Pub groups face calls for tough legislation in MPs' broadside

An influential committee of MPs has urged the Government to introduce statutory legislation to regulate big pub companies, following years of abuse.

In a blistering attack that referred to "bullying and intimidation" of lessees across the industry, the Department for Business, Innovation and Skills' (BIS) committee concluded that self-regulation had "failed" to deliver meaningful reform. It called on the Government to launch a consultation to include proposals for an "adjudicator armed with a full suite of sanctions" to police the behaviour of pub companies.

A key target is the "beer tie" – where the landlord is forced to buy most of their beer from the company from which the premises are leased – following little progress, with pub companies offering only 16 per cent of new lessees and just 9 per cent of existing lessees a lease free of the tie.

The committee said this and other failings were contributing to pubs' closing at an "alarming rate", at a time when a downturn in consumer spending continues to squeeze pubs further.

The group of MPs said they had run out of patience with progress made by the "impotent" British Beer & Pub Association (BBPA) – whose members account for nearly two-thirds of Britain's 52,500 pubs – to implement reform and show it was working successfully within a voluntary code of practice.

However, the BBPA hit back, citing the "significant progress" it had made, adding it was "deeply disappointed" by the report. Those BBPA members who are likely to be most worried are the UK's biggest operators of the beer tie for leased and tenanted landlords, Punch and Enterprise Inns.

Adrian Bailey, an MP on the BIS committee, said this was its fourth report in seven years and the industry had for "too long failed to put its own house in order" following a "final ultimatum" 18 months ago.

He said: "We are firmly of the view that statutory regulation should only be used as a last resort, but we can only conclude that industry self-regulation has failed."

He added: "Pubs are businesses, and they need to be able to succeed as businesses, but they are also at the heart of our communities, and we are losing them at an alarming rate."

In addition to its anger over the beer tie, the BIS committee identified a number of failings, such as pub companies' not providing a national database of rents, and "far too many unpleasant reports across the industry of bullying and intimidation towards lessees". It also said the British Institute of Innkeeping, the body for the licensed retail sector, did not have "sufficient sanctions".

Endorsing the previous government's commitment, the Coalition last year said that if it were recommended, it would initiate a consultation to put the voluntary code on a statutory footing. The BIS committee has urged the Government to set out a timetable for that consultation, as a "matter of urgency". It said: "We further recommend that the consultation includes proposals for a statutory code adjudicator armed with a full suite of sanctions."

But Brigid Simmonds, the chief executive of the BBPA, said its members have invested £265m into supporting the leased and tenanted sector over the past year. She added: "We call upon the Government to recognise these economic pressures and ease the burden on pubs. The pub sector needs less tax and less regulation, not more, if it is to continue to create jobs and sustain much-needed economic growth in our communities."