Closing time?

business and industry, communities

Author(s):  Rick Muir
Published date:  17 May 2012
Source:  Adults Learning

There are few institutions so central to Britain’s culture and way of life as the local public house. Try to imagine Coronation Street without The Rover’s Return, Emmerdale without The Woolpack or EastEnders without The Queen Vic. Outside the home the pub is the most popular place for British people of all ages and classes to relax and socialise.

There are few institutions so central to Britain’s culture and way of life as the local public house. Try to imagine Coronation Street without The Rover’s Return, Emmerdale without The Woolpack or EastEnders without The Queen Vic. Outside the home the pub is the most popular place for British people of all ages and classes to relax and socialise.

And yet pubs are under pressure. Pubs are now closing at a rate of 14 a week and although this is down on the 52 a week closure rate in the first half of 2009, closures remain at historically high levels. The cumulative impact of year upon year of numbers like this is the large number of vacant and derelict pubs that these days haunt most British high streets.

Pubs have been hit by a perfect storm: adverse winds coming from multiple directions have combined to wreak havoc on the trade. The health of the pub trade has always of course depended on the health of the wider economy. There has always been a link between the volume of alcohol consumed and the wider health of the economy.  Whilst consumption increased during the long boom from the mid-90s to the late 2000s, it has declined in the last few years.

Pubs have also been hit by changing consumer tastes. We have gone from an overwhelmingly beer-drinking country to a nation with more continental tastes, in particular a growing love for wine. The relative affluence of the last decade saw a significant rise in the number of people eating out in restaurants: there was a threefold increase in the rate of new restaurant openings between 1992 and 2007. The rise of the ‘gastropub’ has been one way in which pub owners have responded to this trend. There has also been a significant rise in cinema attendances in recent years, which reached a 38-year high in the summer of 2007.

Even more significant for the pub trade has been the shift towards drinking at home. The share of alcohol being purchased in shops and supermarkets has increased dramatically at the expense of pubs and bars. The proportion of beer being sold in pubs and bars fell from over 90 per cent in 1975 to just 56 per cent in 2007.  The key driver here is price: since 1987 there has been a 187 percentage point increase in the retail price of ‘on-trade’ beer, compared with just a 52 percentage point increase in the price of off-trade beer.  Many supermarkets have been selling alcohol as a loss leader and in some shops beer is cheaper than soft drinks.

Those lessees running tied pubs have also been hit as the large pub companies have put up their prices and they have been left with little room for manouevre.  Earlier this year IPPR conducted a survey of tied and non-tied lessees and found that: tied publicans are much more likely to say they are struggling financially (57 per cent of all tied publicans compared to 43 per cent of non-tied) and when asked their income say they earn significantly less than free of tie operators.  Tied publicans who are struggling financially also see the beer tie as one of the most significant factors in contributing to their financial problems with 88 per cent indicating it as a contributing factor.  The government is looking to strengthen the code of conduct in this area, but there remain serious concerns about how the beer tie has been operated in recent years by the big pub companies.

Why does any of this matter? Well the public house is more than just a retail business: it plays an important role at the heart of many local communities, providing a hub through which social networks can be maintained and extended. An opinion poll conducted for IPPR found that outside the home the pub scored the highest of any location as a place where people ‘meet and get together with others in their neighbourhood’: 36 per cent of respondents said that pubs were important for this purpose, compared with 32 per cent saying other people’s houses, 20 per cent saying local cafes and restaurants and 15 per cent saying local shops.

Pubs are also perceived to be the most important social institution for promoting interactions between people from different backgrounds at the local level. When asked where in the last six months they had mixed socially with people from a different background to their own, the pub was the most chosen location with 36 per cent, followed by the home at 26 per cent, work and college at 26 per cent and the local shops at 22 per cent.

Pubs have long been associated with community and civic participation. In the 18th century, for example, working men’s clubs, unions and Jacobite clubs made pubs their meeting places. Tory and Whig ale houses were also established as places to meet and debate. Pubs continue to provide rooms for local charities and voluntary groups to hold their meetings in and particularly in local villages, pubs often provide the only community meeting space, outside the church. The average pub raises around £3000 a year for charitable causes.

In rural areas in particular community pubs have become the host for a range of important public services. At the more informal end pubs can provide an important network of social support, with people able borrow things, get advice from one another and look out for each other. More formally a number of pubs, particularly in rural areas, are delivering important services, such as running the local shop, taking over a post office threatened with closure or providing access to broadband internet.

In addition to these community benefits community pubs add a great deal to local economies. Nationally, the pub industry amounts to 2 per cent of national GDP and community pubs provide 350,000 full- or part-time jobs. In all, the brewing and pub sector generates £28 billion of economic activity, compared with £20 billion by the airline sector, £18 billion by the radio and TV sector and £18 billion by clothes retailing. At the local level, it is estimated that each pub injects an average of £80,000 into their local economy.

So, what is wrong with the current policy framework in relation to pubs? Currently policy fails to recognise that very many pubs are more than just businesses, but also perform important community functions which if lost can have a serious impact on the quality of local community life. The community pub therefore requires greater recognition in legislative and policy terms as an important local amenity.

To provide greater support to the majority of well-run community pubs, IPPR recommends that where pubs act as local community hubs they should be granted 50 per cent business rate relief. We have produced a method for measuring the social impact of a community pub which could be used to determine which pubs should qualify.  Planning law should be reformed to provide greater protection for community pubs and in particular the Government should close the loophole in the law that allows pubs to be demolished without planning permission. A minimum price for a unit of alcohol should be introduced to prevent irresponsible promotions and close the gap between the on and the off trades.

The relationship between the large pub companies and their lessees needs to be rebalanced. Pub companies with more than 500 pubs offering commercial FRI leases should over a period of time provide flexibility to lessees including a guest beer option and an option to become free of tie accompanied by an open market rent review.  There should be a single stronger and more comprehensive code of practice supported by an independently constituted adjudicator with the ability to provide redress to lessees where the code is breached

There is no one magic bullet that will simultaneously solve the problems facing Britain’s community pubs. However, taken as a whole, this package of measures should ensure that local pubs can continue to play a role in supporting community life for many generations to come.

 
 

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Rick Muir, Associate Director for Public Service Reform