Committee
Economy, Energy and Fair Work Committee 18 August 2020
18 Aug 2020 · S5 · Economy, Energy and Fair Work Committee
Item of business
Tied Pubs (Scotland) Bill: Stage 1
Greg Mulholland
Watch on SPTV
It is a model that balances risk and reward, or it is supposed to balance risk and reward. That is the point, and it is the point of the Tied Pubs (Scotland) Bill. Without going through the history, United Kingdom tied pubs—well, pubs in Great Britain, certainly, as Northern Ireland has a different operating model that is more similar to pubs in the Republic of Ireland—moved from short tenancies on brewery leases, where the brewery had a direct interest in selling beer and invested in the pub. It was the beer orders that were botched and allowed the larger pub companies to set up. They then moved tenants onto these 25-year, full repairing and insuring leases, and put all the risk onto the pub companies. If you speak to the likes of Greene King and Marstons and Star, which are hugely profitable, they will have a manager and they will take all the profit. With more marginal sites, they will put in a tenant and the risk goes on to the tenant. The problem with that type of model is that that does not allow the licensee to make a fair living, because of the huge amount extra that they have to pay for beer. I am sure that the committee has seen price lists comparing brewery prices—genuine free house, free-of-tie prices—with the tied prices. There is a huge mark-up on every single keg, which makes it very difficult to make a living. If you are free from that, you can make a living. Licensees want to continue to operate, they want a good relationship, and they want to continue running pubs. However, they can do that only if they are making a living. The way that large companies operate the tie makes that impossible. Therefore, even where there is investment, tenants do not see the benefit because, in too many cases, they cannot afford the rent and they throw back the keys and have to move on. We must stop that cycle, because it is very damaging for pubs and publicans, and, of course, we see more pubs closing.
In the same item of business
The Convener
Con
Agenda item 2 is consideration of the Tied Pubs (Scotland) Bill. I am pleased to welcome our first panel of witnesses: Tom Stainer, chief executive of the Ca...
Alison Harris (Central Scotland) (Con)
Con
Good morning. Does the existing voluntary code protect the rights of tied tenants? I am happy to take answers from whoever feels most strongly about that.
Tom Stainer (Campaign for Real Ale)
Good morning and thanks for the opportunity to speak to you. It is important to understand that the system in Scotland is not regulated by legislation. That...
Greg Mulholland (British Pub Confederation)
Thank you for inviting us and for fitting in this important session. Put simply, the voluntary code in Scotland, much like the one in England and Wales, was ...
The Convener
Con
Chris Wright and Paul Waterson also wish to comment. As the question was our introductory question, I will allow you all to speak.
Chris Wright (Pubs Advisory Service Limited)
Good morning and thank you, convener. The voluntary code that has been in operation has been proved not to tackle important issues relating to unfairness, es...
Paul Waterson (Scottish Licensed Trade Association)
On a point of detail, I note that the pub code in Scotland is now governed by the Pub Governing Body. As you probably know, the pub code was introduced in Ju...
The Convener
Con
Alison, do you want to follow that up?
Alison Harris
Con
No. I am happy with the responses, convener.
Gordon MacDonald (Edinburgh Pentlands) (SNP)
SNP
I have a question about what Paul Waterson said about the voluntary code. It is concerning that you did not find out about that until October 2019 and that t...
Paul Waterson
We have tried to co-ordinate people responding to different things as much as we can. The biggest problem that we have is that tenants are genuinely concerne...
The Convener
Con
I will bring in Chris Wright and Greg Mulholland quickly, as it is an important issue.
Chris Wright
I agree with Paul Waterson, but I also want to ask whether the 10 people who are against the bill are actually tied tenants. I saw an article in a Scottish f...
Greg Mulholland
I absolutely understand why Gordon MacDonald asked his question. One reason that we have found for not getting responses is that the past four months or so h...
The Convener
Con
Tom Stainer also wants to comment. We are running over our time for this question, but it concerns a key issue, so I will bring him in.
Tom Stainer
In our 2014 survey of 200 tied tenants, 99 per cent felt that the Scottish Government needed to act to ensure that Scottish licensees were afforded the same ...
The Convener
Con
Thank you, Tom. We have run over time on that by quite a lot, but I think that that has set the scene with regard to why the witnesses feel that we need a bi...
Colin Beattie (Midlothian North and Musselburgh) (SNP)
SNP
Thank you, convener. On investment in pubs, the committee has heard that one impact of the bill might be that pub tenants increase investment in the pubs tha...
Jamie Delap (Society of Independent Brewers)
Thank you for inviting us to be a part of the forum to discuss the bill. Broadly speaking, at the Society of Independent Brewers, our members are suppliers t...
Colin Beattie
SNP
How is that going to happen?
Jamie Delap
As I said, being totally honest about our limitations, we do not run pubs. Where that investment would come from is not an area where we have direct expertis...
The Convener
Con
We have several witnesses who, presumably, can give some answers on that. Greg Mulholland, Tom Stainer and Chris Wright might want to come in.
Greg Mulholland
It is a key question, and it is one that the pub companies and the trade association, the Scottish BBPA, will always trot out as a reason why the tied model ...
Colin Beattie
SNP
How does it work if they do not own the asset and they are making significant investments in the asset? Surely they will limit their investment to the terms ...
Greg Mulholland
It is a model that balances risk and reward, or it is supposed to balance risk and reward. That is the point, and it is the point of the Tied Pubs (Scotland)...
The Convener
Con
Tom Stainer wants to come in. Please be brief, Tom.
Tom Stainer
I will do my best. To build on what Greg Mulholland has just said and to give you some perspective, in the survey that we did of 200 tied tenants, 54 per cen...
Chris Wright
One of the so-called benefits of being tied is access to capital investment. Most pub companies—including the largest one in the United Kingdom, Enterprise I...
The Convener
Con
Thank you. Finally on this question, I will bring in Paul Waterson.
Paul Waterson
It is worth illustrating the difference in the prices that tied pubs are paying. A keg of beer could be anywhere from £35 and £40 dearer for a tied tenant to...