Dear Dr Cable: no more shilly-shallying, it's time to get tough with the pubcos

An Open Letter to the Rt Hon Vince Cable MP, Secretary of State for Business, Enterprise and Skills

Dear Dr Cable,

I don’t know if the route from your Twickenham constituency to Parliament takes you through Hammersmith, but I would recommend a short detour to shed a tear at the Old Parr’s Head in Brook Green. The pub closed last month even though it had been run successfully for 25 years by Joe and Betty Hynes.

They enjoyed a good reputation for their beer and their food. But the owners, Punch Taverns, pulled down the shutters in May. A spokesman for a property company in West London that’s keen to buy the Old Parr’s Head said it could be turned into excellent flats.

Regular customers would prefer to think it could continue to perform as an excellent community pub. But Punch has other plans that don’t take into consideration the needs of local people.

There’s nothing unusual about the closure of the Old Parr’s Head. The country’s two biggest pub companies, Enterprise Inns and Punch, close pubs with a rapidity that makes mushrooms at dawn seem a trifle tardy. Pub closures rip the hearts out of communities and threaten the livelihoods and pleasure of those that work and drink in them.

You promised a report into the activities of pubcos last December. It was delayed until February and at the time of writing has yet to appear. You say it’s a complex subject and you have received submissions from conflicting interested parties. I have no doubt that lawyers acting for Enterprise and Punch have entered a vigorous defence of their clients’ activities but I suggest they are defending the indefensible.

One response to pub closures is that, with so many competing leisure activities, people are not using pubs to the extent they used to. There’s little doubt that coffee shops, fast food restaurants, cheap supermarket booze and multi-channel television have had an impact on the pub.

But the rate of closure does not support the argument that there are too many pubs. Recent reports by both Greene King and Marston’s indicate that pubs are clambering out of recession and are attracting good custom once again.

And Enterprise and Punch close more pubs than any other pub company as a result of the shocking level of debt they have racked up. Figures produced by Fair Deal for Your Local show that the two major pubcos have disposed of more than 5,000 pubs between 2008 and 2012. That’s one third of all the pubs they own. In 2008, Enterprise owned 7,763 pubs and by 2012 the figure had fallen to 5,720. In 2008 Punch owned 7,560 pubs and that figure fell to 5,529 by 2012.

In 2012, Enterprise had a net cash flow of £296 million but in the same year debt and interest payments totalled £430 million. It’s this crippling level of debt -- caused by a buying spree in the first years of the 21^st century -- that has led to so many of their pubs closing.

The situation is now even more serious. Punch has been teetering on the edge of administration for several months. If the company were to fail, its entire pub estate could close and would be parcelled up and sold on by administrators. Many of the pubs might not survive.

Your report cannot be further delayed. The situation is desperate.  You know the case put to you by publicans and CAMRA for fair rents and freedom from the tie and those proposals need to be implemented – fast.

And the unbridled power of Punch and Enterprise to charge both top dollar for beer and rents that can spell ruination for publicans has to be tackled.

Westminster gossip suggests your report is not only on the backburner but the gas has been turned off: nothing will happen this side of a general election. That’s a disastrous course for a “pub friendly” government to pursue. I urge you to act now in the interests of the country’s pubs and those that work and drink in them.

Yours sincerely,

Roger Protz

*Print version: What’s Brewing June 2014