Campaigners attack London Economics report on statutory code

Research from London Economics, commissioned by the Government as part of its consultation on a pub industry statutory code and adjudicator, said the country probably has c6,000 too many pubs and a sustainable number would be around 45,000.

However, a new report - written by Greg Mulholland, chair of the All-Party Parliamentary Save the Pub Group, Gareth Epps, steering group member of the Fair Deal for Your Local campaign, and Simon Clarke of the Fair Pint campaign - has stated that the research is “fundamentally flawed”, and “a waste of taxpayers’ money”.

According to figures from a Freedom of Information (FOI) request submitted by the group, LE charged the Department of Business Innovation and Skills £26,000 for ‘fieldwork’ while the total cost of the work came to almost £40,000.

The group stated that issues with the research include:​

• The report is based on information provided by the pubcos with no verifiably independent research and no consultation
• The research measures pubco viability, not pub viability
• A complete failure to understand that just because a pubco received a lesser share of pub profit, they cannot simply evict the tenant and close the pub, as they have to honour the lease or tenancy
• A misunderstanding of the pubco economic model and factual errors in consideration and conclusion
• Misreporting of industry statistics and evidence
• The report is based on confidential data supplied by pub companies that are actively lobbying to prevent the Government taking action

It added that LE did not speak to any of the 10 industry organisations that support the national Fair Deal for Your Local campaign.

'Balanced overview'​

In response, Richard Heys, co-author of the London Economics report, said the research was reliant on the data that could be accessed from pub companies but was undertaken independently, “in line with our professional expertise in this type of analysis” and gives a “balanced overview” of the position and likely outcomes.

“London Economics was commissioned by BIS to review the impact the proposals would have in relation to the ways pub companies and tenants may react to the change,” he said.

“We were not ​commissioned to investigate whether we consider the tied pub system to be a fair or good system for managing pubs, nor were we commissioned whether in our view tied tenants were being treated fairly compared to free-of-tie tenants.

Remit​

“Our remit was to source data to identify the state of financial health of the pub companies and, given their history of divesting pubs, to attempt to quantify any further divestments which occur as a result of their income reducing and putting further pressure on their financial position. It is important to note that the impact on the different pub companies varied significantly.

“We consider that our report does not draw any judgement on what should​ happen, what is meant by the term fair, ​or whether the current position of tied tenants is fair or not. It merely reports on what we would expect pub companies​ to do, given previous experience and the financial situation they find themselves in​.”