Saturday, September 22, 2018

What is ‘the Tie’?

THIS excellent piece by Graeme Wilson at the Golden Ball York

What is ‘the Tie’?

The tie has existed since the industrial revolution. As brewers’ output increased they needed to increase the number of outlets selling their ales.

The tie was born. A brewer would buy a property and fit it out to just sell their own ales. They would repair and maintain the pub. Then a leaseholder, in return for a modest rent, would live in and run the pub, buying all of their stock from the brewer.

In 1989 the government, concerned that only 4 brewers owned most of the UK’s pubs and hence most of the UK’s beer supply, introduced legislation now referred to as ‘The Beer Orders’. This stopped brewers from owning more than 2000 pubs and was intended to increase competition in the sector.

The result of the Beer Orders was that pub ownership moved from brewers to property companies (Pub Operating Companies or Pubcos). There was no limit on the number of pubs that they could own and they quickly expanded, buying up the tied estates of the brewers. These companies had no vested interest in what beer was sold and they were able to continue the tie. But instead of their tenants buying direct from the brewer they instead had to buy through their Pubco. The Pubcos added their own markup to the wholesale price, increasing the costs to tenants. Rents increased too as the Pubcos sought to generate revenue to finance their expansion.

Now a large part of our national pub stock in the ownership of corporations who have no interest in what beer is sold nor for how much, nor even whether their ‘assets’ remain pubs or become shops, offices, housing or are even demolished.

Pubcos have systematically starved their estates of investment shifting all of the costs of running the business onto their tenants, including repair, maintenance and even buildings insurance. As a result many pubs have become ‘unviable’, particularly community pubs similar to the Golden Ball.

This isn’t because of the Smoking Ban, nor because of Beer Duty. It’s not because people are drinking less. It’s another example of big business abusing our community assets for their own profit.

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