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
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