Pub Companies

Andrew Stephenson Excerpts

Thursday 12th January 2012 Commons Chamber

[Andrew Stephenson (Pendle) (Con)]

I congratulate the Backbench Business Committee on granting this debate and the hon. Member for West Bromwich West (Mr Bailey) on his efforts to secure it. I am a great fan of the British pub, so much so that I live next door to one and have worked shifts behind the bar at three of my local pubs over recent months—the White Swan in Fence, the Four Alls in Higham and the George and Dragon in Barrowford.

As many Members have said, the future of the pub looks far from rosy. UK pubs are in crisis, with 25 closing every week. Pubs are under pressure for many reasons, including the tough economic times that we are in, rising beer prices and taxes, and below-cost sales of alcohol in supermarkets, which I am particularly against. I believe that there is increasing evidence that the beer tie, as operated by the large pub companies, plays a significant role in the decline of the pub trade. I point out explicitly that I am referring only to the behaviour of some large pub companies that own more than 500 pubs, not to family-owned breweries, which tend to act much more responsibly.

In my constituency of Pendle over the past few years, seven pubs have closed in Brierfield, five in Barnoldswick, seven in Nelson, three in Colne and numerous others in the surrounding areas.

[Andrew Griffiths]

We want to keep more pubs open and to stop pubs closing. Does my hon. Friend agree that all the evidence shows that free houses are closing faster than tenanted pubs?

[Andrew Stephenson]

The evidence that I have seen does not suggest that. In my area freehold pubs have certainly been able to buck the trend and survive because they have additional flexibility in the products that they can buy and in the other costs of the pub. I have seen some of the practices of the pub companies hindering rather than helping the pub trade in my area.

[Karen Bradley]

I should like to add my personal experience to the debate, because I am the daughter of a publican who was tied to a large pubco but now runs a free house. I can reassure my hon. Friend that having a free house is a much more favourable position, and that being free of the beer tie is very important.

[Andrew Stephenson]

I could not agree more with my hon. Friend. That is why I am speaking in support of the motion’s call for a statutory code for pub companies, despite the fact that I am normally in favour of voluntary regulation.

A case in point in Colne, where I live, is the North Valley pub, which closed about two years ago. Like a number of pubs in Pendle, it was owned by a large pub company that completely refused to reduce the rent, although the landlord was experiencing vastly reduced sales, partly because of the tough economic times and the smoking ban. I am sure that if there had been an open market rent review and an independent adjudicator, that pub would still have been open today, but instead the landlord had to hand back the keys and the pub is now a plumbing merchant’s premises. I am sure that the pub company involved would say that it was no longer viable, and that it was always going to close down in the long term, but I do not believe that voluntary regulation is delivering what we need. We therefore have to consider putting things on a firmer footing.

As things stand, the business model of large pub companies is based on extracting an inequitable share of profits through excessive rents and forcing tied landlords to purchase beer and other products at a premium of about 50% on open market prices. That figure has already been mentioned in the debate. Some pub companies, when they set their beer tie, seem to ignore local circumstances completely. From what I am led to believe, landlords in my area tied to Punch Taverns have to pay the brewery something between £1.32 and £1.56 per pint that they buy. In the town where I live, Colne, the Derby Arms sells Foster’s and John Smith’s for £1.49 a pint, and the Wallace Hartley and the Duke of Lancaster sell Foster’s for £1.79. [Interruption.] Move up north. Some of the large pub companies are forcing their tied landlords to buy the product at a higher price than that for which other local pubs are selling it to the man in the street. That inevitably forces pubs out of business, because they cannot compete in the local market conditions. I therefore have no hesitation in supporting the motion and calling on the Government to reconsider self-regulation and stop the large pub companies abusing their position.