Freedom for pub tenants as ministers lose Commons vote

Pub tenants will be allowed to buy beer on the open market rather than through their "tied house" arrangements, under a legislative amendment passed against the UK Government by the House of Commons last night.

A backbench rebellion by more than 40 Conservative and Liberal Democrat MPs, together with Labour members, resulted in a majority of 25 in favour of the amendment to the Small Business, Enterprise and Employment Bill – which also allows tenants to move to an independently assessed market rent option.

At present the clause applies only in England & Wales, but campaigners hope it can be enacted in Scotland also, as the amendment had the backing of SNP MPs among others.

Tied house arrangements commonly involve a subsidised rent and other benefits in return for a requirement to buy beer from the owner's group of companies at above market prices.

Lib Dem MP Greg Mulholland, chairman of the all-party Parliamentary Save the Pub group, who moved the amendment, described this as an "archaic" and "extraordinary" system. Some publicans have complained of unfair treatment and low earnings under such contracts.

Ministers had proposed a pubs code, with a right to request a rent review after five years, but a further offer during the debate of provisions to allow tenants to apply for "market rent" rates after two years, if a review found other measures in the bill had not helped them sufficiently, was described by Mr Mulholland as "business as usual".

The decision was also welcomed by the Campaign for Real Ale, who said it would "help secure the future of pubs", and the Federation of Small Businesses, which hailed a "historic day". But it was described as "hugely damaging" by the British Beer & Pub Association, which said the tied arrangement had "served Britain's pub industry well for nearly 400 years".