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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