Government under fire for unfair treatment of pub landlords

The government will launch an independent inquiry into the regulation of pub companies after MPs claimed that "misleading information and deception" is forcing landlords out of business.

The action by ministers marks a shift in attitude towards the way pubcos are regulated.

Despite facing four enquiries since 2004 for allegedly inflicting a tied system on some of the UK's 6,000 pub landlords, business minister Ed Davey opted in favour of self-regulation of the market in November and a tougher code of practice.

Under the tied arrangements, landlords are contractually obliged to pay rent prices and purchase alcohol from the pubcos at their determined price.

The pressure on the government to back track increased this week when the All-Party Parliamentary Save the Pub Group, led by Liberal Democrat MP Greg Mulholland, revealed that a government response to a Commons investigation into pubcos included text copy and pasted from a pub industry body document.

Following a freedom of information request to the Department for Business, Innovation and Skills, the Group found copy which came straight from the British Beer and Pub Association (BBPA). BIS refused to comply with certain parts of the information request or publish information on legal advice they had received, the group of MPs claimed.

Mulholland said: "It appears that this is an attempt to cover up the quite obvious collaboration that has been going on in secret between BIS and the pubcos and their representative organisation, the BBPA."

During a heated debate in the House of Commons, MPs called for the introduction of a statutory code of conduct to free landlords from tied contracts.

Conservative MP Brian Binley said: "I am talking about pub-owning companies whose model is unsustainable and continues on the basis of excessive debt, misleading information and deception – and it is the tenants who are the victims, faced with prices higher than on the open market, exorbitant rents and a large dose of misleading information."

Responding to the evidence revealed by Save the Pub group, Phil McCabe, senior policy advisor at the Forum of Private Business, said: "British pubs are closing every day as a result of them being squeezed by the very companies that own them.

"These pub companies make it virtually impossible for landlords to run their businesses and yet are apparently enjoying a massively disproportionate influence over the government’s proposed industry reforms, at the expense of bodies genuinely representing licensees."

The independent enquiry is expected to report in the autumn.