New figures based on research conducted by the Federation of Small Businesses shows very clearly that introducing a market rent only option for tied licensees of the large pub owning companies would benefit the UK economy by millions of pounds – and would lead to 148,320 extra staff hours and £48,666,758 in wages paid per year.
The Parliamentary Save the Pub Group and Licensees Supporting Licensees have worked with the Federation of Small Businesses to provide BIS and the Treasury with projections of the impact of reform on the UK economy. The figures are derived from the research conducted by the FSB who used an independent research company to conduct a survey of publicans who would be covered by a proposed statutory code.
The FSB research asked if the market rent only option was available to them, would they take it and what effect it would have on their business decision making. Using the FSB research findings, the new work gives robust projections of the impact of introducing the BIS Select Committee solution, the market rent only option in terms of jobs, investment in pubs and money spent on advertising.
Publicans were then asked what they would do, in various key business decision making areas, if they were operating under a market rent only lease or tenancy.
The key findings of the new work are as follows:
- 9,888 pubs would take on a new member of staff or increase staff hours. If 9,888 paid only the minimum wage of £6.31 to employees and increased total staffing hours by 15 per week, this would create £48,666,758 of additional wages to the UK Economy.
- 10,359 pubs would spend money on maintenance. Working on an average of £1,000 spend per pub, this means an extra £10,359,030 spent on pub maintenance in the UK.
- 6,698 pubs would spend money on modernisation. Working on an average of £1,000 spend per pub, this means an extra £9,697,984 spent on pub modernisation the UK.
- 9,796 pubs would spend more on advertising and websites. Estimating an average £1,000 spend per pub, this means an extra spend of £9,796,000 on advertising and websites in the UK.
On the basis of the extra spend on maintenance, modernisation, increased staffing hours and advertising the introduction of the market rent only option would lead to a total benefit of £78,489,772 to the UK economy.
This doesn’t take into account additional tax take by the Treasury – which would also be a result of the introduction of the market rent only option.
Almost all tenants (98%) agreed they would have more confidence in the future of their business if they were had the market rent only option.
John Allan, National Chairman, Federation of Small Businesses, said:
“These new findings show once again how vital it is for pub landlords to get a fairer deal while boosting the economy and creating new jobs.
“The FSB is certain the statutory code can’t come soon enough. It is not fair to see the largest pub companies controlling the relationships to their own advantage. All landlords need to be on a level playing field creating more choice, greater freedom to invest and the ability to generate thousands of much needed jobs in the UK.”
Greg Mulholland, Chair of the All Party Parliamentary Save the Pub Group, said:
“This new research proves what we have known all along – that a statutory code of practice for the large pub owning companies with a market rent only option for tied tenants would be very positive not only for those pubs but for the UK economy.”
Val Spencer, Licensees Supporting Licensees said:
“These new statistics give even more proof that a market rent only option would be warmly welcomed not only by tied tenants, but the UK economy also. The market rent only option would be a fair deal for the UK economy as well as tied tenants.”
1. The data is based on a telephone survey carried out by an independent research company on behalf of the FSB. The survey of 516 tenants of the big pub companies (both members and non-members of the FSB) took place in August and September 2013.
2. The survey interviewed tenants tied to the six big pub owning companies (who own more than 500 pubs) – these are: Enterprise Inns, Punch Taverns, Admiral, Marstons, Greene King, Star Pubs and Bars.
3. Extrapolated data is based on the overall number of pubs that would be covered by a new statutory code i.e. the leased and tenanted pubs owned by pub owning companies with 500 or more pubs totalling 15,044 pubs. That figures has been taken from the most recent (2012) of each company’s corporate reports: Enterprise Inns – 5,720, Punch Taverns – 4,529, Admiral – 1,222, Marstons – 1,000, Greene King – 1231, Star Pubs and Bars – 1,342. The total is therefore 15,044.
4. The total wages paid to staff per year was calculated as follows:
£6.31 (national minimum wage) x 15 (hours) x 52 (weeks) x 9,888 pubs (the number of pubs who would increase staff hours if they accepted an offer of a market rent only contract) = £48,666,758
5. Research by CGA Strategy and commissioned by CAMRA from June 2013 showed that 57% of tied tenants earn less than £10,000 and it is agreed, including by BIS and the BIS Select Committee that the market rent only option would rebalance the split of pub profits between pub owning company and licensee.
6. BIS have committed, through the forthcoming statutory code of practice, to enshrine in law the principle that the tied licensee is not worse off than the free of tie licensee. The Fair Deal for Your Local Campaign, supported by the Campaign for Real Ale, Federation of Small Businesses, Forum of Private Business, Fair Pint Campaign, GMB Union, Licensees Supporting Licensees, Pubs Advisory Service, Justice For Licensees, Licensees Unite, Guild of Master Victuallers and the All Party Parliamentary Save the Pub Group believes that the only way to do this is to introduce the market rent only option.