Giving evidence at yesterday’s Business Innovation and Skills Committee (BISC) hearing into proposals for statutory regulation, Phil Dixon claimed: "We need reform of the beer tie or we need legislation”.
According to Dixon, tied tenants and lessees were currently paying too much for their beer.
He said: “In the last few years, overheads and business rates have increased, while beer sales have dropped. Licensees need to make margins to make a profit and a decent living – but they can’t make those margins on the prices they are being charged. That’s the problem.”
Dixon said a mandatory free-of-tie option, as outlined in the BIS consultation document published in April, would effectively “abolish” the tie – in turn removing the need for statutory regulation altogether.
“If this regulation allows people to buy lager from wherever they want, you completely undermine the tie. The tie goes.”
However, Dixon warned that a guest ale provision would favour international brewers at the expense of British ones.
He explained: “The idea that licensees will choose a cask ale from a local microbrewer as their guest beer is a misnomer. They will go for the biggest seller, and that’s standard lager.
“If you increase employment in the finance offices of the suppliers of Carling and Heineken, then you actually increase employment abroad. So this needs to be thought through.”
More positively, Dixon believed that when it comes to arbitration cases, self-regulation is now operating effectively. He felt that given time, both the Pubs Independent Rent Review Scheme (PIRRS) and the Pub Independent Conciliation Advisory Service (PICAS) would be a success.
“With PICAS, it has been a success because the licensee can challenge on the spirit [of the agreement]. It costs just £200, and the pubco can’t turn up with their lawyers to intimidate the licensee. It’s licensee versus BDM.
“What happens now there is PICAS and there is PIRRS, when someone has a grievance and a dispute, it gets resolved. Rents are coming down in the tied-trade because PIRRS is there.”
However, the independent adjudicator will have to take PICAS and PIRRS on board or face losing them altogether, Dixon argued. "Pub companies are not prepared to pay twice – for both regulation and self-regulation.”