Justin Tomlinson MP today championed local Swindon based brewery Arkell's in a parliamentary debate on the future of pubs. The debate followed the release of the Business, Innovation and Skills Committee report on pub companies and aimed to examine specifically the nature of the relationship between pub companies and their lessees.
Justin raised Arkell's as an example of good practice in terms of pub ties.
"Arkell’s has about 106 pubs, many of which have tied tenants. That has several benefits. It allows low-cost entry, providing an easy way for someone who feels that his calling in life is to be a landlord to get into the industry; there are economies of scale, and the skills assistance and training which, in most instances, transform the “I think I would be a very good landlord” attitude into some form of reality; and, crucially, it enables an enthusiastic landlord to delegate a number of tasks that he may not himself wish to perform, perhaps preferring to focus on good customer service rather than dealing with the accounts, the portable appliance testing and the insurance.
"Moreover, as a family brewery, Arkell’s has a long-term commitment—historical and emotional—to local communities, and will make long-term investments. My local pub, the excellent Tawny Owl, is installing 85 solar panels which will have a 25-year payback return. Arkell’s has the confidence that that is worth doing. When local community pubs start to struggle, it does everything it can to keep them going. Although sometimes a community will no longer wish to have a community pub and the pub closes, Arkell’s considers itself to be a brewer first and believes it needs to sustain a network to sell its beer."
Justin went on to discuss the problems that have arisen out of these traditional pub ties.
"The head of the Arkell’s family brewery is James Arkell. When I spoke to him, he highlighted that he felt the problem with the pubcos is that over the past 20 years the bond of trust has been broken. Many speakers have highlighted a number of the issues involved in that, including increasing costs and service charges, and lack of transparency, so that when an enthusiastic potential landlord signs up they are not 100% sure of what they are signing up to, as well as lack of support and aggressive changes in contract terms, often driven by the fact that the pubco has decided it no longer wishes to have that pub site as it will make more money if it sells it. Such behaviour is often driven by the fact that many pubcos are drowning in debt. They are accountable to shareholders, and therefore tend to make short-term decisions. I think that all Members agree that action was needed."
The Government is proposing a voluntary code of regulation between companies and their tenants, a move that Justin Tomlinson MP welcomed in his speech, highlighting the advantages and also the caveats.
"I welcome the voluntary code. One of its advantages is that it can be implemented quickly, but the Minister must make it clear that if the industry does not sort itself out and act responsibly, the voluntary code will be replaced by regulation. As a good, proud Conservative, I do not normally favour more regulation, however, so we must try to address this issue in the best way.
"We must continue to review progress, and the pub sector must know that we are doing so. We must then focus on the other issues affecting the pub industry, such as tax, red tape and training. Training is crucial because pub failures are often a result of poor-quality landlords. The next generation of landlords must be able to step up to the challenge and address problems such as the social changes of recent times. Fewer people are inclined to go to the pub, and people tend to go less often. Landlords have to be able to address such trends by providing food and offering quiz nights and sports opportunities. We must therefore look at hospitality management courses in universities and colleges. They train people to work in the restaurant industry, but they should also be proud to train them to work in the pub industry so that we have a new generation of pub landlords who can meet the challenge of protecting those valuable community assets."
You can read the full speech in context at theyworkforyou.com
You can watch the speech online via Parliament TV
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