What really is behind the 2,000-per-year pub decline?

By Ted Bruning

- Last updated on GMT

Expert eye: Ted Bruning examines why so many pubs have closed
Expert eye: Ted Bruning examines why so many pubs have closed
It goes without saying (doesn’t it?) that a reduction in beer duty would help Britain’s pubs, currently disappearing at a rate approaching 2,000 a year?

And when David Cunningham, programme director at Britain’s Beer Alliance, says the Long Live the Local​ campaign “will raise awareness of the jeopardy our local pubs face from an unprecedented range of tax pressures, specifically beer duty, which should leave the Government with no illusions about the strength of feeling behind protecting the UK’s pubs and the communities that rely on them” – well, who could argue?

And when he adds: “In light of the range of tax pressures pubs face, the number of precious institutions we have already lost forever, and the human impact of planned beer duty rises… we need a change in our approach and a new campaign,” you can hardly stop yourself from cheering.

Sadly, none of it is true.

Beer duty adjusted for inflation hasn’t increased over the years. In fact, according to the Institute of Fiscal Studies beer duty is actually lower than it was in 1988 when GrandMet launched the 20-year Inntrepreneur lease.

It’s a similar story with business rates. The total collected by local councils rose from £22.4bn in 2015-16 to an estimated £24.9bn in the current year, almost exactly in line with inflation. At the bottom, then, it’s not tax that’s the problem. So it must be something else.

Make no mistake, the crisis is existential. The generic all-purpose, old-school pub is in the middle of an extinction event – not on the eve of one, not facing one, not at risk from one, but right in one.

Bloody and brutal

The process is bloody and brutal, and there’s no sign to an end of it. And it’s the second such event in my 61-year lifespan. The first, in the ’80s and ’90s, reduced the number of once-ubiquitous, wet-led, food-free village or street-corner locals to a rump. Such pubs still exist, but they are so rare that they constitute a niche in themselves. Now more broadly based community pubs are in the same terminal decline.

We can argue about social changes as the cause till the cows come home to roost, but the fact is that some licensees have been able to adapt, and not just by building a smoking shelter and stocking 15 artisan gins. They have grasped that there are no longer enough casual regulars to maintain the viability of a business of any size, and that going out is, for the vast majority, an experience-led event for which there is an unprecedented range of competition.

Most haven’t though and the loss of generic pubs will continue until those that have failed to adapt – the small businesses in big, expensive shells – are weeded out, and who knows how many that will leave? 15,000? 10,000? Fewer?

The slide could be stopped before then, but only if the impossible happens – only if Mr Cunningham’s vaunted change in approach by the big leased pub chains were anything more than a press release and some PoS material. Because the elephant in Mr Cunningham’s room is pubco rents and restrictions.

The model of upward-only rent reviews, put-and-keep obligations, minimum purchase, full wholesale prices, supposed asset value that (as it transpired) no bank would lend on and all the other burdens of the standard lease was dreamed up by Grand Met’s estates director Mike Dunthorne more than 30 years ago and was eagerly imitated by the lease chains that floated off on rafts of debt from the ‘big six’ following the Beer Orders.

The subsequent downturn forced most of them to securitise their rental streams and clapped financial irons on lessees who – as the only productive components in the whole dizzy pyramid – had to and have to pay more and more for less and less.

So, the income that would give them and lenders the confidence to invest in adapting to changing trading conditions has been siphoned off not by the Chancellor, but by their landlords. And since there is no chance of a general halving of rents, there is only one way of preserving the sort of casual drinking and dining we are about to lose: independence.

The Butchers Arms

Some years ago, I had the good fortune to interview Martyn Hillier of the Butchers Arms, a tiny bar in a former florist’s in Herne Bay, Kent.

It’s the original micropub: a normal pub stripped right down, with everything unproductive discarded. No kitchen. No dining room. No beer garden. No car park. No staff. No business rates. No gas, and precious little electricity. Not even a flat. Just a bar, a WC, Martyn, a cadre of enthusiastic regulars, and beer at open market prices.

The regulars are as keen on real ale as he is, and he knows there are enough of them in Herne Bay to keep a lean and focused operation like his, not just going, but fairly skimming along.

Martyn’s example inspired me to put together a manual explaining how he did it; and while researching my book, The Bar Owners’ Handbook​, I came across many others like him, who had looked for low-rent shop fronts to convert, done so as cheaply as possible (£8,000 in one case, including stock, all paid for on a credit card), cut overheads to the bone, and achieved margins of 60% or more to make a good living (and an agreeable lifestyle) on a low turnover.

And all because they had no pubco on their backs. Anyone can do it and more and more people are.

Taxes, though, are not the issue in the not-so-slow death of casual drinking, and for pubcos to expect the taxpayer to subsidise their failures under the pretence of a ‘campaign’ is outrageous.

The future of the pub as we used to know it (and can know it again) is the micropub, where we can drop in for a pint and a chat and know that the only people taking our money are the brewer and the licensee, and in neither case do we begrudge it.

Ted Bruning is an award-winning beer writer with over 20 years’ experience in the sector. His latest book, The Bar Owner's Handbook by Ted Bruning, is available from www.posthousepublishing.com​ for £12.95.

Related topics: Legislation

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