Squeaky bum time as statutory code consultation nears final whistle
The rhetoric has been ramped up, with claim and counter-claim from the main protagonists. There is so much at stake for both sides that it is now, to quote Sir Alex Ferguson, “squeaky bum time”.
As we enter injury time, Ted Tuppen, ‘manager’ of Enterprise Inns, is accusing CAMRA (the Campaign for Real Ale) — one of the star players for Fair Deal For Your Local — of performing a blatant dive to win a last-minute penalty, with its survey of licensees showing that 84% of those tied to the big pubcos claim to earn less than £15,000 a year.
CAMRA, for its part, feels its team has been cynically fouled all game by an aggressive beer tie.
Has the pubcos’ behaviour crossed the line? Well, without the equivalent of goal-line technology, we’ll have to leave this call to the officials. Referee Vince Cable will have the task of blowing the final whistle on this bad-tempered affair and declaring the winner. His decision will be final… pending any appeal!
Let me now try to extract myself from this sporting analogy before I get completely lost in my own metaphor maze, and briefly examine the mystery of the licensee earnings conundrum: how can two sets of data point to such wildly different conclusions?
CAMRA commissioned a survey of 600 licensees via CGA Strategy and asked them to state the level of personal income they earn from their pub from a range of earnings bands. Notwithstanding the embarrassing error made in the original release, it's figures put tied licensee average earnings at around £12,000.
Enterprise is calculating ‘publican profit potential’ based on its rental negotiations, which it argues settle on or around a figure that is half of pre-rent profit. Its average figure comes in at £34,000.
Neither method is entirely reliable. As someone who has, in a former life, run a salary survey business, I know the limitations of simply asking people how much they earn. Among employees, it is estimated that they inflate their salaries by as much as 20% to exaggerate their status. Among the self-employed, there are good reasons why they might want to understate their earnings.
At least with employees, you can use payroll data. But self-employment incomes are notoriously hard to benchmark. A pub tenant’s earnings are certainly not comparable with the gross salaries of their managed pub GM equivalents, especially if they have accommodation as part of the deal.
Equally, other than in those circumstances where a licensee agrees to an open-book accounting relationship, a pubco will never really know its tenants’ earnings.
I suspect the truth of the matter lies somewhere in between these two figures, and that if we took a midpoint of £23,000 we’d not be far wrong. But there’s no discernible science in any of this, and certainly not sufficient rigour for the Government to be using it as the basis for a far-reaching decision on the future of the pub industry.
