Tue 18th Nov 2014 - Government defeated in Commons vote over pubco market rents Government defeated over pubco market rents: The government has been defeated in a Commons vote on the control that tenanted pub companies can exercise over pubs. MPs voted 284 to 269 in favour of an amendment allowing landlords an independent rent review and to buy their beer on the open market. The amendment to the Small Business, Enterprise and Employment Bill was put forward by the Lib Dem MP Greg Mulholland, who described the "tie" arrangement made between a pub and its owner as an "archaic" and "extraordinary" system. It is thought to be the government's first defeat on one of its own bills since the 2010 election. Tim Page, chief executive of the Campaign for Real Ale, said: "Today’s landmark Parliamentary vote helps secure the future of pubs. Camra is delighted that, after ten years of our campaigning, MPs have today voted to introduce a market rent only option for licensees tied to the large pub companies – a move that will secure the future of the Great British Pub. The government was defeated by 284 votes to 269 with MPs from all parties voting in favour of a new clause to the Small Business Bill that will empower pubco licensees to choose between a tied agreement and a market rent-only agreement that will allow them to buy beer on the open market. Allowing over 13,000 pub tenants tied to the large pub companies the option of buying beer on the open market at competitive prices will help keep pubs open and ensure the cost of a pint to consumers remains affordable. The large pub companies will no longer be able to charge their tenants prices up to 60 pence a pint higher than open market prices. This simple choice should spell the end of pubco licensees being forced out of business through high rents and tied product prices. Thank you to the 8,000 Camra members and campaigners who lobbied their local MP to help make this happen and to those MPs that voted to support pubs. Camra are now urging the government to accept the outcome of the vote." However, Brigid Simmonds, chief executive of the British Beer and Pubs Association, said: “This change effectively breaks the ‘beer tie’, which has served Britain’s unique pub industry well for nearly 400 years. It would hugely damage investment, jobs, and results in 1,400 more pubs closing, with 7,000 job losses, as the government’s own research shows. There are serious legal and competition issues which must be faced, as it rides roughshod over what are previously agreed contracts, and creates an unworkable, two-tier market. I hope Parliament will rethink as the bill continues its progress. On the issue of family brewers remaining outside the scope of the code, we have always taken the view that their inclusion is not necessary, provided that this does not result in a distortion to competition. As the government is now saying it will not include these smaller companies, it needs to ensure a level playing field throughout the legislation.” Mulholland stressed that his plan to allow pubs a “market rent only” option from their parent company would come in gradually over five years and only be triggered at key points in the cycle of a lease or tenancy, such as rent reviews, lease renewals or on the sale of the title of a property, or if there was a substantial change in prices or change in circumstances such as a cheaper pub opening next door. This period would then be followed by two potential periods of negotiation between the pub and the larger owning company with an independent surveyor to adjudicate over any differences in opinion, he said. He said: “This is a reasonable gradual process that will simply bring back market forces into a sector that frankly has become grotesquely anti-competitive. It’s closed to many smaller breweries and it is not working for publicans, it’s not working for those communities losing pubs, and actually, frankly, it’s not working for those large companies themselves.” Commenting after the win, Mulholland said: "This was a victory for people power, for commonsense and for fairness and a victory a huge hard pressed publicans and their customers. I thank all MPs who had the courage to listen to their constituent licensees, Camra members and campaigners who have been campaigning for years to end what Camra call the pub scandal. For too long, the large indebted pubcos have exploited their tenants and taken more than is fair or sustainable from pub profits. Now the House of Commons has clearly passed the select committee option of a market rent option which will stop the pubco rip-off of hugely marked-up beer prices and excessive rents. This is great news for pubs, hardworking pubco publicans and for communities and consumers, who will see many more sustainable pub businesses and a cheaper pint of beer, free from the pubco price escalator. Contrary to typically misleading and increasingly desperate statements from their pubcos and their lobbyists, this does not abolish the beer tie. It simply gives tenants the right, at rent review or renewal, to request an independent assessment of their rent and opt to pay that if their pubco fails to offer. As coordinator of the Fair Deal for Your Local campaign, I am hugely proud of all supporting organisations and want to say a huge thanks and congratulations to Camra, the Federation of Small Businesses, the Forum of Private Business, the GMB, the Guild of Master Victuallers, Fair Pint, Pubs Advisory Service, Justice for Licensees, Licensees Supporting Licensees, Licensees Unite the Union and the Punch Tenant Network. A big thanks also to the BIS select committee, their chair, Adrian Bailey, and former chair, Peter Luff, and all the members who did such important work looking at this issue and coming up with the simple, obvious, market-based solution that will now become the law." John Allan, national chairman of the Federation of Small Businesses, said: “This is a historic day for tied publicans who look forward to a more open and competitive marketplace. The freedom to stock a wider range of beers will provide a boost to local economies while giving consumers greater choice. We call on government to support today’s decision and for all parties to back publicans in their respective 2015 election manifestos.”