FSB attacks pubco profits

Related tags Fsb Minimum wage

The Federation of Small Businesses (FSB) has accused pub companies of "creaming off huge profits" from licensees. In its most outspoken comment on...

The Federation of Small Businesses (FSB) has accused pub companies of "creaming off huge profits" from licensees. In its most outspoken comment on the pubco-tenant relationship yet, the FSB claims licensees are being left to survive on earnings less than the minimum wage.

It says that pubco profits soar while many publicans work more than 90 hours a week for wages under £200, and that almost a quarter of couples who run pubs have to take a second job to make ends meet.

The FSB will use its findings as part of a submission to the Trade and Industry Select Committee, which launched an investigation into the pubco-tenant relationship on May 6.

It quotes a publican in the Midlands who earns £10,400 a year compared to the £48,000 taken last year by the company which owns the pub. Another in the West Country has provided profit and loss accounts which show that his annual income is less than £8,000.

John Walker, FSB policy chairman, said: "Pubcos have their tenants over a barrel. Their licensees pay far more than the market price for beer, give up most of their income from fruit machines, and are subject to 'surprise inspections' because the companies enjoy 'rights of entry' to their premises.

"Power has been transferred from large brewers to large pubcos and tenants still lose out."

Lynn Whiteley, licensee at the Sarah Mansfield pub in Rugby, Warwickshire, said: "I can believe some licensees are only earning £200 a week, we do a bit more but we're certainly never going to make a lot of money in this trade."

But Ted Tuppen, chief executive of the 9,000-strong pubco Enterprise, argues that the relationship remains fair. He said: "Our detailed analysis clearly shows that the vast majority of our tenants make substantially more than the average wage in this country, not the minimum.

"I suspect the FSB research may be biased - therefore, misleading. Our evidence supports our view that the relationship between the pubco and the vast majority of our tenants is fair and mutually profitable."

A poll of 622 licensees on thePublican.com found 74 per cent thought the relationship was weighted in favour of the landlord. Only three per cent said it was in favour of the tenant, five per cent considered it equal, while 18 per cent said there were rewards to be earned.

Click here to cast your vote in the poll.