Saturday, February 21, 2009

Publican. MPs ready to grill ministers on plight of pubs. 20 February, 2009. By Matt Eley.


APPBG must be applauded for raising this high profile meeting to look at what is happening to the pub industry.

It’s a unique opportunity for detailed analysis of the cultural carnage happening in the pub sector and for politicians to learn what really is knocking out pubs faster than ninepins in a bowling alley.

However the likelihood is that the government will get a panning from the out which will range around duty escalators, supermarket pricing, the smoking ban and the credit crunch. There will be calls for vat and rates relief, price controlling, and all the other usual suspects will be dragged into it.
Truth is these are bit parts to the real villains of the piece; the pink shirt and cufflink brigade – the CEOs of pubcos. They won’t appear in person of course, they’ll use stand-ins (did anyone see BBPA on the guest list?) who'll get an ovation for their performance as poor concerned, downtrodden custodians of heritage, community and small business, spending millions trying to keep lessees afloat while the nasty government is putting holes in their shiny boat that, errr... is still making hundreds of £millions as pubs die all around them before being sold off; restrictive covenants attached.

Ministers and MPs must be implored not to ignore the smoking gun that is the pubcos.

Put aside fifteen minutes of the day to ask some hard questions about the failure of the Beer Orders, the power of pubcos and how their enormous financial success has concomitantly drained the rest of the industry of all profit; and how, if it were not for their greed, the industry would not be on its knees as it is. HALF their combined profits pumped into pubs would transform the industry still leaving them rich yet they cannot afford to give back anything they have taken out. Because pubcos have sold the family silver and there’s nothing left.

MPs must be made aware of the horrifyingly close parallels to be drawn with the causes of the banking crisis. Unsustainable rents based on fanciful real estate values and overblown profit projections; Serious sub prime issues; the mind boggling costs of feeding massive borrowing – £1 billion a year, conservatively, pumped out of pub pumps to service their freeholders’ overseas’ debts – in interest payments alone!

No wonder pubs across Britain are falling apart – there’s been money left in the industry for lessees to invest in their own businesses and they have no reserves with which to ride out a downturn in the economy.

Fifteen minutes to consider whether it’s the government to blame for the accelerating demise of thousands of pubs; or the avarice of big business serving only the interests of boardroom and shareholder with utter disregard for customers – their lessees - and the consumer.

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