ALMR chief attacks pubco model

Association of Licensed Multiple Retailers chief executive Nick Bish has told MPs the pubco model is not working.

Bish was speaking at the second session of the Business & Enterprise Committee inquiry into pubco power this morning.

"The ALMR would say that the pubco model does not work well particularly because it is operating in a declining market," he said.

"It was set up 15 to 18 years ago and since then there has mostly been a bull market and increasing property values and only recently we have seen a decline.

"The way the pubco model works is divided between a rent stream and income based on the beer that they sell with the tie to their lessees. In a declining market the income they get from beer sales decreases."

He added: "The result is the tenant is squeezed"

British Beer and Pub Association (BBPA) chief executive Rob Hayward and BII boss John McNamara are also giving evidence at the session.

Hayward defended the industry's response to the Trade & Industry Select Committee's inquiry four years ago - which is the subject of the review.

"We made substantial changes - and they followed overwhelmingly the recommendations made by this committee," he said.

Hayward highlighted the damaging effects of other effects on tenanted and leased pubs, including declining beer sales and the smoking ban.

"The smoking regulations have had a dramatic effect. We indicated to [former health minister] Caroline Flint that there would probably be about 5,000 pubs closing as a result of the ban, two years before it happened, and now the process is accelerating."

But Hayward said all pub companies were now providing more assistance not only in terms of rent concessions but other financial assistance.

He went on to defended the beer tie: "Those operating a beer tie are much more committed to the development of the business. They are not just interested in getting rent from the property."

However Nick Bish called for the complete abolition of gaming machine ties and added that he thought the beer tie did not work for lessees.

"The way it's constructed at the moment it doesn't work for lessees. We don't like FMT (fair maintainable trade) or the beer tie for a longer lease."

The inquiry is now hearing from Punch Taverns chief executive Giles Thorley and Enterprise Inns chief executive Ted Tuppen.

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