Written evidence submitted by Michael
Bell
WHY PUBS
ARE CLOSING
- AN OVERVIEW
Thousands of column inches have been devoted to the
way that pub companies have literally run the British Public House
into the ground. This paper is more of a cry for help for the
thousands of otherwise well-run tied pubs in this country.
Since my original submission in 2004, I have been
involved as a founder member of Fair Pint and have recently suffered
a blatantly biased rent review at the hands of Enterprise Inns.
There is no code of conduct that could ever have saved us, even
if it had been as watertight as possible.
Without dwelling at length, the case revolved around
the fact that my wife and I took out a large mortgage to pay for
the creation of a hotel upstairs above our (Enterprise) Pub. The
lease clearly states that the effect of our works should
be disregarded. In other words the income from the hotel
should be deducted from the turnover before assessing the rent.
This is as opposed to just disregarding the cost of the works
- a figure £50,000 - £60,000 less a year
At the time Rob May was both the head of the RICS
arbitration panel AND head of rentals at Enterprise Inns (A title
euphemistically known as "Rent Boy"!) Mr May held both
these posts, right throughout the length of our arbitration and
right up until a week before the 2008 Select Committee enquiry
at which point he was forced to stand down in his (unpaid) RICS
role. Not to do so, would have been seen as a serious conflict
of interest. Also the whole choosing of the arbitrator was flawed
from the start and we simply didn't stand a chance, so "buttoned-up"
was the case. The result being an over rental by as much as £25,000
a year - the difference between success and failure. Mr May's
"fingerprints" were all over the case.
This massive over-renting coupled with the extra
rent levied by the tie, means that, despite the fact that we have
been pioneers throughout the last quarter century, our income
continues to fall annually. Because of this heavy penalty we are
unable to keep the pub in the standard that Notting Hill demands
and so we lose out to better-funded freehouses who can borrow
(even in this day and age) to fund their improvements.
The tie has long ceased to be the valid tool that
it once was and simply must go. UK products
WILL stand up to overseas competition, the general public can
see through all the smoke and mirrors of "reassuringly expensive"
and other such epithets. The British Public is going more and
more for "local". Which means value for money - no transport
costs and above all NO PUBCO COSTS.
We simply do NOT need a middleman between the brewer
and the licensee. British pubs need massive investment if they
are to survive. This can never, ever be achieved under the pubco
model. Greedy brewers, large and small, saw this as an opportunity
and hived off their pubs into property arms. Now all they are
doing is feeding their massive debt caused by their overspending.
Pubs MUST be offered first to the individuals
that are running them. Pubs MUST be owner-run.
If brewers are not happy, then they shouldn't have sold off the
pubs in the first place. The problem is that the sort of "free
spirit" that makes the British pub a success, does not want
to have someone who has failed miserably at running the pub themselves,
telling them what to do and overcharging them in the process..
There can never be fairness, no matter how thought
through the "codes of conduct". Dissolution of ALL pub
companies is the only solution and the best way to achieve this
is to simply limit the tie to brewers and then only to those products
that they actually brew themselves. Just as it always was.
This would leave us with managed (tied) pubs and freehouses -
nothing else.
Pubcos continue to divert criticism towards the Government
but it is they that are taking most money out of every pint. All
the Government does is limply try and defend its position when
what they should be doing is getting to the root of the problem.
This problem will NEVER go away until the pub company model is
put to rest.
Previous Select Committees have given these parasites
enough rope to hang us all.
We need action NOW and "freedom" for pubs
is the only solution.
WHY PUBS
ARE CLOSING
2 (FOOD FOR
THOUGHT) - OVERVIEW
2
The parallel between the care home scandal and
pubcos is uncanny. I read a newspaper
article and substituted the word pub for care home and it clicked.
Greed, securitisation, no direct interest in the inmates etc and,
if I ever hear the words "duty to the shareholders"
again . . . . . . .! A pub shouldn't have shareholders except
for those that are prepared to get behind the bar and give their
investment oxygen or spend heavily as customers. Hospitality is
a VERY personal; thing. It is impossible to be mine host at arms
length.
Financially the Government cannot afford to
have
— (1) Mass
unemployment from closed pubs. Remember its about 1000 employees
of Punch and Enterprise VS about 100,000 in their 13000 pubs.
— (2) Communities
falling apart.
— (3) Large
amounts of funds leaving the UK economy (to overseas bondholders).
— (4) Also
taxes from individual operating freehouses are bound to be greater
than those paid by the two vultures and their struggling pubs
(with their lack of customers due to over-pricing).
Pubcos make absolutely NO contribution to society
- (Unlike banks - and its not often we can say that!).
It has now got to the point where they have sucked everyone -
breweries, licensees and the public - dry.
(Tied) pubs are too expensive and people are simply
drinking at home. Due to an antiquated lease, I sell twice
as much untied beer as tied and its all down to pricing. £1
a pint less - at the same gross profit % incidentally - is VERY
compelling. It helps get people out of the house - even in Notting
Hill.
We need a two-pronged attack
Supermarket beer is too cheap, (tied and some greedy
freehouses') pub beer is too expensive and only the Government
can narrow this inequality. Even the APPBG's Humphries thought
that some sort of VAT mechanism should be levied on supermarkets.
Brian Jacobs even had the perfect VAT solution (in-store purchase
vs home delivery), but no one listened. I know it wasn't mentioned
at the meeting with Angela Eagle. It's a complicated subject,
and someone needs to join up the dots for Government.
Apart from the odd benign freeholder - we have
now got to the point where there is no room for even the leased
or tenanted models and certainly not if tied as well.
This is the point where pubs MUST be owner
run if they are to survive. No intermediary landlord can afford
to pour money into upgrading pubs. It is now, more than ever,
a lifestyle thing - 7/52, that's the lifestyle! Freehouses work
- think Wetherspoons. Leased pubs don't. See recent reports on
Punch in the City Press. Only their Spirit (managed house) sector
is doing anything. We keep reading "tenanted and leased pubs
are in the doldrums" - and it cannot get any better with
a desperately overstretched middleman (never a woman) in the loop.
This has become a property issue. Where property prices are declining,
so are pubs and even London and the Home Counties are only just
about holding up. Which ever way we look at it, the UK is in for
years and years of minimal growth and stagnant property prices.
The ability to be able to work from home is the one hope we all
hanker after. If that home is a pub, it WILL survive - especially
if it fairly priced and if it is the only ray of sunshine in an
otherwise stagnant community.
— (1) If
pubs are to survive they have to diversify - especially into Micro
Brewing.
— (2) To
diversify, they need funds.
— (3) To
get funds they must own the freeholds.
— (4) So
all pubs should be sold to OWNER/OPERATORS. ie Individually or
to managed house groups/brewers.
— (5) To
enable this, pubcos MUST be removed from the mix (before they
drag us all down with them).
Jon Moulton said it, Guy Hands said it. "The
pubco model is long dead" - so why keep it alive?
I simply do NOT subscribe to the notion put about
by some (that should know better) that if the tie goes completely,
then the foreign brewers will come flooding in. There are some
VERY good small UK lager brewers and they sell very well.
This is what competition is all about. Beer should be a local
thing anyway - a bit like vegetables, Transport costs will soon
level the playing field.
Just think. When pubcos have gone, we will look back
in absolute amazement at our complacency and to why we allowed
it to go on for so long. All we do is pussyfoot around ridiculous
"codes of practice". We are dealing with desperate
people here and frankly, their gloves have long since been lost.
Their only hope is that they lead us round in circles until the
property market improves - dramatically - by which time thousands
more pubs will have gone.
Being in the Portobello Road, I meet a lot of tourists.
The British pub is what they come here for - even if the Government
doesn't appreciate it. A Britain without its pubs would be as
about attractive as a Europe without its café culture or
the Caribbean without its beaches.
This has been going on since 2004 and it's the slowest
AVOIDABLE train wreck in our history.
FFPA sees a world of owner/publicans who will be
able to borrow: to improve their pubs, to close the price gap
between pubs and supermarkets and to diversify into other areas
such as micro brewery, store, cinema and post office, but we cannot
do it without your help.
GOVERNMENT MUST ACT ONE WAY OR ANOTHER - procrastination
is not an option.
| 
