Thursday, August 22, 2019


The #GreatBritishPubcoScam I've not been keeping this blog responsibly for a couple of years now. Partly through life events and partly because the pub sector, my main interest in life, is so mired in appalling practice, so bent, so corrupt, so much a microcosm of everything that's manifestly unsustainable when unfettered private equity greed gets to run the show like bullies in an unsupervised playground I've not known where to start anymore, I've been trying to expose this scandal for more than a decade now, and though not alone in this task of cleaning the Augean Stables, there are many other licensees tirelessly grafting away delivering evidence of bullying, corruption, deception, gaming the Pubs Code and rife skulduggery in the tied pub sector to Government the fact is that nothing has changed and rubbing against the immutable powerful pub sector status quo is supposed to wear people out. And it does. Nothing changes. Thousands of pubs close. People give up all hope of positive change for pubs.

This post was prompted by news that Paul Newby, the Pubs Code Adjudicator, will leave the post at the end of his four year contract; Job Done. Got me thinking about where we are at with pubs. It's not good. It's really bad.

The Pubcos are packing their bags. Newby, Pubs Code Adjudicator, has given them the space they needed to keep on damaging Britain, get out on their terms, without taking a hit. Now Vulture Capital owns the Pubco roosts and it's OUR pubs that are their carrion.

For my friends who are customers of, rather than people who work in and around our unique British institution that is the world's original social network, the humble Pub...

If I can attempt a distillation of what's been happening in to YOUR PUBS over the last 30 years, to explain why they've been closing absolutely everywhere in spite of the FACT that the majority of people in Great Britain would LOVE to have a great LOCAL PUB in their neighbourhood, but don't because of the #GreatBritishPubcoScam

The Beer Orders

In 1989 Thatcher's government brought about the Beer Orders to end cartel and monopoly behaviour in the beer and pub sector with a few giga breweries ruining the country's pub experience with the intention of making a pub sector that was open to competition at every level so that WE, pub going consumers, would get a better range of beers in our local pubs and a freer market that would see pubs develop, evolve, innovate and be naturally more responsive to customer demand and so better serve the public.

This led to the huge brewery owned pub estates being broken up and the pubs being owned by pub companies which emerged to operate and preserve the national pub estate and make it more entrepreneurial and exciting for the benefit of future generations. 😉

Before long these new 'PubCos' owned most of OUR pubs and quickly got into manipulating the market for their own financial advantage by leasing the pubs to individuals who'd take on all responsibilty for every aspect of 'their' pubs maintenance and upkeep, in perpetuity, through fully repairing and insuring tied leases with the pubco obliging them to buy beer at prices set by the pubco... a practice known affectionately as 'the traditional age old beer tie' that has worked for generations to keep pubs alive (they forgot the need for the Beer Orders of course). The pubcos had invented a guaranteed ever growing double income stream for their business plan projections: Tied rents would always go up, without the pubcos having to pay for maintenance of the national pub estate, and the tied supply prices would increase every year ahead of inflation and the publicans would absorb ALL of the increases by making their pubs busier and putting their prices up - none of that was the pubcos business. The pubcos business was only to make money; the maximum return possible for the minimum outlay they could get away with it: the Lessees would do all the investment and pay all the bills for the whole sector.

Pubco profiteering through outrageously aggressive rent increases and their wholesale beer prices to tenants rising well over inflation and brewery gate price - within a decade the pubcos were geared up to asset strip Britain's heritage, traditions and Sense of Place by subterfuge in plain sight: Thousands of individual pub businesses would fail under financial pressure of the pubco prices but while publicans went down the pan all over the show, their pubs were left standing ready for another lessee to come along and make a go of investing in their own business - to be screwed down by the pubco, go out of business and free up the pub for another mugging by the pubco (pubcos call this 'lessee churn'). When a pub has had ten lessees fail in succession it's not had any work done to it for a decade or more, there's been no development, evolution or innovation whatsoever. Just a lick of paint here, a new picture there, a bit of gaffer tape on the carpets and seats where they're worn out. The pubs end up run down, smelly, unfit for purpose and people stop going to The Pub - everywhere - because people won't frequently socialise in run down asset stripped stinking shit-holes; Quite rightly too. Eventually the pubs are so run down no prospective lessee is insane enough to take it on, and customers have long forgotten what it was like when it was a well looked after, brilliant place to hang out in.

The pubcos say 'a series of entrepreneurial professional publicans have not been able to prove the pub's viability, sometimes we have to acknowledge habits have changed and the customers just aren't there anymore. Sadly we have to make a difficult business decision to sell pubs when they are no longer economically sustainable'; For alternative use. TO cash in on alternative asset value and use the income to pay interest on the loans the pubco raised to buy the pubs in the first place. 😎 Nice job. Blame the customer for closing their pubs.

This process has been happening to the majority of OUR pubs, the tied pub estate, for thirty years. The pubs have been asset stripped in front of us. The pubcos have failed in everything except making money out of failure: They created a rapidly shrinking national pub estate locked in a chronic downward spiral of multiple small business failure while the Big Business has become a parasite surviving on the mass sell off of Britain's most cherished, irreplaceable, precious and worldwide unique social assets, for alternative use, forever.

Basically British Pub Culture - OUR invaluable national social heritage - has been wilfully attacked by greedy tanned wealthy wine swilling mohair suit wearing white collar cultural criminals calling themselves Executives of 'Pub Companies' rather than feeders of vultures.

This behaviour has been known and recognised officially since 2004 when the Select Committee looking at the relationship between pubcos and their lessees told them to shape up or be prepared to ship out. It's 2019 now and nothing substantial has happened in all this time.

Other than a thousand plus pubs closing forever, every year like clockwork leaving communities all over the UK with nowhere to socialise and do all the life things we used to do down the pub as cultural events - birth, birthdays, engagements, weddings, funerals, cradle to grave. Most of that doesn't happen down the pub anymore - because they've been closed down by bad business.

It is an absolute scandal and the pubcos just keep on getting away with it.

Below is British Tied Pubco Reform, A Timeline for Dummies which I put together in 2016. To try and get across just how little had happened in 12 years of reform of the tied pub sector. Ie a sum total of ZERO...
... I put it together and pushed it around before the Pubs Code, which was supposed to change all of that above and help SAVE pubs, came into effect. Before the pubcos put a placeman in the Adjudicator's seat to make sure they could pack their bags and get out of the sector on their own terms without so much as a ruffled sleeve of a mohair suit. It needs updating. Since I did that the situation has only got worse for pubs... I knew in 2016 that I would probably be writing something like this in a few years after the Pubs Code was implemented; Because I had no doubt by then - now - that nothing would happen except the same. We the public would be hoodwinked, led along a path to nowhere.

The Pubs Code adjudicator, Paul Newby, today announced he'll be leaving at the end of his 4 year contract. He's done his job. All the main pubcos have been carved up and new venture capital is coming into the pub sector to finish off the end of the British Pub. The paragraph below is taken from the Government website 'An announcement from Paul Newby, the £130K a year Pubs Code Adjudicator. The highlighted bit is all you need know is total, palpable, measurable, horse shit. I'm looking forward to reading what the Beer Writers think is happening in the pub sector now cos they're going to butter it all up as they always do.

We all LOVE a great pub. We all want a great, well run pub in our neighbourhood. WHY don't we have them? That isn't a market that's working properly. It's the #GreatBritishPubcoScam WE deserve better. We deserve to have attractive, fantastic, friendly, welcoming home from home pubs nearby where we can share our lives and loves...

See the video on this link. It was made in 2012 and, I swear, it could have been made in 2019 without changing a word 

It is absolutely disgraceful that nothing has changed. THOUSANDS of lessees have been put out of business and the communities they served been robbed of THEIR pubs.

Don't get me started on the Climate Crisis. Deniers everywhere. Sound familiar? We're living in Emperors new clothes.

1 comment:

  1. The #FoodChain programme
    posted elsewhere here by Paul Swan York is very interesting. Really GOOD in fact. The thoughts from the publicans are bang on the nail. They know why they are there and why they're doing it and what they want to achieve. A lot of it about preserving the culture of proper pub as an institution.
    The quality of Emily Thomas reporting is always high - I get the impression her agenda is to open as much up as possible to her audience whatever subject she's covering. Rarely does such a well put together thoughtful piece get on air.
    When taking my above article in stride it's worth looking at the phenomenon of pubs being churned by pubcos and the never ending stream of new tenants coming into the market to keep the light on in the pubs, no matter how many times they've failed until the point at which everything in the pub is so worn out it can never work again as a business unless it's comprehensively gutted and refurbished from the ground up - literally - services, gas, electric, water, drainage, insulation, heating, cooling, roof, rainwater goods everything always needs to be replaced in these Great British Pubs that haven't had a responsible maintenance and improvements applied to them for at least the last 50 years.
    When I took on My pub in Camberwell in 1995 half of it was still using wiring that had been put in before WW2 and lead pipe water main. ALl the pubs in the area suffered the same neglect. When new lessees come in they make the surfaces look good - redecoration - but by and large there's nowhere enough money or time to do what really should be done to the building to keep it up to standards and fit for purpose.
    When pubcos 'invest in our pubs' as they like to trumpet - they put the rent up. And when a 'comprehensive refurbishment' is done it's never attended to properly. The guts aren't ripped out, just the ends of the runs that are on view are tarted up. Even when a boiler is replaced the whole property isn't looked at with the most efficient outcome in mind - because efficiency is only needed by the leaseholder and they are the last people to be consulted in the process. Generally because they aren't around until after the pub has been 'revamped'.
    It is a sorry process of irresponsible neglect.
    The 'young' people taking part in Emily Thomas's Food Chain, when she asked 'What about the money' none of them were able to say anything more positive than 'live in accommodation' - this in London where a one bed flat is £1,200 a month.
    The only pub that was recognisably NOT tied or part of the pubco hegemony was the Leyton Star where Liam Holyoak Rackal was the publican. That's part of the Electric Star group. Owned by a successful music / rave promoter I know very little about but who seems to have the right ideas and adequate funding.
    The others, Laura Fields about to open the Holly Tree, in an adjacent borough from the Approach Tavern which I presume is Bermondsey Pub Company or similar (It's Remarkable Group James Watson knows the boss I believe) and Elliot Dickinson at the Albert Arms in Esher is Fuller's and I assume, a managed outlet where the workers are paid by the head office of the now non brewing freeholder.
    All in all a very interesting programme - reading between the lines showing how difficult it is to make a go in the pub market when you've got everything going for you. Even when young, ambitious, enthusiastic and skilled with a vision for hospitality - it's a grind. They're all working to pay the rent...
    It all needs a serious shake up.