Memorandum submitted by Graham Brown
Rents—my niece and myself are Punch
Taverns tenants and we have had a tortuous time* with them since
we took on a lease nearly two years ago, not least the inability
to get any information out of them regarding rent levels—and
we have e-mails from our area manager stating that there are no
figures on file or available anywhere else to say how the rent
level was calculated. All we know is that we were told it was
non negotiable and it is £20,000 per annum higher than the
rental level set, on a free of tie basis, by the Valuation Office
in Wrexham—as an aside, we have to pay an annual fee for
rateable value assessors who can appeal on our behalf to try to
obtain lower Business Rate levels but when we enquired about starting
this process Punch taverns advised us to be aware that the process
could show valuations which would justify an increase in rent.
I understand that the 2004 Trade & Industry Select Committee
demanded clarity for the rent valuation process but this is clearly
not the case with us.
Discounts—when we entered into
the lease we were told we would have maximum (40%) discount on
beers etc and the lease actually states that, due to their considerable
buying power, Punch Taverns was able to offer its tenants considerable
discounts. In reality these "discounts" equate to our
paying c£40 per barrel more than we would pay to a local
supplier on a one-off purchase. It would appear that the Pub Companies
are using their purchasing power to increase profits rather than
to benefit the tenants and, ultimately, the consumer. When we
raised this with our Area Manager we were told that the prices
were "subsiding rent levels". Due to the present economic
climate we have now been offered further discounts for a limited
period. We have also been offered a rent reduction for six months
but this is on the basis that we also buy spirits off them—on
asking why they were increasing the tie we were told that it was
purely a "gentleman's agreement" and wanted us to buy
spirits off them in recognition of the reduction.
Other costs—I am an independent
Councillor on Powys County Council and, for the past five years,
have been the Independent Deputy Chair of the LGA's Safer Communities
Board. In this role I gave evidence to the Les Elton Licensing
Fees Review Panel. This panel included Francis Patton from Punch
Taverns. My stance at these meetings, on behalf of local government,
was to try to persuade the Panel that local authorities should
be given the power to set fees locally rather than have them set
by Central Government. However, there was the feeling that local
authorities would "profiteer" and set fees higher than
needed. Interestingly, in my personal business, we recently had
a letter from Punch Taverns to say that they were changing the
way in which they collected the Licence Renewal Fee and, when
the first invoice arrived, it transpired that they are going to
be charging us £334 per annum for a licence renewal fee of
£195. Clearly, this pub company is going to be making money
from their tenants—with a property portfolio of 8,500, if
all tenants are having to pay the same amount of up-lift, Punch
Taverns will be taking over a million pounds additional money
from its tenants which, given the stance of the Elton Review Panel
on which it was represented, raises some interesting questions!
I re-iterate that I am writing this as a private individual and
NOT representing the LGA.
Similarly, we have to pay Punch Taverns for
property insurance. Following some wind damage to property in
the beer garden I contacted PT to ask if the insurance covered
it. I was told the insurance purely covered damage to the actual
building. During this phone call I asked how come we were paying
an annual premium of just over £1,600 for such a limited
insurance cover (it is a small village pub and the premium should
be more in the region of £500) and how had it been calculated.
I was told that there was no specific calculation for each pub
as HSBC just gave a global premium figure for the estate and this
was then divided amongst the pubs. I have no evidence as I cannot
get the information but, given the situation with the licence
fees, I would not be surprised if the amount Punch Taverns collects
from its tenants in premiums far exceeds what they pay themselves.
Within the last few days we have just received a letter from Punch
Taverns stating that, in order to save a rise in the cost of premiums
to its tenants, it is raising the level of excess from £500
to £1,000 so only those that make a claim pay any extra.
* I think this is outside the remit of the
Select Committee but these include on-going problems arising out
of refurbishment works carried out by Punch Taverns before we
took over the lease such as the failure to obtain Building Regulations,
the failure to provide the appropriate Certification and, of concern,
the production of certificates previously unavailable, when the
Health and Safety Officers starting threatening to serve Notice.
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