FSB: Government must abolish the Pub Company tie to save Britain’s pubs

One in eight tied pubs are struggling to survive, hit hard by inflated prices of beer imposed on them by the Pub Company (Pubco) that owns them, according to a new report by the Federation of Small Businesses (FSB).

In a survey of the FSB’s publican members, one in eight said they are paying up to 50 per cent or more for beer compared to untied pub owners who buy their products on the open market. They are then forced to pass these inflated charges to the customer to make ends meet. Another 85 per cent said that high beer prices imposed on them by the Pubco is a problem for their business and nearly three quarters (73 per cent) said they would support a complete removal of the tie.

The FSB believes the tie is the principle reason for over 50 pub closures a week and is urging the Government to take action now to save the country’s tied pubs.

Over the past year, 2,377 pubs have closed; now at least seven close every day. Pub closures not only affect the tenants and their families, but the wider community – more than 600,000 people rely on their local pub for employment, yet over the past year 24,000 people have lost their jobs due to closing pubs.

Tenanted pubs have been struggling with high rents and hikes in the price of alcohol, enforced on them by the Pubco. In the survey, 87 per cent of tenants said that the tie is a problem for their business and nearly 80 per cent of tenants said that the transparency in rent reviews is an issue.

The FSB urges the Government to take the following actions to ensure tenants are given a chance to make a fair profit:

– Abolish the tie where it does not give tenants the opportunity to make a fair profit;
– Create an independent Ombudsman who will support and advise tenants in conflict with their Pubco that cannot be resolved; and
– Enforce fully transparent rent reviews through a statutory code.

Clive Davenport, Trade and Industry Chairman, Federation of Small Businesses, said:

“Tenanted pubs are being crippled by high beer prices: one in eight tenants are paying 50 per cent or more for their beer because of the inflated prices imposed on them by the Pubco. This then has to be passed onto the customer for the pub to survive. Three quarters of tied tenants said they would support a complete removal of the tie, so we must see change. The tie must be abolished.

“Pubs are closing at a rapid rate and if action is not taken now, the great British pub will become extinct – leaving the next generation unable to visit a traditional pub. The dramatic number of pub closures is not only affecting the tenants and their families, but the wider community – 24,000 people lost their jobs over the past year.

“Tenanted pubs are not being given a fair deal from the Pubcos that own them: nearly one in six say they do not receive enough business support and a further seven out of ten are left to their own devices once the contract has been signed. The FSB is calling on the Government to introduce an independent ombudsman and a statutory code to ensure transparency at rent reviews. Without urgent action, we could see the pubs at the heart of our communities disappear forever.”

ENDS

Notes to Editors

1. The FSB is the UK’s leading business organisation with over 215,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at http://www.fsb.org.uk.

To view the policy document please email prue.watson@fsb.org.uk

In May 2009 the Business and Enterprise Select Committee published a report into the relationship between tenanted pubs and the Pubcos that own them and revealed that around 67 per cent of managers of tenanted pubs with a turnover of half a million earn £15,000 – which amounts to less than the average wage.

Contacts

Stephen Alambritis: 020 7592 8112 / 07788 422155
Sophie Kummer: 020 7592 8128 / 07917628998
Prue Watson 020 7592 8121 / 07825 125695
Marc Shoffman 020 7592 8113 / 07595 067068

For regional FSB contacts please go to www.fsb.org.uk/regions