The AM is calling on the UK Government to reform the ‘tied model’ operated by large pub owning companies.
Around 1/3 of pubs in the UK are owned by large pub companies who then lease the pubs out to tenants to run as their own businesses. These pubs are contractually obliged to buy their beer only from the pub company, preventing pub licensees buying on the open market.
This is known as ‘the tie’.
The AM said the fundamental problem is that large pub companies take too much of a pub’s profits and is calling for legislation to ensure fair rents and fair beer prices to help local pubs in his constituency.
Mr Skates said: “The traditional local pub is going through a very difficult time at the moment. Unreasonably high beer prices and inflated rents have caused the closure of hundreds of pubs right across North Wales. Drinking habits are also changing and the competition of local supermarkets is very intense.
“Nevertheless there can be a bright future for the village pub, but we need the help of the UK Government and large pub companies to help achieve this.
“We need the UK Government to introduce a new statutory code of practice for large companies that will enshrine in law the long accepted but largely ignored principle that the tied licensee should not be worse off than a free of tie licensee when it came to issues such as beer pricing. This would allow them to pay a price for beer and drinks that would help them make a sustainable profit.
“Rents need to change, too. It would be much easier for small pubs tied to big chains if their tenants were allowed to pay a reasonable market rent. For those renting from companies with 500 or more pubs on their books they should be allowed to pay a fair, independently assessed market rent.
“Such a system is simple and cheap to administer and would give tied licensees the choice as to whether to pay fair rent only or a lower rent and higher beer prices.”
The latest Association of Licensed Multiple Retailers Benchmarking Survey showed that tied rents are actually higher than rents for free of tie pubs. So many tied tenants are effectively being charged double.
The AM added: “We’ve got some fantastic pubs in my constituency, from the recently re-opened Tyn-Y-Capel co-operative pub in Minera to the Buck House Hotel in Bangor-on-Dee, which has now started re-selling Wrexham Lager for the first time in over a decade.
“We now need sensible reform of the tied system to ensure those local pubs linked to a big brewery can continue to turn a profit and have a fair chance of staying open in the next few years.”
Mr Skates is backing the ‘Fair Deal for Your Local’ campaign led by CAMRA, The Campaign for Real Ale.