Pubs are part of the social fabric of this country, but unfortunately many are in trouble. The Campaign for Real Ale (CAMRA) estimates that 26 pubs close each week. It’s also likely to get worse: research from R3, the insolvency trade body, indicates that 37% of the UK’s pubs and bars (equivalent to 5,500) have a higher than normal risk of entering an insolvency procedure in the next 12 months.
Each pub closure costs a local economy £80,000. There’s an impact on jobs too: the average pub employs ten people, and these are often young people who are finding it especially hard to find work at the moment.
Many factors are behind pubs’ gradual decline, including changing lifestyles and the increase in VAT. But there is no doubt that the unfair and unbalanced relationship between very large pub companies (known as PubCos) and individual landlords has been identified by CAMRA as a key factor in pub closures.
PubCos own three quarters of Britain’s pubs and usually require their licencees to buy all drinks products from them, at whatever price they determine. This is hardly a competitive market – instead it appears to be a broken one, where vested interests dominate and landlords are paid very low wages. It really surprised me to learn that CAMRA estimates that three fifths of landlords tied to PubCos earn less than the minimum wage and the majority make less than £10,000 a year. Given all this, the need for reform is urgent.
Labour has been calling for a statutory code to guide and regulate the relationship between PubCos and landlords since 2010. The BIS Select Committee concluded nearly 4 years ago that self-regulation was no longer viable for the pub industry and a hugely diverse range of groups in the pub trade all agreed with its recommendations, including CAMRA, the Federation of Small Businesses, trade unions, the Independent Pub Confederation and the Forum of Private Business.
Last week in Parliament, Labour called a debate on this issue to demand that the Tories and Lib Dems implement a code to help pubs. Unless this happens very quickly, there is unlikely to be time to get a bill through Parliament before to the General Election. Such a code would only apply to the largest pub companies – those owning over 500 premises. It would help to create a market which is fair and balanced to the benefit of consumers, brewers and landlords alike by implementing independent rent reviews, allowing landlords to go free of the ‘beer tie’ and ensuring rules are properly enforced.
Unfortunately, the Government refused to take action, instead choosing yet another delay whilst they “review” the response to the consultation held on this issue – responses they have had since June of last year. This is a tremendous shame because the situation facing many pubs is urgent and the sooner the law is changed, the more pubs will be saved — I would hope we can all drink to that.