Beer Background

Pub closures: the Big Lie

Added: Thursday, November 21st 2013

The All Party Parliamentary Save the Pub Group have published a report which shows that CGA Strategy’s figures on pub closures – and other figures – clearly show that the non-managed (largely leased/tenanted) sector has seen many more net closures than those of independent freehouses – the opposite of what the British Beer and Pub Association (BBPA) and the pubcos have tried to claim is the case.

The report, which is based on data and ongoing correspondence from CGA Strategy, who  compile data on pub closures, include CGA’s own figures between December 2005 and March 2013 which show a net closure rate of 15.9% (5,117) for Non-Managed pubs (mostly leased and tenanted) and only  9.5% (2,131) for independent trade pubs.

This clearly exposes the myth – long been peddled by the pubcos and their lobbyists, the BBPA – that somehow “tied” pubs are closing in smaller numbers than free-of-tie pubs and shows that this is actually the opposite of what is going on in the sector.

Extraordinarily, the BBPA’s own numbers - published in their Statistical Handbook 2013 - show that over 10 years from 2002-2012 the 'Free/Independent' sector has actually GROWN whilst the 'Tenanted and Leased' sector has shrunk.

The BBPA’s figures show pubs in free/independent ownership have actually grown by around 1,600, whilst the pubs in tenanted and leased ownership have shrunk by more than 8,000, showing the 'free/independent' sector is bucking the trend.

The BBPA have chosen to omit these clear facts from their pub closures statements and instead made wholly unsupported and incorrect statements giving an entirely misrepresented picture of the state of the UK's pub sector.

The report also exposes how, with pub transfers from one sector to another (from non-managed to free) not being logged in the figures, some closures of non-managed pubs are being wrongly presented as closures of independent/free pubs – including failed pubco pubs being sold to developers and being classed as a ‘free’ closure, something that is clearly wrong and is distorting the figures. The fact remains that the number of pubs in independent/free ownership has remained stable over the last ten years which means that this must be happening – and therefore giving a misleading picture of sector closures.

The report also exposes how the CGA figures do not record many temporary pub closures – known as “churn” where a pubco pub tenant fails and is replaced. This means that this trend, that is rife, is happening in an estimated third of pubco estates every year according to figures revealed from pubcos is NOT counted where the closure is under two weeks, which is commonplace with pubcos installing temporary managers and replacement tenants on a tenancy at will (TAW) basis. 

Finally, using the staggering disposal rates of the large pubcos, from their own report – that show an incredible THIRD of all the pubs of the two large pubcos being sold off - the Save the Pub Group show that it is this part of the pub trade that is doing exceptionally badly – both in terms of temporary and permanent closures. This clearly shows why the Government must act to deal with this – and the endemic pubco overcharging that is leading to so many pubco pub failures and closures.

The required action is to introduce a statutory code of practice for the large pub only companies which enshrines in law a market-rent only option for tied licensees.

This report and figures are clear evidence showing the catastrophic effect of the pubco tied model and the comparative health of free/independent pubs must be used by BIS to back the appropriate action, which is the BIS Select Committee solution. Only their market rent only solution will ensure that pubco tied publicans at last have a fair deal – which will lead to many more pubs being viable and staying open and serving their communities.

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Greg Mulholland MP, Chair of the All Party Parliamentary Save the Pub Group, said:

"The reality of the CGA's figures is that show that over eight years the non managed sector has seen many more net pub closures than independent free pubs, the opposite of what the pubcos and their lobbyists, the BBPA have said.

“What is shocking is that the BBPA's own figures explicitly show that the tenanted and leased sector has declined whilst the number of independent free pubs has expanded, so the BBPA knew this all along yet have continued to peddle their myth which is utterly disgraceful.

"It is now time that the Government admitted it had been duped by the pubcos and their discredited lobbying body the BBPA but questions must be asked as to why BIS were so ready to accept something at face value that was never true.

"The real evidence is clear - from CGA, from the BBPA themselves and from the pubco disposal figures from their own reports. The tied pubco model has been a disaster and is closing pubs up and down the country and this is what the Government must deal with. This can only be dealt with through a market rent only options for tenants of the larger companies which not only would make those pub businesses significantly more profitable, it would also prevent many closures by preventing companies forcing licensees out through unreasonable terms.

"So the real evidence is clear and BIS are now running out of excuses to not introduce the essential market rent only option. It is time that Jo Swinson and Vince Cable showed the necessary courage, ignored the baseless and in some cases dishonest scaremongering and looked at the stark reality of what is happening to British pubs and finally introduced the Select Committee solution to give a fair deal for thousands of British pubs."
imon Clarke, from the Fair Pint Campaign, said:

"Anyone with a modicum of common sense knew the BBPA claim that free pubs were closing faster than tied had to be wrong.

“The BBPA's own figures show the free sector is actually growing tentatively whilst leased and tenanted pub closures are in comparative freefall.

“Fair Pint consider it has been utterly deceptive for the BBPA to have selectively used some of their data whilst ignoring the truth to support their argument to keep self regulation afloat permitting the asset stripping of the Great British pub sector.

“The figures demonstrate that given a chance, with a Market Rent Only option, many pubs could operate viably and many would not have been lost to corporate greed."

Greg Mulholland
railway tavern