Penalised for owning tied houses

We're looking again at the 1909 Budget and the impact it was likely to have on specifically the pub trade.But not the whole of the pub trade because of the different way licensing worked in the different parts of the UK.

When younger I used to wonder why almost all the pubs were tied in England, but not in Scotland. It turns out that it was all to do with the way licences were issued.

In England and Wales, the 1869 Licensing Act not only made it extremely difficult to obtain new licenses, it also made it much easier for the authorities to revoke licences. With temperance twats sitting as licensing magistrates in many areas, it's no wonder that there was an aggressive campaign to reduce the number of licences.

In Scotland and Ireland, things worked differently.

"His [Mr. Herbert Samuel, MP] estimate of the proportion of the total consumption of beer, as taking place in on-licensed houses, viz., two thirds of the total, itself illustrates how unequally the burden of new taxation is distributed.

About £2,800,000 annually is to be extracted from the English and Welsh brewers as a penalty for owning or supplying "tied houses."

Does any one doubt that if the conditions under which the Irish and Scotch publicans have carried on their business had been the same as they are here, they would not also have sold their licensed houses as they have in England?

In England a licensed house is a valuable monopoly, requiring capital and possessing a substantial saleable value.

In Ireland, owing to the ease with which licences have been granted, the monopoly has no comparison with that in England, and the capital required and the saleable value are correspondingly small.

In Scotland the licence is personal to the publican, and does not attach to his premises."

The English publican, therefore, has had most to fear from the organised hostility of the teetotal party, which is largely responsible for the tied-house system in this country, and it is not surprising that the old-fashioned English publican has long ago sold out his business."
Brewers' Journal, vol. 45, 1909, page 415.

Because the number of licences in England was limited and likely to decrease rather than increase, it greatly boosted the value of pubs. Mostly because it prompted a rush to buy tied houses in the 1880s and 1890s, a move financed by the capital raised when breweries coverted to public companies.

As the breweries owned most of the pubs in England, it was up to them to pay the licence fee. Meaning quite a big extra expense. It also reduced the value of pubs, which was a big problem for businesses where that's exactly where most of their  capital was tied up. In the remaining few years before the start of WW Imany breweries had to mark down the nominal value of their shares to reflect this reduction in capital.

Things have certainly changed in Ireland when it comes to the granting of new licences, which is as good as impossible today.