Wednesday 2 April 2014

A letter to Mr Oliver Letwin MP - Minister for Government Policy

2 April 2014

Dear Mr Letwin

Thank you for responding to my recent tweet regarding pubs.

I’ve been involved the licensed trade for almost 30 years. I have successfully operated numerous restaurant, bar and pub groups. I’m a founder member of the Fair Pint Campaign and a current steering group member of the Independent Pub Confederation (IPC).

In recent years pub businesses have been failing in unprecedented numbers. Much of the damage being caused to publicans, and the cause of so many of these pub failures, is the abuse of the beer tie and rental valuation systems by companies such as Enterprise Inns, Punch Taverns and brewers that copy them such as Greene King, Marstons, Fullers and Shepherd Neame. Organisations like the British Beer & Pub Association (BBPA) may wish to promote ‘other issues’ such as duty and supermarket pricing as the reasons for pub failures but this simply isn’t true. Higher taxes may not help but they aren’t closing pubs.

I'm concerned that you may have been misled about the intentions of the BBPA and also their misplaced claims that the members they represent have changed their ways. The BBPA represents large property owning interests in the pub sector such as the companies mentioned above. It’s simply untrue to suggest that they have changed their ways – they haven’t at all. More money invested in PR and marketing may offer this illusion but the reality, as tied publicans will testify, is somewhat different. It is in fact the activities of members of the BBPA that has directly led to many of the serious issues of decline in the pub sector that we are now experiencing. Those serious issues, tied pub closures for example, have recently escalated and contrary to BBPA and pubco claims this is not at all what you would expect from an industry on the up.

The BBPA does not represent publicans. It is paid for by property companies and brewers. The so called Beer Group (APPBG), Chaired by Andrew Griffiths and up until recently, managed by Robert Humphries, is paid for by those same parties and does not represent publicans. For far too long both of these organisations have pretended to represent the interests of real publicans whilst in fact furthering the interests of a small number of larger benefactors such as Enterprise Inns and Marstons. In truth, the BBPA and the beer group are far too conflicted to present a true and complete picture of the problems faced by pubs and it does not help with the real issues, nor does it confer credit on Government, when they seem so ready to be part of the smoke screen being thrown up by the BBPA, the pubcos and the beer group.

The current BBPA self regulated code of practice administered through PICAS, PIRRS and the Pubs Governing Body (PGB) are largely an elaborate attempt by that organisation to bypass proposed Government intervention. This is about the exploitation of tied UK publicans through the over-charging of beer and the manipulation of pub valuation and rental guidance. Some well meaning politicians have been sucked in by codes that only offer the potential to resolve peripheral issues. The central issue and the main stumbling block to progress is the rebalancing of risk and reward and this remains absent, as it always will do, from the self-regulatory process.

The problem is now, and always has been, that there is no mechanism in place to restrain pub owning companies from abusing their dominant position and taking more than a fair share of a pubs profits.  Even now, with all of self-regulated bluster thrown up by the BBPA and its members, the basic requirement, the right of a tenant to be able to trade in a free and fair market place, remains a distant and illusive pipe dream.

Rental guidance and the starving of pubs of investment by depriving them of profit has led to many pubs closing their doors as they are unable to compete with their free of tie neighbours. CGA strategy recently confirmed that two thirds of UK pubs closing were tied. This of course does not take into account the business failure rate in the tied sector (bankruptcy, lease surrender, forfeiture, eviction etc) which, if published, would paint a true picture of the damage caused by the beer tie in the UK. This figure, for obvious reasons, remains the pubcos best kept secret.

It is clear that those against 'meaningful' reform will wish to continue to promote a self regulatory regime, in the hope of deluding you and other senior officials into influencing a dilution of the Government's statutory proposals. The purpose of the exercise is to maintain the status quo whilst denying the pub sector the changes it so desperately needs. A self-policing, self regulatory code, such as the one written by the pubcos and large brewers, simply can’t work and it’s crazy to watch so many people get distracted from the reality by ‘code obsession’. It’s kind of a corporate, close up card trick. Lots of distraction up front while the real trickery continues under the table.

The sector is at a crossroads and a statutory code that includes a free of tie option (MRO) and enshrines in law the principle that the tied tenant should be no worse off than if they were free of tie is the only supportable position and will undoubtedly put the industry back on the road to recovery. It will create necessary change and promote a way forward that offers greater protection for existing publicans and newcomers to the industry such that they do not suffer the extraordinary level of exploitation that has been seen is so many cases up and down the country. We have had four select committee inquiries and a pub consultation survey all screaming for change yet the abuse leveled at tied publicans, even with so much political scrutiny, still goes on today.

I would welcome the opportunity to meet you should you feel it would be helpful and very much look forward to hearing from you.

Very Best

Stephen Corbett
07946 721117

No comments:

Post a Comment