Wednesday, 25 June 2014

Statutory code - a massive diversion?

I made clear on 5 June my reservations about Government plans for a Pubs Adjudicator and Statutory Code. I wasn't coming over all Private Frazer - "We're all doomed!" - but was expressing caution in contrast to CAMRA's unalloyed, and in my view uncritical, joy concerning the proposals. As I said previously, I hope CAMRA's optimism is right, but I remain doubtful.

"He would, wouldn't he?"
Peter Furness-Smith, the managing director of McMullens brewery, has also expressed serious doubts about the proposals, which he suggests would make the pub owners responsible for business risks that are normally the responsibility of the tenant. If the government decides to increase, for example, business rates, VAT, duty, employment or regulatory costs, they would become the responsibility of the pub owner as they are "outside the tenants' control" . He further states that this could apply even to an increase in, say, fuel costs; the tenant could negotiate his rent downwards, thus passing the cost the owner. I'm fully aware that what he says could be interpreted as a predictable Mandy Rice-Davies response, but that doesn't mean we can glibly dismiss his opinions.

His further points include:
  • Government costs for pubs, including tax, amount to more than 40% of sales.
  • Even after recent duty reductions, a small community pub contributes to government coffers five times its profits.
  • For pubs to thrive, the high levels of taxation and bureaucracy need to be reduced.
The more I think aboutthe more I'm concluding that the adjudicator and statutory code represent the government putting the blame for all the woes of the pub industry onto the pub owners. McMullens is a brewery with a tied estate and so doesn't really come into the same rapacious category as pub companies (pubcos) such as Punch and Enterprise. As I've written before, the government and the big pubcos share the bulk of the responsibility for the problems pubs are facing.

So, some final questions:
  • Why a statutory code when in all other areas of industry, business and finance the government prefers voluntary codes to statutory "burdens on business"? In other words, why is this particular sector singled out for special treatment?
  • By getting CAMRA all delirious about an attack on the pubcos, have the government created a massive diversion away from their own responsibility for pub decline? 
  • And is CAMRA therefore inadvertently letting the government off the hook?

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