Statutory Code: Shepherd Neame claims mandatory free-of-tie would shut brewery

In its response to the consultation on the statutory code, the Kent-based brewer and pub operator warned that a mandatory free-of-tie option, which is one proposal for the code, would “destroy the basis of the traditional tenancy”.

"The (perhaps intended) consequence of this proposal would be to reduce investment in pubs, which generates substantial local economic benefit, and consequential loss of new job creation.

“The loss of operational support would result in declining loss of sales and viability of public houses. At best, this would result in lesser quality pubs less likely to achieve the licensing objectives and contributing less to the national economy. At worst, it would result in large scale closure of pubs and loss of community benefit to the detriment of the social well-being of the nation as a whole. An unintended, but entirely foreseeable consequence.”

The company added: “On a local basis, such an option would almost certainly result in the closure of the Shepherd Neame Brewery.”

Pub vacancies​

Shepherd Neame highlighted data on pub vacancies from Wellington Pub Company, the biggest free-of-tie pubco, that it said “raises serious questions as to whether this model is working effectively in all cases.

As of September 2012, Wellington had 55 vacant pubs, or 7% of the estate, while 159 (20%) were not let on long leases. In contrast, at 1 June 2013 Shepherd Neame had five sites (1.7% of the estate) that were vacant, and the same number were let on non-substantive terms.

The company warned that the abolition of the AWP tie, a proposal of the code, would give to “widespread fraud, money laundering, tax evasion and criminal activity, with consequential loss of income to HMRC”.