Pub prices irritate MPs

By staff

Drinkers in Britain’s pubs may be paying more for their beer because of ties between pub companies and their tenants, MPs have claimed.

The business and enterprise committee expresses fears in a report published today that ‘pubcos’ may be forcing tenants to buy beer “at higher prices than they could obtain elsewhere”.

As a result pubs may be being forced to push up their prices to consumers.
“There are strong indications that the existence of the tie pushes up prices not just to lessees but to consumers,” the report states.

“We have no confidence that the advantages of the tie outweigh its drawbacks. There is an easy way to test this; as leases become due for renewal, the pubcos could and should offer lessees a choice between a free of tie lease and a tied one.”

A survey commissioned by the committee found that over three-quarters of lessees were dissatisfied with the tie. Two-thirds said they earned less than 15,000 a year.

The committee has called on the government to refer the matter to the Competition Commission. It expressed frustration in the report that the Office of Fair Trading has “declined to act” and says the industry has demonstrated an inability to reform itself in the past”.

Union GMB is seeking to get tenants to rally behind the report. It is writing to 9,000 tenants of pubcos Punch and Enterprise inviting them to join the GMB to overcome what general secretary Paul Kenny has described as an “imbalance”.

“GMB members who are tenants have concluded that the only answer to this imbalance is the traditional one of combination and collective bargaining to secure a fair deal,” he said.

The report comes against a backdrop of growing concern about the state of the pub industry, with the recession causing the number of closures to accelerate.

The British Beer and Pub Association’s most recent beer barometer saw year-on-year beer sales slip 8.2 per cent in the first quarter.