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Debate briefing: The brewing industry

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28th April 2009

ePolitix.com reports on John Pugh's Westminster Hall debate on pub ownership and the brewing industry.

John Pugh (Lib Dem, Southport) admitted that it is possible to be "too sentimental" over pubs.

But he noted that private equity houses which purchased pubs had, as a result, put a financial burden on the industry.

"A good case had been made for a degree of regulatory reform" he said.

John Grogan (Lab, Selby) called for a complaint to be made to the Office of Fair Trading to get the matter of ownership "looked at for a 20th time".

He raised a number of options to tackle the problems including clauses to enable higher rents, wider supplies of beers and the IPPR proposal to the Campaign for Real Ale to create a, possibly statutory, code of conduct.

He did not support minimum pricing but thanked the prime minister for the small brewers' relief which had enable the rise of micro-brewers.

Sir George Young (Con, North West Hampshire) agreed that there were "some benefits" of the 'tie' between pubs and large pub companies but was "unconvinced" that it brought about greater stability.

The inability to buy alcohol as cheaply in a pub as products on sale in supermarkets was a restraint of trade.

Quoting GMB figures concerning pubs changing hands, and highlighting the instabilities in the industry, Sir George backed a move towards "obligatory clauses in contracts as a temporary measure".

Sir George concluded by noting the need to tackle the longer term problems, including the availability of finance, to create a different and more sustainable structure.

Greg Mulholland (Lib Dem, Leeds West) argued that the local community 'owns' a local pub but has "virtually no say" in the future of a pub.

The ideal pub would be owned by the people running the pub, using local beer and services. But he added that "in Britain today we could not be further from that situation".

Simply referring it to the Office of Fair Trading would be to "kick it into the long grass", he warned.

Laurence Robertson (Con, Tewkesbury) called for a balanced debate with no "rush" to conclusions.

He suggested a delay until the business, enterprise and regulatory reform committee reported on the industry.

Martin Horwood (Lib Dem, Cheltenham) also spoke in favour of the tenants.

For the Liberal Democrats, business spokeswoman Lorely Burt stressed the problems the pub companies (PubCos) are facing in terms of property. However, she said that restrictive covenants would "have to stop".

Jonathan Djanogly for the Conservatives said that PubCos are "so saddled with debt" that this impacts on their tenants. And he agreed that community ownership was a possible solution, as long as restrictive covenants were not allowed.

But he said the decisions of the Competition Commission and Office of Fair Trading should be respected.

He criticised the use of alcohol as a loss-leader. But he felt that setting a minimum price was not the best measure "at this point".

Djanogly stressed that revenue-neutral alcohol measures, such as increasing alcohol on strong cider whilst lowering it on mild beer, would be best.

He concluded that the increase in alcohol duty was a "tax on the many, not the few".

Responding for the government, business minister Gareth Thomas accused the Conservatives of not stating what they would do.

He accepted that these are challenging times for the industry.

Thomas warned that national brewers could have a monopoly on the wholesaling of beer if the tie was removed.

And he stressed that competition decisions had been moved from ministers to independent bodies.

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