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RSSThe silent crisis engulfing our pubs
Pub workers are battling against a corrupt set of markets rigged against them.
By Rowenna Davis Published 12 March 2012 12:17
Pub workers are battling against a corrupt set of markets rigged against them.
Mark Dodds sits opposite me in a café. He looks bereft as he clutches a little cappuccino. It's as if he was made to stand behind a bar, and he looks awkward in a chair. After sixteen years of running his pub in Camberwell, it finally closed down in September.
"We were making a profit until 2005," says Dodds, "We were still a viable business, we just got squeezed from the top. I fought and fought but in the end I had to let go... Honestly, it's a relief to be signing on."
A silent crisis is engulfing our pubs, and the reasons behind it are little known. It blows like a chill across the country, sweeping in and out of the boarded up pub fronts in our inner cities all the way to our remotest rural corners where punters huddle over their pints in their few remaining social centres.
Last year sixteen pubs closed every week. To put that in perspective, that's over two every day. In the last two years, over 1,000 pubs have disappeared from Britain's suburbs alone.
If this was just the result of market demand, the story would be a sad one. But the real story inspires anger. Pub workers are battling against a dark, corrupt set of markets that are rigged against them. Many are going down not because they need to, but because they're forced to.
Think of your local pub. The chances are that it will be "tied", meaning that it is most likely owned by one of the big pub companies. That people who are actually running that pub - the "Publicans" - are forced to pay rent at prices the owners decide (dry rent) and buy beer at the prices they set (wet rent).
These pub company giants are not household names. Enterprise Inns owns 6,000 pubs; Punch Taverns owns about the same. Looking from the outside, it's not easy to tell which pubs have ties and which don't. They don't have to be chains. Today over half of Britain's pubs are tied, and it's squeezing them into submission.
In one of the most shocking statistics, a recent IPPR report found that 46 per cent of publicans in tied pubs earned less than £15,000 a year, compared to only 22 per cent of non-tied publicans.
I'm not often disappointed by the FT, but when they reported on the decline of pubs in this article last week, they failed to tell this story.
"Tied pubs offer you promises of support and training and good beer prices, but they are often lies", says Jonathan Mail at the Campaign for Real Ale, "It's only after you've invested £50,000 of your own money that it doesn't turn out that way, and your beer prices suddenly jump arbitrarily high."
Mark Dodds said he had to buy £2,000 of beer a week from his pub company, when he could have bought the same amount for £1,200 from a wholesale supplier down the road. When he first took over the pub the rent was £32,000, but at the next round of negotiations his pub company wanted to more than double it. The 68 per cent hike they finally settled on, combined with another rise in the next review, bankrupted him.
"If I'd been able to keep our profits for extra investment," says Dodds, "I could have made that pub work."
Why would any pub company want to squeeze its managers in this way? Some say short-termism. As long as you gain the target level of return over the whole portfolio it doesn't matter if one or two get squeezed along the way. In some cases, it may even suit companies to force the publicans out of business so the site can be sold to a property developer. That explanation is at least consistent with the free market, but it still leaves a community without a pub.
We should remember that Britain's 50,000 pubs are more than watering holes. They are centres of our community, as Jamie Wright's sweet film aboutThe Railway in Wales shows. Interesting IPPR research has tried to put an economic tag on the social value of a pub. By factoring in things like the equivalent cost of holding community meetings elsewhere, they found that each pub offered between £20,000 and £120,000 of community value a year. That's on top of the £6 billion tax revenue and one million people they are estimate to employ.
This is not unrelated to the High Streets First campaign. At the moment, betting shops and pay day loan companies can move into former pubs without planning permission. "The Hope" in my constituency was the last pub on Rye Lane, now it's a Paddy Power. Local people feel that they are losing control of the high streets they love.
Of course pubs face other challenges. Demand is falling. Competition is increasing. Supermarkets are serving a new generation more interested in intoxication than conversation. With beer duty set to go up 10p a pint in the budget on top of VAT rises, there are worries that another wave of pubs will be pushed over edge, and free holders like the Railway are also at risk. But according to IPPR's research, it's still the tied pubs that are suffering most.
So what do we do about it? Dodds is exploring setting up a co-operative pub chain, The People's Pub Partnership, and it's worth supporting. It's also worth asking your local pub whether they are tied, and how they are being treated. With punters onside, publicans can increase the pressure on owners for a better deal.
As for policy, the Campaign for Real Ale is calling on the government to give publicans the choice to leave the tie completely at their next round of rent negotiations. Pub companies would still have a few years to make their ties attractive, and pubs wouldn't leave all at once. It wouldn't just help the publicans and the communities that treasure them, it would also be consistent with the free market.
Rowenna Davis is a journalist and author of Tangled up in Blue: Blue Labour and the Struggle for Labour's Soul, published by Ruskin Publishing at £8.99. She is also a Labour councillor.
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Rowenna Davis is a journalist and author of "Tangled up in Blue: Blue Labour and the Struggle for Labour's Soul". She is also a Labour councillor.
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42 comments
My guess is that several pubs a week are closing because a certain well known pub chain retails a pint of a given market leading beer or lager for up to one third of the e UKprice of your average village pub. That chain also opens at 7am to 7.30am typically and does not close against the advertised hours on the daily whim of a rural landlord. You also tend to get a certain consistency of cheerfull efficient service up and down the uk, as opposed to the lottery of good service or vile service of the rural landlord. The well known chain also offers full meal deals from less than £2.
The rural landlords are also in competition with a large range of supermarket deals which undercut even the well known pub chain.
Nevertheless the average rural pub landlord feels he has a divine right to expect us to drive however many miles, at howver much cost, to pay well over the odds for his variable service provided his eccentric opening times match our journey.
Well I say they should compete or close.
Apologies for the double posting below. They machine was being slow.
If you are interested in part ownership of the nation's pubs then please see the People's Pub Partnership:
www dot peoplespubpartnership dot org
The legal structure is just about complete and it's nearly ready for going to detailed business plan. If you leave your contact information there it will not be used for anything other than to keep you up with information about developments.
Regards
J Mark Dodds
For your diary: Tune in and turn up for THIS:
https://socialenterprise.guardian.co.uk/en/articles/social-enterprise-ne...
For your diary: Tune in and turn up for THIS:
https://socialenterprise.guardian.co.uk/en/articles/social-enterprise-ne...
I love pubs. Worked in them for years. Love the people, the culture, all of it. However, as it's now nearly £5 a pint and I can't smoke in comfort, is it any wonder I'm more inclined to have a drink at home?
I'm glad you mentioned betting shops. As the pubs disappear betting shops are springing up like weeds round my way (Harringay). It is a great shame but then our legislators have plenty of bars where they work and I understand they are pretty cheap too.
This is so true - the Pubcos are killing off so many of their tied leesees & tenants yrt the government does'nt want to know.
Smoking ban, cheap beer, and crass management companies insensitive to local needs. I used to go to the pub three or four nights a week. Now I have to pay three times as much for my beer, as I would for a carry out from the corner shop (four times as much as the supermarket, but I try to be an ethical shopper). And I have to go outside for a fag - fair enough in summer; but no dice in winter. My pub habit is down to about once a fortnight.
The answer, I believe, is to use legislation to tackle the corporate managers, and encourage proper free houses/better-regulated ties; and to partially reverse the smoking ban - probably allowing multi-room pubs to have designated smoking rooms.
Talking to a few publicans around my way the smoking ban didn’t have a big impact. The people who smoke still go to the pub. One landlady is blaming all this on companies like Enterprise who squeeze as much money out of you without leaving much for themselves and in doing so publicans give up. Also these Pubcos are more like property owners than rather than companies wanting to sell beer. They get the money anyhow.
"Last year sixteen pubs closed every week. To put that in perspective, that's over two every day."
Thanks, couldn't have worked that one out!
I wont say who my chain is but I will say I want to punch them ;-)
The council own the building (now up for auction) and charge my chain 28k rent, they charge 48k to us. They refuse to invest in the problems our pub has and like the article says: beer canbe gota lot cheaper if weren't tied.... I like this article...
as for the smoking ban: dont get me started ... that comment "you dont have the right to poison me" annoyed me to no end.... just as you have the right to go drink in a non smoking pub (or room) .... div
I am sure that the extra price for beer tied tenants pay for beer does have an effect.
However the smoking ban has had a far more disastrous effect than all other government interference. My figures are from the British Beer and Pub Association and are the number of closures.
1999 +400
2000 100
2001 600
2002 700
2003 200
2004 400
2005 400 pubs
2006 400
Smoking ban.
2007 1,409
2008 1,973
2009 1,352
2010 1,466
We have lost 12% of our pubs to the smoking ban and 150,000 jobs.
The real damage was caused by the Smoking ban,I have hardly been to Pub since it came in !,it took a big element away from the Pub and that was freedom!
Note to those posting for an end to the smoking ban in pubs:
You are entitled to damage your own health. You have no right to damage mine.
http://www.straightstatistics.org/article/claim-and-counter-claim-over-p...
The stats here have a 6% decline in the total number of public houses over 2.5 years. Is this really a "crisis"?
if i had to list in order the reasons i feel i'm dying a slow death it would be
1....the brewary and their greed on every level.
2....supermarkets,cant argue when people say,but we can buy ...for under a tenner.
3....smoking ban....i believe we as landlords have the right to choose wether we're a smoking or non smoking pub.
4...socialising of the future generation,who do not understand just what is to be had from a local pub,chatting together,compettative games,theme nights,charity events..etc...its all about online communication.not face to face.
the british pub is a traditional institute that no other country can boast of.here before ciggies and laws dictating what you can and cant do.we will lose something so important to british culture,but no one seems to care.its all about profit...and not the landlords i'll have you know.
Translating "loss of pubs" into "loss of jobs" is of course economically illiterate. If people are simply choosing to spend their money elsewhere, that spending will support jobs elsewhere, all else equal.
Pubs started to close in their thousands after the introduction of the smoking ban.
"The smoking ban was, if anything, 25 years too late."
So we should have culled the pubs 25 years earlier, then?
Utterly amazing that an article like this could have been written without any reference to the "elephant in the room". Anyone who knows the pub trade is well aware it has had a devastating effect, although the effect may be least in trendy areas of inner London.
@Alastair X
Yes at that rate within 30 years there will be no pubs left.
the smoking ban is a part of the problem but not the biggest one
firstly, breweries and pub ownership belong to multinational companies. the same ones that own the supermarkets that sell you cheap booze. all they are doing by eradicating the pubs is saving themselves money and cutting out the middleman ie the landlord with his expenses.
secondly, what a great coup for the powers that be and the social engineers. now, instead of having community institutions on every street corner where common people aired their opinions and discussed the weeks events, we now have a nation of mass media hoodwinked individuals whose social skilss are diminishing at a fast rate due to getting all their info from the redtop rags or the skewed tv news. they live virtual lives in front of the gogglebox all the time with nothing to take their mind off it.
and the easy to come by recreational drugs havent helped either.
I hate fag smoke, so now go to the pub far more often since the smoking ban.
It's just puffers pining for the old days of filthy, stinking pubs.
The smoking ban was, if anything, 25 years too late.
Sounds like a cartel of sorts. Another reality lassiez faire capitalism. Regulation can be a good thing after all.
AlastairX,
Whilst your point is good in many respects, you make a fundamental error. The fact that less money is being spent in pubs may not be that people are choosing to spend an equivalent in other areas, therefore creating an equal level of jobs. it may instead, and more probably be,that people have less money to spend in total, therefore creating lesser or no jobs.
The Pubco's are operating a Cartel, Eti and Punch are effectively the same company, but just try proving it! its got to the point now that when a pub is sold, the pubco's refuse to sell it to the leaseholder, as they want to ensure that they eradicate all competition for their other pubs,how they continue to Hoodwink the Competition commision is way beyond me !
This situation, on top of the smoking ban is a perfect storm.
Why the Government persists with this iniquitous ban when it is clearly so damaging I do not know. We should bring back smoking rooms in pubs.
We are trying to re-open our local pub as the first community co-op pub on a housing estate in the country. Think the co-op model is one of the ways forward http://www.facebook.com/TheBevy
The pubcos certainly must take a big slice of the blame for the number of pub closures. Once they decided they were more property investment companies than pub operators, and over-borrowed massively to support that strategy, the writing was on the wall, especially in the light of subsequent developments in the economy & property market. They were then obliged to unload property faster than ever to reduce borrowings. And the last thing they wanted to do was sell their pubs as competing pubs, hence restrictive covenants to prevent that. As you say, certain alternative uses to not require planning permission. And, in order to sell pubs for residential development it is often in the pubcos' interests to run them down pubs so that they are not commercially viable in support of a change of use application. Sure, the duty hikes don't help but, even without them, the pubcos would be shafting pub landlords on "wet rent" premiums anyway.
They have got too big and powerful. The government forced the breweries to sell their pubs off, supposedly to create competition, but this clearly has,nt happened as the big pubco,s are 10 x times worse also we were warned from Ireland what would happen with a blanket smoking ban. We would lose 25% of the smaller pubs.. No surprise there then. I can only assume that the government is not at all interested in gaining excise duty or in keeping people in work.
I would like to see an end to the smoking ban. The smoking bans have closed the doors on many pubs and bars accross the country.
Smoking is not illegal so why encourage the passing of laws that ban a legal activity and that desciminated against smokers? A smoker purchases cigarettes legally, pays taxes on them and then smokes them on private property. The owner of the establishment should decide whether to have a smoking ban or not - not the government. If people don't like a pub that allows smoking then they can go to a different pub. It's not out of peoples control to leave a pub that allows smoking. Blimey! Whats so diffcult about that?
I dunno? Its seems to me like a gross over-reaction and cruel that non-smokers are so intent on getting their own way that they have to legislate against the free choice of an individual on an otherwise legal activity. I mean, if someone wanted to open a coffee shop that targeted smokers who enjoyed a cup of coffee and a fag then they should be able to do so. I don't see a problem with this?
I'm in favour of an end to the smoking ban.
She fails to mention the widespred intimidation of owners of licensed premises by fundamentalist muslims. But then, this is the New Statesman.
The pubs are dying because of social change. They don't exist in a bubble. There isn't a government plot. I spend about 500 quid a year in pubs and if that level of spending is reflected across the nation then we still have too many pubs. I can think of 20 in that hotbed of alcoholism Newbury and a similar number in the surrounding area. Thatcham has 5 in 400 yards and another 5 within the town. It's just not viable. Sorry guys!
There's a lot of emotional claptrap spoken about pub closures. The fact is we were starting from an extremely high base when there was, quite literally in some places, a pub on every corner. I live in a large town - 100,000 - and half of them would not be lamented if they closed. Sorry, when it comes to pubs, I care more about quality than quantity.
Note that the smoking ban & the global recession came in so closely together that it's hard to differentiate between closures due to smokers leaving & closures due to pubcos' greed. From casual observation of my locals it looks as though there are as many smokers frequenting them as before, just clustering round the doors outside when they want to smoke. Personally I'm only really likely to go to a pub if I'm out for a meal, & I'm quite glad of the smoking ban when I'm eating. Wetherspoons pubs seem to be doing ok with their cheap food & beer.
Wrong target Frustrated Boozer it's the paramilitary wing of the United Methodists that's to blame.I have to push past a cordon of them every time I go to the gents. And don't get me started on the Sally Army and their sinister attempts to sell War Cry in the snug. But this is the New Statesman, you never hear about that!
16 a week closing? Is that shutting-down, or changing hands? The process known as Churn, whereby the tenant loses everything, the VAT and Tax don't get paid and the pubco scores another re-let with promise of repeating the cycle quite soon. How much do the pubcos earn out of Dodgy Dilapidations?
Ricardo,
well, how about we let pubs choose for themselves whether they want to allow smoking or not? There used to be two non-smoking pubs in Cambridge which did very well, thanks, out of their status and were quite happy that they had a nice USP to capitalise on.
And if - as we kept being told by the government - the "majority of people" had wanted a smoking ban then the pubs that chose to ban it would be booming, and could expand, and the ones that kept it would cough themselves into bankruptcy. In fact the thought occurs that if anyone had believed for a second that the majority of pub-goers wanted a ban then that would have been a brilliant solution.
Only they didn't, did they? Because it was a massive lie. And now the pubs are closing.
Sorry to hear that some people above have stopped going to the pub since the smoking ban. I have started going.
"The pubs are dying because of social change. They don't exist in a bubble. There isn't a government plot. I spend about 500 quid a year in pubs and if that level of spending is reflected across the nation then we still have too many pubs."
There is something in this. My father-in-law lives in a rural village with a population of less than 300. Nevertheless in the early 19th century it supported 11 pubs or alehouses. God knows how, but it probably had something to do with the presence of agricultural workers, the acceptability of a pint of beer with lunch, and relaxed licensing laws.
Now it barely supports one. So something has changed.
fuck the pubcos off and bring pubs into community ownership join CAMRA
The WHO (world health organisation) was the main instrument in the smoking ban, some idiot signed us up to their conventions, they are an unelected body who dictate what we should and should not do, in this EU WHO diktat regarding smoking bans they state that ventilation does not work, and to over rule property rights, and to use excessive fines, and make examples of people, I wish our hospitality trade had fought agaist the ban, like the Dutch and Germans did. I used to enjoy having a social life the ban destroyed that.http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ%3AC%3A2009%3A296%3A0004%3A0014%3AEN%3APDF
Brilliant one, Row!
Labour needs to put forward real, radical plans to boost growth and reform regarding pubs. I'd say that Ed Balls should propose a cut in beer duty, which could be paid for by a rise in cigarette duty. Also, Hilary Benn should be calling for a "right to try" whereby communities can come together and take over failing pubs in their own community, in order to save the industry.