Now what's all this about a Beer Tie? And why is Stewart Jackson MP so excited?
Julian Bray writes: I see that Stewart Jackson MP is all over the media claiming victory for voting in Parliament [ED: Voting? Isn't that what he's paid to do?] against the Beer Tie where pubs are tied and have to order beer from a restricted choice and that includes spirits, all at premium rates, through the owners (or agents of the freeholder), the PUBCO.
I do wish he would first read some of the publications CAMRA puts out before rushing into the TV studio. Mr Jackson, known for climbing on the latest bandwagon, claims that it will help save small community 'wet led' ie back street pubs. Sadly it won't save the majority of them This is why.,,,,,
In a nutshell the Government of the day, ordered the large Breweries of the time to sell off or dispose of their huge estates, chains of pubs and hotels.
Which they did, closing down many in the process, as the properties were snapped up for conversion to private residential dwellings in towns and villages throughout the country.
The remaining ones were acquired in their thousands by specially set up property companies [ PUBCO's] which in fact are nothing more than property companies with little or no practical links to the 'wet' trade and apart from a few exceptions have nothing to do with brewing or breweries.
They financed the purchases by raising commercial finance, so quickly became debt laden and started dreaming up ways to make money out of an assortment of licensed properties, and pay down the debt plus interest...
The beer tie contract the many new entrants and existing publicans signed up was promoted as a device to offer the many community or back street pubs released onto the market - on cheap short term lease rentals - and importantly on a no repair lease. But new licensees found that very quickly the tie extended beyond a simple beer tie, and also included handing over 50% of slot machine income.
They also had little leeway as payments were automatically deducted, directly from the hapless publicans bank account by the pubco on the day of delivery, whereas the PUBCO will take 30 days plus to pay the beer supplier. Part of the premium rates paid by this new breed of licensees for their beer and spirits would in some cases not cover repairs to the cellar coolers, purchase of CO2 gas, servicing the CO2 python, fridges, and other beer keeping and stillage equipment. Some of the PUBCOS and their agents also demanded the rookie publicans sign 'belt and braces' personal financial guarantees. A few wisely put their businesses inside the protection of a limited liability company, but the majority did not...
All the traditional support services formerly provided by the Brewery had vanished, only they were still demanded by the new owners the PUBCOs, who rapidly set up side deals with the suppliers of the support services such as stock keeping, traditionally bundled in as part of a Brewery tie. The difference was the new publican had to pay for them!
All that was really left outside of the tie, were soft drinks and catering/ food services. So the bulk of the profit for the beer tied pub was in providing a food service something that a back street community pub wasn't known for, well excluding picked eggs, nuts and crisps.
The other lifeline was the payment of tax credits and what Mr Jackson MP and his chums in voting to ban the beer tie have put in train is that publicans will now see a market rent applied for a limited period, but these again can be influenced by well resourced PUBCOs and their retained army of lawyers. The measures will also see an increase in tax credits being paid out..... no one saw that coming...
So what is the answer? Simply PUBCOs having run up the massive commercial debt in the first place when finance rates were high cannot now expect the hapless back street community publican to continue funding at previous levels. In villages, post office and banking services could be run out of the pub along with a designated drop off point for companies such as Amazon. Ideally a food service needs to be introduced but frankly many community pubs are not set up for this, and do not have the qualified staff to provide it.
So the fate of Community Pubs throughout the land has yet to be settled. With councils closing down community centres, village halls being turned into antique malls, there soon could be no place for the community to meet, and that in turn breaks down community ties and spirit. Perhaps they could be considered a special case, possibly VAT zero rated and red tape cleared if the pub wishes to diversify? Clearly in the great scheme of thing these are small measures (see what we did there?) but if a hard working man/woman cannot down a pint or two in convivial company, and can only take supermarket canned refreshment in front of the telly, then really what is it all about? answers on a postcard to Number 10 Downing Street SW1, tell him I told you to ..
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