the code, such as the right to call for a tie free market rent will only really benefit tenants of the larger pub companies that are part of a chain of 500 or more outlets.
It remains to be seen what the impact could be in the long term, but there must surely be a risk that this move may put some landlords off working with smaller breweries, which may well prove damaging to our smaller pub owning breweries. Although the additional flexibility of being able to offer a traditional tied relationship may result in smaller breweries being able to attract landlords with lower start up costs and shared risk.
Some sections of the industry are also concerned about the uncertainty that will be caused, while we wait for this legislation to pass its final stages. This could take some time, and further amendments may be possible.
And what could this change mean for the end consumer? Will we end up paying less for our pints? Arguably for a successful tied pub, lower beer prices from its supplier could result in this being passed on to the consumer, but this has to be weighed against increased rents that will put pressure on the less successful tied pubs. It seems unlikely that there will be a substantial reduction in price for the consumer.
We await the outcome of the legislation as it passes through the House of Lords with interest.
To contact the team, please call 01392 210700, email foodanddrink@stephens-scown.co.uk or visit www.stephens-scown.co.uk.