Memorandum submitted by South Norfolk
Council
1. BACKGROUND
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. PUBCOS
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.
CONCLUSION
3.1 Although not directly related to your
key questions, we hope this report assists the Committee in their
deliberations.
APPENDIX ONE
REPORT ON THE PUBLIC HOUSES IN SOUTH NORFOLK
QUESTIONNAIRE
1. BACKGROUND
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".
2. ANALYSIS OF
THE FACTORS
AFFECTING THE
PUB TRADE
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
| 97% |
| 2. Supermarkets selling cheap alcohol |
96% |
| 3. Tax on alcohol | 87%
|
| 4. Business rates | 85%
|
| 5. The credit crunch | 85%
|
| 6. The smoking ban | 65%
|
| 7. Beer tie constraints | 64%
|
| 8. Drink drive laws | 41%
|
| 9. Legislation and red tape | 33%
|
| 10. Second homes | 12% |
| |
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 | 93%
|
| 2. Good food | 87% |
| 3. Location and passing trade | 80%
|
| 4. Being child friendly | 66%
|
| 5. Inclusion in guides, eg CAMRA, Good Pub
| 46% |
| 6. Advertising and marketing | 44%
|
| 7. Theme nights or quizzes etc | 44%
|
| 8. Longer opening hours | 34%
|
| 9. Diversification | 32%
|
| 10. Special offers, eg two for one |
27% |
| |
3. SUGGESTIONS FOR
ASSISTANCE BY
SOUTH NORFOLK
COUNCIL
We had a huge number of responses to this, and some of the
specific responses are as follows:
Signage
— 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.
Rates
— 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.
Smoking
— 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.
Planning
— 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.
4. WILLING WITNESSES
TO COME
AND TALK
TO THE
TASK GROUP
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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