Government flexes its muscles against the big pub companies

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By Joel Hills, ITV News Business Editor

The idea of running a pub is very seductive, the reality can be very different.

11,000 pubs have closed in Britain in the past decade.

The smoking ban, a rise in VAT and Beer Duty, the recession have all played a part. As a nation we are drinking less than we used to, but the Government has come to the view that some publicans face financial hardship because they are being treated unfairly by large pub companies.

Of our 49,000 remaining pubs approximately 23,000 are "tied". That is to say the publican rents the pub from a pub company, to which he pays rent and from which he must purchase beer - often at above the market price.

Beer ties have existed for years - the allegation is that more recently the large pub companies, in their drive to make money (and in some cases service some quite staggering levels of debt), have put the squeeze on their tenants.

A pub in Brighton - the new rules should make it easier for publicans to seek redress if they feel they are treated unfairly.

CAMRA says 57% of "tied" publicans earn less than a National Minimum Wage equivalent salary of £10,000 a year.

"Driven to the wall" was the phrase the Business Secretary used a year ago, the language has softened since but the problem persists, self-regulation is judged to have failed and so, this morning, we have action.

In comes in the form of a statutory code, and an independent adjudicator with the power to resolve disputes and the muscle to impose fines.

It will apply only to pub companies deemed the worst offenders/most complained about; those which own more than 500 pubs, of which I can think of only five: Enterprise Inns, Punch Taverns, Marstons, Greene King and Spirit. Between them they run around 13,500 pubs.

The facts that the Government has established are fiercely disputed by the industry. The British Beer and Pub Association argues that rent and beer prices have been falling, that they have no obvious interest in driving their tenants out of business.