Pub Companies - Business, Innovation and Skills Committee Contents

Written evidence submitted by Pete Leary

The Loggerheads Pub was the last remaining Public House and Inn in what was known as Narrowmarsh, (now called Cliff Road) an area immediately South of the Lacemarket in Nottingham's City Centre. It was said to be the 4th oldest surviving pub in Nottingham and dated back to around 1640. For centuries, this was a notorious area and historically dates back to the 9th century. The pub itself was once at the heart of Narrow Marsh and was frequented by Dick Turpin in 18th century. Today, although not a pub, the building is the only surviving remnant from the area and its fascinating but unmasked past. This history is close to extinction but should and still could play a major role in education, tourism, entertainment and economic growth for Nottingham and the wider community.

In December 2005, I signed a lease assignment with Enterprise Inns and paid £40,000 for the remaining six and a half years of a 10 year lease on The Loggerheads Pub. Prior to this, Enterprise arranged for me to have only one meeting with a regional manager in order to establish what my intentions were and to agree the monthly rent. When I questioned why the rent was going to be higher than advertised on the sales particulars, I was told that VAT had been applied, so I checked the calculation and signed an "agreement in principal". Only when I had signed for the lease and taken keys for the property did I receive an invoice for the initial rent payment which showed that the rate agreed, was in fact exclusive of VAT. This was to be the start of a great "partnership"! I believe that was the word that the regional manager used.

Within months of me taking on the lease, a major redevelopment commenced on my doorstep; the building of the Nottingham Contemporary Art Gallery, which completely cut off about 80% of my passing trade due to the closure of a pedestrian Right of Way between the City Centre and our location. On approaching Enterprise for some help in dealing with the City of Nottingham Council, the Planning Department, the Highways Authority etc. my area Manager didn't even want to hear about it, said it was my problem; some partnership!!!. The closure of this Right of Way lasted for two years and when I approached the Council I was told that compensation was "out of the Question".

The whole ludicrous fiasco cost me, my friends and family £150,000, wasted years of my life, left me homeless, unemployed and penniless. It also meant the loss of one full time and 2/3 part-time jobs for local people in the community.

So, to get to the point about pubcos and the tied agreement, here are the basic terms:

—  Pay a premium to take full responsibility of a building belonging to a pubco.

—  Pay for all maintenance and repairs other than structural (ie boiler replacements, central heating replacement, rewiring, PAT testing, fire alarm systems, emergency lighting systems, external lighting, fire doors, fire closers, re-glazing, re-roofing, tree pruning, garden maintenance, drain clearing, etc), but if they are structural, expect the pubco to send a surveyor out to argue that the structural fault has occurred as a result of poor maintenance on the leaseholder's behalf. The so called "partnership" suddenly becomes a "Buyer Beware Partnership". I lost the use of two out of five letting bedrooms because Enterprise refused to fix the leaking roof.

—  Pay rent without a fair platform to negotiate. (ie not related to any other open market contracts with product ties).

—  Pay an annual increase in rent regardless of sales. (Initially undisclosed at the start of the agreement).

—  Pay for all upgrades to the property with regards to local and National authority regulations. (Fire, electrics, gas, licensing, environmental health, noise prevention/double glazing, public liability, disabled access, police).

—  Pay for redecoration of the property both internally and externally every three years.

—  Pay for insurance of the building at an extortionate rate through pubco.

—  Pay for separate building insurance independent from above (as part of the agreement).

—  Pay for cellar maintenance.

—  Pay for additional security surrounding the premises.

—  Pay for products from pubco at extortionate prices under the terms of the agreement.

—  Pay extra for these products as they increase with little warning and without relation to any other pricing.

—  Pay for private delivery services if products are not delivered. Enterprise will not deliver unless you have paid up front—"Partnership".

—  Pay extortionate prices for the use of gaming machines within the premises.

—  Pay for damaged sound equipment due to water ingress from a structural issue and suffer the loss of revenue from music nights for three months waiting for Enterprise to carry out the repair, only to then have to fix it myself due to the total incompetence of their contractors.

—  Pay for fines incurred when accused of buying out.

—  Pay for bailiffs fees when threatened with non-payment of invoices because you have no passing trade and you can't let your bedrooms.

—  Pay for interests and repayments due as a result of borrowing money.

—  Pay for solicitors to avoid prosecution or legal proceedings and....................

If you're not bankrupt and have not emptied the pockets of all of your family by this point to avoid legal proceedings, then:

—  Pay for the remaining term of the lease (including fees, interests, taxes and expenses).

Although my story is my side of one encounter with a pubco, I wish to express my concern for the problem for pubs in general.

In the Licensing Act 2003, four licensing objectives were set out:

—  1.  the prevention of crime and disorder,

—  2.  public safety,

—  3.  prevention of public nuisance, and

—  4.  the protection of children from harm.

Since then, the responsibility of fulfilling these licensing objectives has been put solely on to licensees and it is extremely difficult to achieve this with so many outgoings from a small business.

If the government want to see pubs succeed whilst adhering to the objectives then they need to make small businesses more aware of the costs involved in the mandatory requirements of local authorities.

More so, they need to abolish the tie so that there is a clear understanding of the rent and rates. The tie model has catastrophically failed and is no longer sustainable or redeemable.

In conclusion, I feel that I was mislead from the start with Enterprise and mistreated throughout! In particular, they did not adhere to their own contractual obligations with regard to the structure of the building and ignorantly continued to threaten and charge me regardless. For this reason, I previously wished to make a claim against them but can not afford to do so. I hope that in the future there will be more support for individuals and small businesses who are bullied by the likes of Enterprise.

Pubcos should have a built-in understanding of their industry and should be able to adapt and support their employees and tenants as they all play a vital role in the cultural and social content of Great Britain. Real Estate Investment Trusts who aim to clear debt by bankrupting small businesses and families need to be a thing of the past.

Make way for the pub revolution, let the new pubcos support the industry and local production and help discourage the supermarket's anti-social hangover.

Make way for the pub revolution!

Ban the tie! Ban the tie! Ban the tie!

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© Parliamentary copyright 2011
Prepared 6 October 2011