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According to a study of 558 licensees, conducted by the Institute of Public Policy Research (IPPR), 46 percent of tied pub tenants earn less than £15,000 per annum – more than double the rate of free-of-tie licensees. Other survey findings that are being used to urge the Government to act on the current beer tie arrangements include:

• 57 percent of tied tenants say they’re struggling financially (compared to 43 percent of non-tied)
• 88 percent of these specifically identified the beer tie as one of the most significant factors in their financial problems
• Almost 90 percent of tied pubs generate an annual profit of £30,000 or less (non-tied: 74 percent)
• 37 percent of tied tenants believe that within three years they will no longer be managing their current pub (non-tied: 22 percent)

Among several recommendations, the IPPR’s report called on the Government to:

• Require pub companies with more than 500 tied pubs offering commercial full repairing and insuring leases to ‘provide flexibility’ to lessees, including a guest beer option and an option to become free of tie, accompanied by an open market rent review
• Require pub companies to cooperate with the creation of a pub rents database, and publish their wholesale price lists and details of discounts paid to lessees
• Implement the recommendation from the Law Commission that unfair contract terms regulations should be amended to improve protection for the smallest and most vulnerable businesses (those with nine staff or fewer).

IPPR associate directo, Rick Muir commented:

‘Thousands of publicans across Britain are being put under significant financial pressure by the beer tie. Our survey of publicans shows they have suffered worse through the recession because of [it].

‘A recent select committee report shows that the higher prices tied publicans have to pay for their beer are not adequately compensated for by lower rents. It estimated that because of the discounts they can access, non-tied operators will make more money from their businesses.

‘The Government should act to reform the way the industry operates and give publicans greater freedom from the big pub companies.’

However, a spokesman for the British Beer and Pub Association outlined their position on the benefits of the tie.

‘We need a thriving tied sector, as tied tenancies and leases still provide a low-cost entry into operating a pub without the capital required to buy a freehold.

‘Any look at the problems facing the industry also needs to take account of the wider picture. Since March 2008,we have seen a 35 percent increase in the tax on beer — this is a central reason why so many pubs are under pressure, as 50 percent of their wet sales are still beer.

‘Pubs are some of the most highly regulated businesses in Britain, and this is adding hugely to operating costs.’