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The Government has rejected pub industry calls for regulation of the sector to be watered down, but stressed that there are still “areas for improvement”.

Ministers indicated on Monday that it could however be willing to reform rules over tied pubs tenancies.

The Government has found that the Pubs Code Adjudicator (PCA) is working following a review of the sector watchdog and its work since 2022.

However, the review also found that “targeted amendments” could be appropriate to help support tied tenants, who are publicans renting pubs from typically larger groups and tied into buying a proportion of their drinks from the owner.

The Government said it therefore plans to develop proposals aimed at “strengthening the effectiveness” of the pubs code.

The pubs code was introduced 10 years ago to help protect tied pub tenants in their relationship with the large pub group.

In a written statement to Parliament, business minister Kate Dearden said: “the review found the PCA has been broadly effective in enforcing the code over the review period, with particular success in reducing arbitration cases and successfully completing the first investigation under the code.

“The review however notes that there are areas for improvement.

“Whilst the Secretary of State does not believe he needs to issue new guidance under the act; the Government encourages the PCA to act on six areas identified in this statutory review to further improve its effectiveness.”

In July, the PCA launched a statutory investigation into the UK’s largest pub group Stonegate amid concerns the company “may have failed to comply with its legal obligations” under the code.