Pub companies who are allegedly “exploiting” their tenants are to face fines under new plans announced by Business Secretary Vince Cable and voted through the Commons yesterday. The relationships between pub companies and tenants will now be subject to a statutory code and policed by an adjudicator, with the aim of preventing excessive rents and beer prices.

Just under half of Britain’s 50,000 pubs are run under “tied” agreements, whereby large companies – the six largest in the UK being Punch Taverns, Enterprise Inns, Greene King, Marston’s, Admiral Taverns and Star Pubs & Bars – lease their properties to tenant landlords. Those tenants are then required to pay whatever rents and beer prices the “pubcos” demand. However, there has been increasing criticism from industry experts that those rates have been exploitative – and have contributed to the closure of over 3,500 “tied” pubs since 2009.

Prior to the Commons debate, the industry had been self-regulated. A deal in 2011 established the Pubs Advisory Service (PAS) and the Pubs Independent Conciliation & Arbitration Service (PICAS). However, MPs deemed that pub companies had not done enough to demonstrate that a voluntary approach had been successful. That chimed with the views of pro-pub campaigners, who had dubbed self-regulation “a farce” – and Cable himself stated that pubs were “struggling to survive on tiny margins … due to pubcos exploiting and squeezing their publicans by unfair practices and a focus on short-term profits”.

The latter point is particularly pertinent: the pubcos’ approach appears incredibly short-sighted, with their own, long-term profitability under threat if closures continue. Pubs have already faced a series of tough challenges, with the 2007 smoking ban, the increasing availability of cheap alcohol in supermarkets and the generally poor economic outlook encouraging drinkers to save their money or stay at home. Cable’s move appears to be an attempt to save the industry from itself – a damning indictment of the leading pub operators and their current management strategies.

Vince Cable image courtesy of Flickr via Wikipedia, and licensed under the Creative Commons agreement