Death of the English pub
Pubs are not dying, they are being massacred.
We have always seen pubs go under, bad landlords, pubs in the wrong place, but what we are now seeing is not pubs dying, they are being massacred, we are losing 26 pubs a week. We are seeing ethnic cleansing of the English pub by zombie pubcos.
the tied pub
Traditionally we had the tied pub, with a few of what were known as free houses.
Tied pubs were tied to a brewery. This model more or less worked. The brewery had an outlet for its beer in the pubs that were tied to the brewery. It was in the interests of both parties, the pub landlord and the brewery, as a successful pub meant the brewery sold more beer.
There was a little crack in this model, well actually more than one crack.
The pub landlord was restricted in what could be sold in the pub, the output of the brewery, whereas the free house was free to sell whatever it chose.
For the drinkers in the pub it meant restricted choice and where a regional brewery was the only player in town, higher prices as no competition.
Lincoln was a rare exception, several different breweries had pubs in the town, this gave a wide choice of pubs, of beers and lower prices.
The breweries were exploiting their local monopoly, the government stepped in and forced the breweries to sell off a large number of pubs. Unfortunately in kicked the Law of Unintended Consequences, and into the opportunity created, stepped the zombie pubcos.
Pub companies, aka pubcos, were created to buy the pubs that came onto the market. They bought tens of thousand of pubs, creating large pub owning companies, that then dominated the market.
Pubcos, lacking money, borrowed heavily, using the pubs they acquired as collateral. They now have huge debts running into billions of pounds.
As companies, the pubcos are not viable, they are not returning a profit, can barely cover the interest payments on the debt, and not a hope of ever paying off the capital.
The banks maintain the myth pubcos are viable companies, as can then reside on the asset side not the liability side of the balance sheet.
The only way they remain in business is by screwing pub landlords, by charging over-inflated rents, and forcing the pub landlords to buy drinks from them at often double the market rate. Then when the pub fails, sell the pub for redevelopment.
Greg Mulholland MP, who chairs the All Party Pub Group, has described what is happening as a ‘slash and burn policy’. During a recent House of Commons debate he described the two largest pubcos, Enterprise Inns and Punch Taverns, as ‘zombie companies’ which do not pay dividends and ‘have no growth plan or export potential’.
Greg Mulholland added: ‘They just about pay the cost of their debt by selling off their assets. That asset stripping is happening now — slash and burn.’ He said that between them, these two pubcos ‘collectively disposed of more than 5,000 pubs between 2008 and 2012 — one third of all their pubs’.
Reward for failure. Ted Tuppen, founder and chief executive of zombie pubco Enterprise, received a basic salary of £640,000, a bonus of £329,000 and pension contributions of £160,000 last year.
Often it is claimed the pubs are failing because they are not viable. True, they are not viable tied to the pubcos, strip them of the pubco tie, let choose what to buy and sell, purchased on the open market, and they become viable.
For Punch Taverns, the average debt per pub equates to £640k [last year £593k] and they indicate the average value per pub of £643k [last year £597k] . Even if the extraneous “other” assets and borrowings were set aside the answer would be similar average debt £581k [£540k] and pubs valued at £585k [£543k]. Both the average asset value and borrowing per pub has increased over the past year. These indicate that the borrowing are just about equal to the property value. If nothing else, this is unsustainable, and raises a question mark on the value of the properties, have they overstated the value of the properties?
The average Punch Tavern landlord is earning only £15k per annum, if their 4096 pubs had been free of tie and owned by the current tenant their average profit would be just £62k per annum.
If you walk into a pub and wonder why they have such a poor choice on offer, why rubbish beers, why the high prices, do not blame the landlord, blame the pubco, as the landlord probably had little or no say.
Pubcos do not care if pubs go bust, if they do, they can sell for redevelopment. Unlike with breweries, there is no common interest in the pub doing well. For a brewery, if a pub does well, they sell more beer, if a pub fails, they have no outlet for their beer.
freedom and choice
A survey published by the Federation of Small Businesses said pubs wanted freedom and choice. 88% of tied pubs said they would be better off if they operated under a ‘fair rent’, 74% said they would spend more promoting their business, 74% said they would hire more staff and 65% said they would cut the price of beer. Almost all respondents (91%) would approach microbreweries for products.
Pubs tied to either Enterprise Inns ( around 6,000 pubs) or Punch Taverns (around 4,000 pubs) , felt they were the worst treated.
Free of pubco tie, landlords would be free to support small breweries, everyone would win, money injected into local businesses, better choice in the pubs.
Kirsty Valentine tried to do this in The Alma in Newington Green, Islington. She supported entrepreneurs, it went down well with her clientele. She got slapped down by pubco Enterprise Inns.
local communities local heritage
The village pub, is often the oldest building in a village, together with the village church and the local manor house. In a town, the pub will often be the oldest part of a street scene.
Pubs are part of our heritage. Heritage gives sense of place, a sense of belonging, enhances the quality of life. Destroy heritage, and you could be anywhere, Clone Town, all towns look the same, the same tacky High Street stores, no character.
Free of pubco ties local pubs are local businesses, they recycle money within the local economy, support local businesses, employ local people, provide community space, are often active players in the local community.
There is a strong argument to be made for the social and economic value of the community pub. IPPR in their recent report Pubs and Places: the social value of community pubs, placed the wider social value of a sample of community pubs at between £20,000 and £120,000 per pub. It noted that pubs inject an average of £80,000 into their local economy each year, besides their cultural and practical community value.
To state the obvious, live music needs live music venues, be it the local pub, the indie coffee shop. One of the consequences of losing 26 pubs a week, is the loss of live music venues.
local and national planning
There is much that can be done at local and national level.
Too many local planning authorities are rubber-stamping what is put before them, ignoring local opposition and ignoring the damage caused to the local economy and local community.
To demolish The Tumbledown Dick for a Drive-Thru McDonald’s, the local planning authority obtained legal advice to ignore it was an Asset of Community Value, to ignore health as a planning matter. Legal advice the committee did not see. Following the rubber-stamping of the planning approval by his committee, the chairman of the committee bragged how pleased he was that the committee had agreed the deal he and a fellow committee member had stitched up with McDonald’s behind the backs of the local community!
Is the pub registered as an Asset of Community Value under the Localism Act? If not why not? ACV status gives the local community first refusal to buy the pub,should it be put on the market, and six months in which to raise the money.
Is the pub locally listed as a building of local historical importance? If not, why not? Does the local council have in place a policy of listing local buildings of local importance? If not, why not?
Currently, no planning consent is required for a change of use for a supermarket, a restaurant. This needs changes to the national planning rules.
Against very strong local opposition, the boarded-up Wey Inn in Godalming has been acquired by Tesco. No planning consent for change of use is required.
The Tumbledown Dick
The Tumbledown Dick is an old coaching inn c 1720s. It was located on tracks on the desolate heath, long before Farnborough existed, where it nows sits boarded-up on the main road.
The Tumbledown Dick closed in 2008, prior to then, a popular live music venue.
The Tumbledown Dick has holes in the roof, water pours in every time it rains. It has been subjected to wilful neglect. The local council has refused to serve enforcement notices.
Last month, against widespread local opposition, planning consent was granted to demolish for a Drive-Thru McDonald’s.
Planning officials instructed the planning committee to ignore Asset of Community Value status, ignore health. This was claimed to be based on legal advice, legal advice no one saw, legal advice it was subsequnty denied had ever been given. The committee chairman later bragged how pleased he was his committee had approved a deal that he and a fellow committee member had brokered with McDonald’s.
The same councillors and the local member of parliament who were happy to meet with McDonald’s and cobble together a dirty little deal to demolish the pub for a Drive-Thru, refused to meet with the local community who were fighting hard to save the pub and raise the money to buy it to run it as a community pub and arts venue.
One of these councillors, the only one not on the planning committee but in whose ward The Tumbledown Dick is located, the day following the planning committee granting planning consent to McDonald’s, gloated on his blog that he was lovin it, a few days later, to rub salt in the wounds, he suggested Farnborough should have a live music venue. He has now posted on his blog the local community should hand over the money they have raised and cooperate with the local council, and at the same time inferring the money was raised under false pretences.
Someone within the local council is believed to have claimed a £20,000 finder’s fee from McDonald’s. McDonald’s refuse to say who.
The Lord Nelson
The Lord Nelson is a 200-year-old pub in the Lincolnshire village of Dunholme, not far north of Lincoln.
The Lord Nelson has been sitting derelict for about a year. Earlier this year it was acquired by the Co-op.
Against strong local opposition, the local council has granted planning consent for it to be demolished for a Co-op supermarket.
The Co-op was founded by the Rochdale Pioneers, to give local communities a stake in local shops, local businesses.
Even at this late stage, the Co-op should do the decent thing, lease to the local community to be run as a community pub.
The Alma,a Victorian pub in Newington Green, Islington, was a pub to avoid, that is until Kirsty Valentine took over as landlady.
Eleven years later, a lot of hard graft, The Alma changed from a pub to avoid to a pub you would wish to visit, CAMRA awarded London Cider Pub of the Year.
Kirsty knew what her customers wanted, real ales, real ciders, pubco Enterprise said no, she could only sell what they dictated, had to be bought at nearly the double the market rate.
Friday morning, The Alma was boarded-up. For Kirsty the loss of her livelihood, the loss of a business she had worked so hard to build up, the loss of her home. For the locals, the loss of their pub.
Closure of The Alma exposed the myth that pubs are closed by bad landlords. Pubs are not closed by bad landlords, pubs are closed by bad pubcos.
The Wey Inn
The Wey Inn in Godalming has been boarded-up for about a year. It has been acquired by Tesco to turn into a supermarket.
No planning consent is required for the change of use.
The Eagle Ale House
The Eagle Ale House is in Battersea in London. It is run by Simon Clarke together with his business partner. Until recently, they both worked up to 80 hours a week, each earning £12,000 a year, but despite their best efforts, they have had to take second jobs.
Simon Clarke is a prominent campaigner for pub reform, supports Fair Deal for Your Local, a campaign to get better deals for pubs.
The Crown Inn at Pucknowle in Dorset is the local pub, the village inn, and the local community shop.
The Anglers Rest
The Anglers Rest in Bamford in the Peak District National Park in Derbyshire, is a community pub, or as the local community call it, a community hub. It will house a cafe, the local Post Office, be used for art exhibitions.
With its rescue by the local community, it is now the only surviving pub in Bamford.
Community pubs, free of pubco ties are viable, pubs tied to pubcos are not.
No 42 in the Top 100 most read articles on Medium, November 2013.