Statutory Code: Plans to legislate 'could close 1,600 pubs'
The report from London Economics says the UK probably has c6,000 too many pubs and a “sustainable number” would be about 45,000.
The report looks at the direct impact on the pub industry of different proposals under current Government plans, which include a statutory code.
For example, if the code was introduced with no guest beer option it would lead to 1,500 to 4,800 closures in the short term and a loss of 7,500 to 23,700 jobs.
The addition of a guest beer option would increase this to between 4,600 and 6,400 closures and between 18,800 and 38,100 job losses.
Free-of-tie option
A free-of-tie option would lead to between 4,600 to 6,400 closures and 23,000 to 31,600 job losses, it says.
In the longer term, the introduction of statutory code including a guest beer option could see up to 1,600 closures, and with a free-of-tie option this would be up to 1,300.
1,600 pubs would close
The report says: “It is our conclusion that the reforms proposed in the consultation will close up to 1,600 pubs, although there is very great uncertainty about the precise value.
“In particular, the size of the transfer from pubcos to tenants resulting from the ‘no worse off’ principle is very hard to estimate, our results reflect the impact of a range of possible transfer values.
“However, there is clearly surplus pub capacity, in quite a volatile market where, with so many pubs on the margin of viability it is hard to determine which pubs will close. Stakeholders raised with us that there may be up to 6,000 surplus pubs in the UK forming 12% of the market, and if this policy did deliver several thousand closed pubs it would act as a substantial fraction of this long‐term trend which is likely to occur unless major changes to tax policy and social norms take place.
Boost to other pubs
“If one assumes, as we have done, 60% of consumers move to another pub that implies that, on average pubs which remain will see footfalls 7.2% higher than present. This would be sufficient to turn a poorly performing pub into a more attractive prospect if it can see the immediate future out. As such it may deliver enough of a boost to other pubs to reduce closure rates in the medium term.”
