The Fair Pint Campaign

News: Pubcos urged to release figures on pub forfeitures and surrenders

23rd May 2008

In a letter to John Grogan MP, responding to his comments on the Fair Pint campaign, Brian Jacobs, a member of the steering group of the Fair Pint campaign, said:

“We do, of course, welcome your recent comments, and your support for our campaign to persuade the Business and Enterprise Select Committee to review the implementation of the recommendations made by the former Trade and Industry Select Committee in 2004.  As you know, our campaign is very much concentrated around realising that central aim.

“There has been no suggestion over the past four years that the T&ISC recommendations were wrong.  They were considered to breathe transparency into the profit and rent equation and ensure that the tied tenant was not worse off than if they were free of tie.  If the Business and Enterprise Select Committee can be convinced to reinvestigate the market, it is our belief that they can only come to the conclusion that the 2004 recommendations have not been adhered to by many of the larger pubcos, precipitating the need for a statutory solution.

“We have deliberately not developed our campaign around being ‘anti-pubco’, but more from a desire to achieve transparency and fairness for tenants.  However, there is irrefutable evidence that the pubcos have shown a blatant disregard for the T&ISC recommendations.  This fact alone makes a strong case for the tie to be broken.  Had the pubcos voluntarily adopted the T&ISC recommendations I am sure that tied landlords would not feel so aggrieved.  If a different solution could be found that guarantees that tied landlords are no worse off than free of tie landlords and that they had a sustainable liveable income, then we would be very happy to support such a solution.

“Much has been made of the potential impact of a break in the tie on rent levels.  However, as any valuer or professional in this trade will confirm, while the consequence of the tie being removed could have some impact on the rent, the income and competition benefits would both be substantial.  The rent calculation would be fairly and transparently assessed using the Fair Maintainable Trade (FMT) for a pub.  Whilst it is conceivable that rents might increase for some pubs if the tie were to be removed, that increase would, at worst, be half of the decreases in beer prices that the pub would enjoy through dealing with the breweries direct.  This will encourage lessees and pubcos to work in true partnership, maximising potential profit for both parties, and helping to safeguard the future of British pubs.

“You have highlighted the figures quoted by the British Beer & Pub Association (BBPA) which state that managed and free-trade pubs appear to be closing faster than leased and tenanted sites.  However, these figures are incredibly misleading as they do not take into account pub forfeitures, and involuntary and voluntary surrenders of pubs.  When a tied tenant goes out of business, the pubco will not usually close the pub down but simply replace the previous tenant with a new tenant who, in turn, will invest substantial money into the business, only to often face the same difficulties as the previous tenant.  This scenario, which is typical of the situation that the campaign is looking to highlight, will not show up in the BBPA’s figures, as the pub has not physically closed its doors to customers.

“It is our aim to encourage an open, transparent and fair debate about the future of the UK pub market.  It is, therefore, vital that the pubcos publish the number of pub forfeitures and surrenders in their estates over the last three years.  Given your influential position as Chair of the Parliamentary Beer Group, I hope that you are able to put pressure on the pubcos to release these figures?”

ENDS

1. To arrange interviews or for further information, please contact Hugo Legh or Sarah Hyder at Connect Public Affairs on 020 7222 3533 or info@fairpint.org.uk.

 
 
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