Tied Pubs (Hansard, 27 March 1991)

§ Mr. Lilley

Yes. I have considered carefully representations both for and against the deferment of the November 1992 date by which major brewers are required by the Beer Orders to release pubs from ties. I have concluded after weighing up all these representations that amending the orders in this way could not be justified. Brewers will have had three years in which to make their dispositions by November 1992. Deferring the date would be unfair to those national and regional brewers who have already taken steps to comply with or take advantage of the order and would prolong uncertainty for tenants.

The Beer Orders require brewers owning more than 2,000 pubs to free up from tie half they own in excess of 2,000 by 1 November 1992. There are at least four ways in which a brewer can free up a pub from tie: the pub can be leased to the sitting tenant free of any ties; sold to the sitting tenant; sold with sitting tenant to a third party; and sold with vacant possession. Only the last of these four options would involve the eviction of the tenant.

I am naturally concerned about statements by certain brewers that they will issue "notices to quit" to large numbers of their tenants, even though the number issued is likely to be much lower than the figures that have been mentioned in the press. I understand that most of these notices will be issued by two national brewers in order to renegotiate the terms of their tenancy agreements and will not ultimately lead to evictions. I have urged the brewers concerned to keep the number of notices they send out to an absolute minimum and to make their purpose clear to tenants.

Deferring the November 1992 date in the Beer Orders would not affect the date by which the brewers would have to send out "notices to quit" since this is determined by the fact that all tenancy agreements will be protected by the Landlord and Tenant Act by July 1992. It has been put to me that there would be no need to issue "notices to quit" if the date in the Beer Orders was deferred since this would allow pubs to be sold as they become available through natural wastage. However, brewers will have had three years by November 1992 in which to take action to comply with the order. This already represents a year more than was originally recommended by the Monopolies and Mergers Commission in its report on the supply of beer. Four of the six major brewers have either already taken or announced steps to comply with the order by November 1992. It is not clear why these should be disadvantaged because the other two have been slower in taking action.

Several national brewers who have already taken steps to comply with the orders have made it clear they do not wish to see any deferment of the November 1992 date. A large number of the regional brewers have expressed strong opposition to any change in the date as they are keen to strengthen their brewing base by acquiring further premises and selling to more "free outlets". They regard the present orders as a balance between the interests of brewers of different sizes which would be upset if there was a change in the date. A number have suggested that deferring the date in the order might lead to further regional brewers withdrawing altogether from brewing. 432W Tenants' representatives have also generally made it clear that deferring the date would be unwelcome as it would prolong uncertainty for their members.

I recognise that the changes taking place are unsettling for many in the industry. But they also offer opportunities —to tenants to manage their own businesses and to brewers to compete in a larger free trade market. I believe that it would be wrong to change the timing now, given the way many national and regional brewers have already responded to the orders and given the further uncertainty that would be created for pub tenants if the implementation date were delayed.