Pub Companies - Business and Enterprise Committee Contents

7  Conclusion

192.  Not all the problems of the pub industry come from the tied pub model. It is clear there are many pressures on any retail business, and pubs are challenged by changing consumer preferences, changes in the regulatory framework and general economic circumstances. However, as numerous groups and commentators have remarked, pubs are valued as community centres. It is not Government's job to protect failing industries, but it does have a role in investigating failures and abuses in the market. Its duty to exercise that role becomes more urgent if those failings and abuses have social as well as economic impacts. As we have noted, during our inquiry we receive evidence from lessees of many different pubcos. We were told of pubcos which failed to honour verbal agreements about the status of leases, and pubcos which failed to make agreed repairs. There were recurring stories of rent reviews which lessees could not dispute without excessive costs, and stories of lessees not just working long hours for low pay, but supporting their pub from other earnings. The consistency of these themes suggests that something is seriously amiss. This is confirmed by our survey: over 60% of lessees in tied estates were dissatisfied with their pubco.[278] The Trade and Industry Committee recommended that if the industry could not improve voluntarily, there should be a mandatory code of practice. We believe more should be done.

193.  This Report contains recommendations which will affect the way in which businesses can treat one another. Some might argue that this can be left to the market. Pubcos which not only benefit themselves but support their lessees are likely to stay in business. If pubcos push too hard and are too greedy they will fail. But on the way bad companies will inflict real damage on their direct customers, the lessees, and on their indirect customers, ordinary drinkers. The potential for such damage may be increased by current economic conditions producing a ready supply of inexperienced would-be lessees eager to use their redundancy money to enter a new career.

194.  It may be the industry's problems can be solved by a framework ensuring fairness and transparency in dealings between landlord and lessee. It may be necessary to ensure that inequalities in bargaining power are recognised, even when business contracts are involved. It may be that the beer tie should be prohibited. The OFT has failed to examine this market properly; the Government should now assume responsibility, to ensure both that competition issues are properly investigated and that the wider legal framework is adequate.

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