8/10 for CAMRA

Mike Benner, the chief executive of CAMRA has written to the Chancellor asking him to consider some important points. There is a press realise on the CAMRA site. This is also reported by The Morning Advertiser.

This clearly comes in the wake of the excellent Community Pub Inquiry report. Although this report is grand it will not work to simply give politicians recommendations. They will only act if they think it improves their vote. So we need to show the government that we care about the findings. We need to gain the support of the popular opinion.

CAMRA is doing the right thing in starting to publicise the issues contained within the report. My only complaint is that it's not enough yet and it's happening too slowly. However, it's the right move.

Looking at the responses to the Morning Advertiser article is interesting though. The ferocity of the attacks on CAMRA and the tied system are alarming. From the CAMRA perspective I rather think that this is a little like a pupil who has done his best piece of work to date, only to be told off by teacher for a few spelling mistakes.

It does also show just how hated the tied system is, mainly by licensees, but still, CAMRA perhaps does need to think about this.

Cause and effect

Newtons Third Law Of Motion states: "To every action there is an equal and opposite reaction."

Now although in economic and social terms it would be harder to apply this law absolutely, there is, I'm sure, some parallels.

The smoking ban is a clear example. From my biased view point I am now very pleased about the smoking ban, primarily because the style of pub I run has probably benefited and also because I am now a non smoker as a result. It is clear that there are many pubs not in this situation. It is one of the myriad of effects that are causing problems with some pubs as smokers who might not smoke in their own homes, now feel they might as well smoke on their own door step. I might be the case that for the health of the nation and to weed out the poorest of pubs this is worth the pain, or maybe not.

The CAMRA full pints campaign claims that the pub industry is ripping of consumers to the tune of £481 million a year. Firstly, if this were to be true then the pub industry would not be in the terrible state it is in. The truth is that many pubs are struggling to make a profit. Many larger brewery's are reporting dropping profits. So where is this mystical £481 million going?

It may well be the case that more clarity is required for the pint measure. A lined glass does show clearly the pint mark. The reality is that if legislation were to be brought in to ensure pints were uniform, to the line, then more product would be used, costing the pub more and so the only way to maintain profitability would be to put up the price of the pint. Cause and effect.

Since owning my own pub I have become more aware of the number of people who have tried to make a living out of the pub industry and failed. I know a significant number of people that have tried very hard to make their pub work and found the rewards just not significant enough to be worth the effort. Many of these people are significantly disillusioned and would never run a pub again, despite having gained significant experience along the way.

The Community Pub Inquiry there is a mention, if disappointingly brief, about how increasingly difficult it is to find people to run pubs. (see para 40 page 12). It would be useful for the industry to find a way to make running a pub attractive again. This would be especially good if we could find a way to retain valuable skills lost due to failing pubs.

Kipling often comes to mind during our days here, and at the risk of going against the quote, I find this useful:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;

I believe a prerequisite for being a good licensee is a desire to achieve the aims of Kipling in "If" His advice is hard to achieve and I regularly fail on the first two lines:

IF you can keep your head when all about you
Are losing theirs and blaming it on you,

I do believe many achieve this, and go on to "build 'em up with worn-out tools". The great shame is that they rebuild away from the pub industry, and often without breath of the loss they suffered at the hands of the industry.

The inability of a freeholder to achieve market value for a failing pub drives many away from the industry vowing never to return. Having lost their all, but perhaps not wanting ever to share the experience of their failure with others.

One of my criticisms of the Community Pub Inquiry, and I hesitate to criticise an otherwise excellent piece of work, is that it suggests that it should be made harder for pubs to have their uses changed. I believe that there are huge numbers of past licensees who have lost much, and gained nothing other that skills that the pub industry needs. Failing to allow individuals to sell their property for it's true market value is driving people out of the industry. Cause and effect.

It may well be true that this pub or that is an important part of the community. But if the community is unable or unwilling to financially support the establishment then is it fair that we burn out an increasing number of good people and insisting that there is an ever decreasing value for pub property?

I believe there are many CAMRA campaigns where the end result of the campaigning may be doing more harm to the pub industry than is realised. I believe that the message from the Inquiry towards planning restrictions on change of use comes from CAMRA HQ. I strongly believe that we need a shrinkage in the number of pubs to make the remainder better and to match the number of available people to the number of pubs - otherwise, the likes of me, the enthusiastic licensee, will disappear completely.

Government - "Not in the business of keeping pubs open"

In the Community Pub Inquiry the Department for Culture, Media and Sport (DCMS) are reported to have stated that they are not in the business of keeping pubs open. It is my view that government regulation and legislation is a major contributor to the failure of the pub as a small business.

DCMS are responsible for government policy on tourism and leisure including licensing laws. They are the main department that could do something to prevent the demise of the small pub.

We should remember that every small business that needs to employ a few people or has public areas are all having similar problems. The small corner shop, the little greengrocer or butcher are also burdened. There may be some advantages of the legislation that has been brought in. It is much harder now for rogue traders to do a bodge job on your electrics or your gas central heating. Perhaps this is good. Perhaps the small independent pub is just one type of small rogue trader that needs crushing.

The difference between the corner shop and a pub is complexity of the business, and if you are a small shop owner please don't be under the illusion I think you have an easy job. A pub has nearly every aspect of legislation to deal with. Health and safety at work, food safety, public safety, alcohol licencing, public disorder, employment rights, building regulations, fire safety, public entertainment, performing rights licence, etc. On top of this, because of the vast range of products that the pub goer expects to have available, has very complex accounts. A pub is possibly the most complex type of small business there is to run.

The problem is, for the small pub, the regulations are completely pointless. Take for instance the fire regulations. Last year their was a fire at a hotel in Newquay where 3 people were killed. That was tragic. The interesting thing is that the event made a major news story as would any hotel fire that killed people. The fact is that this incident, though very tragic, is extremely rare and despite continual increases in legislation there is little if any reduction in fatalities in the small community pub. The current situation is that the fire safety inspection is now the responsibility of the pub owner - the fire service is now just an enforcement rather than inspecting authority. This is a measure brought in to save costs for the government but puts these costs disproportionately onto the pub.

A similar situation arises with food safety. The new HACCAP regulations are designed to reduce the incidence of food poisoning by less than 20%. If you knew the complexities of HACCAP then you would understand that for a small business this far exceeds the laws of diminishing returns. In fact I imagine this sort of regulation simply distracts the licensee from actually running a safe kitchen as he or she is often the one in the kitchen telling the staff to keep the raw chicken away from the lettuce. If the licensee is too busy filling in paperwork then this is time away from safety supervision. HACCAP should not be required where the business owner acts as a daily on the job supervisor.

I am no fan of the Pubco. I am unlikely to ever be one unless I end up owning a chain of pubs myself. I am sure that they have a commercial advantage by having the resources to tackle the swaths of regulation that exists. The sole freehold trader does not have the advantage of this support. It is with some surprise then that several Pubco's have contributed evidence to the inquiry and they all seem to be supporting the idea that regulation has gone far too far.

So consider these things next time you are canvased by a Parliamentary Candidate. Ask them what they are going to do about regulation that has gone far beyond the point of sensible diminishing returns. Specifically ask them if they are going to simplify legislation that affects the pub industry. Ask them if the Government would like to make it their business to keep pubs open or if they think the small pub is a rogue trader that needs to be eliminated.

Pub operating costs soar

I posted yesterday about the All Party Parliamentary Beer Group report on the Community Pub Inquiry.

I've finished reading it and I think the most striking thing about the findings is just how complicated the whole issue of pub viability is. It is just not appropriate to simplify the issues in the way many do. I do believe that it is the best, almost unbiased report I have seen for some time into the overall pub industry and it's problems.

I hope over a series of pieces to try and distill the findings for the reader. But as I say, the overall issues are complex and I would urge anybody who is intent on complaining about beer being too expensive or this or that pub closing should first very carefully read the report.

Today I'm going to simply quote some costs at you. Costs that have escalated over the last 10 years or so.

The operating costs of the average pub are now around 45% of turnover - they used to be more like 32%

Of the operating costs 17% was wages in 1997 - it is now around 50%. This shows that minimum wage, leave entitlement, statutory sick pay and working time directive have had a significant effect as well as a whole raft of other employment laws.

Beer duty has gone up by 27%, whereas duty on wine has only gone up 16% and duty on spirits and ready to drink (RTD) spirit based drinks have only gone up by 3%. To me RTDs are a main catalyst of the increase of alcohol related social problems.

It used to cost a single £12 fee and an instant decision by the Licensing Justices to have a simple change to a licence, called a licence variation. For instance to open up or brick up a door. Now it probably costs £1000 and months of work. This is not helpful when pubs need to adapt to survive. Pubs have not got the resources or time to do this. For a small change the cost of legislation far outstrips the cost of the practical work.

The cost of legislation on pubs is astronomical and moreover the type of legislation is not appropriate. Take HACCAP for instance. This requires a member of the team to document trivia for the environmental (mental) health officer to look at and give the pub Brownie points. This distracts the sole trader from the kitchen where he is often the one ensuring the food is safe. A classic example of paperwork detracting from safety and at the same time making the small business almost impossible to run. It is though, not one single piece of legislation, but the whole raft that is put onto the industry in a one size fits all policy making system.

One recommendation is for the duty on draft beer to be reduced. Alternatively for the VAT on draft products to be decreased. Unfortunately the E.U. prevents that. At least that's what the economic Secretary to the Treasury claims.

It is striking that the report finds that the average profit for the licensee is only half of what he pays to the treasury in VAT and beer duty. This is before he pays his employees' NI and income tax.

I say it again - reader, yes you!! don't let the government ignore this very important piece of work done by the APPBG.

COMMUNITY PUB INQUIRY

I am halfway through reading the report on the Community Pub produced as a result of the All Party Parliamentary Beer Group Inquiry. It makes interesting, if difficult reading.

It can be found here. I think it is excellent and should help the industry - but don't let the government ignore it. It's been published for a couple of weeks and despite having talked to somebody who is very closely involved and reading the trade press as much as time allows, it only came to my attention today. (Probably partly my fault - but I still should have seen it in the trade press or on a blog or something - wake up guys!!)

It discusses the many and varied problems facing the smaller pub business. It includes of course the two major ones often cited:

1. Smoking Ban
2. Cheap supermarket drink

It also lists a whole range of other factors including:

1. Cheap, high quality home entertainment (reading blogs for example!)
2. Rafts and rafts of legislation (boy do I know it)
3. Beer duty increase(27%) is greater than spirits(3%) and wine(16%) (spirits surely are more of an alcohol problem)
4. Overzealous legislation enforcers - the council normally
5. Unfair rating system
6. Rising labour costs (minimum wage and employment rights effects)

And many more.

There will be more on this here - but if you think cheap supermarket booze and the smoking ban are the main issues, read the report and think again.

I believe if the consumer focuses only on the two big issues, because they are the ones that the consumer cares about, pubs will still close at an alarming rate because we miss the point.