Pubco bosses: ‘cancelling pub rents will leave the sector in disarray’

By Ed Bedington

- Last updated on GMT

Trade body view: the Government grants are to help pubs cover rental payments, according to Emma McClarkin
Trade body view: the Government grants are to help pubs cover rental payments, according to Emma McClarkin

Related tags: Rent, Bbpa, Coronavirus

There are growing calls from across the sector for pubcos to cancel rents entirely during the coronavirus crisis.

However, this contradicts instructions from the Chancellor Rishi Sunak, who set out the position that the grant money being given to pubs was to pay “fixed costs”, which included rent.

The Morning Advertiser​ (MA​) is aware of the growing demands for pub companies to go beyond merely deferring and, indeed, some have cancelled rents entirely for defined periods of time that are under review.

With confusion on the issue rife, MA​ has approached the chief executives of the leading pub companies to call on them to set out their stall when it comes to the position of rents and support for the sector.

Speaking through the British Beer & Pub Association (BBPA) chief executive Emma McClarkin, the sector has pointed to the Chancellor’s comments on the purpose of Government funding.

McClarkin said: “The support from Government in the form of grant payments of £10,000 and £25,000, in addition to the business rates holiday this year, have been warmly welcomed by our sector.

“When announcing this vital support for the UK economy and businesses, Chancellor Rishi Sunak was explicit: ‘Businesses have fixed costs that we will target support at – most of these have two major fixed costs: rent and staff’.

“On the purpose of the grants announced in the support package, he was even clearer that the ‘…grants we have given actually provide a lot of cover to cover those fixed rental payments.

McClarkin said the intention of the support package is clear: “This means pubs, like other businesses, have the support they need to continue to meet their fixed outgoings – supporting the entire business ecosystem.”

On top of this, however, she pointed to the fact that BBPA members were working hard to take further actions to help alleviate immediate impacts on pubs: “Not least deferring rent collections, which is in direct contrast with other commercial landlords that are pursuing businesses for immediate payment even though they are not open.”

She said her organisation would also continue to lobby Government hard to increase support and the speed with which it is delivered.  

McClarkin added: “We are all too aware though that the Government support can’t come quick enough, which is why we, as the BBPA, are in regular discussions with officials and ministers, urging them to get grant funding to publicans as quickly as possible.

“Our members are helping publicans wherever they can, but cash flow and, ultimately, finite resources for our members mean this Government support is an essential part of their support package. With pubs closed and no cash coming in, our members are also having to make significant sacrifices to try and safeguard the survival of their businesses.”

She went on to point out that pub companies themselves are not being granted rent cancellations from commercial landlords. “At best, only deferments and, therefore, they have ongoing future costs themselves. These are also exacerbated by other fixed costs such as interest payments.

“Crucially, as employers supporting thousands of jobs in these challenging times, they have a commitment and duty to protect people’s livelihoods in their operations. 

“It is why many companies have been forced to access the Government’s Coronavirus Job Retention Scheme themselves, so that when we are all through this crisis they are there and ready to help our sector get back on its feet. Otherwise, when pubs are allowed to reopen, you could see people unable to return to work, investment cancelled and vital maintenance postponed.”

She repeated calls for the entire sector to work together to get through the crisis: “The health of the pub sector is closely linked with the health of our members’ businesses – we are all a partnership. 

“We all love pubs and are passionate about doing what is best for them. Only by working together, united as an industry, can we do that and get through this crisis. That is why, in this time of crisis, we are doing everything we can as an industry to help everyone through it and will continue to do so.”

Below is the full letter from Emma McClarkin, chief executive of the British Beer & Pub Association:

This is an extraordinary time for our sector, the like of which we have never seen before, and it is important that we all work in partnership to protect it. That is why we acknowledge the calls many publicans are making on rent payments and recognise the pressures they face.   

The support from Government in the form of grant payments of £10,000 and £25,000, in addition to the business rates holiday this year, have been warmly welcomed by our sector. When announcing this vital support for the UK economy and businesses, Chancellor Rishi Sunak was explicit:

“Businesses have fixed costs that we will target support at – most of these have two major fixed costs, rent and staff.”

On the purpose of the grants announced in the support package he was even clearer that the “… grants we have given actually provide a lot of cover to cover those fixed rental payments”.

The Chancellor’s intent with his support package is clear: to help cover fixed business costs, including rent. This means pubs, like other businesses, have the support they need to continue to meet their fixed outgoings – supporting the entire business ecosystem. 

The BBPA and our members are acutely aware of the situation facing publicans across the UK. Therefore, in addition to this explicit support on rent and other costs, we have collectively lobbied the Government to provide further support to pubs. Our members have also taken actions as operators to further alleviate the immediate impact on their pubs. Not least deferring rent collections, which is in direct contrast with other commercial landlords that are pursuing businesses for immediate payment even though they are not open.

We are all too aware though that the Government support can’t come quick enough, which is why we, as the BBPA, are in regular discussions with officials and ministers, urging them to get grant funding to publicans as quickly as possible. Our members are helping publicans wherever they can, but cash flow and, ultimately, finite resources for our members mean this Government support is an essential part of their support package. With pubs closed and no cash coming in, our members are also having to make significant sacrifices to try and safeguard the survival of their businesses.

Our members have not been granted rent cancellations from commercial landlords, at best only deferments and, therefore, they have ongoing future costs themselves. These are also exacerbated by other fixed costs such as interest payments. Crucially, as employers supporting thousands of jobs in these challenging times, they have a commitment and duty to protect people’s livelihoods in their operations. It is why many companies have been forced to access the Government’s Coronavirus Job Retention Scheme themselves, so that when we are all through this crisis they are there and ready to help our sector get back on its feet. Otherwise, when pubs are allowed to reopen, you could see people unable to return to work, investment cancelled and vital maintenance postponed.

Of course, we want publicans to be in the best position possible to hit the ground running when this awful crisis is over. The health of the pub sector is closely linked with the health of our members’ businesses – we are all a partnership. It is why I am in daily dialogue with chief executives from all of our member companies to ensure that we are working together for the long-term good of all pubs.

We all love pubs and are passionate about doing what is best for them. Only by working together, united as an industry, can we do that and get through this crisis. That is why, in this time of crisis, we are doing everything we can as an industry to help everyone through it and will continue to do so.

Related topics: Property law, UnitedWeStand

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