The tie: don't dump on the truth, Brigid

The oft-repeated mantra from Brigid Simmonds of the British Beer & Pub Association in recent weeks is that “the tied house system has been with us for centuries”. As it’s the pantomime season, let’s all chant in unison: “Oh no it hasn’t”.

And we’re talking about a quite different model to the one Brigid is so quick to protect. Her staunch support for the tie – repeated on ITV’s Tonight (18 December) on saving pubs – comes as a result of parliament’s decision in November to allow pubco tenants the right to move outside the tie if they sign up for a “market rent” option.

This is a radically different form of the tie to the one that developed in the 1800s. It was a system of pubs owned by and tied to brewers. The breakup of the giant national brewers in the 1990s as a result of government legislation enshrined in the “Beer Orders” created a new model of pubs owned and controlled by non-brewing pub companies.

And the pubcos have brought with them a ruthless, profit-at-all-costs attitude that has driven up pub rents to undreamt of levels and led to the eviction and ruination of thousands of publicans. That’s at odds with the old brewery tied house system: for all its faults, it delivered a degree of stability in the running of the nation’s pubs.

And, rooted in Victorian paternalism, brewers did form a partnership with their tenants. There were charities and even homes to help tenants who fell on hard times. It was said of the late John Young, chairman of Young’s brewery in South London, he knew all his tenants by name and sent their wives flowers on their birthdays.

It’s unlikely that the bosses of Enterprise Inns and Punch Taverns know many of their tenants by name let alone trouble florists to mark their wives’ birthdays. Paternalism and consideration are not high on the agendas of the national pub companies – and many of the tenants don’t last long enough in a pub to celebrate birthdays.

The system they have largely replaced dates to the unforeseen consequences of the Beer House Act of 1830. This allowed householders who could afford an annual licence costing two guineas to turn their premises into rudimentary public houses. Many of them were shoddy and ill-run. If the owners brewed beer, it was often undrinkable. Those that survived did so as a result of help, loans and supplies from commercial brewers. When many of the pubs went out of business the supplying brewers called in their loans and cut their losses by taking them over.

The brewery tie was based on two forms of rent: “wet” and “dry”. The wet rent referred to the price tenants paid for beer, the dry rent was the one charged for the pub and accommodation.  In return for paying the market cost for beer, tenants enjoyed rents way below the market value of the pub. They were often peppercorn or marginal rents but the brewers were satisfied because their pubs were profitable and stable, with a low level of tenant turnover.

The model became skewed after World War Two with the rise of large national brewers, such as Allied Breweries, Bass, Watney and Whitbread. They came to own more than half the country’s pubs. As a result of brewery takeovers and mergers, choice for drinkers became restricted and beer prices in big brewers’ tied houses were considerably higher than in those run by smaller producers.

This situation led to a Monopolies Commission report into the industry in 1989. Its recommendations included forcing the Big Six national brewers to turn a proportion of their pubs into free houses and to offer “guest beers” from independents into the rest of their estates.

Rather than comply, the big brewers sold off many of their pubs and eventually moved out of brewing completely. The pubs they left behind were bought by banks and other financial institutions. After years of turmoil and changing ownership, most of the nation’s pubs are now owned by Enterprise and Punch, with Mitchells & Butlers another national player.

There’s no longer any notion of wet and dry rents with the national pubcos. Not only to tenants and lessees pay top dollar for their beer but they also have to fork out for rents that are eye-wateringly high and are subject to constant review and increase.

The result has been instability, pub closures, loss of livelihoods and misery for many people who invested their life savings into pubs and have come away with nothing.

And little has changed for consumers who find in many pubs a choice of beers from the pubcos’ lists that all too often are just national brands bought at deep discounts from bigger brewers.

The campaign organised by tenants’ bodies and CAMRA, and supported in parliament by Greg Mulholland MP and members from all parties, led to the vote in favour of MRO in November that aims to deliver a better deal for both tenants and drinkers.

Brigid Simmonds – whose BBPA is the voice of global brewers and giant pubcos – may disagree with the voice of parliament but she shouldn’t rewrite history in her rush to dump on it.