Opinion: Pubs v Pubcos, which side are you on, Mr Cameron?

Dear Dave,

The last time we spoke was in the Tite Inn at Chadlington, a great village pub with a landlord who I and others helped get rate relief for to keep the last pub in the village going.  We know you appreciate pubs – when the phone-hacking scandal was rife, you bolted to Charlbury Beer Festival, though you needed practice at Aunt Sally.  Maybe you’ll have more time to do that soon.

Fast forward a decade or so and you have a big decision in front of you.  With over 100 pubs a month closing [according to new figures released by CAMRA] due largely to the overpricing of beer and rents by a handful of debt-ridden companies, your Lib Dem partners in Government launched a consultation on whether to bring about a statutory code of practice to stop licensees being put out of business by untenable rent rises, inflated beer prices and landlord-tenant relationships at times reminiscent of the Rachman era.   Meanwhile, some of the biggest pub companies, particularly Punch Taverns, are to all intents and purposes bankrupt as they desperately try and stay afloat by artificial means.

I helped organise the launch for the Fair Deal for your Local campaign at the Jolly Anglers in Reading, a pub famously closed by Enterprise Inns at a mere eight hours’ notice, rescued after a community campaign and now running as a free house.  The campaign is calling for the Government to implement the statutory code and also a Market Rent Only option for licensees to buy drinks at a fair market rate.  Opponents of reform have previously tried to collude in an underhand way with officials to preserve restrictive practices which are draining this thriving sector of an increasing proportion of its circa 250,000 jobs, and continue to shut perfectly viable pubs.

Unusually for a Government at pains to appear decisive, three months on and you still haven’t responded to the consultation results.  However (and worryingly), you have been seen with the boss of pubco Admiral Taverns at your Downing Street reception for Tory MPs in the summer (moonlighting as the chairman of Hook Norton Brewery, who despite being entirely unaffected by reform are issuing bloodcurdling warnings should it be implemented: I wonder why?).  You haven’t yet been to talk to licensees such as Jim and Claire at one of the pub success stories in your constituency; closed by pubco Greene King after licensees came and went, it is now winning awards.  It isn’t the only pub that has struggled when run by a pubco, then thrived when run under a fair market system.  I can name others in the constituencies of Teresa May, Jeremy Hunt and other Ministers, and publicans who have raised concerns with them and other Conservative MPs – dozens of whom have backed the Fair Deal campaign.

On Saturday the Liberal Democrats are debating a motion (F2, if you’re interested) to ensure ‘A Better, Fairer, More Sustainable Future for British Pubs’.  I recommend you have a look at it.  It calls for reform – and other measures to stop pubs being sneakily converted into supermarkets.  (If you’re still talking to Tim Yeo, ask him about the case in his constituency.)  I hope the Liberal Democrats will nail their colours unequivocally to the mast of the survival of the Great British Pub, and end the Great British Pubco Scam.   Which side are you on, Dave?

* Gareth Epps is a member of FPC and FCC, a member of the Fair Deal for your Local campaign coalition committee and is an active member of Britain’s largest consumer campaign, CAMRA. He claims to be marginally better at Aunt Sally than David Cameron, whom he stood against in Witney in 2001.

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19 Comments

  • Steve Comer 3rd Mar '14 - 1:58pm

    The main problem is that a pub owner can convert the premises to a retail use WITHOUT getting planning permission.
    Some pub companies have a recent track record of deliberately running down the pub, claiming it to be ‘not viable’ and then selling it to a supermarket chain. The use class orders badly need reform, but the obsession with ‘de-regulation’ is pushing the coalition in precisely the opposite direction.

  • Simon McGrath 3rd Mar '14 - 6:54pm

    Odd that neither this peice nor the motion mention some of the other reasons why pubs are doing well – that less people visit them. Combination of all sorts of reasons – the smoking ban, supermarkets selling cheap alcohol and many more places such as coffee bars for people to meet.

    We are asked to believe that the owners of pubs behave in a way totally inimical to their own interests by forcing ‘viable’ pubs into closure. Much more likely that there is simply less demand for pubs.

  • Simon McGrath 3rd Mar '14 - 8:41pm

    I’m sorry it doesnt make sense to you. It seems quite simple – there are lots of reasons for pubs to close in that less people go to them.

  • Simon ‘McGrath repeats one of the Tobacco Manufacturer’s favourite myths that pub closures have resulted from the legislation to protect people from secondhand smoke in public places.
    This probably betrays a lazy approach to the subject rather than a desire by Simon to return us to the bad old days of smoke-ridden pubs; the vast majority of us are delighted never again to have to endure death by a thousand fags.

    Some pubs have been thriving since they got rid of smoking. Hardly surprising whey you consider that most people (andtherefore most pub users and potential pub users) do not smoke and do not wish to be subjected to other peoples smoke.

    Simon would do well to look at the real reasons why some (certainly not all) pubs close – as indicated by Gareth Epps.

  • Nick T Nick Thornsby 3rd Mar '14 - 8:48pm

    In the article linked to in Gareth’s last comment it states that in the period referred to 57% of pub closures were tenanted pubco pubs.

    In itself this does not seem to me particularly helpful one way or the other because it does not take into account the proportion of pubs that are tenanted in the first place (if more than 57% of pubs are pubco-owned then the figure would suggest that pubco pubs are *more successful*).

    In any event it seems to me that there remains an oversupply of pubs. Within 5 minutes of my house in suburban Greater Manchester there are at least 13 pubs: 2 of them are currently empty, one has been turned into a supermarket and the remainder are operational. But I don’t for a moment think that the remaining ten will survive for much longer, quite simply because my generation go to pubs much less frequently than my parents’ generation, who in turn went much less frequently than their parents’.

    The prevelance of pubcos is a symptom of that over-supply and falling demand because they have filled a gap where previously others (primarily banks) financed pubs: they will no longer do so to anything like the same extent because the writing is on the wall – pubs are in general not good investments.

    But the analysis of the state pubcos offered in the piece seems to me to be broadly right: their assets are now primarily the real property of the pubs themselves and the debts outstanding from current and former tenants (only a fraction of which are secured and/or have any realistic prospect of being repaid). So they are essentially on a smaller scale in the same position of many financial institutions pre-2007 and just like Northern Rock there will come a point at which pubcos are no longer an attractive proposition in the money markets. I suspect that time will come sooner rather than later.

  • Nick T Nick Thornsby 3rd Mar '14 - 9:34pm

    Gareth,

    Do you know (roughly) what proportion?

  • John Heyworth 4th Mar '14 - 10:54am

    The iss ue is gathering momentum across all areas of the national press……
    http://www.camra.org.uk/article.php?group_id=12886

  • Does it occur to anyone that our Party’s blind support for smoking bans – including in adult-only venues who might have wished to choose to operate a separate smoking room – might have had one *teensy weensy* bit to do with the financial issues many pubs now face? Along with many other factors, but not to be disregarded.

    I am sure there will soon be a piece of ASH (ie GSK!)-sponsored research along to prove me wrong.

  • Simon Banks 4th Mar '14 - 8:29pm

    Undoubtedly there are reasons other than exploitation and underhand behaviour by pubcos why pubs are under pressure. That seems to me to be an added reason why factors we can address quite easily should be dealt with. Take the analogy of some wild game animal traditionally shot, whose population is declining rapidly. The reasons may include unsuitable weather and excessive shooting. That the weather is a factor will not be accepted as an argument against a temporary shooting ban. So if fewer people (not less people, Simon McGrath) are going to pubs and yet pubs are considered to be valuable community resources, that’s an added argument for making sure the dice isn’t loaded against them.

    Why should pubcos “act against their own interests”? Well, for a start, many businesses act against their own interests by getting their business decisions wrong. I know of tenants who are well aware what their customers want , but are systematically obstructed in providing it. Stupidity, maybe, a we-know best attitude maybe, secret deals with brewers, conceivably. Then consider: many businesses want quick profits. Selling the pub brings in a quick profit and the CEO won’t be around when profits are hit long-term.

  • Gareth – except that pubs’ profitability may have been hit by the smoking ban, causing pubcos’ already unsustainable business model to come under greater pressure. Straw: camel’s back.

  • Frank Furter 5th Mar '14 - 11:52am

    There is no doubt that the smoking ban has caused the closure of some pubs – but,probably, they would have closed anyway. I have been a pub drinker for sixty years. In that time there have been hugh changes: in pubs, in brewers, in licencing hours, in access for children, in the smoking ban, and in the nature of the high street. Once pubs relied on their base clientele – the regulars. They were 100% smokers, and they came in every day. These are disappearing. People now have greater choice of how to spend their money. When I started my career as a drinker, there were no restaurants on the high street other than fish and chip shops. Now there we are spoilt for choice so we go to pubs less frequently unless they offer something extra: good food, entertainment, a nice atmosphere, clean toilets. I am struck by the analogy with cinemas. In the fifties, they were everywhere – from fleapits to luxury cinemas. People went to them two or three times per week. But now most of these have gone, to be replaced by fewer multiplex cinemas, visited less frequently. I suspect this is the way the pub trade will develop, despite any attempts to prevent it.

  • On Saturday evening at Conference in a superb Real Ale pub 3 mins walk from The Barbican, York Lib Dems are holding a “Fair Deal For Your Local” Event with speaker Greg Mulholland. All are welcome to come and listen and sample some great Yorkshire Beer (8 on draught).

    ROOK & GASKILL, Lawrence Street, York, 7.30 – 9pm

  • Oh look. Turns out pubcos and independents are closing at almost exactly the same rate. Turns out one of the major discontinuities was, indeed, the smoking ban. What a shock.

    http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11283995/The-real-reasons-for-the-tragic-
    demise-of-the-British-pub-industry.html

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