A government rebellion last night just broke a system that’s governed British pubs for centuries, and shares in the industry are tanking.
A rebellion against the government yesterday that passed by just 15 votes means that pub tenants currently tied to a supplier would be able to negotiate a market rent and buy their beer on the open market.
The vote has effectively ended the “beer tie”, a process by which tenants of pubs owned by the big pub companies (PubCos) are charged a higher-than-market price for their beer, in exchange for benefits like cheaper rents and access to the company’s cheaper supply chain.
The rebellion has sent a massive shockwave through listed pub companies this morning: Punch Taverns and Enterprise Inns, the two largest floated PubCos, have seen their shares drop by more than 9% and more than 11% respectively.
The Federation of Small Businesses cheered the move, but anti-prohibition campaigner Chris Snowdon is less impressed, arguing that campaigners and pub tenants have just shot themselves in the foot:
If no publicans can afford to buy the pub, it is likely to be sold off to developers and turned into a shop or a private dwelling, as has been happened on a large scale since 2007.
PubCos currently own 19,000 pubs in the UK. Enterprise Inns and Punch Taverns, in particular, are in enormous debt. What do you think they are going to do with their property portfolio now that the government has torn up their contracts and destroyed their business model?
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