Monthly Archives: June 2013

JG & Partners, latest Alcohol Licensing News, Police ‘castigated’ for unbalanced evidence

Police ‘castigated’ for unbalanced evidence on a review

Posted: 26 Jun 2013 05:00 PM PDT

For those of us who regularly appear in review proceedings brought by the police, we know that it is not uncommon to be faced with a large volume of evidence supposedly relating to the premises, but which on close scrutiny proves on occasion not entirely to be the case.

The current Guidance indicates that the ‘licensing authority should accept all reasonable and proportionate representations made by the police unless the authority has evidence that to do so would not be appropriate for the promotion of the licensing objectives. However, it remains incumbent on the police to ensure that their representations can withstand the scrutiny to which they would be subject at a hearing’ (9.12). To our mind, this imposes a responsibility on the police to ensure that the evidence which is presented is fair and balanced.

In a recent case, councillors on Sutton’s licensing sub-committee apparently have heavily criticised police evidence in a licence review carried out on a late entertainment venue in Sutton. Barrister Sarah Clover, who appeared for the venue, confirms that the sub-committee concluded that “a slanted view of the evidence was presented by reason of unsatisfactory editing of the CCTV (footage), to give only a picture which appeared to support the application and omitting footage which showed a truer picture of incidents. The language in the (police) narrative was exaggerated and unnecessarily emotive. We were presented with 1,800 pages of documents by the police – substantial numbers of those pages contained no evidence whatsoever. Police evidence contained little or no recognition of actions taken by the premises licence holder in response to police concerns. The staff witnesses for (the premises) were found to be enthusiastic, professional and passionate about their jobs. The CCTV evidence showed the door staff to be vigilant, to deal with any trouble in a calm manner and to show concern for vulnerable customers.”

 

Clearly any police evidence put forward should be capable of withstanding close scrutiny (and made the subject of such scrutiny) and if it cannot, the police case should be justifiably undermined.

Milton Keynes – Late Night Levy decision deferred

Posted: 26 Jun 2013 05:00 PM PDT

Milton Keynes Council last night deferred a decision on whether to introduce a Late Night Levy across its licensing area. See our previous news article’Milton Keynes to Levy?‘.

 

A cross party working group is to be set up to discuss the matter further with a view that the Licensing Committee will re-consider the matter in late September.

Newcastle Late Night Levy moves a step closer

Posted: 26 Jun 2013 05:00 PM PDT

Newcastle City Council Cabinet yesterday approved the adoption of the Late Night Levy across Newcastle for premises authorised to trade between midnight and 6am.

The decision is open to ‘scrutiny call-in’ and cannot be implemented until the call-in period has expired – this is 10am on Thursday 4 July 2013 and, as it must, their decision was also referred to the full City Council which will consider the matter on Wednesday 3 July 2013 at 6pm. The final determination lies with the full council.

The Cabinet decision in full can be seen here: ‘Cabinet Decision‘.

The decision includes a proposal that the implementation date will be 1 November 2013 and that the operation and effect of the levy should be reviewed in January 2015.

How a Pub Co., Helped a Hero in Afghanistan, Barrel-Dregs (264)

My name is Angie. This is my story.

How a Pub Co., Helped a Hero and his family whilst he was in Afghanistan.

Did they Hell!

A little over four years ago my husband and I bought a Pub Co lease in Northampton. At the time I was a nurse and my husband was a soldier. We knew little about the pub trade but were happy to learn and we believed that this was the perfect opportunity to build a future for ourselves and our three beautiful children – a future that didn’t involve my husband risking his life everyday fighting on the front line in Iraq or Afghanistan.

The pub was owned by a major Pub Co and although it was in desperate need of repair, we managed to borrow some money and this together with our savings, we managed to scrape together the £70k we needed to purchase the lease. The rent was £48k a year which did seem a little high, but the turnover figures we were given seemed to show that with a lot of hard work the business could work.

It didn’t take us long to realise that we had been conned. The pub wasn’t turning over anything like the previous tenants figures suggested and almost from the off we knew we were going to struggle. As I waived my husband off for what was supposed to be his last tour of Afghanistan, both he and I knew it wouldn’t be the last time I would be doing this. It turned out that way too – it wasn’t long before he was getting on that plane again. Even now, over four years later, he is still in Afghanistan and we can’t see a way for our family to be together.

With three children to raise and a unsustainable pub to run I tried hard to make ends meet. I was cleaning, serving drinks, taking in deliveries and working around 80 hours a week to keep the pub open and all the while wondering if my husband would return home safely.

The rent was just too much and the cost of beer was extortionate but Pub Co refused to help. Over the next two years I had three different Pub Co business managers who bullied, threatened and intimidated me. They kept telling me I would lose the pub if I didn’t pay the rent and all the while it was my husband who was sending across money so that I could pay Pub Co and stop them from throwing my family out of the pub. It was an awful time. It still upset’s me now.

There was so much work to do in the pub and we had to fund it all ourselves. The roof was leaking, the heating system didn’t work, the walls in the upstairs apartment were rotten and all the windows needed replacing. The place was a mess. My son’s bedroom was a death trap. We just couldn’t afford to do the repairs and my son was constantly ill. I was truly on my own and my husband was still sending money to pay the rent. Everyday brought the added stress of not knowing if I would be a widow by the end of the day. They knew about my son’s illness but still they refused to help.

I was offered a business recovery plan but it came with a catch. They gave me a small rent concession in exchange for tieing me in for more products. The problem was it actually cost me more money. I limped through a couple of these plans before my husband said no more. They lasted about 12 weeks each time and I was no better off on any of them. At one point I worked out that a bottle of cider from Bookers cost about 74p but when tied into the Pub Co it cost me £1.92. My business recovery plan with the Pub Co was never going to work.

I was placed on stop many times by credit control which means you can’t get any beer and because of the tie you’re not allowed to buy it anywhere else. They force you by beer at ridiculous prices and when you owe them money they stop you from buying it from another supplier. It’s such a ridiculous situation. What good is a pub without beer?

I did buy out on a couple of occasions, I didn’t have a choice – they wouldn’t release my beer order because I owed them rent. I told them I was going to do it because I wasn’t going to let them take the pub off me. I couldn’t. I owed too much money.

They came down to the pub each time I told them I had bought out and each time they fined me. On one occasion they accused me of buying two cases of beer from another supplier. I hadn’t and they knew as much but they still fined £150 a case.

Eventually they realised I was an easy target, a payer if you like and they came down to the pub with some colourful brulines charts. It was a busy Friday night and I was on my own behind the bar. I was told that I had bought out of tie and they were going to take the pub from me and throw my family out on the street. I was frightened and confused and I tried to tell them that they were wrong. They wouldn’t listen and my customers were watching. They made me sign a letter agreeing to pay their £2,500 fine. I wanted them out of the pub I had little choice; I wanted the man to stop. I didn’t read the letter but they told me that it gave them the authority to throw me out of the pub if they caught me buying out again. It was an awful experience and one I will never forget, the Pub Co knew the pub was in trouble yet they sent in a bully to intimidate a mother with three children and take more money. Money I didn’t have.

Not long after, with the pub only selling a couple of products as I couldn’t afford to buy stock, Enterprise offered to buy my fixtures and fittings in order to release cash so that I could pay off some bills. I owed fortunes to the VAT man and PAYE, and the gas and electric companies were hours away from cutting me off. The Pub Co said that I could use the cash for whatever I wanted and we could buy the furniture back over a period of time.

My husband and I thought long and hard about this as we were now wise to the fact that every time the Pub Co walked through the door it would cost us more money. We eventually agreed. We had little choice.

Our furniture was valued and an amount agreed. Over the next couple of weeks we waited for the money but it never came. At my wits end and sick with worry I finally called the Pub Co to find out where the money was. They told me they had used it to pay another buying out fine – something I knew nothing about. They had made the whole thing up. I broke down and cried right in front of my children. They didn’t understand why and I couldn’t explain. I will remember their frightened faces until the day I die.

The fine was £2,500 which meant there was still money left over. I asked if I could have it but again they refused. Over the coming weeks Pub Co used it to secure their rent. Rent at full rate and rent I couldn’t afford. I couldn’t pay my VAT bill and I was worried sick. I was permanently ill, completely exhausted and extremely low. My mental condition was not good. I wasn’t eating or sleeping and I thought of taking my life. How dare they do this to me.

Eventually, with no money, no life to speak off and a pub with no beer I closed the Pub for good. I called the Pub Co and told them they had beaten me and I couldn’t take anymore.

That was a little over two years ago and the whole experience has cost my husband and me all of our life savings. From start to finish the Pub Co took away my sanity my dignity and over £250,000 – everything that my husband and I had ever worked for.

On the day my husband received his Army Pension after 19 years of service we spent every penny of that £9000 in seven minutes, paying bills that were left over from the Pub Co tied pub.

I couldn’t be a mother to my three beautiful young children during those few years and I hate myself for that. A year later and we have nothing left, no pension, no savings, no collateral in our family home, just a huge pile of debt.

When we left the Pub Co pursued us for a further £43k – money they alleged they had lost in income, further fines for buying out and fixtures and fittings. A lie right to the end because they had already taken the furniture.

In court the judge ruled that we could keep our family home. He said that I had suffered enough and I should be allowed to sleep in my own bed.

At least I am safe and happy now and living an ordinary life even if I am surrounded by debt. I have CCJ’s and court orders all over the place and it will take the rest of my working life to pay it off. I have gone back to being a nurse. My crime in this story is I wanted to have a successful business and a better life for my family.

My husband and I have no real future to look forward to as we use all of our money to pay off our debts. I don’t think we will ever see an end to this. Almost two years later I try hard to forget but the pain is still there.

Please don’t let this happen to anyone else ever again.

Wife of a Hero

Potboy Midlands

Note:- The Pub Co guilty of this apalling episode and  dreadful tale, with names has now been posted on Facebook and Twitter and sent to all the relevant MP’s.

Fair Deal For Your Local

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.

 

Alliance Online Catering Equipment – suppliers of Pub and Bar Equipment to the Licensed Industry

Are Punch Taverns falling out with their Backers? Not a smart move.

Backers fall out with Punch Taverns’ over debt

A disagreement over how to restructure Punch Taverns’ £2.4bn debt has deteriorated into a very public bar room brawl between the pub company’s board and a powerful group of lenders.

Giles Thorley made a very lucrative exit, before the frailty of Punch Tavern’s really hit the fan.

The following is an extract from the Telegraph.

Punch’s debt is held in two complex vehicles, dubbed “Punch A” and “Punch B”, which drink up vast amounts of cash to avoid a breach of covenants.

A group of senior lenders has been at loggerheads with Punch Taverns’ board since February, when the company unveiled a plan to restructure its “unsustainable” £2.4bn of securitised debt, held in two complex vehicles.

Punch on Monday published a revised proposal, which sought to alleviate concerns that senior bondholders were not being prioritised in the correct way over junior lenders.

But on Wednesday morning, a special committee set up by the Association of British Insurers (ABI) to represent a group of senior bondholders threw the first punch in a fresh bust-up by describing the revised plan as too “vague”.

The new plan only amounted to a “marginal revision” of the previous proposals, the committee said, as it also attacked Punch’s board for publishing plans publicly “without prior negotiation and discussions” and without allowing bondholders to conduct “appropriate due diligence”.

“Although certain key terms remain to be clarified, the ABI Committee considers that it is unlikely that it will be able to support a proposal developed around the thinking described in the update,” it said.

The statement prompted a strongly-worded riposte from Punch, which is led by executive chairman Stephen Billingham.

Punch accused the ABI special committee of making “inaccurate” statements and insisted it has gone to “great lengths” to engage with disgruntled senior lenders.

Punch also questioned the fees charged by the special committee’s advisers at Rothschild and Latham & Watkins, claiming they were “disproportionate to all other adviser fees”.

Mr Billingham said: “We have had constructive discussions with a broad group of stakeholders, including a number of members of the ABI special committee.

“We are somewhat surprised by the statement…which is inconsistent with that dialogue.”

Punch, which has more than 4,000 pubs in the UK, has made it clear it wants to reach a resolution to its debt woes by the end of this month so it can start acting like a “normal publicly listed company” again.

Punch ballooned to almost 10,000 pubs during an acquisition spree last decade, as a consequence they have changed from a speculators “Darling” to a predictable “Disaster”, now their backers are trying to keep them afloat in a very rough sea, or are the jumping into the “Leaky Life Boats”.

For those backers that haven’t read it go to “The Great Pub Co Con” on Google.

 

An interesting article by Toby Perkins MP on Pub Co’s

Post from Toby Perkins MP: Pub Co Reform

Published on 7th June 2013 by Emily RyansCAMRA Logo

Toby Perkins is Shadow Minister for Small Business and Labour MP for Chesterfield

 

Whilst any politician would obviously prefer to be making decisions in government, an effective opposition can still achieve change in important areas, particularly with passionate and well organised campaigning groups behind them.

A perfect example would be the work CAMRA and Labour have recently done on the regulations of “PubCos” – the large branded pub companies who own thousands of pubs and dominate the industry

Our pubs are amongst our most iconic national treasures. But whilst the Rovers Return and the Queen Vic might remain hubs of their fictional communities, too many local pubs across the country are closing and too many pub landlords are facing bankruptcy. Each of the eighteen pubs that close every week costs their community eleven jobs and sees a loss of around £80,000 to the local economy.

Pubs are struggling in these tough times. Factors such as cheaper supermarket offers to cash strapped punters have played a part in this trend, but crucially the unfair relationship between PubCos and their tenants has gone on too long and must be tackled.

The cross-party Business Select Committee has produced four reports in recent years all of which called for a stronger statutory code to regulate the relationship between PubCos and licencees and in January 2012 the Commons voted unanimously for just such a code to be introduced. This move was supported by a broad coalition led impressively by CAMRA.

Despite all this, the Tory-led government still needed much persuasion to move towards the position taken by CAMRA and myself. As recently as October 2012 the minister responsible for pubs refused a meeting request from the Publican’s Morning Advertiser on the grounds that all the government’s commitments to pubs had “now been achieved”.

I was determined to convince them otherwise, so I called the first Opposition Day Debate of 2013 (one of the rare opportunities where parties not in government can set the agenda for the House of Commons and force a vote on an important issue) on PubCo regulation.

CAMRA played a hugely important role in getting their members to send out thousands of emails to MPs across the country to highlight the importance of the debate. Without this interest I doubt the debate would have had the high profile that it did in the House of Commons and beyond.

I was therefore delighted that within 24 hours of this debate taking place the government spectacularly back-tracked and agreed to introduce statutory regulation. This was great victory for the perseverance of groups like CAMRA.

However, whilst the government now agree that there is a problem they still have not gone far enough in giving the pub industry the certainty it deserves and there remains suspicion that they will not deliver the scale of change that is needed.

A non-tied option for publicans was one of the key changes which the BIS Select Committee called for but the original BIS press release from January 2013 noted that the new code “will not mandate, as some campaigners have suggested, a ‘free of tie option’ with open market rent review”. A couple of hours later this sentence had been removed from the press release on the Department’s website, leaving campaigners scratching their heads as to where they stand.

The government now say that they will ensure that tied pubs are no worse off than free-of-tie pubs, but I don’t know of any pubs campaigners who think this can be realistically achieved without a mandatory free-of-tie option.

Even more alarmingly, the government launched its consultation far behind schedule and following weeks of reports in the newspapers that they were preparing to ditch plans for a statutory code following internal coalition wrangling.

We cannot allow the government to perform another u-turn and walk away from its commitments to pubs. I would therefore encourage all CAMRA members to take part in the consultation on the BIS website to ensure that proposals like a guest beer provision – something I know is particularly close to the hearts of many CAMRA members – are included in the final legislation.

I have made it clear that if the government take the necessary steps to redress these concerns I will work with them to get it on to the statute book as quickly as possible. I will be consulting directly with publicans and campaigners in the coming weeks to better understand what must go into the statutory code if it is to work for ale lovers across the country.

I hope the future of the pub will look much brighter at the end of 2013 than it did at the end of 2012.

Effective Statutory Legislation is the only way to control or get rid of unscrupulous Pub Co’s.

CAMRA has upset the doyen of the Pub Co’s. Barrel-Dregs (263)

Pub Co’s at their Glorious Best

CAMRA have upset that lovable Ted Tuppen of Enterprise Inns, he who notoriously has the innate ability to bite when he should keep his mouth well shut.

It would appear that the learned Teddy Boy has objected to CAMRA’s statement that 60% of large Pub Co tenants/lessees earn less than £10K per annum, it would further appear that the figure from their statistics is 57%, the difference is not worth splitting hairs over.

Good old Teddy Boy trots out his usual commercial that his tenants are alleged to earn an average of £34K per annum, including the cost of the five star luxurious domestic accommodation attached to everyone of his pubs, well it should be luxurious if CAMRA’s figures are correct, with my experience of inspecting thousands of pubs, much of the accommodation would be unsuitable for any vaguely average family and I doubt whether good old Teddy Boy would live in 60% of his pubs for longer than a few days, I’m sure his wife would not.

Sadly all are living over the shop, with inadequate sound proofing, many have a shared commercial kitchen, most do not have a private entrance, in busy times (When they happen) stock is piled up in the domestic areas, children hate the fact that there friends are restricted access at busy times, the list is endless.

If Teddy Boys’ and CAMRA’s  figures are even vaguely correct, nobody in his right mind would seriously pay £500.00 per week to live over a pub, I’ve done it too many times, my Wife hated it, the children loathed it and we had Freehouses with extensive accommodation, the only one that really enjoyed it was the cat and she had been homeless until we took her in.

Nobody in the industry seriously believes that the average Enterprise tenant/lessee earns £34K per annum, with the recession and falling business, these figures sound like fantasy land, Teddy Boy go and run one of your lower end pubs for a month, living over the shop with your family and then you might like to reconsider your luxurious accommodation and your take home pay.

Teddy Boy get real or keep your mouth shut and look after your lessees/tenants.

How many Pub Co Directors really know what it’s like to struggle and live over the shop, very few?

Potboy Midlands

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.

 

Alliance Online Catering Equipment – suppliers of Pub and Bar Equipment to the Licensed Industry

Pub Co’s and the HMRC VAT Scheme

 VAT Scheme, a good idea for Pub Co’s and the HMRC

A very poignant email from an Enterprise struggling Lessee, which says it all, I have not added the Lessees name for obvious reasons.

As an Enterprise pub I get a monthly bulletin (EmPowernews) the main article was ether to make you laugh or cry or both.

HMRC “Flat Rate Scheme for VAT.” Could save you money????

Depending on your business, the Flat Rate Scheme for VAT from HMRC could save you money and reduce the administrative burden of completing VAT returns. Under the scheme, you simply apply a 6.5% charge* to your gross takings, and you pay this amount across to HMRC in your VAT return.”

This is the state of Enterprise and probably other Pub Co they expect pub in their estate to make a living with sales under £3000 per week at their rent and tied  prices.

Pub Co’s do not live in the real world of running a single unit pub.

I wish my poor fellow Publicans good luck if they make a living and can save  money under the Vat scheme.

Note:- If the small lessee had been a large corporation based outside the UK, this scheme would doubtless have been 1.5%, if the HMRC are trying to save themselves admin costs, why not have a variable percentage depending on turnover, 6.5% sounds outrageous to a struggling pub, with Pub Co’s impossible rents, minimal or non existent discounts, hiked rates based on over renting and all the other issues stacked against the lessees.

Using a figure like 6.5% serves Pub Co statistics well to promote the theoretical profitability of a lease to impress gullible politicians.

Get real HMRC, I had a long discussion with one of your top Valuers a couple of years ago, after he gave a presentation on valuing pubs.

I raised many common sense issues and anomalies to him, which he had absolutely no idea about in running pubs, his view was strictly old practices which have been abused by successive Pub Co’s to their financial advantage.

He asked me to raise these points to HMRC about Pub Co’s application of these practices, I had an acknowledgement and nothing further, nothing changes.

Barfly

 

Alliance Online Catering Equipment – suppliers of Pub and Bar Equipment to the Licensed Industry

Bob Sales in conversation with Pub Co ops director Richard Turpin

In conversation with Pub Co ops director Richard Turpin

Last week, pubco CEO Roland Rodent announced the appointment of Richard Turpin as Director of Operations. He is to take up the post with immediate effect. Keen to find out his views on the current state of the industry, Robert Sayles met up with him at Roland’s flagship pub The Jolly Roger.

http://www.morningadvertiser.co.uk/Opinion/Robert-Sayles/In-conversation-with-pubco-ops-director-Richard-Turpin

MORGAN & CLARKE JUNE 2013 NEWSLETTER NO. 21 a very interesting read.

MORGAN & CLARKE  JUNE 2013 NEWSLETTER NO. 21

Pigeon House, The Broadway,

Oakridge Lynch, Stroud, Glos. GL6 7NU

Email: info@morganandclarke.co.uk   Phone:  01285 719292

www.morganandclarke.co.uk

(Also at:  London, Cardiff, Matlock, Braunton, Lewes)

 

 

Never has it been more true that looking forward into our hoped-for summer, is not so much a profits forecast, rather a weather forecast.   Not only has there been no discernible spring weather, save for the odd few days, but also trade gardens, which should now be maturing into full bloom, are also about a month behind.   This has also been reflected in the lack of trade use of trade gardens in general.   Here’s hopes for a dramatic change in the weather and for the recouping of lost trade.

 

1.  Staff Costs

The vexed question of the reality of staff costs has reared its head yet again in a number of rent reviews wherein Pubcos and Brewers have in some cases, spectacularly under-estimated the reality of proper staff overhead costs.   With so many pubs now changing emphasis to gastro-style food, the skills level in the kitchen has been substantially elevated over that of the previously standard pub grub cook, into a highly demanding and salary-expensive, cheffing role to produce consistently high quality, hot plated food.

 

Aside from the question of whether key catering staff live in or out, there is also the question of genuine staff availability.   It is quite a different matter to have a gastro pub or hotel located in a town centre as against a highly desirable, picture postcard setting, overlooking an estuary in North Snowdonia National Park.   Remarkably, in each instance, we have had staff estimates firmly anchored at a maximum of 22% by Pubcos as against the reality of approximately 28% minimum staffing overhead costs.

 

When asked to produce evidence of the supposed lower staffing costs levels, we have not yet seen anything solid that would justify the rent review calculations at such a lowly rate.   Conversely, when detailed proof in the form of staff records has been produced (some nudging 30%), these are dismissed with the airy comment of “poor management”.   Invariably, this type of comment comes from the Pubco / Brewer retail field staff who have never been involved in catering operations and have no concept of the difficulties faced.

 

Our advice is always to ensure that there is detailed evidence of the staffing complement, part time or full time, hourly rates and hours worked,   There is also the certainty that over the course of the rent review period, staff overheads will increase inexorably in line with minimum wage rates and associated skills levels.   Time and again this automatic rise in staff overhead costs, is overlooked in the calculations for open market rental.

 

2.  Management or Hands-On?

Another blind spot for Pubcos / Brewers, is the crossover point between a tenant’s hands-on operation and the employment of a manager effectively as front-of-house.   The ALMR annual statistical review has up to 7% staffing overhead cost for the employment of a manager, but where does this extra staff level kick in?

Managed houses per se, operated by a large number of the members of the ALMR, generally start off at a fair maintainable trade level of approximately £300,000 ex VAT.   There are, of course, very many other trading outlets with considerably higher levels of sales.   However, why should some form of management staff be excluded from overhead costs in the lower range properties?   It seems to be almost universal in Pubco / Brewer rent calculations, that a manager is never factored into the staffing overheads.   It is always assumed that the lessee can be and should be, 100% hands-on, putting in 85 – 90 hour working weeks.   We know this is not the case, although trying to change the mind-set of the Pubco / Brewer, is often an uphill battle.   Why?   Because the key to justifying the high rents is in keeping overheads, (staff wages in particular), as low as possible to manipulate the final result.

 

3.  Do You Start with the Result First?

There has been some considerable concern recently over vastly exaggerated levels of suggested fair maintainable trade.   Indeed, the exaggeration has been so extreme in certain cases, that it led us to stop and question the logic behind the whole affair.    Then the penny dropped with what might be the reversal of the calculations.

 

To explain.   If you start off with the rent aspiration, say for example, an increase of 10-15% on the current rent and then reverse the calculations backwards, it is quite logical to end up with a hugely ridiculous fair maintainable trade to justify the original rent aspiration.   Perhaps the proof of this rather bizarre thinking is in a very little item hidden away within the calculations, which is the food gross profit margin.

 

It is quite possible, with the accuracy of individual stock lines, to produce a wet gross profit as a fraction of a per cent, for example 49.6% would be a logical resultant due to the accuracy of stocktaking and product line pricing.

 

However, food stocks are entirely different and are only ever capable of calculation in round numbers due to portion control and associated pricing.   There is never the precision that you can achieve from wet stock.

 

We delved further to find that virtually all of the Rent Assessment Forms served on our clients, seemed to have this same basic flaw.

 

Three such examples of “estimated” food GP margins, were:  56.1% (Wiltshire market town), 60.6% (village near Wetherby), and 68.2% (remote, moor-side location north west of Sheffield).

 

In each of these three examples, the level of fair maintainable trade was hugely in excess of actual trade which, of course, then begs the question of whether or not the lessee is of Reasonably Efficient Operator status.  In all three cases, no explanation was offered as to why the vastly inflated level of fair maintainable trade represented REO status, or indeed how those levels of trade would actually be achieved.

 

So there you have it.  If you have a substantial over-estimation of fair maintainable trade and you tick the descending boxes through the rent review calculation, you will then magically justify a rent increase rather than the reality, in virtually every case, of a substantial rent reduction.

 

4.  PACT – PIRRS

Following on from the May 2013 Newsletter No.20, it may be recalled that we were seeking clarification from Bernard Brindley, the Chairman of PIRRS, over the hoped-for crossover between PACT (Private Arbitration on Court Terms) and PIRRS, concerning the settlement of rent at lease renewal if all other items such as lease content have been agreed.

 

Regrettably, there has been no further action from Bernard Brindley’s letter of the 23rd April and a polite reminder has been issued in the last few days.

 

We have taken it on ourselves to contact all nine registered PIRRS expert valuers and find that three of them have, in fact, been PACT accredited by the Dispute Resolution Service of the Royal Institution of Chartered Surveyors.   However, there is one major sticking point confirmed in the exchanges of correspondence, namely that if Reasoned Determinations and Confidentiality were a pre requisite of a PIRRS referral at lease renewal, fees would have to be substantially increased.

 

This appears to cut away the ground from the basic advantage of PIRRS in that it is a cheap system that does not approach the same strictures of openness and Reasoned Awards that would follow with a PACT referral.   We are still hopeful that Bernard Brindley and his colleagues at PIRRS    can find a way forwards that embraces both the openness of PACT, but at an economical and fixed fee structure.

 

5.  The Long Grass Beckons

Simon Clarke and David Morgan gave a detailed presentation to the RICS on the perceived manipulation of RICS Guidance Notes, on the 28th February 2013.   This was reported in our April Newsletter No.19.   Guess what?   The matter is still “under consideration” which does not mean that either Simon or David will be giving up.   The perceived manipulation still continues nationwide, to the considerable detriment of tenants facing either rent review or lease renewal.   It may take time, but eventually matters must be resolved.

 

6.  Government Consultation Proposals

Simon Clarke contacted the RICS after the reported comments of the Chief Executive of Enterprise Inns were widely aired in the Trade Press.   Simon sought confirmation over the view of Ted Tuppen that the Government proposals were not in accordance with RICS Guidelines.   Simon reiterated that the Government proposals are that the tied licensee should be no worse off than if they were free of tie, being a statement made by the RICS in the Pubco Forum Report 2009 following evidence given to the Select Committee by David Rusholme, FRICS, of the RICS.

 

The detailed response outlining the position of the RICS, is quoted verbatim hereunder, clarifying the effect of paragraph 7.21 of the RICS Guidance Note 67/2010.

As I sent in my email when asking for members’ comments, our response on the Government proposals will be strictly limited to the valuation issues embedded within the consultation.  Whether a tied licensee should be no worse off than if they were free of tie, appears to be the position that the Government has taken and we will not comment on this other than to refer readers to 7.21 of the RICS Guidance which states “…. there is nothing contained within this guidance that should result in rents in one sector being set at any advantage or disadvantage to another…..”

 

I cannot comment on Ted Tuppen’s comments as they are not wholly clear whether he meant this in relation to the tie / free of tie element.   However, there are certain things to be considered within the consultation in respect of overriding lease terms in relation to alternative rent review dates and the effect the consultation will have on the hypothetical landlord.   We will also ask for clarification in relation to the power of the Adjudicator and how this will fit with the established RICS Dispute Resolution Service”.

 

It would appear that Government are taking the position seriously with the opportunity for all parties in our specialist sector of valuation, to have the chance of detailed and further comment.   Hopefully the results will be widely publicised which will give transparency to the whole process and put matters to rest.   Let’s hope that the results will appear sooner rather than later, without yet another “long grass” exercise where something was “seen to have been done”, but then forgotten.

 

7.  High Street Shop Closures – The Stats

Tucked away in the Business Section of the Times on the 20th May, was a Report from the British Retail Consortium / Springboard, Footfall and Vacancies Monitor, which was begun in July 2011.   It appears that there is now one in every eight shops in Britain is boarded up on the basis that 11.9% of town centre shops were vacant in April, compared with 10.9% in January.   This is the highest recorded level of vacancies since the Monitor was started.

 

The so-called ‘elephant in the room’ is pointed squarely at Business Rates with year-on-year increases, heralded by the British Retail Consortium as a rates model that is well past its sell-by date.   The BRC’s beef is that the likes of Amazon (with reported sales of £4.2 billion last year) pay virtually no tax and have minimal Business Rates bills.

 

The side effect for the On-licensed trade is twofold.   Firstly the secondary retail footfall in town centres is demonstrably falling with its effect on pub trade (that is if you are not a Wetherspoons or the like) and that the Business Rates burden will continue to heap financial misery on the trade as a general rates revaluation is not on the cards until 2015.   Rate assessments will not easily be capable of change unless there is a physical variation in circumstance (bypass road, factory closing, or similar) rather than just the general effects of the deepening economic recession.

 

8.  And Finally

 “Alcohol is a misunderstood vitamin” (P G Wodehouse)

–       do you want a beer?

–       but it’s seven o’clock in the morning

–       Scotch?  (Dean Martin and Sammy Davis Jr.)

 

Best wishes from the Team at M & C

Email:  info@morganandclarke.co.uk

Phone: 01285 719292

BISC, Important News for all Pub Co Lessees and Tenants

Business, Innovation and Skills Committee

                               

Select Committee Announcement No.4

Thursday 6 June, 2013

For immediate release

 

ONE-OFF EVIDENCE SESSION LOOKING AT THE GOVERNMENT CONSULTATION ON ESTABLISHING A STATUTORY CODE FOR PUB COMPANIES AND TENANTS

 

The Business, Innovation and Skills Committee will be holding a one-off evidence on Tuesday 11 June looking at the Government consultation on establishing a statutory code for pub companies and tenants.

 

Tuesday 11 June

 

Committee Room 6, Palace of Westminster

At 9.30am:

  • Brigid Simmonds OBE, Chief Executive, British Beer and Pub Association

 

At 10.30am:

  • Bernard Brindley, Chairman, British Institute of Innkeeping

 

At 11.15am:

  • Simon Clarke, Independent Pub Confederation
  • Kate Nicholls, Strategic Affairs Director, Association of Licensed Multiple Retailers
  • Martin Caffrey, Operations Director, Federation of Licensed Victuallers Associations

 

At 12.15pm:

  • Phil Dixon, independent pub adviser

 

The session will be open to the public on a first come, first served basis. There is no system for the prior reservation of seats in Committee Rooms. It is advisable to allow about 20 minutes to pass through security checks. Committee Rooms and timings are subject to change.

FURTHER INFORMATION:

 

Committee Membership is as follows:

Chair: Mr Adrian Bailey MP (Lab) (West Bromwich West)

Mr Brian Binley MP (Con) (Northampton South)                                    Paul Blomfield MP (Lab) (Sheffield Central)

Katy Clark MP (Lab) (North Ayrshire and Arran)                                    Mike Crockart MP (Lib Dem) (Edinburgh West)

Caroline Dinenage MP (Con) (Gosport)                                                  Julie Elliott MP (Lab) (Sunderland Central)

Rebecca Harris MP (Con) (Castle Point)                                                  Ann McKechin MP (Lab) (Glasgow North)

Mr Robin Walker MP (Con) (Worcester)                                                 Nadhim Zahawi MP (Con) (Stratford upon Avon)

 

Media Information: David Foster fosterda@parliament.uk   020 7219 7556/07917 488729

Committee Website: www.parliament.uk/bis

Specific Committee Informationbiscom@parliament.uk/ 020 7219 5777/5779

Watch committees and parliamentary debates onlinewww.parliamentlive.tv

 

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