Pub Tenants

PUB TENANTS FACING TOUGH TIMES

If you are a tenant of Punch, Enterprise or another major pub operating company, this will be of interest to you. GMB is one of the largest trade unions in the UK with over 610,000 members in all sectors of the economy. The union’s role is to improve working conditions for members through campaigning and negotiation.

Some GMB members are pub tenants with the major pub operating companies. They have sought the assistance of the union to secure a better deal from their landlords: lower rents and keener wholesale prices.  GMB has concluded that the best way of helping is to highlight the anticompetitive actions of some pub companies to the government and establish a system of negotiations across the industry that will make sure each tenant can make a decent living. Only pub tenants can achieve this, working together through a trade union.

Pub tenants joining GMB would not be breaking new ground. Many thousands of self employed people in the hospitality and entertainment industries are already active trade union members. For decades GMB has been involved in campaigning and negotiating pay and conditions for bar managers/tenants in members clubs under the CORCA agreement with the club owners.

OUR CAMPAIGN
We recently told government ministers that an unintended consequence of the Beer Order legislation in the 1990s to loosen the tie between breweries and pubs to free up the market for the benefit of consumers has been the growth in ‘Pubcos’ who are operating in an anti –competitive manner.  It is the impact of the higher charges for drinks that is killing pubs and
driving them out of business. ‘Pubcos’ are blaming everyone else for the problem and not looking at the damage they have caused through their own greed.  GMB are calling on the government and MPs to revisit this legislation.

OUR AIM – LOWER RENTS AND LOWER WHOLESALE PRICES
Our aim is to break up these companies to enable pub landlords to buy their beer from breweries and wholesalers at real and competitive prices. Pubs cannot survive being made to be cash cows to pay off the debts of the property companies and brewers. They do not have the interests of pubs and consumers at heart. 

We can only achieve this goal together if enough pub tenants stand up to be counted, join the union and get involved. We will organise collective legal challenges to the pub companies, lobby government ministers and represent individual members in disputes with their pub companies.

Pub Tenant Application Form.pdf

GMB Legal Package

For all legal issues other than Brulines, (see below), GMB has arranged a heavily subsidised rate with Andrews Angel Solicitors. The cost to each existing member is £250 plus VAT for an initial 2 hour case review. If, during the review, issues are identified that may have wider implications for the GMB membership as a whole or opportunities to establish precedents and case law are identified then GMB may consider further financial assistance. Otherwise, members are then responsible for their own costs after having received advice.

The procedure for accessing the legal assistance package is for members to contact Sue Boyd asap and you will be sent a questionnaire to complete and return. Paperwork will be forwarded to Andrews Angel Solicitors who will contact you direct.

Regarding Brulines issues, we have an information pack and questionnaire available on request to members and issues will be reviewed on a case by basis by our in-house legal team at National Office.

For further details please contact Sue Boyd at .(JavaScript must be enabled to view this email address) or telephone 01246 234383.

Pubco Legal Package.doc

Brulines Weights & Measures Guidance

Wednesday 1st February 2012

GMB CALLS ON DEPARTMENT FOR BUSINESS, INNOVATION AND SKILLS TO ISSUE GUIDANCE TO LOCAL TRADING STANDARDS OFFICERS RE BRULINES EQUIPMENT

As Brulines equipment, when used to fine tenants, is covered by Weights and Measures legislation local trading standards departments now want guidance on this says GMB

GMB, the union for pub tenants, has written to Department for Business, Innovation and Skills asking for guidelines to be issued to local trading standards officers on how to apply Weights and Measures legislation to Brulines equipment when used to fine pub tenants. See copy of letter below.

In December Mr Davey the BIS Minister confirmed that the Government considered that Weights and Measures legislation did apply in when used to levy fines but it was for local trading standards offices to enforce the law. See note 2 below

Following this confirmation from Government a GMB member requested that his local trading standards department in Wandsworth enforce the law relating to the equipment in his pub. The trading standards officer has yet to get involved but told this GMB member “I will wait with interest to see if the National Measurement Office or BIS issues any formal guidance on this issue following the Minister’s statement.”

Paul Maloney GMB national officers for pub tenants said “Mr Davey’s statement has opened a can of worms for pubcos.  Enterprise alone levied £10 million worth of fines last year based on a system we know to be inaccurate. This places the local trading standards officers in very difficult positions as they are scared to death of being the one to bring down this house of cards. Consequently they are simply ignoring the issue by asking for “more guidance” on this matter which the minister is now reluctant to give.

GMB members have no intention of letting this drop. We will not go around in circles on this. I have written to the Department asking for them to issue the guidance. They may refuse saying existing guidance covers this equipment or they may issue new guidance. Either way Trading Standards are duty bound to enforce the law.  GMB will insist that they do as far as our members are concerned.”

Note 1

Copy of GMB letter

Mr. Iain Mansfield, Senior Policy Official,

Department for Business, Innovation and Skills

1 Victoria Street,

London   SW1H OET

Dear Mr. Mansfield,

As you are no doubt aware the GMB has had a long standing interest in the plight of tied tenants, with many of our members suffering at the hands of Pub Companies, experiencing terrible examples of injustices.

We were gratified therefore when Mr Davey confirmed, what we have been aware of for some time, that of the issue regarding the Brulines system.

Many of our members have been penalised with ridiculous fines based on this system which has been comprehensively shown to be inherently flawed and we were therefore pleased that Mr Davey confirmed that, as Brulines was in use for Trade, it came under the remit of Trading Standards.

Unfortunately local trading standards departments have been extremely reluctant to become involved in this debate due to the lack of clarity from the minister and it would appear that it is necessary for clear guidance to all Trading standards officers regarding this issue - something they have been requesting.

I am sure, like the GMB you would support every effort to make sure that individuals have the right to trade without having barriers put in their way and it is clear that Tenants require the support of local authorities which they are currently reluctant to give.

I would be grateful if Mr Davey would therefore supply that guidance as a matter of urgency so that this confusion is cleared up once and for all.

Yours sincerely

Paul Maloney GMB

2 Statement by Ed Davey on 6th Dec 2011

“I am told legally under the Weights and Measures Act, in general, that the Brulines equipment is not in use in trade if it is for monitoring purposes.

However, I am told now, in general, that when it is used, not just to monitor, but to actually go ahead and fine someone, the act of the fine, in general, means it is in use for trade.”

Bias In Pub Panel Chair

31 Jan 2012

GMB, the union for pub tied tenants, commented on the news that Rodger Vickers from Punch Taverns will chair the newly-formed Pub Independent Conciliation Advisory Service (PICAS) deal with disputes about matters other than rents between pubcos and tenants.

Paul Maloney, GMB national officer for pub tenants said “Ed Davey has been taken for a gullible fool by the pub industry. Appointing Rodger Vickers is the equivalent of the FA appointing Sir Alex Ferguson to referee a game between Manchester United and Liverpool. The bias is that blatant. Vickers is part of BBPA to his last sinew so GMB members can expect him to press the cases of the pubcos. Even today he is in the pub of a GMB member pressing the case for a 60% rent increase in the middle of a recession.

This new PICAS, which we are told will be up and running at the end of February, is part of the self-regulation deal between the British Beer & Pub Association and the Government in the wake of the Business, Innovation & Skills Committee (BISC) report which Ed Davey signed off.

PICAS will operate alongside another toothless bodyPIRRS (Pubs Independent Rent Review Scheme) where Vickers has also been an advisor since 2009. PICAS remit is disputes other than rents and will have the same dismal record as PIRRS. MPs on BIS Select Committee need to probe why Ed Davey has proved such a soft touch.

The underlying issue not being tackled at all is sky high rent that have pushed the price of a pint £1 above the level justified by inflation and changes in taxation. This has priced pubs out of the market. This additional revenue ends up offshore paying pubco bondholders in tax havens. BBPA, which justifies this rip off culture, has the bare faced cheek to launch a campaign for tax breaks as its members blatantly shovel money offshore into tax havens”.

Pints Under-Filled By 3% - Official

Monday 5th December 2011

It is high time that when people order a pint and pay for a pint they should get a pint as under-filling totals up to 148 million pints of beer and cider each year that drinkers do not get with a retail value of £444m says GMB the union for pub tenants. Nick Bish, the top boss of the Association of Licenced Multiple Retailers (ALMR) the association representing pub operators has admitted what pub drinkers have known - that pubs systematically under-fill drinks by up to 3% on average. Mr Bish revealed this in a recent letter to a GMB tied pub tenant who was complaining being unable to make a living.

Dave Mountford, a tied pub tenant in Derbyshire with the support of GMB, is contesting a demand from his landlord Punch Tavern for a 60% increase in his rent. Mr Mountford claims that in calculating his profits Punch do not take full account of the normal wastage that is part and parcel of running a pub. Wastages are due to several factors likes spillages and slops, the amount not sold at bottom of kegs, product drawn off during line cleaning and changing kegs, and kegs not been 100% full when delivered from the brewery. Punch referred to ALMR bench-marking on wastage. Mr Mountford then raised the issue direct with Mr Bish.
Nick Bish responded on 16th November saying that there was no specific line providing for wastage in any of the bench-marking ALMR did. He went on to say that he had consulted the Venners, a major stocktaking firm in the industry, and the feedback he got was that wastage was offset by under-filling. This is what he wrote: Nick Bish said “I also spoke with Venners. The feedback I got there was that they regard yield as the best measure of efficiency in converting product [draught beer] to cash and believe that yield approaching 100% is achievable – mostly through the under-filling of brim glasses by [say] 2-3% that offsets the entirely reasonable wastage at the bottom of casks and line cleaning of course.”

ALMR represents 96 companies that between them operating 10,423 outlets in the UK.

Paul Kenny GMB General Secretary said “for years beer drinkers have regularly complained about the short filling of particularly beer and lager in certain outlets. It would seem that Mr Bish and his Association have known, and by implication condoned, this illegal practice. It is high time that when people order a pint and pay for a pint they should get a pint.

There is big problem here. If operators offset wastage by under-filling as Mr Bish says they do then under-filling would total up to 148 million pints of beer and cider each year that drinkers have paid for but do not get with a retail value of £444m at £3per pint. Mr Bish and his colleagues are making life very hard for the honest and decent landlords who look after their customers and do not cheat or short change them. This scandal should be ended. Mr Bish should issue instructions to his members to end the practice as should all the other pub operators. There has to be an honest acceptance that given normal wastage a yield of 100% in pubs are simply impossible without short-changing customers.

Property companies that own pubs should make proper allowances for wastages when negotiating rents with tenants. ALMR should have a proper figures for wastage in all the bench-marking data.
Customers who think they are being cheated should challenge this as should local weights and measures officers. Perhaps it is high time to change legislation to make oversized glasses compulsory and make publicans fill to the line.”

Pub Closures Will Continue Says GMB

Thursday 24th November 2011

GOVERNMENT PROPOSALS ON PUBS IGNORES CENTRAL PROBLEM OF SKY HIGH RENTS AND WILL DO NOTHING FOR HARD PRESSED PUB TENANTS

BIS response is a disaster for the pub industry as abuse of pub tenants will continue and pubs will continue to close as customers refusing to pay inflated prices desert local pubs in droves say GMB

GMB the union for tied pub tenants commented on the Government response to the Select Committee report on pub companies which dealt with the abuse of tenants by the Pubcos.

Dave Mountford, GMB member and tied tenant of the Rising Sun pub in the Peak District who is contesting a demand for a 60% rent increase on his pub said, “This BIS response doesn’t deal with the central problem facing the industry which is the sky high rents being charged by the property companies who own the pubs. These sky high rents are used to pay inflated levels of interest to off-shore bond holders. These high rents have driven up the price of drinks in pubs by £1 a pint. This has priced pubs out of the market in many areas particularly in the less affluent areas. Beer sales in pubs have dropped by 40% in less than a decade. Pubs have closed down as a result. Net incomes of pub tied tenants has suffered very badly and many don’t earn the minimum wage per hour for very long hours.

The response adds up to a serious waste of taxpayer’s money as seven years of investigations identifying the central problem of sky high rents have been completely ignored. Instead BIS proposes to make legally binding a weak Code of Practise which will do nothing to address the central problem of sky high rents. In my own case, where I am facing a demand for a 60% increasing in my rent, if the code was legally binding it would not help me in any way. That the Government like the Office for Fair Trade is prepared to ignore the evidence of abuse in the industry points very clearly that the regulators has been captured by the vested interests in the City that designed the rip-off that is the current tied pub trade.

This outcome is a disaster for the pub industry. The abuse of pub tenants will continue and pubs will continue to close as customers refusing to pay inflated prices desert local pubs in droves. Pubs that survived the depression of the 1930s and the blitz will not survive. One small crumb of comfort in the response is that the Government at last recognises that the Brulines flow monitoring equipment is not covered by Weights and Measures Act and as such cannot be used to support fines on tenants by the pubcos where there are disputes about turnovers in pubs.

GMB will continue to campaign to get rid of the cartel like bodies from the pub business and to secure a free market for drinks in pubs. GMB will continue to support our pub members and will continue to organise in the sector.”

Contact:  David Mountford on 07579 009660 at The Rising Sun

GMB Tied Pub Tenant At Commons Rally Tuesday 22nd November 2011

GMB DERBYSHIRE PUB TENANT IN DISPUTE WITH PUNCH OVER DEMAND FOR A RENT INCREASE OF 60% TO ADDRESS HOUSE OF COMMONS RALLY TODAY ON PUBCO REFORM

Tied tenant of the Rising Sun in Peak District will tell the rally that a rent increase of 60% would reduce the net income from the pub to less than £10,000 per annum which is not acceptable.
GMB tied pub tenant Dave Mountford will address a rally in the House of Commons this evening (Nov 22nd) organised by the All Party Parliamentary Save the Pub Group on the need for pubco reform. There will be speakers from Campaign for Real Ale and the Federation of Small Businesses.

The event will be held on Tuesday 22nd November from 6.15pm to 8pm in Committee Room 8 in the House of Commons Westminster.

Dave Mountford will tell the rally how, with the support by GMB the union for tied tenants, he is contesting a demand for a 60% increase in rent for the Punch owned Rising Sun pub in Middleton near Matlock in Derbyshire. Punch, without putting forward any evidence, claim that the increase of 60% in rent brings this pub into line with rents for other Punch tied pubs in the region.

Dave Mountford, the tied tenant of the Rising Sun, will tell the rally that a rent increase of 60% would reduce the net income from the pub to less than £10,000 per annum which is not acceptable. To contest this wholly unreasonable rent demand GMB is undertaking a major survey of pub rents and incomes in East Midlands audited by independent researchers who will validate the findings.

Two years ago Dave Mountford, with support from GMB, was in dispute with Punch two years ago over Health and Safety and repair issues at the Rising Sun. After a very public battle the two parties agreed an amicable settlement. Wet rent to Punch has since increased by £50,000 per annum as Dave Mountford trebled to turnover on alcohol at the pub.

David Mountford said ’I have a slide presentation on how Punch have gone about the rent review which I will show to this rally on pubco reform at the House of Commons. I will explain carefully what happened to me at my pub. The Rising Sun has gone from strength to strength, despite having to battle Punch all of the way to get there. On that basis I didn’t expect another fight, but obviously they are either too greedy or can’t afford to change their ways. They now make £85,000 per annum from the pub while we make £20,000. I was stunned when Punch announced an increase of 60% on the dry rental figure based on their calculations of a Reasonably Efficient Operator.

However when I looked at the way they had worked out their shadow P & L it was apparent that there were many areas that were incorrect – an overvalued gross profit, a mix of sales that increased higher margin products, inflated turnover and understated costs were obvious and easily challenged – however the comparable data was a real eye opener. Punch gave me a comparison of 19 Punch Pubs with rent and turnover and stated that it showed I was on a “favourable deal” as my turnover of beer was the highest and my rent the lowest. I pointed out that this was not how comparable data should be used according to the RICS formula.

However when I contacted the landlords on the Punch list I soon got an even truer picture. The first Pub I spoke to had just received an eviction notice form Punch that very day, the 2nd was just about hand over the keys and the third was facing that possibility in the very near future. Of the 19 Pubs none were even remotely like my Pub. Only 3 said they were happy with their arrangement with Punch. Many were on temporary assignments as the pubs were due to be sold as Punch could find no one willing to take them on.

It was obvious that the list did in fact show that the only reason we were surviving was that our rent was the lowest and our turnover the highest. On the £20,000 we clear we pay income tax and from the after tax income we look after the family. When I put these findings to Paul Crooks, Punch senior rent assessor, he told me to prove my findings – despite him obviously having all the information available to him.  I am accepting the challenge which is why GMB plan to undertake a major survey of pub rents and incomes in East Midlands audited by independent researchers who will validate the findings.”