In September, the BIS Select Committee unanimously delivered a devastating verdict on the pubcos for the third time running and lambasted them for repeatedly breaking promises to change their business practices. They also found unambiguously that ‘the tie’, as operated by them, is unfair to licensees, many of whom can’t earn minimum wage despite healthy turnover figures; is bad for pub customers who are overcharged for a pint, due to the hugely inflated prices the licensee has to pay for beer; and it is closing pubs that need not and should not close.

The Committee found that, even after four damning reports in seven years, and having given the industry a period of fourteen months to change, self-regulation had failed, with the industry and the big companies simply not doing what was asked of them by the Committee and by Ministers to avoid intervention. Critically, none of the pub owning companies has introduced a genuine free-of-tie option with an open market rent review. Despite the Committee’s decision, the companies and their representative organisation, the British Beer and Pub Association (BBPA), have said that they will not do this.

The pubco business model is built entirely on a bubble of debt. In good times they gambled on extra borrowing based on inflated prices – the casino business model that has caused so much damage elsewhere. The current debt of Enterprise and Punch combined is £6.5 billion – that’s right, billion – against a property estate valued at little more and falling, just like their share prices. The pubcos had no capital, and no capacity for growth. Sound familiar?

The commonly held alternative to this market failure is to encourage growth rather than stifling it. The list of pubs that have thrived free of tie is growing fast. Entrepreneurial publicans, running pubs free of the racket that 30-60% higher wholesale drinks prices constitute, are turning round pubs that died under a pubco regime of no investment, short-termist management and Rachmanesque practices on lessees. Or as Nick Clegg himself put it, in simple, liberal terms, “I don’t like the big guys beating up the little guys”.

Take the Shurlock Inn. The only pub in a small village outside Reading, under Enterprise ownership it failed and closed. Faced with its loss and a change of use to housing, villagers rallied around. A group of them bought the pub, did it up and focused on good food and good local beer. The place is now thriving. But they are the lucky ones, as the pubcos sit on dead weight assets – increasingly hoping that a non-existent property speculator will show up. The Government’s Community Right to Buy proposals will help, to a very small degree; but they only scratch the surface.

My local publicans – tied and free of tie – reckon that free houses run around one-third cheaper than pubs leased from pubcos. The tie is a restraint of trade; at a time when the small/craft brewing sector is going from strength to strength, the pubco tied model is restrictive and anti-competitive. The excessive take of publicans’ earnings punishes those working for the pubcos and stifles enterprise.

Independent research shows that nine pubs close a week owned by pubcos, compared to five free-of-tie pubs; the research had to be commissioned to correct false claims made by the discredited BBPA – themselves slammed by the Select Committee, who described them as “impotent”. Their claim, believed by some, that the pubs closing were free houses not pubcos has been proved to be false.

When the brewers’ grip on pubs was removed some 20 years ago, nobody foresaw the creation of vast standalone corporations running pubs into the ground while riddled with debt. It’s estimated that 10,000 jobs a year are currently being lost through pub closures. Although the Government’s ‘one in, one out’ policy on regulation will not make this easy, actions must now surely follow the clear instruction of the Select Committee, combined with the stated willingness of our Ministers Vince and Ed to act on the Select Committee’s wishes. Critically, they must not allow the pubcos and BBPA to defy Parliament.

This is an opportunity to save a major part of the pub industry, save jobs and stimulate growth and entrepreneurship. It’s an opportunity that must not be missed.