“Free Of Tie” Option For Pubs

5 Jun 2013

“Free of tie” option 3 will enable the pub tenant to be free to buy products at open market prices and to pay a fair market rent for their pub or stay tied to the pubco if that is better says GMB.


GMB, the union for tied pub tenants, commented on a CAMRA survey on the pay of tied pub tenants. See CAMRA release in notes to editors 1 below. Steve Kemp, GMB political officer, said “That 60% of pubco licensees earn less than £10,000 a year is a national disgrace that cannot be allowed to continue. Option three in the BIS draft statutory code, which is now out to consultation, frees the tenant to buy products in the open market and to pay a fair rent for the building. GMB is campaigning for this option to be adopted when the issue goes back to Parliament in the autumn.


GMB has written to all elected councillors and MPs in Britain asking them to support option three which will resolve the issue which plagues tied pubs. See copy of GMB letter in notes to editors 2 below.
We need local elected politicians of all parties to make their voice heard loud and clear in favour of a free and open market. This will enable the pub tenant to be free to buy products at open market prices and to pay a fair market rent for their pub or stay tied to the pubco if that is better.”


Contact Steve Kemp 07730 898 102 or GMB press office 07921 289880 or 07974 251 823


Notes to editors

1 CAMRA Press Release for Wednesday June 5th 2013

Pubcos squeeze life out of pubs with high rents and wholesale beer prices

New data shows 60% of pubco licensees earn less than £10,000 a year

CAMRA, the Campaign for Real Ale, is today presenting new evidence to MPs revealing that the majority of publicans tied to the big pub companies earn less than the minimum wage. These new statistics are released as pub campaigners visit Parliament to join a rally supporting Government plans to clamp down on big pub companies charging above market rents and inflated beer prices.

A representative sample of over 600 licensees were interviewed by research firm CGA Strategy*, with the results showing that licensees tied to the big pub companies are substantially worse off than free of tie lessees. A shocking 60% of licensees tied to the big pub companies earn less than £10,000 a year. This compares to only 25% of free of tie lessees who earn less than £10,000 a year.

The other end of the earnings scale also shows a stark difference in earnings, with just one in a hundred tied pub licensees earning over £45,000, as opposed to one in five who run free of tie pubs.

Mike Benner, CAMRA’s Chief Executive said:“These new figures reveal the shocking truth that many licensees tied to the big pub companies are struggling to survive due to unfair business deals verging on outright exploitation. Pubs that are invaluable community assets are being put at risk by pub companies forcing the majority of their licensees to survive on less than the minimum wage. The inability of licensees to earn sufficient income means money cannot be invested back into pubs enabling them to grow as businesses.”

“The Government should be congratulated for recognising the need to call time on the abuses of the big pub companies. Our message today is that they must push forward plans for an independent adjudicator and code of practice without delay.”

“The big pub companies are contributing to the destruction of Britain’s pubs by failing to support their licensees with competitive wholesale beer prices and rents. Every pub failure is a disaster for the individuals involved as well as for the local community built around that pub. In contrast, pub companies can profit from pub failures by retaining licensees’ deposits, premiums and even selling the pub off to property developers.”**

“Pub goers can join the charge to secure a fair deal for pubs by visiting fairdealforyourlocal.com”.


NOTES TO EDITORS

The “Fair Deal for Your Local” campaign is supporting plans for an adjudicator, code of practice and an option for licensees to pay a market only rent freeing them from the burden of having to pay a typical 70% premium on wholesale beer prices.

*The full report of the licensee survey will be included in CAMRA’s submission to the Government consultation

**Tied licensees going out of business can be subject to fees for dilapidations as well as forfeiting deposits and premiums paid.

For further information contact CAMRA’s Press Manager Neil Walker via .(JavaScript must be enabled to view this email address) or call the Press Office on 01727 798 443


GMB letter to elected politicians

Dear Elected Politician,

I am writing to you as an elected local politician on behalf of GMB tied pub tenants members. I am asking you to support Option 3 in the draft statutory code for tied pubs currently out for consultation by Department for Business, Innovations and Skills.

The property companies that own over half of Britain’s pubs charge sky high rents to tied tenants of pubs in your area to pay interest on massive financially engineered debts. These debts are held mainly by bondholders in offshore tax havens.

Interest payments on these huge debts have to be paid each week before the tenant pours a pint and regardless of whether s/he can make ends meet or not.

To pay these sky high rents a pint of lager is on average 80p per pint higher and ale is 65p per pint higher than justified by inflation and like for like changes in taxes since 1987. This is pricing pubs out of the market and they have closed in droves.

The common view that shareholders in the pubcos own a pub business is wrong. In fact the shareholders don’t own a pub business; they own a holding company which invests in and manages pub securitizations.

These securitizations are the infernal machine that is closing pubs in your area. It is the same infernal machine that drove Southern Cross care homes in your area to the wall.

In 2009 an Office for Fair Trade report concluded that the average tied lessee is being overcharged by pubcos by around £12,000 per annum or £230 per pub per week, after higher “wet rents” and lower “dry rents” are factored into the equation (pages62 to 64).

GMB and others have campaigned for Parliament to legislate to free pubs from this infernal machine before it destroys them all.

Last month the Department for Business, Innovations and Skills published a draft statutory code for tied pubs for consultation. The consultation is available to view online at https://www.gov.uk/government/consultations/pub-companies-and-tenants-consultation and will run until 14 June.

GMB welcome the conclusion by BIS that pubcos will overcharge tied tenants for rents unless they are prevented from doing so.

GMB is in favour of Option 3 the “freedom option”. This offers tied tenants the ability to buy products from the open market and pay a fair market rent for the building.

GMB consider that the other two options will allow pubcos to put up rents by the backdoor by overcharging for products tenants are tied to buy from them.

This is what the consultation document says on option 3:

“Option 3: Mandatory free of tie option with open market rent review

All pub owning companies with over 500 pubs would have to offer a free of tie option with open market rent review. This would apply at the next rent review point for current leases and for all new leases. Each licensee would be able to choose to be either tied or free of tie. This is in addition to the statutory code and adjudicator from option 2.

The rent in the free of tie offer would have to be based on Royal Institute of Chartered Surveyors guidance. This would ensure that there was a genuine free of tie option rather than one involving an unrealistically high free of tie rent.”

I am writing to you to ask you to respond to the BIS consultation as follows: by email

.(JavaScript must be enabled to view this email address), or by post

Pubs Consultation, Consumer and Competition Policy , Department of Business, Innovation and Skills, 3rd Floor, Orchard 2, 1 Victoria Street, Westminster, LONDON ,SW1H 0ET

I would also like you to make representation to your local MP to support the free of tie option 3 when the matter comes before Parliament later this year.

We will likely only get this one chance to save your local pubs.

We need local elected politicians of all parties to make their voice heard loud and clear in favour of a free and open market. This will enable the pub tenant to be free to buy products at open market prices and to pay a fair market rent for their pub or stay tied to the pubco if that is better.

If you want more information can you contact .(JavaScript must be enabled to view this email address) or phone him on 07730 898 102

Yours sincerely Paul Kenny , GMB General Secretary