Waxing Lyrical...

...a commentary on beer or 21st century "democracy"? You decide...

Calling all pagans...

It's gonna be that time of year again soon...

Top Tips and more for your pub's Hallowe'en party... just click the pic...

I knew it was too good to be true...

Well I knew it wouldn't be too long before the current coalition government got back in to the swing of things after their summer break and the diversions of foreign policy and the economic situation lost their ability to stop ministers spouting utter nonsense.

Today, it has been reported the minister responsible for crime prevention, Jeremy Browne, has revealed the government's thinking on the future of Personal Licences having considered its extensive Alcohol Strategy consultation responses. Earlier this year it was mooted the current need to renew Personal Licences every ten years might be scrapped. Now the honourable gentleman is proposing getting rid of Personal Licences altogether.

(For those not in the know, there are two types of licence related to the sale of alcohol in the UK, the aforementioned Personal Licence ensures individuals receive adequate training to enable them to sell alcohol safely and responsibly, the second is the Premises Licence which regulates how venues such as pubs and restaurant and retail outlets such as off-licences and supermarkets are operated).

If you cast your mind back to 2003 when the current Licensing Act came into force there were, and are, four principal Licensing Objectives, to wit (and in the order they are enacted):

1.the prevention of crime and disorder

2.public safety

3.the prevention of public nuisance

4.the protection of children from harm

The minister should take note, the area of government he should be principally concerned with, the prevention of crime, is right up there at number one. Strange then, that his concern should be the 'administrative and financial burden' on businesses which sell alcohol.  This über-nuMPty reckons the move could save businesses around £10m a year as the Government finds the personal licence system may not always be the “most targeted and proportionate way to ensure alcohol is sold responsibly, for example, all premises – from the riskiest to the quietest – must comply with the system regardless of whether it is locally appropriate or not”

So with a conservative estimate of some 100,000 premises licensed to sell alcohol the 'saving' might be £100 per business. That's just under two quid a week, hardly a financial burden and not a great amount to worry about 'saving' in the grand scheme of things. I wonder if the minister has considered the "unintended consequences" of his proposals? But what are they? 

Well, I'm glad you've asked. The consultation (into personal licensing) proposes enabling targeted, local alternatives to personal licences through locally applied conditions to premises licences.(At the moment, all alcohol sales must be authorised by a personal licence holder, who must have completed training on the risks alcohol can present if handled irresponsibly. They must also notify licensing authorities if they commit any offence which suggests they may be unsuitable as a manager at licensed premises.)

Browne said that the decision came after "extensive discussions" with the trade, police and local Government during the recent Alcohol Strategy consultation (sic) and he reckons the saving would still allow licensing authorities to keep "a focus on measures to tackle crime and disorder at licensed premises. This consultation is an opportunity for licensing authorities, the licensed trade, police officers and the general public to share their views on this proposal. In particular, the Government is seeking views on whether it would cut costs for businesses and maintain appropriate safeguards against crime and disorder at licensed premises.”

Notwithstanding the continued focus and demonisation on the on-trade I wonder if Mr Browne, has carried out a full cost-benefit analysis? I think the hospitality industry should insist one be carried out on this proposal as the switch, ten years ago, from the old Justice's Licence system to the current licensing regime cost the industry hundreds of millions of pounds to implement. Does the minister think it would cost any less to needlessly re-jig licensing arrangements again?

Going back to his ministerial brief, does the minister think removing the professional qualifications a Personal Licence holder has to hold, the training licensees have to undergo to achieve those qualifications and thence obtain their licence is going to do anything to promote the four licensing objectives? Surely if one is serious about lifting those in the pub trade from "trades (wo)man" status to that of professional practitioners who operate their businesses with the best standards of conduct and adherence to the law, then scrapping the de minimus requirements of the Personal Licence isn't going to improve the situation.

There have long been rumblings from local authorities, who are charged with administering our national alcohol laws, for them to be allowed to set their own local licensing fees as opposed to nationally imposed rates. If this ridiculous proposal comes into effect and licensing is on a local basis with the myriad of regimes this will give birth to then only one logical conclusion can be drawn and that is licensing costs will sky-rocket as cash-strapped councils seek to further "monetise" the licensing process.

And let's not stop there. Under the current regime a Personal Licence holder can pretty well work anywhere in the UK (with a few minor variations in Scotland and Northern Ireland). There is one national qualification, one national set of criteria for obtaining and retaining the Personal Licence, so how would several hundred individual licensing regimes and requirements help keep costs down, let alone protect the licensing objectives? How would this help the labour market? Surely it would lead to less flexibility for individuals and businesses alike. I think Browne's colleagues in the DWP, the Department for Business and Industry, the Treasury, Numbers 10 & 11 might have something to say if he knackers the free flow of qualified licensees around the country. Even Lord Tebbit would be hard-pressed to suggest licensees "get on their bikes" and go where the work is if these barriers to free movement of labour are imposed.

What, pray minister, is your proposal for the role of Designated Premises Supervisor (DPS) on existing Premises Licences? At present the DPS is, what under the old system was the "landlord" or "landlady", the person responsible for ensuring licensing laws are adhered to. A DPS must, for now, hold a current Personal Licence. So who will be responsible under your mad-cap proposals? A new qualification and new licence for the DPS? How will this save businesses money? Local councils will still have to administer some form of licence for those who actually sell the booze, there will still need to be a minimum level of training and there will still need to be an "examining board" to ensure only those who pass the test get a licence. Who will pay for this? Who will pay for the transitional costs? Well my guess is it'll be business and ultimately their respective customers. Will there be a refund for the thousands of Personal Licence holders for not only their licence fees but the training they underwent?

Here's another thought, under the existing arrangements the Premises Licence has been fairly well protected from the short-comings of an individual DPS in the event of a review. What protection will there be for owners such as freeholders and yes, even the dreaded pubcos, who by and large hold the Premises Licences for their pubs and bars? I for one can see the potential for huge costs for owners of licensed premises when licences are lost on the football field of local council politics and local police commissioners' re-election campaigns.

Clearly Mr Browne has not considered the consequences of these proposals, perhaps he never had a wise old grandmother to remind him that "if it ain't broke, don't fix it". Equally clear is that "joined up thinking" isn't part of the minister's vocabulary either. For, imperfect as our licensing system might be now, think how completely bollixed it'll be if the hospitality industry and the off-trade have to deal with any number of variations. I can see the likes of Tim Martin having a nervous breakdown as he tries to reconcile disparate licensing regimes to the needs of his national pub empire. And pity the poor local government officers who have to implement any changes, imagine the (wo)man hours that'll go into dismantling the current system and building a new one.

I've maintained for some time this government has a schizophrenic attitude to its Alcohol Strategy and Mr Browne's latest wheeze does nothing to change my view. And to think I was doing so well over the summer, I'd managed to reduce my intake of pills, I'd stripped the padding out of my cell and nursey even had time for a well-deserved break. Back to the drawing board on that one. Thanks a bunch Mr Browne.

Well at least I won't have to change the motto on my coat of arms as it will firmly remain " Nutrix, medicina, nunc!"

Down The Rabbit Hole... or How I Learned To Love Irony

I'm not sure if it's the continuing high level of humidity, the increased levels of Vitamin D in my system from recent sunny days, the lack of sleep due to stifling nights, the side-effects of the anti-histamines I'm taking to ward off hay-fever or maybe it's just a combination of all of them, but I was struck by two announcements this week, one from HMG and one from Tesco. They have left me feeling somewhat divorced from reality and I am feeling as confused as Alice after her vertiginous descent as she dealt with the murderous Red Queen and the manic Mad Hatter and his tea party.

The former, in the guise of Home Office Minister Lord Taylor of Holbeach who released figures in the House of Lords that reveal that almost all the major supermarkets are selling large volumes of alcohol below cost; the latter masquerading as Tesco's UK Managing Director announcing plans for the "evolution" of its larger stores and hints this could be rolled out to its smaller "convenience" stores.

But any way back to the Red Queens' government's comments on findings in the latest available figures (for 2008) that 6 out of 7 supermarkets sold alcohol below cost, with a total of over 220 million litres of alcohol sold below cost price, ALMR Strategic Affairs Director, Kate Nicholls said:

“The Government’s admission of the scale of below cost selling and supermarket irresponsibility when it comes to pricing clearly demonstrates the need for swift, tough and effective action not only to tackle pocket money prices but to impose the same regulation of promotional activity in the off-trade as pubs, clubs and bars currently face.”

The problem was further emphasised with the release of the Smoking, Drinking and Drug Use Among Young People Survey (published 25th July), which shows that a quarter of underage drinkers bought alcohol from a shop, supermarket or off-licence and almost 40% got it from friends or relatives at home, with the majority of these purchases also likely to be from shops and supermarkets. This compares to 1% of young people who had obtained their alcohol from pubs. Responding to these findings, Nicholls said:

“With more than 70% of alcohol now consumed away from the safe, supervised environment of a pub or bar – and the latest research showing two thirds of consumers citing price as the main factor behind that – the time for government action is now. We cannot go on allowing a tide of cheap alcohol to undermine the good work responsible pub and bar operators are doing to deliver the Government’s public health and public order agenda.”

So the Red Queen government recognises the culpability of the off-trade's irresponsible alcohol retailing policies in society's relationship with alcohol and it admits pubs are, by far, more responsible in terms of under-age drinking at the very least. Both sets of figures (below cost retailing and where 11-15 year olds obtain alcohol) have been available since they came to office yet still no action is taken against retail giants such as the Mad Hatter Tesco. Fair enough, I hear you say, but these things take time, there were other priorities, we can't be anti-business...

You'll understand why I find a certain amount of bewilderment in the Red Queen government ministers decrying pubs on the one hand whilst on the other hand recognising, as does Lord Taylor, that perhaps we should be looking more closely at the off-trade. However, this is just the normal schizophrenic attitude this administration has to its 'alcohol strategy' and is not the true source of my Carrollian confusion, for this lies in the Mad Hatter's Tesco's business plans.

The Mad Hatter Tesco's MD has spoken this week of "retail destinations that are exciting, relevant and convenient”, Chris Bush told 'The Grocer' magazine the company wants to create destinations that would mean shoppers can visit a yoga class, pop into the dry cleaner’s, get their hair or nails done, or enjoy a meal, all in the same retail space. Bush said food courts were an “important part” of the company’s plans, with fresh food, coffee shops, and fast food options part of the offer. (I'll bet they are!)

Don't forget, of course, in two days the Mad Hatter Tesco opens a 'Giraffe Restaurant' at its Watford Extra store, with plans to open ten in total this year - and a new carvery-style concept the same day in Coventry. Bush hints at the rationale behind the retail giant's recent acquisition of the 'Giraffe' brand and his company's road map:

“In the past, large hypermarkets were popular because they offered a massive range of products and people liked being able to buy everything under one roof – it made life easier. The internet has changed all that - people don’t even need to leave their homes to go shopping and more people are using convenience stores for regular top-up shops. Our customers pay to put fuel into their car and drive away from their homes to visit us, so we need to give them good reasons to come to our larger stores.”

Mind you he's only echoing earlier comments this year from the White Rabbit his commercial director, Kevin Grace:

“We’ve been doing a lot of thinking about retail destinations and how our stores might become somewhere that people spend more time, as well as shop. With more general merchandise moving online, we have a great opportunity to rethink how we use the space in some of our larger stores. To put some of that thinking into context, it might be useful to think about the many different shopping malls around the world. In most cases, their food concepts are excellent and it’s one of the main reasons people go there."

On the same day as the Mad Hatter Tesco opens its first Giraffe Restaurant it will launch a new casual dining concept called "Decks" at its Arena Shopping Park site in Coventry and is planning to use spare space at its sites to install community rooms. "Decks", part of The Mad Hatter Tesco Family Dining Division, will feature carvery style decks – with hosts manning different serving stations. 'Decks' will offer “classic British favourites, from breakfasts and roasts to crumbly cakes served with a proper cuppa”. A job advert states: 

“Our food is on display and so is our kitchen team. Serving as a “Deck Host” means chatting, recommending to guests and carving fresh roasts. Behind the scenes is different as our “support chefs” are working at pace backing the deck, and that means clean plates and fresh food.”

And the architect of these abominations? Former Mitchells & Butlers chief executive Adam Fowle who has been advising the supermarket chain on its strategy to develop the Mad Hatter's Tesco’s portfolio of food and drink brands (which already included includes Harris+Hoole coffee shops and the Euphorium Bakery concept).

Meanwhile, the first "community room", which will be available for yoga classes, music lessons and birthday parties. The 600 square foot room in Coventry will be available free of charge and include tea and coffee-making facilities. The community room is similar to initiatives the Mad Hatter Tesco already runs in some of its stores in Thailand (run previously, yep you got it, by their newly appointed UK Managing Director).

I have a question to pose to those who will inevitably have to administer  the Mad Hatter's Tea Party Tesco premises licence under the 2003 licensing act: "How will you reconcile responsible retailing practice within the on-trade element of Tesco's premises with their irresponsible approach to selling alcohol in its off-trade sector, especially if they're contained within the same premises?"

Will you a) relax your approach to Tesco's retailing in its on-trade department or b) impose the same strict standards to its off-trade counter?  Or as Jeremy Browne might have it,  will Tesco's on-trade adventure fall within the category of "community premises", which will have less onerous licensing provisions of "low alcohol sales"?

A "virtuous" circle has now been formed... the pubcos labouring under mountainous debts divest themselves of "unsustainable pubs" run by "bad landlords"... these pubs are snapped up by mega-grocers... the government and local licensing authorities continue to turn a blind-eye to irresponsible alcohol retailing by the grocers... more people shop online with the grocers... drink more at home... and when they do eventually get their respective bums of their sofas and go out for a drink or meal they go to one of the grocers' hybrid on/off trade premises... fewer people use their local community pubs... more pubs are declared "unsustainable" by the pubcos... and there you have it, what my business dictionary describes as:

"A self-propagating advantageous situation in which a successful solution leads to more of a desired result or another success which generates still more desired results or successes in a chain"

And who said irony was dead?

From the mouth of babes...

 

...nuff said eh?

They Think It's All Over...

Last Friday (14th) the government's much vaunted consultation into the relationship between pubcos and their tenants closed amidst much congratulatory back slapping by certain sectors of the pub trade. Whilst the mutual appreciation is well-deserved one must voice a cautionary note on the danger of becoming over confident and more importantly reducing the pressure the reform lobby has exerted thus far.

It can be of no small concern pubcos kept their 'powder dry' until the very end of the consultation process, with little detail given of the "unintended consequences" for the pub trade that has become the latest mantra for the pubcos and pub-owning brewers. 

Only Ted Tuppen, CEO of Enterprise Inns, has stuck his head over the parapet to articulate the dread unintended consequences if regulation is the outcome of the consultation. He is widely reported as saying:

• "A material increase in the rate of pub closures, particularly smaller pubs and pubs in rural locations

• Closing off the industry to newcomers

• A “huge reduction” in the level of investment into pubs

• Reduced consumer choice, the closure of cask ale breweries and the dominance of international lager brewers

• Brewery closures, job losses, “and of course a massive tax hit to the Treasury"

 ... will result from regulation. Hands up anyone who believes anything Ted has to say, after all he stands accused of lying to Parliament in the past? 

So tell me Ted with the £10,000 average you spoke of to the Publicans Morning Advertiser potentially to be transferred from Enterprise Inns to each of its tenants if the RICS/BIS forumlae are applied, why would this result in increased pub closures? Ten thousand quid per pub might go a long way towards allowing your tenants to invest in their respective businesses and might just make them viable in the current economic climate. And that's not just a one off transfer of value, that's every year and in many cases £10,000 will be a huge underestimate.

As for closing off the industry to newcomers, if it means your much touted "low cost entry" for newcomers to the trade is brought under legislation ensuring a fair and transparent business relationship between tenant and landlord then so be it if a few prospective publicans decide not to risk it with your company.

Any property company that doesn't invest in its own assets is unlikely to attract the reduced number of would-be tenants (remember the industry will have been closed off to newcomers, leaving only seasoned veterans of the trade), so will there really be a huge reduction in investment and for many of your tenants would they notice the difference? I mean your company isn't renowned for the investment it makes in the majority of its tenants businesses, unless you're talking about your infamous SCORFAS?

And let's see if the mandatory free of tie option or guest beer provision is enacted in any regulations arising from the consultation whether this will mean less choice for consumers and fewer breweries. Despite your price gouging of both tenants and brewers there are more brewers now than in the past 70 years, with more sustainable tied pub businesses the rebalancing of risk and reward is likely to deliver, I would hazard a guess brewers will do just fine thank you very much. And whilst we're on the subject just how patronising can one person be with only one head? Surely it'll be consumers who determine whether micro or regional brewers do well out of them as opposed to the multi-national brewers? Given your attitude to tenants and MPs it's not surprising you think so little of the British beer-drinking population.

Ted I sometimes wonder whether you're a fit and proper person to be running a plc, if you think what might potentially be a £200 million injection into the pub market is going to result in less revenue for HM Treasury. If anything 20,000 tied tenants being able to afford to, oh I don't know, maybe pay themselves a living wage and become "good consumers" will result in increased revenue for the government and outputs for the economy.

20,000 tied tenants having increased confidence in their respective businesses and maybe investing in their pubs might even have a knock on effect as their customers realise mine host is not going to be the latest in a string of hapless tenants bankrupted by the Enterprise Inns "low cost entry" business model and is going to stay in their pub. It might even result in a couple of extra visits to the pub and increased customer commitment to the pub. That's gotta be worth a couple of hundred mill in duty and VAT as well. 

Maybe with 20,000 sustainable tied pubs the banks might offer up more lending to an industry in recovery? 

Who knows with all that increased confidence and lending maybe some of the chronic underinvestment by your company (and other pubcos) in the national pub estate might be put right as an army of local tradesmen and women repair the material damage done. Oh, and did I mention how this increased capital spending would bolster buillders'/decorators'/furnishers'/electricians' order books, which, will result in increased spending and profits for these artisans? Could it be that HM Treasury would see an increase in tax from them too? Stranger things have happened at sea Ted.

Anyway you can get the measure of the man from this:

“In my opinion, the consultation document is a disgrace. Biased and almost completely lacking in genuine evidence, it espouses as truth the opinions of a small but obsessive group who have been campaigning against the pub companies for almost a decade.

Fair Pint, IPC - they’re all the same people, including a high proportion of failed or failing publicans looking for someone to blame, or self-serving campaigners looking to make a turn.

For heaven’s sake let’s have a sensible debate based upon the evidence rather than hearsay and the prejudice of an MP who has never quite got over being called a moron.”

I'm sure I don't need to bore you with my ripostes to these sparkling observations... the evidence given by the 'tenants' panel' express more eloquently and passionately whether it's just a minority of malcontents and "failed publicans" or a tsunami of opprobrium. I wonder how many heads of other estates, even those who have less than 500 pubs, are thinking the same way? Ted Tuppen, whilst no longer the poster-boy for the pub trade, may well have articulated the prevailing sentiment within board rooms up and down the country. He may also have dealt their campaign to avoid regulation or exclude sub-500 estates from regulation a crippling blow with his latest outburst. After all it never goes down well to remind people whom one has lied to and insulted of the original calumnies and rudeness, especially if they have the power to put you firmly in your place. In Ted's case let's hope his place is a retirement home for the permanently bewildered.

At the close the consultation over 8,000 responses have been received, of which I'll wage a significant majority are from pubco victims in favour of reining in the pubcos, especially as CGA's Tenanted Pub Licensee Survey revealed (Monday 17th)  94% of tenants are in favour of regulation. Hardly a "small but obsessive group".

If there was any justice in this world Tuppen would be stripped of his CBE for the damage he has done to our industry, in the same way Fred Goodwin was stripped of his knighthood for the unholy mess he made of RBS. That being said it's a bit rich of Tuppen to opine thus: 

"Are we going to let a small group of campaigners and a handful of MPs bugger up our great industry?”

Ted it's the likes of you and the gone (but not forgotten) Giles Thorley, late of Punch Taverns, who have done the most to "bugger up our great industry". Admittedly MPs have a lot to answer for with crippling beer duty, high VAT and the smoking ban, however, their actions were carried out in the 'interests of society'. Your company and other pubcos don't give a stuff about society and certainly haven't given a rats arse for many of your tenants or cared unduly about what may still yet prove to be, the irreparable damage you have done to the pub trade. Your overarching drive has been greed and profit at all costs, the very worst type of capitalism.

Anyways, back to last Tuesday's committee session... a hint of things to come might have been given in the evidentiary session in the blustering and often combative performance of Brigid Simmonds of the BBPA. As ever with these events its the sub-text one has to pay attention to and in this instance I sense an almost cabalistic undertone and it centres around the "franchise option".

There was much talk of Wolverhampton based Marstons' franchise offering and to be frank I have little knowledge of how successful this is for their franchisees, although I'm guessing it's working just fine for Marstons or they wouldn't have put some 500 pubs over to this particular business model. (I shall be making it a mission over the summer to find out how their franchisees are fairing).

Whether or not the franchise option is fairer on the franchisee than many pubco agreements will be quickly be demonstrated if the pubcos seize on this as a way of circumventing any regulations arising from the pubco consultation as a way of doing 'business as usual'. The mountains of debt some of these pubcos are stuck with and the need to service that debt will no doubt make any franchise offering from the likes of Punch Taverns or Enterprise Inns just as disadvantageous to their franchisees as their current tenancies or leases are to their tied tenants.

BIS would do well to consider the increased murmurs about franchises and leave provision for franchises to be brought under the scope of the Pubs Adjudicator should the very same companies who have brought such ruination to our industry pursue their usual business model of exploiting their franchise "partners" as they have done with their tenants and lessees.

The nice nurse is bringing my little paper cup now with the lovely little pills... oh and she says if Ted's to lose his gong I need to suggest it to the Honours Forfeiture Committee...

Four Days In June...

Here is Ted Tuppen's letter to MPs:

Just one thing Ted... publish the figures, let them be verified by an independent expert accountant/auditor... the numbers can be anonymised to ensure no commercial confidences are broken... let's see if everyone else has got the Enterprise Inns (and other pubco) business model all wrong.

In the meantime if you want to know what your fair rent would be click here