Dave Law, who runs The Eagle Ale House on Chatham Road, just off Northcote Road in Battersea has appeared in the Guardian talking about the plight of pubs whose landlords refuse to cancel their rent during covid19 when they have been unable to trade. But the problem seems to stretch further back than the pandemic...
With only one of the big six landlords cancelling rents, tenants fear for their future
While there are hopes that pubs could reopen before the end of the summer as restrictions begin to ease, times in the industry are tighter than ever.
Even before Covid-19 forced pubs to call time indefinitely, trouble was brewing. Many of the 9,126 proprietors who lease their premises from one of the UK’s major pub companies, or pubcos, have been fighting to reform or abolish the “beer tie” for years.
The tie, currently the subject of a regulatory review, is an ancient but controversial deal under which pubs buy their beer at inflated prices from the business that owns their property. In exchange, supposedly, they pay lower rents.
According to some publicans, the big pubcos have long exploited weaknesses in the tie to their own ends, trapping tenants in unfavourable terms that make it nigh on impossible to run the establishments at a profit. Now, with the excess strain placed on the industry, festering resentment is at risk of boiling over into a full-blown pub brawl.
The bone of contention is that, despite the lockdown choking off publicans’ source of income, nearly all of the major pub companies have refused to cancel rents, opting to defer their demands or offer a discounted rate instead.
The problem is that many publicans will reopen with a debt they won't be able to repay.
“We need rent to be cancelled during the period,” insisted Dave Law, who runs the Eagle Ale House near London’s Clapham Common. “We’re being forced to pay based on turnover that we can’t make because of government decree. Rents are already inflated and when we come out of this, we’re going to be in a recession.”
Dave fears he won’t be able to recoup his lockdown losses unless pubcos step up and share more of the pain.
The Pubs Code Adjudicator, which regulates the beer tie, has twice warned pub companies to make sure they are being “fair” to tenants. So far, the pleas have had little effect.
There is some help at hand, in the form of the government’s decision to waive business rates this year. Pubs below a certain size are also eligible for a grant of up to £25,000 from the state to help them pay costs.
The concern, though, is that as soon as they receive the money, publicans will simply be handing it straight over as rent to pubcos who ought to be better able to take a financial hit. That would leave publicans dipping into their own savings – if they have them – to pay other costs.
One pub-owning firm, Admiral Taverns, has broken ranks with its peers. On 21 March, it cancelled all rent until the end of April. After that, pubs that don’t receive any government support will remain free of rent. Any that do receive help will be asked to hand over only a small percentage of it as rent, in most cases less than half of what they would ordinarily pay.
A spokesperson said the aim was to help pubs recover from the pandemic “not weighed down by debt and fear about the future”. But Admiral is the only one of the big six pubcos to take this step, and the other players in the sector are taking a tougher stance.
Punch Taverns, Ei Group, Star Pubs & Bars, Greene King and Marston’s all told the Guardian that they were taking steps to help pubs that needed it. In some cases this could involve rent reductions. None, though, have taken a blanket decision to cancel rents altogether. Instead, some have taken measures that have enraged their tenants.
The British Pub Confederation declared itself “appalled” at a letter sent by Heineken-owned Star Pubs & Bars to its tenants. The company proposed a discount on rents but told publicans that unless they agreed to its terms, they would be charged the full amount. They would also lose the discount, they were told, if they revealed the terms of the agreement.
A Star spokesperson said: “We’ve already written to clarify the content of the letter regarding rent reductions with our licensees, confirming they don’t have to pay any of their reduced rent until June or when pubs reopen.”
The British Beer and Pub Association (BBPA), the pub industry’s trade body, has warned that thousands of pubs could go out of business unless the government extends financial support until they can reopen.
But the BBPA, backed as it is by the major pubcos, had less to say about rents. “Rent is a commercial decision and the BBPA does not advise its members on commercial decisions,” it said.
Publicans, typically a cynical bunch, won’t be surprised.
Original article in the Guardian: https://www.theguardian.com/business/20 ... licans-say
1. Exterior of The Eagle Pun by NappyValleyNet
2. David Law behind the bar at the Eagle Ale House by Martin Godwin/The Guardian