Pub Companies - Business and Enterprise Committee Contents

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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