The plague of pubcos

The Cat and Fiddle pub on St Albans Road West being demolished

The Cat and Fiddle pub on St Albans Road West being demolished - Credit: Archant

Pubgoers in St Albans could be forgiven for asking: “Pub closures? What pub closures?” We may read that 26 pubs a week are closing throughout the country but most of the city’s hostelries have been spared the axe. We still have around 50 pubs but other areas have not been so lucky.

The Herts Advertiser’s sister paper, the Welwyn Hatfield Times, is running a vigorous campaign called Support Your Local. Its September 18 edition had a front page photo of a closed and boarded Cat & Fiddle pub in Hatfield that has now been turned into nine flats and three houses.

The Times’s campaign has been running for five years, which gives an indication of the problem in its area. Support Your Local has been taken up by councillors in Welwyn Hatfield. Cllr Kieran Thorpe raised the issue at a full council meeting and he says that full planning permission and community consultation should be required before community pubs are allowed to be converted.

When a pub closes it can rip the heart out of the local community. People go to pubs to do far more than drink. They meet friends and they enjoy a meal. With energy prices in the headlines, pubs offer warmth to those who struggle with heating.

Pubs are often part of the history and culture of British society. In St Albans we can take pride in the Boot and the Old Fighting Cocks, two of the oldest inns in England and rich in history and folk lore.

And pubs also make an important contribution to the economies of their communities. As Cllr Thorpe in Welwyn Hatfield points out, pubs inject an average of £80,000 each into their communities every year.

The reasons for pub closures are complex. There’s grossly unfair competition from supermarkets that sell beer so heavily discounted that the prices are sometimes less than the cost of production. Beer is offered as a “loss leader” in a bid to attract customers into stores for their weekly shop.

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Less attention has been given to the role of giant pub-owning companies that close perfectly viable pubs in order to profit from their sale to property companies. The pattern of pub-owning in Britain has changed out of all recognition in the past few decades.

Pubs used to be owned in the main by breweries. But a government report in the early 1990s showed that the large national brewers acted as a cartel, fixing prices and charging far more for beer than smaller competitors. As a result of sweeping changes brought in by the government of the day, most of the big brewers sold their pub estates to new pub-owning companies, known as “pubcos” for short.

A devastating report published at the end of September by the Fair Deal for Your Local Campaign revealed the full horror of the grip of Britain’s pubs by the two biggest pubcos, Enterprise Inns and Punch Taverns. Fair Deal for Your Local is run by publicans with the full backing of St Albans-based Campaign for Real Ale, the Parliamentary Save the Pub Group and the GMB trade union.

The report says: “Figures over the last four years expose the calamitous reality of the pubco business model, with a staggering third of pubs owned by the two largest pubcos being sold off in just four years.”

It goes on to say that Enterprise and Punch have between them disposed of more than 5,000 pubs between 2008 and 2012 – that’s 33 per cent of their outlets. In 2008 Enterprise owned 7,763 pubs. By 2012 this figure had fallen to 5,720.

In 2008 Punch owned 7,560 and that number had declined to just 4,529 pubs by 2012.

The Fair Deal report accuses the two companies of “slash and burn” tactics. “They have been asset stripping in a desperate attempt to pay off the extraordinary level of debt they are in. This debt accumulated after a period of reckless empire building, over-evaluation of their estates and over-borrowing against that value.”

To emphasise the point, the report adds that in 2012 Enterprise had a net cash flow from its pubs of £296 million but in same year its debt and interest payments totalled £430 million. As a result of this £134 million shortfall, the company has resorted to selling off pubs, regardless of the interests of pubgoers and their communities.

The role of the pubcos is currently being investigated by Vince Cable’s business and enterprise department. Let’s hope he takes action to stop the destruction of the nation’s pubs.