Think tank warns tied publicans are more likely to struggle
Tied publicans are much more likely to say they are struggling financially and also earn significantly less than non-tied operators.
That is one of the conclusions in a report by the Institute of Public Policy Research (IPPR) into the tie, supported by the Campaign for Real Ale (Camra) and the Fair Pint campaign.
The report, which noted that 25 pubs are closing every week, said it found the level of business churn is also higher in the tied sector than in the non-tied sector, and that tied publicans who are struggling financially see the beer tie as one of the most significant contributing factors to their financial problems.
Many tied publicans surveyed for the report also claimed they had not seen their pubco's revised code of practice and only a minority of those who have seen it felt that it would benefit them.
The IPPR called on the Government to reform the way in which the tie operates.
"The OFT decided not to refer this matter on competition grounds, because it did not find evidence that consumers suffered from a lack of choice in a competitive market. However, even if this matter cannot be pursued on narrow competition grounds, the fact that a significant proportion of publicans appear to be being put under significant financial pressure is a matter of serious concern. This is not only because of the personal financial hardship involved but also because the sustainability of vital local amenities is being put under pressure," the report said.
It recommended the following options:
To implement the recommendation from the Law Commission that unfair contract terms regulations should be amended to improve protection for the smallest and most vulnerable businesses (employing nine staff or fewer).
To require pubcos that have more than 500 tied pubs and which offer commercial full repairing and insuring (FRI) leases to, over a period of time, provide flexibility to lessees, including a guest beer option and an option to become free of tie, accompanied by an open market rent review.
To support efforts to make information on business costs and turnover more transparent.
To support moves towards greater market transparency by requiring pubcos to co-operate with the creation of a pub rents database and to publish their wholesale price lists and details of discounts paid to lessees.
Sunday Mirror launches pub campaign with Camra and Al Murray >>
Pubcos back in spotlight over tied business model >>
Business Committee opens another inquiry on pub companies >>
By Neil Gerrard
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