Localism Bill

Memorandum submitted by the British Beer & Pub Association (L 73)

Our interest

1. The British Beer and Pub Association is the leading trade association for the brewing and pub sector in the UK representing members who account for 95% of the beer brewed in the UK and more than half of Britain’s 52,000 pubs.

2. BBPA supports what we believe is the government’s intention in putting forward this Bill. The Government moves to protect valued community assets and reform the bureaucratic system of rate relief for small local businesses is to be welcomed; however, we have some concerns about the specifics and the drafting of the bill which we believe could have a detrimental rather than a positive effect on pubs as valuable parts of communities.

Executive Summary

3. BBPA is concerned that making rate relief the responsibility of the local authority may mean that cash-strapped councils choose not to make use of this power.

4. BBPA is very concerned that offering the right of sale to the community removes the ability to make a business to business transaction. Furthermore, if a pub is placed on a community register, its value will be severely diminished.

5. If the pub is sold to the community and then does not succeed, it further ties the hands of that community who may wish for a trade sale. Banks may also be unwilling to fund such proposals, particularly if in the long term the value of the pub falls.

6. BBPA believes that the community should only have the right to buy if the pub is closed and/or there is a proposal for change of use or demolition.

7. The BBPA had understood that the intentions of the provisions of the Bill were to prevent the loss of community facilities in those communities where the operator, whether it be a company or an individual freeholder, sought to close the business and utilise the land/building for another purpose, such as private housing.

8. The clauses in Chapter 4 do not appear to achieve this aim, but do prevent the sale of pubs listed by the local authority as a going concern.

Areas of concern:

Part 3 – Non-Domestic rates: discretionary relief

9. Whilst we support the Government’s move to cut the bureaucracy surrounding the claiming of rate relief for small businesses and broaden its scope, we are concerned that the move to make the funding of rate relief the responsibility of the Local Authority may well mean that cash strapped councils will choose not to make use of this power.

10. It is to be welcomed that Councils will have the power to grant rate relief to local businesses that they view as needing specific assistance; however, our concern is that with the cuts in spending that many councils are being forced to make, the rate relief scheme may sink low on the Local Authority’s list of spending priorities and therefore the perceived widening of the scheme may in fact not materialise.

11. We are supportive of the Government’s move to remove the need for businesses to apply for rate relief. However, if the application of this power does become discretionary on the part of the Council then we feel that the reality may be that there will still be burdens on small businesses to try to prove their eligibility for the relief if in fact the Local Authority decides to consider claims at all. There is also a real need for local authorities to inform small businesses that they may be eligible for rate relief. Otherwise, small businesses may not be aware of their eligibility to claim the relief.

12. In conclusion, the lack of funds available to Councils at this time may make this move somewhat redundant and could potentially even reduce the amount of businesses able to take advantage of the scheme.

Part 4: Chapter 4 - Assets of Community Value

13. BBPA supports what we believe is the spirit of the Bill in this section and Government moves to protect community assets, including pubs. There are sometimes instances when a buyer is not forthcoming for a much liked community pub and the community may seek to purchase the lease or tenancy and run it as a collective enterprise/service. We are aware that this has occurred in some areas with some success and some of our members have sought to support projects of this kind, e.g. The Cherry Tree, Cherry Willingham in Lincolnshire, supported by Punch Taverns and The New Inn, Shipton Gorge in Bridport, supported by Palmers. We are fully supportive of this where it does occur in that it attempts to retain viable pubs which are often an integral part of the community. However, we are concerned that the specific drafting of the Bill might have the opposite effect in restricting the sale of viable pubs to private buyers who wish to continue to operate it as a pub.

14. As we understand it, ‘community assets’ of which pubs can be included will be listed in order to afford them a level of protection when they are sold. This would mean that when an asset is put up for sale a ‘moratorium period’ would come into play during which time the Community would have a the chance to get together a group and the means to buy the premises or the lease or tenancy in order to prevent the pub or other asset from changing use. This would appear to come into effect whether or not the sale of the property as a going concern to another party had been agreed or envisaged.

15. This would in effect blight the business-to-business sale of viable pubs which would be subject to this procedure, where there is no intention to remove that facility from the community.

16. We consider that the funding of a pub for purchase when offered for sale with a listing of community interest could be seriously hampered if the only exit route was to offer the property to the community to purchase, as this may have a significant effect on its long-term valuation. There is also the question of where funding for the community will come from and whether banks would be prepared to invest in such properties. If the community-owned operation failed the property would be devalued further.

17. The community may in effect become "a special purchaser" to the extent that they would be the only party who could bid. If a property is offered on the open market as a trading concern then surely there needs to be fair competition in the open market.

18. We would only see the proposal effective if the property had been closed and was being subject to a proposal for alternative use or demolition, unless the pub can be proved to be viable to the local planning authority.

19. We had understood that the intentions of the provisions of the Bill in this regard were to prevent the loss of community facilities in those communities where the operator, whether it be a company or an individual freeholder, sought to close the business and utilise the land/building for another purpose, such as private housing.

20. The clauses in Chapter 4 do not appear to achieve this aim but do prevent the sale of pubs listed by the local authority as a going concern. This would not only present a problem for pub owners but would also similarly restrict community groups who have purchased the business and who wished, for whatever reason, to sell it on to a commercial party or indeed another community group. This is not an unlikely scenario, as in some instances community groups may struggle to run the pub effectively and themselves run into financial difficulties. In such circumstances they may find themselves without a quick exit route as the sale by such a group would be similarly blighted if the pub remained listed.

21. The Association understands the desire of the Government to preserve as much of the community’s assets as are sustainable and supports the concept of community ownership if the commercial will to operate a pub is not forthcoming. The Bill as currently drafted, however, does not achieve this objective and we would urge the Government to look carefully at the drafting in this respect.

Protection of Local Services (Planning) Bill

22. The Private members’ Bill which was recently going through Parliament, sponsored by Nigel Adams MP on Protection of Local Services (Planning), contains provision to protect community facilities from demolition or change of use in planning law.

23. We consider that protection against the application for change of use would be a much more sensible safeguard of community assets like pubs than restricting the sale of pubs per se.

24. In the Parliamentary questions before the Second Reading of the Localism Bill, Pubs Minister, Bob Neill MP expressed his intention to work with Nigel Adams in order to best co-operate over the areas of common ground with his Bill and the Localism Bill.

25. We would therefore urge you to consider incorporating this mechanism into the Localism Bill so that the community asset in question goes into a Moratorium Period in which the community can attempt to gain the means to purchase the pub, only if there is no sale to a commercial party forthcoming or the pub is to be demolished or there is an application for a change of use. We believe that this would have the desired effect of preventing the loss of assets of community value, without preventing the commercial sale of a viable pub.

February 2011