Is it last orders for Britain's pubs?

Some may believe that the pattern of this government during the wretched coronavirus pandemic has been to announce measures with impressive vim and vigour only for their intentions to be let down by a failure of having done the vital legwork and consultation beforehand.

It’s not for me to make any judgement, but it is clear that the pub industry urgently needs a statement providing clarity and direction unless the entire sector is to be irredeemably damaged.

July 4 – the earliest date the government has said the hospitality sector could reopen – is just 16 days away yet operators are entirely in the dark as to whether they will be able to do so.

Pub operator Oakman Inns has today unilaterally decided it will reopen on this date as owner Peter Borg-Neal has clearly been driven to distraction by the complete failure of this administration to give him information.

If he is to open by this date, he knows he needs to make it Covid secure and that requires time and work.

The British Beer and Pub Association, alongside several pub operators, has pleaded with the government for a decision on reopening dates and the 2-metre rule by today – Friday June 18.

We know a person is more likely to catch the virus when closer than 2-metres yet most other countries have reduced this measure and are opening up. The number of cases in this country remains stubbornly high but is falling and deaths – especially in London and a couple of other areas – are very slight. There is obviously a balance of risk – this is well known; the lack of a decision, though, baffles many.

This evening, I’ve received a set of demands from the Campaign for Pubs - an organisation run by former Liberal Democrat MP, Greg Mulholland who has worked over many years fighting to keep pubs going.

Here are the demands - will the government help at all? One can only hope.

The full list of the 10 Points to Save Pubs is: 

1. A definite date for opening NOW! (by Friday 19^th June)

2. Social distancing of 1 metre - not 2 metres (or most pubs simply cannot open)

3. Clear full guidance for pubs and insurance companies to be issued by Friday 26^th June – pubs need real clarity about any physical infrastructure requirements, and also about specific responsibilities and liability issues, so that they can be properly insured under fair policies which will be honoured 

4. Relaxation of licensing restrictions where extra spaces would help smaller pubs operate more viably and safely 

5. A strong mandatory Covid-19 rent code of conduct including a statutory right to a rent review for all pub tenants 

6. A rent-free period for all pubs, and an extended period of protection from landlords if rent cannot be paid

7. Continued financial support for staff – extended fully-paid furlough where pubs are unable to viably/safely trade due to continued Government restrictions  

8. VAT to 5% for at least 12 months - the only sensible way to help with reduced margins, as any price increases would reduce trade even further

9. Business rates reform - announced now and implemented in April 2021 – and rates relief for all pubs until a reformed system comes in

10. A 12 month ban on all change of use for pubs – pubs need protection in the planning system now even more than ever

A timid launch for timid pub reforms

If the press launch is anything to go by, then tied publicans should be wary of the government’s pub reforms plans.

For the first time since the botched coup against Nick Clegg, the Deputy Prime Minster and Liberal Democrat leader met in public with Vince Cable, the business secretary, in a Piccadilly pub to unveil the long-awaited proposals to give tenants a bigger say in negotiations with pubcos - the large, often heavily indebted, property-companies which own about 25,000 pubs across the country.

Such is the level of trust between the two men that the press were kept outside the Queen’s Head, left in the rain, unable to hear a word. All that was released were a few sentences, with Vince Cable saying: ’Far too many landlords feel their income is squeezed by big pub companies, so today we are taking action to make sure they get a fairer deal.’

Even the venue chosen for the launch left a lot to be desired. The Queen’s Head is a very distinguished pub in the heart of the West End, but it is independently owned and, therefore, will not be affected by these proposals.

As for the measures themselves, they are not as sweeping and radical as the campaigners would have hoped. The reforms will allow tenants, tied to companies like Punch Taverns and Enterprise Inns, to request a rent review if they have not had one for five years, and to see the information companies use to increase rents. (For background on the issue, see here)

Tenants would have access to an independent adjudicator who could impose sanctions if a new mandatory code is breached. Tenants would also be able to ask for an assessment to see whether they were better or worse off than free-of-tie tenants.

But there is no market rent option, no relaxation of the tie. Tenants will still face ground rent and be forced to buy supplies through their owners.

The reforms leave the pubcos pretty much as they were. Punch and Enterprise remain ’zombie’ companies, as Greg Mulholland claimed in the House of Commons in 2013. And vocal campaign groups, who many might think would be on the side of tenant publicans, bemoan any intervention by the government.

For example, Brigid Simmonds, the chief executive of the British Beer and Pub Association, said:

'While we welcome greater certainty and clarity after such a long period of debate, we are disappointed that the government is seeking to introduce potentially costly legislation, with the disproportionate costs of a statutory adjudicator, rather than supporting the existing, and evolving, system of self-regulation.'

It would be a tough ask to find any tied publican who would defend the current system of self-regulation.

There will be opportunities as the legislation passes through parliament to amend these fundamentally timid plans and Greg Mulholland, who has been one of the most prominent champions for reform in the House of Commons, has indicated he intends to do what he can. Responding to messages of congratulations, from Lib Dem president Tim Farron, pleased that any proposals were being discussed, Mr Mulholland replied:

We can expect to see the free-of-tie option tabled. It will get the backing of Labour, the Lib Dems and many Tories, so could still force its way into legislation.

But the most significant obstacle facing even these reforms is the fracturing coalition.

While Clegg and David Cameron try and portray an image of back-slapping unity, in truth, this Queen’s Speech sees a series of measures suggested by one side followed by another set from the other. It was noticeable that no Conservative figure has associated him or herself with the pubco measures. George Osborne is certainly nowhere to be seen and the pubs minister Brandon Lewis - who appears to have only a semi-detached relationship with his brief - is invisible. And, of course, there was no Andrew Griffiths MP, who represents Burton, the spiritual home of British brewing, and has spent years campaigning against any such reforms; surely he is not closer to the non-beer making pubcos than the pubs which actually sell the stuff?

While reforms have wide support amongst Tory backbenchers, there is no support from the Conservative benches in government; indeed, the delay to any proposals having been unveiled before now has not been the amount of responses to the consultation, as previously and preposterously claimed, but because of the extensive lobbying campaign by pubcos.

Lib Dem figures accept these measures are very much a ’first step’ - and Labour have already pledged to go further if re-elected - but they face a battle to get even these passed through parliament.

Time for a Fair Deal for your local

For those who love pubs, it has been described as a ‘last call to arms’.

Today publicans from across the country, with their loyal supporters and locals behind them, will descend on parliament to demand a Fair Deal for Your Local, an impassioned plea for the government to act to help save them.

For pubcos – combined with a series of poor short-sighted measures introduced by a series of governments, the smoking ban and the bargain-basement prices supermarkets charge for cheap, nasty lager –  threaten to make the sight of your familiar, welcoming local a thing of the past.

The all-too-frequently exploitative relationship between large pub companies – organisations like Enterprise Inns, Punch Taverns and Green King – and their tenants is something which has been allowed to fester for far too long.

About 20,000 pub tenants across the country have to purchase their beers, wines and spirits exclusively from their pubcos, and in exchange, they are supposed to benefit from lower rents.

Instead, far too frequently tenants are hit with above market-level rents, making their costs crippling forcing them out of business. A good recent example is the Chequers Inn in Whitney, the Prime Minister’s constituency. After twelve years landlord Simon Moore called it a day in May. While his annual turnover averaged around £230,000 a year, his rent to Enterprise Inns amounted to almost 40 per cent of this.

The reasons for these sky-high rents are various but a key factor is pubcos realised the inherent value of their property stock during the boom years and leveraged absurdly to expand their portfolios. When the credit crunch hit they were left with huge debts to manage.

But it is not just high rents which has heaped pressure on pubs. Selling pubs is frequently seen as a way out by pubcos. Tales of pubs being allowed to decay, driving away punters, until they are no longer financially viable, are legion. And the sector keenest to take advantage of this fire sale have been supermarkets.

It is not the fault of the likes of Sainsbury’s or Tesco’s. Why wouldn’t they be keen to get hold of prominent landmark buildings, well known locally and crowbar in a convenience store?

An edition of the London Drinker last year, the CAMRA magazine which can be found in many of the capital’s good pubs, highlighted this problem. The piece, by Roger Warhurst, began by saying: ‘Fifty London pubs have been converted or redeveloped for supermarket convenience stores since 2010, generally without the need for owners to seek planning permission for change of use.’

A pub’s licences are the real beauty for supermarkets. Large pubs frequently have all that is required – especially alcohol licences.

A recent victim of this loophole is the beautiful George IV pub in Brixton which Lambeth Council’s planning committee narrowly voted in favour of allowing to be turned into a Tesco Metro in May.

The only aspect of the application councillors could really object to was the installation of a disabled ramp – described by one as ‘zigzagging across the front of the building like a mark of Zorro' – and whether it was in keeping with a fine Victorian building. Of course it wasn’t, but as a pub is currently not viewed as viable the committee was left with the choice of an empty building or a shop. That the pub had been registered as a community asset as part of the government’s risible ‘localism’ agenda was of little import.

Today CAMRA have published research providing more evidence how pubcos are squeezing the life out of publicans. As many as 60 per cent of licensees tied to the big pub companies earn less than £10,000 a year, compared to only 25 per cent of the free of tie lessees. And at the other end of the scale, only one in a hundred tied pub licensees earn a salary of more than £45,000 a year, compared with one in five who run free of tie pubs.

So today, the pub trade gather. The government proposes reforms which could ensure tied lessees would be no worse off than those not tied, applying to all pub firms that have more than 500 pubs. It could be the start of a revival. With their parliamentary champions, like Liberal Democrat MP Greg Mulholland and indefatigable campaigners like @Lifelandlady , we should stand beside them and make sure the coalition delivers on its promises.