Pub closure rates disputed

February 5, 2010: Pubs are now closing at a rate of 39 a week, down on the 52 a week closure rate in the first half of 2009, according to the latest survey from the British Beer & Pub Association (BBPA).

However, the figures are being disputed by the Fair Pint campaign which argues that the figures do not reflect the real state of the tied pub sector as the closures figures do not include the number of business failures within the sector.

A net total of 1,013 pubs shut their doors for the last time between July and December 2009, according to the BBPA, with the loss of more than 10,000 jobs. A total of 2,365 pubs closed during the whole of 2009, it said.

Although these latest figures are slightly down, closures remain at historically high levels. There are now 52,500 pubs in Britain — well down on the 58,600 pubs operating when the Licensing Act came into force in 2005. In addition, the Government will lose over £250 million in tax revenues this year, if the current closure level continues.

The slowing rate of closure is a sign that things may be starting to improve, says the BBPA, as economic conditions ease and the recessionary bite slackens. However, significant pressures on the sector remain. The BBPA warns that Government should be seeking ways to avoid intensifying those burdens.

The tax burden remains a key issue. Government plans for another above- inflation increase in beer tax in the forthcoming Budget will be a further blow to struggling licensed premises. Government should equally stop increasing the red-tape burden on the sector, which increases the complexity and cost of running a pub, says the BBPA.

While all types of pub are closing, in the second half of 2009 the number of independently owned freehouses fell more rapidly than the number of pubs in the leased and tenanted sector. There were 576 closures among freehouses (22 a week), compared with 320 among tenanted pubs (12 a week), despite the latter being far more numerous overall — the remainder of closures are among managed pubs (117 in total at a rate of five a week). The survey also reveals that a significant number of pubs were sold into the free trade, with 735 being transferred into freehouse ownership from July to December 2009.

“The UK economy may be edging out of recession, but times remain very tough for pubs,” says Brigid Simmonds, Chief Executive of the Beer & Pub Association. “Continuing pub closures, and the 5% decline in pub beer sales we reported last week, confirm that pubs are not out of the woods yet. In the current climate, the last thing pubs need is a higher tax bill in the Budget. This won’t help the public finances either, as closing pubs, job losses and falling beer sales mean less tax revenue for the Treasury."

However, Steve Corbett, spokesperson for the Fair Pint campaign, countered: "In order to protect the interests of its pubco members, the BBPA is peddling the same line that freehouses are closing at a faster rate than tied pubs. This is clearly a misrepresentation of the real situation which is that the unsustainability of the tied pub business model has led to an increasing rate of business failures and churn of tenants within pubco estates.

“The [Central Government Accounts] do not show this level of churn. Figures released by the GMB last year showed that typically over a third of pubs in the big pubco estates have seen changes of tenant within a three-year period. We believe that this rate has increased significantly over the past 12 months with a growing number of pubs either being managed by temporary management companies or short term tenancies.

“The BBPA claims don’t agree with figures released by Punch and Enterprise to the City as recently as last month. In their trading updates, both companies stated that they had disposed of over 500 formerly leased and tied pubs in just the first few weeks of the current financial year. Enterprise Inns stated that the number of closed pubs in their estate had not decreased and there had been an increase in the number of pubs held on short term agreements.

“We will only see a true analysis of the state of the pub sector when the BBPA and its members release a full breakdown of the number of tenant failures and the level of churn within their estates.”

l With concerns about the future of many pubs still high, the BBPA is urging the public to get behind its new I’m Backing the Pub campaign. To help ensure a more prosperous future for Britain’s much-loved locals, supporters can sign up at www.backthepub.com