Friday, 29 March 2013

Consult or be damned ...


Well, it's only taken the best part of a decade, dozens of hearings, a veritable mountain of evidence and countless contributions to the pubco debate, but the long-awaited government consultation on a statutory code to regulate the pubco-tenant relationship is upon us.

As I and many others have said, this will be a once in a generation chance to put the largest sector of the pub market into an equitable state. Lined up on one side will be the pub owning companies (both brewers and non-brewers) and on the other their respective tenants.

Its terms of reference have yet to be formally announced but one that must be included is the over-arching principal that recent committees and parliamentary debates have determined: that a tied tenant should be no worse off than a free of tie tenant.

For this to succeed the pub trade will have to convince our political masters of the current imbalance between landlord and tenant in the industry. The former will claim their business model is both fair and sustainable, whilst the latter will claim the opposite.

For me it's quite simple, when 66% of tied tenants earn less than £15,000 a year for their endeavours and most pubcos and tied pub owning brewers earn some four times as much from the same pubs there is a patent and inescapable imbalance. (I would venture the current parlous state of tied pubs is probably a major factor in the fact that 85% of pub employees earn less than the Living Wage, so if for no other reason than ensuring there is a more equitable division of profits to allow thousands of pub workers' pay to be lifted to this level, then there has to be change).

Not until the entrepreneurial skill and labour of the tenant is perceived to be of equal value to the capital commitment of the landlord and this is codified in strict regulations with a powerful adjudicator able to enforce them will the ailing tied pub sector be something we can all be proud of and not remain the current shabby example of sharp practice and unfettered greed on the part some landlords, that quite frankly as a veteran of the industry I am quite ashamed of.

Already the doom-merchants and nay-sayers are trotting out their customary warnings and some from quarters that would surprise you. For instance the operations director of the Federation of Licensed Victuallers Associations (FLVA) seems to think a free of tie option for tenants would be unworkable as he seems to think that the average pub tenant will not have the wit or resource to screw as good a deal out of drinks suppliers as their landlords. Obviously Mr Caffrey from the FLVA has never heard of buying groups or crowd-purchasing.

To his credit, however, he does point up the absurdity of limiting the effects of any regulation to those companies with estates in excess of 500 pubs. He is quite right to say "there should be one rule for all". So that's another over-arching principle to add to the list, no escape for small estates who can be just as ruthless as their larger counterparts. Besides which, even parliament cannot be thick enough to think that clever corporate lawyers and accountants aren't already working on ways to split the large estates into sub-500 sized parcels to avoid regulation.

Of no surprise to this writer is the usual clap-trap from Brigid Simmonds, the mouthpiece of the British Beer and Pub Association (BBPA) who claim to represent all pubs and brewers in the UK. The BBPA is a misnomer if ever there was one, as they represent not pubs and publicans but pub owning companies (some of whom brew beer, some who don't). She warns of "unintended consequences" of seeking a free of tie option for tied tenants ... I'm just wondering what those may be? Are such veiled threats the last resort of some of her incorrigible members? If so the battle may already be won for tied tenants as there is a mood afoot in this country that is distinctly set against bullies and corporate fat cats.

She goes on to tell us "it is vital for the trade that the tied model works well as a successful business model for both partners" ... it's a bit late for that love; after all the major pubcos have had more than enough time to prove the equability of their business model. Unfortunately for them, successive Business and Industry committees have seen the evidence from both sides and come to the quite natural conclusion the current business model of high property rents and even higher tied product gouging pricing is not working for the tenants.

Ms Simmonds says "it is not in their [pubco] interests for it to be abused" - perhaps she should have a quiet word with her organisation's tied pub owning members as many of them have been abusing the traditional tied model for nearly 30 years. Apparently the BBPA is "fully prepared for the model to be tested as part of the consultation" , no doubt they will be, for it's definitely in their interest for as little movement from the status quo as possible.

So the battle lines are drawn and it's now up to the thousands of tied tenants in the UK who think and can easily prove they are constantly on the shitty end of the pubco stick to have their say. It behooves all tenants (tied or free of tie) to contribute to the consultation and counter what will, no doubt, be a well-orchestrated effort by their respective landlords to attempt one final feat of legerdemain and avoid regulation and change.

I say both tied and free of tie tenants as the implications for both (and the free-trade sector of the pub industry) cannot be escaped ... for one, a truly free-market rent structure and drinks pricing environment where even the traditional "back street boozer" can generate sufficient income for its licensee to live on and who knows maybe even invest in the future of the national pub estate.

So dear reader, if you're a tied publican or you drink in a pub owned by one of the more rapacious pubcos then urge your host to have their say. The current state of affairs cannot continue with thousands of hard-working publicans forced into penury at the hands of morally bankrupt landlords and to do nothing to ensure future generations of publicans get a fair shake of the stick would be an abrogation of their responsibility that no excuses such as "I don't have the time" or "I don't do politics" will forgive ... unless, of course, you are happy with your lot, in which case spare a thought for many of your colleagues in the trade who are being systematically ripped-off. 

Remember when the well of "bottom end" tied pubs finally dries up who do you think your landlord will turn on next?

For a more succinct version of this piece ... look at this short message:

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1 comment:

Vickske said...

And the battle of of the smb's is one of the supported issues by Begian beer day , CHEERS