David Cameron pledges to 'look very carefully' at pubcos

The Prime Minister was responding to a question from Greg Mulholland, the chairman of the Parliamentary Save the Pub Group, who urged the Government to “tackle the pubco problem by getting rid of the pubco price escalator”.

Speaking during Prime Minister’s Questions he said that while the 1p beer cut announced in last month’s Budget was welcome, it would do nothing for the 20,000 pubs tied to the major pubcos.

Cameron replied: “We want to look very carefully at what is happening in tied pubs and at the activities of some pub companies. It has been debated in the House. We are looking very closely at what more we can do to make sure there are fair outcomes for Britain’s publicans and Britain’s pub goers.”

Long wait​

A consultation on the potential for a statutory code governing the relationship between pub companies and tenants closed last June but the Government has still not published its response.

Speaking after PMQs, Mulholland said: “The Prime Minister and Chancellor have said they want to save pubs, but despite the beer duty cut, pubco pubs will continue to fail and close in droves unless the Government finally tackles the anti-competitive, price distorting tied pubco model.”

Simon Clarke, of the Fair Pint Campaign, said: “Following the duty cut and escalator being scrapped the Treasury must have been disappointed at the response from tied publicans who they probably expected would be celebrating.

“In just over a year some cask ale products have dropped in price by 1p, thanks to the Government initiative, whilst at the same time the some pubcos have increased the price to their tenants by as much as 15p. To maintain the same profit margin, which is already tenuous, the tied tenant would need to increase the price of a pint to their customer by 30p.

Unsustainable​

“Clearly once again tied tenants have sought to absorb the damaging pubco increases but as the pub closure rate shows, with almost two thirds being tenanted or leased pubs, this cannot continue.”

Brigid Simmonds, chief executive of the British Beer and Pub Association, said: “We believe the tie is vital to the British pub trade.  It provides low-cost, low-risk partnerships between pub companies and tenants/lessees. For as little as £30,000, entrepreneurs can obtain their own pub.

“Plans to over-regulate the sector would be very costly and damaging. We all want to ensure tenants are treated fairly, which is why we now have a strong system of self-regulation in place, which is low-cost, effective and legally binding.”