Categorized | Blog, Featured, News

Toby’s speech to the Business in Sport and Leisure Conference 2013

On 7 November 2013, Shadow Pubs Minister, Toby Perkins MP, addressed the Business in Sport and Leisure Conference 2013 at the Oval cricket ground in South London.  

His subject was “Labour’s approach to the licensing sector and pubs“.  You can read the keynote speech below.

***

Oval cricket groundThank you very much for that introduction, David, and it is also a great pleasure to follow Ann Pierce. And I think in hearing Ann’s presentation, there are a few of her observations from her research and evidence that would support things that I wanted to cover today.

It’s a great pleasure to be with you here today.  I would also like to place on record my thanks to BISL, not just for putting together today’s event but for being a strong and determined voice on behalf of British business in the fields of sport and leisure for over 25 years.

Today is not about persuading each and every one of you to march out of here and Vote Labour. We know some of you will and some of you won’t, that’s life in our game, though for the avoidance of doubt we would like it if you voted Labour, but what today is about is showing you our Labour’s vision for the future for pubs and the licensing sector to give you an opportunity to consider how that might help your businesses and to give you an opportunity to raise any questions you have on this approach.

It’s also amazing to speak to you in such a magnificent and historic stadium.  As someone who blames spending too much time on a cricket pitch for my lamentable school record, it is a great pleasure to be here. I might have hoped that when I first got to perform at the Oval it was in a different context but it’s nice to be here nonetheless.

My most recent (and possibly last) Cricketing involvement ended with a dropped catch and a broken thumb a few weeks ago, but my life has been littered with parallel encounters with Cricketing greatness, that have made this failure all the more difficult to accept.

Cricket wasn’t an option, but having left school at 17 to take on a telesales job, I worked in the private sector for my entire career, eventually setting up my own small businesses in the leisure industry.  Called Club Rugby, we supplied bespoke rugby kit to Rugby clubs, schools and University teams from our base in Chesterfield.

So as you can see I haven’t always been a politician, and prior to 2010 I could even be described as a human being!

This is why I was particularly delighted when Ed Miliband asked me to become his Shadow Small Business Minister. I was even more pleased to learn that one of the responsibilities was that of Shadow Pubs Minister. It is a tough job, in an industry that faces many challenges, but it does comes with its own consolations.

I have lived many of the challenges that small businesses face and hope I bring that perspective to the role.

Whilst I have been asked to speak on Labour’s approach to pubs, I would also like to touch on the importance of sport and sporting businesses to Britain’s economic recovery.

As I have already reflected, I ran a business in the sports industry in Rugby products, I also made many links through playing County level Rugby and enjoyed Coaching. And the benefits to our economy, the links we make in our communities and right across the world through Sport was brought home to me just this morning.

I attended a meeting to discuss the economic and cultural links between Britain and Japan, and how as a small business minister we can make the most of the trading potential in our relationship with Japan.

And while we were talking about the exhibition of erotic 19th Century art they are currently displaying in the London Museum, I reminded them that while they may have sent us their dirty pictures, we sent them Gary Lineker!

And it’s also true that they see our Premiership as huge export product, and as the host of the 2020 Olympics, they told us that the success of London 2012 has led to a huge increase in public support for Tokyo 2020.

So we have huge export potential to build a corporate Olympic legacy, exporting our organisational brilliance and expertise as well as our iconic sporting history and modern day sporting pre-eminence.

But to return to my key task today to talk about one of the key parts of my portfolio of responsibilities- to look after and support Britain’s pubs.  In this I cannot claim any prior direct professional experience … though few could argue I haven’t demonstrated considerable enthusiasm and support.

I think there are a number of key facets to our approach to the future of the British pub trade and why we see it as so critical to our future success.

Firstly, we recognise that pubs are hugely important community assets.  Our pubs are amongst our most iconic national treasures. To consider Coronation Street and the role of Rovers Return, the Queen Vic in Eastenders or Rodney and Del Boy down at the Nags Head demonstrating their central place in our national life.

But as Ann has just said, there is also the economic impact on revenues, jobs and growth. We can’t fail to be concerned at the trend of 26 pubs closing each week. Each pub employs on average ten people; often the very people that will find it hardest to access the jobs market; young people, women, part time workers.  Nearly £21 billion a year is contributed to the UK economy by the production and sale of beer.

When a pub closes its local community loses a hub and the focal point for community engagement disappears but the local economy also loses jobs and around £80,000 a year of value.

We believe in a genuinely free market, but as we have in other markets that are demonstrating uncompetitive or restrictive practices, Ed Miliband has made it clear that we will intervene to ensure that markets have rules that enable them to be fair.

We all know and understand that pubs are private businesses which must adapt in order to overcome the many challenges of a marketplace in flux.

Pubs must have a USP- a Unique Selling point; whether it is the quality of food, entertainment, real ale; or the ambience of a roaring log fire and hearty & robust debate, pubs that don’t innovate, die.

So it is vital that we work to support the professionalization and re-skilling of the licensed trade wherever possible.  Many experienced licencees have left the trade because they have seen their take home pay fall year on year until we have reached the point where many tell us that they are on less than the minimum wage when their long working hours are considered.  Addressing the issue of earnings by reforming the broken PubCo model is key to this but we also need to reward excellence and best practice where we find it.  I know that the BISL are very supportive of initiatives such as Pubwatch and Best Bar None, as am I.

The last Labour government also established the Purple Flag scheme.  It establishes national “gold standards” for town centre’s night time economies and aims to promote and raise the image of Britain’s town centres at night.

Meanwhile, at a time of the cost of living crisis, supermarkets increasingly offer a cheaper alternative to those feeling the pinch.  This has combined with changing lifestyles where young people are now more likely than ever to “pre-load” at home in front of a music channel or games console than visit their local pub.

We have to acknowledge that taxation – whether it be VAT, beer duty or the introduction of a Machine Games Duty at 20% this February – has undoubtedly had an influence.

The links between pub failures and all its impacts and the way that the large pub companies operate is well discussed but not always understood.

The evidence on this has come from a variety of sources both locally and nationally.

As the MP for Chesterfield, a town with a huge and diverse night time economy. I recently carried out a large scale survey of pubs in my constituency, and the results which came back fit perfectly with the national evidence that pubs and publicans tied to the large pub companies – known as pubcos – which dominate the British market are struggling.

57% of tied-tenants who responded to the Chesterfield Pubs Survey cited PubCos increasing the price of beer disproportionately to cost as one of the most serious negative influences on their businesses.

43% of tied-tenants claimed to have already sought a renegotiation of the terms of their tenant’s agreement.

96% of the pubs which returned the Chesterfield Local Publicans Survey saw a drop in profits during the last year, but crucially tied and managed pubs saw their profits drop to a greater degree than free-houses.

So the pubco model is failing economically, but the question that has also been posed is- is it fair?

A large coalition of groups – diverse enough to include the UNITE and GMB unions, the Federation of Small Businesses, the Forum of Private Business and CAMRA – have all been campaigning on this issue for some time and have identified the need for stronger statutory regulation to manage the relationship between pubcos and licencees as a key recommendation.

Labour agrees with them, as does the cross party business select committee.  This Committee has produced four reports in recent years all of which have identified these issues and the last of which finally and reluctantly called statutory code to regulate the relationship between PubCos and licencees, including a mandatory market rent only option for pubco licencees.

I was proud at the start of this year to lead the very first opposition debate of the year on the subject of pub companies; and it was a triumph as just 24 hours before this debate the government spectacularly back-tracked and agreed to consult on new statutory regulation to rebalance risk and reward on the pub industry.

The consultation on exactly how this statutory regulation will look and work is now ongoing.  So what exactly do I want to see as the end result of this process?

Well first and foremost I hope the government keeps their promise and actually delivers the change licences need and deserve.

A non-tied option for publicans was one of the key changes which the BIS Select Committee called for.

The BIS Select Cttee’s consultation response also raises direct fears that new legislation will be delayed.

So above all else we need to make sure that the change we need actually goes through.  To ensure that Labour is hearing the real voice of the industry, I hosted a roundtable in the House of Commons in February where publicans, and campaigning groups like FairPint, the Pubs Advisory Service and CAMRA could have their say directly to politicians.

I have set the government three challenges which their final package must include if they are to have Labour’s support.

The first of these is a genuine free of tie option for landlords.

Many of the pub companies bought huge numbers of pubs when the breweries were forced to divest themselves of their pubs in the wake of the 1989 Beer Orders Act which restricted the number of pubs breweries could own.  Pub companies over estimated the value of their premises and so in many cases are charging high rent, alongside a high price for beer to make up the difference.  This has led to a situation where otherwise viable pubs can find themselves going under.

Money is leaving the industry to pay off the pub companies debts and leaves the industry short changed.

A beer tie will work for some publicans in some circumstances, we are not calling for the end of the tie but we are saying that the big pub companies should offer a mandatory free of tie option.

This would allow licencees to operate in a market that offered them the freedom to sell the product they want, a re-constructed market that would actually be freer.

Secondly, we want open market rent reviews.  When a new licencee takes over a pub, or when an existing rent contract expires and is renegotiated, there should be a fully transparent and independent rent review by a suitably qualified surveyor.

Thirdly, there must be a truly independent body to monitor the regulations and adjudicate in disputes between licencees and pubcos.

So you can see how Labour’s approach to pubs is truly grounded in the principles of a free market with fair rules to prevent restrictive practices and big companies unfairly using their size in an uncompetitive way.

We have been driving through this change, even from opposition.  So, I hope that by the time the next Labour government comes to power significant change to the relationship between pubcos and licencees, as envisioned by the Business select committee, will already have been pushed through.  Even if this is the case, this will still leave much important work to be done in the pub trade.

For example, we will still need to find a more appropriate balance between the on and off trade.  Other countries, including Ireland, have looked at how these imbalances can be addressed.  Two thirds of publicans in my Chesterfield pubs survey, identified cheap supermarket alcohol as having a negative impact on their business.

To address irresponsible retailing practices, a minimum unit price for alcohol should have been implemented. The Government were well on their way to introducing a minimum unit price for alcohol before dramatically u-turning on the policy in April. Labour supports a minimum unit price for alcohol which is not an extra tax, but a regulatory floor to prevent retailers loss leading on alcohol.

At a time when people have seen prices rise faster than their wages in 39 of the last 40 months, looking to take action on the 10% of product sold at dangerously low prices is a tough call, but we don’t see that the answer to the cost of living crisis is for supermarkets to overload the profit on fruit and veg and discount alcohol as a loss leader.

Additionally, we will certainly also need to review the balance of taxation which 75% of my local publicans cited as a major problem. We supported the Government’s move to scrap the beer duty escalator and continue to support that, but we do want to see evidence that this saving is being passed on to landlords and subsequently consumers themselves.

Research from the House of Commons library demonstrates the impact of the Tory-led government’s decision to increase VAT to 20%. Duty accounts for about 15% of the price of a pint, whereas VAT accounts for 20%. So whilst the 1% cut in beer duty was a welcome sign of intent it will make a marginal difference and further steps to reduce the gap between off and on trade must be considered.

And it is an irony that at the time we are considering the role of Supermarkets in the demise of British pubs that they are not only a threat to pubs in terms of pricing, they are also actively acquiring many pubs to turn into local supermarkets – 200 British pubs were lost to convenience stories between 2010 and 2012, with Tesco responsible for 130.  This is particularly tragic when the pub lost is a community asset which under a fairer model could be profitable and successful.  At the heart of this problem is the decision of the massive Pub Companies to divest themselves of their assets to cover the debts they accrued by buying their pubs at an over inflated rate in the first place.  Enterprise and Punch, the two largest PubCos have been at the head of this asset stripping movement, as collectively they disposed of more than 5,000 pubs between 2008 and 2012 – one third of all their pubs.

So there is much to do for the pub trade, but as Ann’s evidence demonstrated the link between the economy, disposable income and the leisure trade is indisputable and so the biggest thing we could do to boost British pubs is, and always will be, to put money back into people’s pockets.  David Cameron has been Prime Minister for forty months, and in thirty nine of these months prices have risen faster than wages.  When people are feeling the pinch they decide to stay in and watch their favourite soap rather than head to their favourite bar or pub.

Under David Cameron businesses have been hit by business rate rises of £1,500 on average and they are now facing a further hike of £400 in April. A Labour government will cut then freeze business rates for millions of small business proprietors. By not bringing forward the government’s planned further 1% Corporation tax cut which would reduce the tax bill of 80,000 larger firms and using all of the money to cut the business rate bill of 1.5m small firms.  This would save British businesses £1,800 on average.

We will offer more free childcare to hard pressed families is designed to overcome this cost of living crisis and put pounds back into the pockets of punters.

People know that our banks remain reluctant to lend in the sector to small firms particularly, and so Labour’s plans to reform the banking sector with a new stream of local banks with local decision making at their heart offer real potential to unlock growth.

We will work to ensure that local communities have a stronger say working with local authorities on the planning needs in their communities to protect pubs as a community asset.  Our skills taskforce report reflected Ann’s evidence about the link between skills and prospects and so there will be a real focus on the quality of apprenticeships to skill up the next generation and support employers to access the staff they need.

And we concur entirely with Ann’s view on the importance of work experience that broadens children’s horizons and takes them to new frontiers rather than copying the experience of their parents.

And our job guarantee will offer support to employers who employ the long term employed.

Not ‘work for nothing’ schemes that deliver impoverished staff and but a genuine programme that rebuilds the link between work and reward and recognises your role in helping people turn their lives around.

So a future One Nation Labour government will mean: a fairer market; fairer taxes, a focus on helping people to be better off, less financial disadvantage for the on trade, support to professionalise the industry; lower business rates, local banks that understand your markets and locations; lower energy costs; more skilled young employees, real work experience and support with employment.

That is a package of support that recognises the vital role that your industry plays in our economy, as a provider of revenue, jobs and growth. That’s a package that I am proud to present to you, and it is one that says we value the work you do, we want you to thrive and supporting you to do so will be the mission of the next One Nation Labour government.

Comments are closed.

Welcome

I am Toby Perkins, Labour's Member of Parliament for Chesterfield. If you would like to get in touch with me, my office is open and can be reached by phone on 01246 386 286. I also hold regular surgeries so that constituents can meet me and I can take up their concerns. If you would like to make an appointment then please do contact my office. Thank you for visiting.

Contact Toby

Tel: 01246 386286
Email: toby.perkins.mp@parliament.uk
Post: 113 Saltergate, Chesterfield, S40 1NF

Surgeries

I hold regular surgeries for my constituents.
Please call 01246 386286 or email toby.perkins.mp@parliament.uk to make a booking.

Total Politics Top 30 MP Blog

RSS Appearances