Pub Companies - Business and Enterprise Committee Contents

Memorandum submitted by South Norfolk Council


  1.1  At its meeting of 14 April 2008, members of the Tourism, Heritage, Enterprise and Culture Overview Sub-Committee at South Norfolk Council felt that anecdotally, there was cause for concern around the difficulties public houses in the area were facing. It was agreed that a Task Group of four members should be set up to examine the factors leading to the success or otherwise of pubs and consider what advice or assistance, if any, this Council could offer licensees in the district.

  1.2  The Task Group felt it was important that their consideration was based on evidence rather than supposition and so a questionnaire was sent out to all the publicans in the district, which asked a number of key questions. A summary report of those responses, is attached as Appendix One.

  1.3  This Council is still examining this issue and, although not directly relevant to your investigation, councillors felt that it would be useful just to very briefly explain what we were doing. Following the questionnaire we are hosting a conference for publicans on Monday 29 September where a number of officers will talk about planning business rates etc and then two workshops on training and support, and marketing will be run. There will also be officers available during the morning, on an informal basis, to assist with any queries on smoking, licensing etc.

  1.4  The Group has also listened to various external witnesses for example representatives from commercial estate agents, a local brewery and Enterprise Inns are coming on 29 October. Later this year, we intend to publish a report detailing exactly what practical advice and assistance this council can offer publicans in our area.

  1.5  The Council's campaign to assist public houses in the district has received a great deal of attention in the media. The press release was picked up by the EDP, Diss Express and the Diss Mercury, all of whom ran it as a front-page story. The two main national publications for licensees, the Publican and the Morning Advertiser, were contacted and both ran the story on the front page of their website and also as a story in their printed magazines.

  1.6  As part of my research, I came across your investigation into the role of the pubcos and councillors felt strongly that a response should be sent to you from the Council.


  2.1  The overwhelming findings from leaseholders in the area was that high rents were a major factor contributing to the lack of profitability and beer ties were also mentioned. In terms of your specific questions, the Task Group has not considered these aspects, as its role was more inward focussed, in terms of what this Council can do now, to assist pubs.

  2.2  However, the overwhelming conclusions and comments relating to pubcos were as follows:

    2.2.1  The basis for calculating rents. It appears that the major factor is how the rents are calculated. Pubcos are of course a property company whose profitability basis is secured on rising rents and the profits made from buying stock and reselling to publicans. The basis for calculation of rents should be on the existing trade not the future trade. If trade increases, then so can the rent, but to base the starting rent too high is counter-productive.

    2.2.2  Publicans experience. Because the leasehold tenant route is a relatively low start up cost way into the trade, many of the applicants have little or no experience and the training offered by most pubcos is not sufficient, particularly on the legal/finance side.

    2.2.3  Upward only reviews. These should simply not be allowed as if trade falls significantly, it is counter productive to squeeze more rent out of a failing business.

    2.2.4  Rent reviews. We feel it is vital that publicans should have agent/legal representation at such rent reviews and would need to actively "opt out" of having such representation, perhaps by signing a statement that there are aware of the risks of representing themselves.

    2.2.5  Property values. We feel that many freeholds have been bought at an inflated price and the pubcos are now unable to sell their properties, without exposing this over valuation of their property portfolios. It may be the current financial climate will lead to an inevitable selling of some of the portfolio.

    2.2.6  Property numbers. They simply own too many properties, bought a few years ago when property was booming. Perhaps the answer would be to restrict the number of pubs a company can own.

    2.2.7  Assistance programmes. We felt that it must make economic sense for pubcos to have all pubs open and trading and thus some type of assistance scheme would be useful.


  3.1  Although not directly related to your key questions, we hope this report assists the Committee in their deliberations.




  103 Questionnaires were sent out to all the public houses in South Norfolk on 8 July. 52 Completed questionnaires were returned which is a response rate of over 50%, which is way above the norm. An average response rate for surveys/questionnaires carried out by the Council is normally around 10%.

  The aim of the questionnair was to identify the actual factors affecting the pub trade in South Norfolk to inform and assist the Task Group in suggesting options for advice and assistance. As one licensee put it, "Local people are increasingly valuing good quality service over cheaper chain style operations—an opportunity exists for rural pubs to get back to basics".


  The full breakdown of answers and every comment received is available if required, but to summarise, licensees felt very strongly, or strongly that the following negative factors affected their business:

1.  High Rent
2.  Supermarkets selling cheap alcohol 96%
3.  Tax on alcohol87%
4.  Business rates85%
5.  The credit crunch85%
6.  The smoking ban65%
7.  Beer tie constraints64%
8.  Drink drive laws41%
9.  Legislation and red tape33%
10.  Second homes12%

  The other issue mentioned many times was high overheads, especially electricity/gas/fuel (many pubs are on oil fired heating/customers having to drive—fuel costs etc).

  In terms of positive factors, licensees felt very strongly or strongly that the following factors increased their business:

1.  Customer service
2.  Good food87%
3.  Location and passing trade80%
4.  Being child friendly66%
5.  Inclusion in guides, eg CAMRA, Good Pub 46%
6.  Advertising and marketing44%
7.  Theme nights or quizzes etc44%
8.  Longer opening hours34%
9.  Diversification32%
10.  Special offers, eg two for one 27%


  We had a huge number of responses to this, and some of the specific responses are as follows:


    —  allow more signage on the roads—three separate responses on this;

    —  allow "A" boards on side of road outside pub; and

    —  more brown signs for pubs—four separate responses on this.


    —  reduce business tates—18 separate responses suggested this;

    —  continue with rural rate relief;

    —  to assess rateable (non-domestic) value on a case by case basis;

    —  reduce VAT rates for small businesses;

    —  drastically reduce refuse collection charges;

    —  reduce council tax on living accommodation; and

    —  hep out with council tax.


    —  to be more helpful with advice on the smoking shelters;

    —  allow my smoking shelter to remain where it is;

    —  review smoking ban policy;

    —  write to Government so pubs can become a smoking or a non-smoking pub; and

    —  bring back smoking rooms—an opportunity to choose to be smoking/non-smoking would have been appropriate.


    —  easier planning application process and reduction of costs for applying for planning;

    —  help with planning consents for erection of smoking shelters and perhaps financial assistance for buying and erecting such shelters; and

    —  grants for using local produce/beer.

Other Council issues

    —  have all local pubs feature on a page on your website;

    —  introduce a star quality rating for pubs (food outlets);

    —  more help with diversification—in my case I believe a visiting post office/library/local councillors surgery/help with setting up a small general stores etc;

    —  crack down on pubs that are not complying with licensing and smoking bans;

    —  encourage events and music festivals and beer festivals;

    —  SNC could set up champions within the pub trade as examples of well run alcohol outlets; and

    —  SNC could host a campaign based on promoting rural businesses in a positive light, pubs are increasingly being held accountable for the actions of their customers, ie noise etc, which to a certain degree is unavoidable. Pubs should be promoted as family friendly encouraging responsible drinking and social/community activity.

  Members are invited to consider these suggestions along with any practical steps the Council could take.


  There was a fantastic response to this request. It has been suggested that in view of the huge response, it might be a good idea to invite all the licensees who responded to perhaps a breakfast meeting where they can network, maybe have some workshops etc. In terms of other witnesses, I am pleased to report that representatives from Britannia Business Sales (East Anglia) Ltd, Adnams Brewery and Enterprise Inns have agreed to come and talk to the Task Group.

26 September 2008

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