Small Business, Enterprise and Employment Bill

Written evidence submitted by Barry Haigh (SB 07)

· As an ex-tenant of Marston’s which Andrew Griffiths (MP for Burton) supports I can inform you that there are three issues: one is the price of the rent, the second is the tie and extortionate price, and the third is the dilapidated condition of the big pubcos’ neglected properties.

· The only way to have fairness and openness, if this committee wish to do that, is to have market rent only for any pubco or brewery with more than 250 tenanted pubs. Then it would be up to the people to see and decide if they wish to risk their efforts and finances.

· As we are all aware, the small breweries have to work hand in glove with the tenant, but Enterprise, Punch, Marston’s and others have for so many years used the poor tenant as a cash cow: the more they work the more the large pubcos will increase the rent and beer price, just to pay for their inadequate and corrupt business practices.

· The picture (Annex 1 – not included) is an example of what Marston’s class as tenants’ accommodation standards. The building is listed as Grade 2. This is what the Government and Treasury have allowed of companies such as Enterprise, with only one managed pub, and Punch, with not many more managed pubs, with finances that read £180 million equity with a £2.3 billion debt pile. I hope that this committee understand they are asking the tenants to stand the pubcos losses and interest charges which works out at £34,000 a year per pub before rent and other charges are added, which the tenant has no control of. Please make this, and the fact that the tax payers own 86% of RBS – the bank that they have loans with – fully transparent to all. If the pubcos and breweries are acting as property leasing companies then why do none of the normal laws apply to them?

· One other point which you should be aware of is that the tenant’s deposit has no safeguard. Pubcos use the deposit for their cash flow unlike private landlords who have to keep it safe in a deposit account.

· All the faults and weaknesses have come about after the change which was made to the Beer Orders. What tenants cannot understand is why the government has allowed these rogue companies to continue trading for so long when it is easy for everyone to see it is a disaster waiting to happen. As you are well aware Enterprise's finances are very much the same as Punch and they have six hundred million pounds due on notes in 2016. Action needs to be taken now, and the only way is to have Market Rent Only.

· I myself would purchase at least one pub but after having three valuations of a property I find that the pubcos and breweries have over valued the pubs solely to keep a false asset value on the company. If you require proof of this I would be happy to supply you with it. The only argument that the pubcos and breweries use for the costs is beer duty: this is a false view. The largest percentage of cost is from pubcos and breweries charging 20% Vat and 40% mark up on goods supplied.

· If the committee and the pubcos want true and fair business then surely they could charge just a market rent so the tenants can, as with any other business, see if it is viable.

· I note that the price of beer sold to tenants from the breweries is vastly different from the price at which breweries supply the supermarkets. This cannot be because of the duty. I would suggest it is due to the greed of breweries and pubcos squeezing every possible penny from the already hard put upon tenants.

· If you want to stop anti-social drinking then it is the supermarkets with their offers on beers and spirits that are the cause, with people preloading before they leave the house. Tackle this problem and you will find that pubs are not the cause – they promote regulated drinking and refuse to serve anyone who has obviously had far too much to drink.

· There is a massive impact on and cost to the Treasury from tenants being on tax credits and other benefits as a result of the pubcos. I am aware the government owns 86% of RBS; I hope it is not now the case that this committee is expecting the British taxpayer to pick up the bill or indirectly support the pubcos with their greed.

· It would seem that the committee fears the pubcos folding. I know that people will invest and buy pubs but only at a fair price: prices in an open market will reflect and protect from pubcos and breweries trying to get back inflated prices so that their asset values are higher than the true value.

· All these points and the tenants’ views – not just pubcos and breweries views – should be made available. It is supposed to be a free market: we do not appear to have such a thing when it comes to pubs.

· There is one more point that the committee should be made aware of. Marston’s, Punch, Enterprise and the others use holding companies for pubs that they cannot get tenants for, and the licensing authorities have no control or knowledge of this. In some cases the operator that has been placed in the pub has no personal licence.

September 2014

Prepared 15th October 2014