I was sat in The Scruffy the other night – my pet name for the local pub The White Bear in Idle – gently caressing my glass when I could not help but stop and wonder how it was that this weak pint of beer, one of the few regular comforts of everyday life, was now almost £3 a pint.
Looking around I could not justify it in the surroundings as The Scruffy has no plush leather seating nor does it seduce us with scantily clad waitresses which is a minor blessing as Our Jackie in a thong is not going to get the punters flooding back in. So how it that a pint of beer is is now, give or take a few pence, almost £3 a pint causing pub closures to escalate to levels never seen before.
There has been a lot of political chatter recently about the fate of the seemingly endangered great British Pub largely led in Parliament by local Leeds Lib Dem MP, Greg Mulholland, albeit as far as I can detect to date with no great progress. I have been following the debates and subsequent negotiations via an excellent free publication called the Tyke Taverner published bi-monthly by CAMRA (Campaign For Real Ale) Bradford and available in The Scruffy and many other such dubious establishments.
The Pubco
Towards the end of last year there was a Parliamentary Select Committee Report on the public house operating companies (Pubcos) who between them control in excess of 50% of the pubs up and down the country with the two largest being Punch Taverns (recently split in two with a new entity called Spirit and Enterprise Inns. The Select Committee approach seems very fashionable at the moment but I am not sure how much these mass gatherings of the great and the good really achieve barring keeping a few MPs in the public eye especially as you can see many of these on television these days. Indeed, most publicly funded committees seem to me to be an exercise in blagging a few free lunches.
I once attended a Planning Committee meeting at Bradford Town Hall– select it was not – chaired by a John Lennon lookalike and attended by several Councillors who looked like they had taken leave from Greenham Common. The meeting dragged on and on until the door opened and in was wheeled a trolley of goodies so bountiful that almost immediately the meeting was brought to an rapid conclusion regardless of the fact that nothing had been decided at all in order that the local grandees could get tucked in. So I have little faith in any Select Committee having any notion of what is going on with the local pub these days.
Where it all Began
Indeed, successive Governments of both persuasions seem to have worked hard and consistently in one direction to threaten the very existence of this treasured social habit pushing the price of a pint to the three quid level in even the most basic of pubs these days. In my view it started with the Tories back in 1987 with Lord Young’s Beer Orders Act which broke up the control of the pub trade previously held by the large brewers which was seen at the time as an unfair competitive advantage by a Monopolies & Mergers Report. All that happened was that one monopoly position was scrapped and replaced by a far more damaging creation – what became known as the Pubcos.
These new companies were created to manage the pub estates that the brewers were forced to shed and largely debt funded by the major institutions that saw this as a property backed gilt-edged investment with the only risk appearing to be that the average British male became teetotal…so it seemed a pretty safe bet. Property of course, could only go one way…could it not? Of course the new companies had to repay the new debt and this they would do from profits from rents charged and earnings from the new estates.
To Dream The Dream
In the process a whole new breed of pub tenant / landlord was created encouraged to take a stake in their local pubs although rarely actually owning anything other than the pub’s “goodwill” whatever that may be worth – generally equivalent to a bag of pork scratchings. For a not inconsiderable up-front stake this flood of willing new entrepreneurs basically got nothing other than the promise of eighty hour weeks, the opportunity to fast-track lung cancer and the inevitable grim ending for thousands in the bankruptcy courts squeezed by ever increasing rents and a pub-tie far more onerous than anything the old large brewers ever enforced.
Thousands of people sunk redundancy payouts into their dreams of owning a pub often having had little or no experience of running any kind of business at all. They were like lambs to the slaughter as the Pubcos not only control the rents for the properties but also the supply of what became known as Tied Products. In effect they have total control of what a landlord can buy and sell and, logically, at what price. So next time you think the price of your pint appears steep there may be little the landlord – or lady – can do about it.
When it all Falls Apart
The model the Pubcos were founded on was seriously flawed as it only works in good times and the woes of the retail sector in general at the moment follow a similar pattern with debt levels too high to sustain in tougher climes. And so in recent years we have seen a vicious combination of falling property values for all commercial properties plus the high debt burden[2] on the main operating companies. What has happened is that the values of the investments by bond holders have diminished and so the basic levels of risk and reward are brought into play. Debt becomes more expensive and the only way the pressure can go is down the chain.
As the Pubcos have battled to reduce their debt burdens their only recourse has been a tightening of the pressures on individual landlords with increased rents and the tie on products. In the free market it is accepted that landlords can buy far cheaper than from the Pubcos but they are simply not allowed to and so the escalating price of a pint has no other explanation. And what has been the response from successive Governments? Merely a relentless increase in duty budget after budget relying on man’s basic need to drink himself into a peaceful state if only to forget the misery of day to day life under whatever Government was in power.
Excuse the pun but it is also a smokescreen to suggest that the smoking ban has caused pubs to shut at an increasing rate. Do you really think that the average working man is going to become an Eastenders watching teetotaller sat in with the wife just because he cannot have a fag with his pint? The smoking ban, I would argue as a non-smoker, has made pubs even more attractive now that you don’t need a coal miner’s helmet to find your seat in The Scruffy. Nor do you need to fumigate everything you wore the previous night.
Tony the Visionary
The conditions that have combined to see pub closures on a daily basis were also exacerbated by that visionary, Tony Blair, so cap in hand to big business who came up with the bright idea of 24-hour drinking instantly turning city centres into no-go areas blighted by kids pissed as farts pre-loaded on cheap supermarket alcohol. The case for this was argued strongly on the notion of creating a café culture inBritainwhich is fine in Knightsbridge but has as much chance of happening in most city centres inBritainas Blair ever finding a firework under Saddam Hussein’s bed. He might not have found any weapons of mass destruction but he did unleash plenty of self destruction in most of theUK’s city centres.
Cow-towing to both the brewing industry by creating a free for all in city centres all day and all night and simultaneously bending just as far the other way for the major supermarkets allowing them often to sell alcoholic products as loss leaders conveniently ignored the traditional community pub slowly having its life squeezed from it which is complete hypocrisy. Whilst we might think it’s a good thing that we can now buy a case of beer for less than a tenner it just does not benefit wider society as a whole because the effects on the numb minority always blight the responsible majority.
A Timebomb
We now have a major health issue caused by alcohol and to all intents and purposes fuelled by Government and big business. Growing up we drank beer which was relatively low strength and had the ability by its sheer volume to fill you to the brim meaning you could drink no more. Now you can go “down town” and blow your brains out with all manner of shots, alco-pops and high strength bottled products. And it’s not as if a lot of these kids have that many brain cells to waste.
The pub is not and never was the problem indeed it is a vital part of everyday life crucially providing employment at the low end of the ladder, a place to socialise and a regulated arena for alcohol consumption. Recently a new duty was introduced in effect halving the duty on the price of a pint from around the current level of £1 for beers with an ABV% of 2.8% or less. Surely this is a move in the right direction not only reducing the price of a pint but, more crucially, reducing the strength of the beers available. To date I have not seen any offering from the brewing industry but surely these are just around the corner.
Sadly, relying on the Government to do anything more than offer sound bites is hopeful at best. The short-termism of politics means that the Exchequer needs the alcohol duty today whatever the burden on the NHS in future years just as much as it needs the corporation taxes from the major supermarkets. As if to confirm this the response to the Select Committee report from the Department for Business, Innovation and Skills, which was critical of the Pubcos, was made with the assistance of…wait for it…the Pubcos! I continue to cry into my pint and shall not be investing my hard earned in a pub.
Respective net debt burdens held by Punch Taverns and Enterprise Inns from latest 2011 public accounts are as follows:
Punch – £2,585m
Enterprise@ – £3,003m
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