Opinion

Pubs with rateable value above £51k are being penalised

By Phil Dixon, trade adviser

- Last updated on GMT

Grants plea: trade adviser Phil Dixon believes all pubs should be treated on an individual basis
Grants plea: trade adviser Phil Dixon believes all pubs should be treated on an individual basis

Related tags: Coronavirus, Rateable values

When you have advised and represented publicans for four decades, you think you have experienced difficult times: recessions, floods, foot and mouth, Chernobyl fallout, draymen’s strikes... but a worldwide pandemic that closes all UK pubs is, sadly, just unprecedented.

It is certainly a complicated situation. Publicans with an rateable value (RV) of £51,000 and under can obtain grant support but, arguably, Britain’s best tenants/lessees/free traders/multiple operators with an RV over £51,000 cannot? Many are major employers and, in local cases, have staff that have been with them forever.

What is interesting to witness are people who have campaigned against ‘the tie’ and that family brewers need to have legislation thrust upon them, are now applauding those very same companies. Many, incidentally, who operate a 100% tie for all wet products on the support they have been able to offer by cancelling rents.

However can all the major players afford to do the same? In truth, without Government support, I doubt it. The exception was Admiral Taverns, which I have to say, was pleasantly surprising but how long they can sustain this remains to be seen.

One policy for four situations?

I am, though, not convinced a one-size-fits-all policy is right. Let’s compare four local tenanted/leased pubs:

  • Pub A: RV £15,750. Rent £12,000. Turnover £160,000. Staff: 2 part time
  • Pub B: RV £50,000. Rent £42,000. Turnover £700,000. Staff: 9 full time
  • Pub C: RV £65,000. Rent £55,000. Turnover £1,100,000. Staff: 11 full, 9 part time
  • Pub D: RV £84,000. Rent (recent MRO (taken market-rent-only option), now free of tie) £110,000 (ouch!). Turnover £1,100,000. Staff: 16 full time

In cases A and B, the tenants will receive a £25,000 grant, which, according to Chancellor Rishi Sunak is to help fixed costs, and he clearly stated (twice) rent as a fixed cost. In the case of pub A, I find myself wondering if it is unreasonable that the rent element, ie, £3,000 of the £25,000 plus any self-employed income support/profits compensation obtained ought to be paid to the landlord company.

In the case of pub B, it may well be a percentage of rent could still be paid.

Pub C though is in the s**t. Pub D, unfortunately, is in deeper s**t and both will need some full-on support. In other words, it seems to me the key principle is to ensure our pubs and publicans survive but in the major companies probably supportive terms may need to vary on an individual basis. The issue of losing potential assistance by electing to go free of tie will be a real concern.

Greater contribution needed for some than others

My argument is that publicans below – or especially those above the £15k to £51k RV sector – need a greater contribution because they will not have been able to access the full £25,000 grant.

Let us also not ignore the pressures on the likes of Stonegate (Ei), which is a very decent company and has won more awards than Meryl Streep. Are the commercial landlords whose pubs they rent offering them any concessions at all? On the contrary, the threatening letters nearly always demanding full rent are being sent out daily to all the major companies.

In the 2008-onwards recession, Enterprise, Punch et al did offer support. I accept, in many cases, by reducing rents to the levels they should have been in the first place. But it was a fact that Ted Tuppen (Enterprise’s CEO) would talk about the £62m they had contributed even if he did it with a face that looked like he had sat on a pineapple in a sauna.

The threat to the nation’s publicans will be, in the main, to those free of tie, yes campaigners, those free of tie, those with RVs over £51,000 and those in the quasi/franchise area where all they receive is a percentage of a turnover that is now non-existent.

It is complex, it is unique but I must also stress a simple approach of a deferral of rent with an intent to recoup it across the board is equally totally unacceptable. It has to be each case on its merits.

So all pubs will need and require support. I just think it will be considerable in some cases and not as much in others. So it is not straightforward but it is a requirement for the hospitality industry to work together to face the greatest threat in its history.

Related topics: Other operators, UnitedWeStand

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