November 18, 2014 / 7:23 PM / 4 years ago

British lawmakers give pub tenants free choice of beer

LONDON (Reuters) - British lawmakers on Tuesday voted to give people who lease pubs from big companies more freedom about where they buy their beer, overturning government plans for industry reforms.

Almost half of Britain’s 50,000 pubs are run by tenants under “beer-tie” agreements, which mean they buy beer from the firm that holds their lease at above market prices in return for subsidized rent or other benefits. Some publicans have claimed unfair treatment and very low earnings from such deals.

Government plans to allow publicans to challenge rental prices had ruled out a rent-only option that would let publicans buy beer on the open market, citing concerns that it could hurt companies and the industry.

However, lawmakers on Tuesday unexpectedly voted 284 to 259 in favor of adding the option to the Small Business, Enterprise and Employment Bill.

The laws, which still have to pass through several stages of legislation before they are enacted, could hurt pub groups like Punch Taverns and Enterprise Inns, which makes half its profit from tied beer and cider sales.

The Campaign for Real Ale group said the vote was a landmark victory, handing publicans more options.

But Numis analyst Douglas Jack said he expected legal challenges and that with pubs closing at a rate of 31 per week, the changes would further deter landlords from investing in the industry.

The British Beer and Pub Association called it a “hugely damaging” decision and said it could prompt the closure of 1,400 more pubs with 7,000 job losses.

Shares in Enterprise Inns closed down 2.9 percent, with Punch Taverns down 2.3 percent.

Reporting by Neil Maidment and William James; Editing by Kate Holton/Ruth Pitchford

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