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Tied Pubs Overcharged By 45% For Beer

Thursday, December 12, 2013

Wholesale Price For Beer In Tied Pubs 45% Over Free Market Price Means Government Must Act To Protect Consumers And Stop Closures

Parliament must legislate statutory code with a free of tie option with tenants able to buy products on the open market and pay a fair rent for the building says GMB

GMB, the union for tied pub tenants, commended Greg Mulholland MP for Leeds North for asking a question at Prime Ministers Question Time on Wednesday 11th December which drew attention to a new study on the extent of overcharging on the wholesale price of beer by property company Punch Taverns and the negative impact on consumers.

A government decision on a draft statutory code covering tied pub rents and wholesale prices is expected shortly. See notes to editors for copy of press release issued by Business, Innovation and Skills Committee on the draft statutory code in July 2013.

Greg Mulholland MP said “New figures show that the second largest pub company in this country, Punch Taverns, overcharged the British consumer in its pubs, on beer alone, by £4.3 billion over 10 years. Clear market manipulation is taking place, so will the Prime Minister commit to deal with this crony capitalism? Will he listen to the Federation of Small Businesses and back the Business, Innovation and Skills Committee’s solution to this problem?”

The study Mr Mulholland refers to compares wholesale prices charged for standard products in pubco pubs, where the tenants has no access to the free market, with prices charged for free of tie pubs.

A summary for five popular drinks are set out in the Table below. This shows that pubcos charge tied tenants an average £1.56 per pint for Carling which is 48p per pint more than the £1.08 those running free houses are charged.

WHOLESALE PRICES CHARGED FOR KEGS TO TIED AND FREE OF TIE PUBS

Product 11 gallon keg

Wholesale prices

 

 

 

 

Pubco tied tenant Mean average

Free of Tie pub

Mean average

% difference

Carling

 £ 136.93

 £         95.00

144%

Guinness

 £ 146.63

 £       108.49

135%

Fosters

 £ 131.34

 £         95.49

138%

Stella Artois

 £ 143.09

 £         88.00

163%

Kronenbourg

 £ 149.92

 £       108.49

138%

 

 

 

 

Average

 £ 143.85

 £         99.09

145%

 

Paul Kenny, GMB General Secretary, said "This study lays bare why Parliament must legislate the statutory code with a free of tie option with tenants able to buy products on the open market and pay a fair rent for the building. The aim is to lower sky high rents and wholesale prices charged by pubcos.

To pay sky high rents and wholesale prices 45% above free market prices a pint of lager is on average 80p per pint higher and ale is 65p per pint higher than justified by inflation and like for like changes in taxes since 1987. This is pricing pubs out of the market and they have closed in droves.

We need Parliament to legislate option 3 in the draft statutory code to allow tenants to buy products on the open market and pay a fair rent for the building."

End

Contact Steve Kemp GMB national officer on 07730 898 102 or GMB press office 07921 289880

Notes to editors

Copy of press release issued by Business, Innovation and Skills Committee

Select Committee Announcement No.16 Monday 22 July 2013

NEW REPORT: Consultation on a Statutory Code for Pub Companies

There can be no more delays in establishing a Statutory Code for pub companies, say MPs

A Bill establishing a statutory code for pub companies should be brought forward at the earliest opportunity, says the Business, Innovation and Skills Committee in a Report published today. The Committee welcomes the Government’s consultation on a Statutory Code of Conduct, an action it recommended in 2011, but warns that there can be no more delays in resolving the matter and bringing forward legislation.

Whilst welcoming the Government’s intention to include within the Code the principle that a tied tenant should be no worse off than a free-of-tie tenant, the Report states that further clarity is needed on how this will be achieved through legislation. The Committee is also supportive of the inclusion of a mandatory free-of-tie option.

The Adjudicator which will oversee the Statutory Code should be given the full suite of powers, including the power to fine, states the Report. At the same time, the Committee notes that PICAS and PIRRS have been positive developments in the pub industry and urges the Government to ensure they are retained in the new statutory framework.

Commenting on the Report, Adrian Bailey MP, Chair of the Business, Innovation and Skills Committee, said:

“The Government has belatedly come to the right decision and consulted on establishing a statutory code and an Adjudicator. I welcome this action and only wish it had come when we first recommended it almost two years ago.

“The Government must now bring forward a Bill at the earliest opportunity and certainly no later than the start of the next parliamentary session. Any more delays would be unacceptable, we have waited long enough.

“The principle that a tied tenant should be no worse off than a free-of-tie tenant is sound. But clarity is needed on how this will be achieved in practice.

"The BBPA is against the inclusion of a mandatory free-of-tie option and highlights the benefits of the tied model. We believe a free-of-tie option should be included in the Code. If the tied model delivers significant benefits it has nothing to fear—it will continue to be an attractive model for lessees and the free-of-tie option will not be taken up.

“The effectiveness of the Statutory Code will be seriously undermined if overseen by a toothless Adjudicator. The Adjudicator should be given the full range of powers, including the ability to impose fines.”

The Report’s other conclusions and recommendations are:

· The Government proposes that the Statutory Code should apply to companies which own more than 500 pubs. Whilst seeing the rationale for setting a threshold, there is merit in including a level of flexibility to allow the Secretary of State subsequently to alter the threshold in the interests of the industry [paragraph 38].

· The Statutory Code should only apply to pub companies with leased and tenanted pubs. The Department should reflect this in the Bill [paragraph 39]

--ENDS--

FURTHER INFORMATION:

Committee Membership is as follows:

Chair: Mr Adrian Bailey MP (Lab) (West Bromwich West)

Mr Brian Binley MP (Con) (Northampton South) Paul Blomfield MP (Lab) (Sheffield Central)

Katy Clark MP (Lab) (North Ayrshire and Arran) Mike Crockart MP (Lib Dem) (Edinburgh West)

Caroline Dinenage MP (Con) (Gosport) Julie Elliott MP (Lab) (Sunderland Central)

Rebecca Harris MP (Con) (Castle Point) Ann McKechin MP (Lab) (Glasgow North)

Mr Robin Walker MP (Con) (Worcester) Nadhim Zahawi MP (Con) (Stratford upon Avon)

Media Information: David Foster fosterda@parliament.uk 020 7219 7556/07917 488729

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