Pub Companies - Business, Innovation and Skills Committee Contents

5  The Beer Tie


147.  In 2009, Business and Enterprise Committee Report made the following conclusions:

The dispute over the tie could be ended easily: every lessee could be offered the choice of being free or being tied. This would enable both sides to prove their competing claims. We believe each and every existing lessee should, in a phased programme, be offered this choice and the same choice should be offered to every new lessee as he or she takes on the lease. To make the choice fair, the process of agreeing revised rents must first be improved as we have previously recommended.

Although a voluntary agreement is preferable, we doubt that the pubcos would respond effectively to such an approach. We therefore recommend that the Department considers how best to achieve this end and that it opens an urgent consultation into the principle and phasing of this proposal. The status quo is not an option. [193]

The 2010 Report agreed this was the way forward and recommended "the option of being tied or being free of the tie is the only way to judge properly the fairness of the tie".[194]

148.  The previous Government responded to the Report in the following terms:

The Code of Practice should also incorporate a beer/non-beer tie option for tenants with a commitment that the Government will act if the industry does not.[195]

That Government's support for community pubs briefing paper confirmed that position and undertook to "monitor progress for one year and intervene to introduce a non-tie option and legislate for a Beer Order to allow guest beers if these flexibilities are not introduced".[196]


149.  The BBPA told us that although a free of tie option was not explicit in the Framework Code, it "does not preclude companies from offering free of tie options". The BBPA went on to say that many of its members already offered a variety of agreements and cited as evidence:

  • 9 of its largest members offer free of tie agreements on beer
  • 5 of these offer to all their tenants and 4 offer to new tenants only
  • 75% of new tenants are aware of Free of Tie Options
  • Options currently cover about one third of the pubs owned by BBPA members, ie. approximately 8,000 pubs.[197]

150.  Ted Tuppen of Enterprise Inns told us that his company "have and will consider proposals from any publican who wishes to exchange their current agreement for an entirely new agreement on a free of tie basis".[198] He went on to state that:

We are negotiating free-of-tie deals with people as we speak, and in an open market. If somebody wants to take a pub from us free of tie, they will have a business plan, they will have a rent that they believe is correct and they will make that rent bid.[199]

151.  By contrast, Mr Whiteside argued that Punch Taverns was not offering genuinely free-of-tie deals because lessees, as independent free of tie operators, would not have access to the same level of discount on supply of beer as Punch. In addition he said that Punch needed to 'protect' its 'buying terms arising from scale.'[200]

152.  The BBPA/IPC survey revealed that only 16% of new lessees had been offered a free-of-tie agreement by their landlord and only 9% of current lessees had been offered changes to their agreement.[201] In addition, CAMRA argued that the 'free of tie leases' being offered were unlikely to be of 'substantial interest' even if proactively marketed to lessees as:

Any concessions on the tie are fully counter-balanced by requirements for an unsubstantiated increase in rent or an unsubstantiated Tie Release fee.[202]

153.  Our predecessor's recommendation clearly stated that over a period of time all existing lessees and all new lessees should be offered a free of tie lease with an open market rent review based on RICS guidance. This recommendation was endorsed by the then Government. Despite this clear instruction, the BBPA/IPC survey has shown that only 16% of new lessees and only 9% of current lessees had been offered a free-of-tie lease. Furthermore, it is open to question whether the free of tie agreements which have been offered are 'genuine' free of tie and accompanied by a full open market rent review. Again we conclude that the industry has shown itself unable or unwilling to deliver meaningful reform.

193   HC (2008-09) 26, paras 138 and 139 Back

194   HC (2009-10) 503, para 153 Back

195   HC (2009-10) 503, para 6 Back

196   HC (2009-10) 503, para 10 Back

197   Ev 91 Back

198   Ev 107 Back

199   Q195 Back

200   Ev 82 Back

201   Written evidence submitted by APPG Save the Pub (para 2.2). Published in Volume II on the Committee's website Back

202   Written evidence submitted by CAMRA (para 6.9). Published in Volume II on the Committee's website Back

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© Parliamentary copyright 2011
Prepared 20 September 2011