Pub companies: follow-up: Government Response to the Committee's Fifth Report of Session 2009-10 - Business, Innovation and Skills Committee Contents

Appendix 2: Government support for community pubs briefing paper

1. The Prime Minister asked John Healey in January to lead work across government designed to help and support Britain's community pubs.

2. Community pubs include the traditional local pub and local membership clubs, which offer more than just a place to drink. In many communities across Britain the pub is the centre for social and recreational activity and a focus for local charitable activity. For many people the local pub is one of the things that helps define the place where they live. Pubs that people value for their importance to the community can be found all over Britain; in rural villages, suburban streets and in our town centres.

3. Yet, despite the place that the pub holds in British life, many are closing their doors. In February 2010, the British Beer and Pub Association (BBPA) published figures showing the number of pubs that had closed in the second half of last year:

  • Pub closures are now running at 39 a week, down on the 52 pubs a week closing in the first half of 2009;
  • Total of 2,365 pubs closed in 2009, and
  • 24,000 jobs were lost in 2009, because of pubs closing.

4. It is not just pubs and clubs in rural areas that are under pressure but also those in urban and suburban communities.

5. There are a number of reasons why pubs and clubs are closing, such as the impact of the recession and legal changes, like the smoke free laws. Changing social habits also mean that fewer people are visiting pubs and clubs. The Government cannot try to reverse wider social and lifestyle changes and we are not able to support businesses that are fundamentally unprofitable.

6. To continue attracting customers, pubs and clubs need to offer more than just a pint. Pubs that diversify and extend the range of services they provide to the community are more likely to prosper than those that do not. We have heard from the licensed trade that rising costs are a key factor in closures and tenants and lessees argue that some profitable pubs are being closed down because pub companies want to profit from alternative uses for the pub's site. The Government can support pubs and clubs to make their businesses stronger and more diverse and seek to strengthen and support the pub industry.

7. To develop a comprehensive package of support for community pubs John Healey MP has worked closely with ministerial colleagues in the Treasury, the Departments for Culture Media and Sport (DCMS), Business, Innovation and Skills (BIS), Environment and Rural Affairs and the Ministry of Justice. The Government has taken account of findings of the BIS and CMS select committees and the work of the All-Party Beer and Pub Group as well as holding discussions with pub companies, landlords, tenants and other groups directly involved in the pub industry.

8. Our plans fall into three main categories:

  • Business support;
  • Industry standards and consumer choice, and
  • Community and local council action.

Package of support

1. Business support

Business support gateway services

9. 'Pub is the Hub' is a national advisory body which will act as the established first point of contact for landlords and tenants requiring access to expert business advice on a range of issues that they face.

10. 'Pub is the Hub' is a voluntary not-for-profit business support service, set up in 2001. Pub is the Hub has visibility and credibility with the industry and a track record of supporting over 300 pub-based rural services. With new government funding to establish seven full-time advisors, Pub is the Hub can extend their support nationwide, providing business advice directly themselves or directing pubs to Business Link or another agencies to get the best support for their needs.

11. To strengthen these links our intention is to put in place a formal arrangement between Pub is the Hub and the established Business Link service to underpin advice and support. The initial work on this arrangement should be completed as soon as possible and should result in a formal link between the two organisations. Our new funding for Pub is the Hub will be around £1 million over the next three years.

Community ownership support for 50 pubs over 3 years (through the Plunkett Foundation)

12. We will contribute to a three-year pilot programme to help up to 50 pubs move into community ownership through the Plunkett Foundation. This programme will provide support to local communities to be directly involved in creating and maintaining their community pub, so it can deliver the services and benefits they want. The Government will provide grant support to communities matched by loans from third-sector organisations and a contribution from the communities themselves. Funding for this programme will be £3.3 million over three years.

Support from Regional Development Agencies (RDAs) for community pubs

13. We are working with RDAs to ensure that Local Action Groups and local communities are aware of the benefits of community pubs and have all the information they need to access the available funding under the Rural Development Programme for England (RDPE).

14. Defra and the RDAs will be publicising this widely through existing rural networks, including the RDPE National Rural Network managed by the Commission for Rural Communities.

Independent study of the pubs sector

15. We will commission an independent study of the pubs sector to establish ownership and management patterns, reporting to Government by the end of 2010.

Independent review of the issues affecting local membership clubs

16. Work on this review has shown that while pubs and local membership clubs face many similar challenges, there are pressures particular to working men's and other local membership clubs. Ministers in DCMS and DLCG have therefore jointly commissioned Lord Turner of Bilston to lead a clubs review and to report to ministers in the two departments by the summer recess.

Skills plan for pub sector

17. Building on the research into licensed hospitality conducted by People 1st in November 2009, we will commission a one year on follow-up review of skills in community pubs. The review will be independently chaired by Chris Banks, Chair of the Learning and Skills Council.

18. The review will pick up skills issues arising in the BIS Select Committee Report on the pub industry, and will include:

  • Provision of business management skills, particularly looking at community pubs, and
  • Access to training and funding for SMEs/community pubs including the provision of on the job training.

2. Industry standards and consumer choice

Endorse the BBPA Code of Practice on tenancies and leases and commit to act if industry cannot show it is complying with the code.

19. The BIS Select Committee has recently completed an in-depth review of the relationship between pub companies and their tenants and published its Report. The Committee recommends the industry should have one year to fully implement their Code to ensure transparency and openness in setting contracts and leases.

20. We back the Committee's recommendation and the one-year deadline for the industry to show it is complying with its own Code. Government will monitor progress for one year and intervene to regulate by putting the Code on a statutory basis backed by an industry enforcer, if the industry fails to deliver.

Seek to strengthen the industry Code of Practice.

21. We will press the industry further to offer freedoms for tenants to offer consumers more choice as part of their Code of Practice. The Code of Practice should:

  • offer tenants a tie/non-tie option to enable them to best reflect the needs of the community, and
  • offer a guest beer option for those tenants that opt for a beer tie.

22. Government will monitor progress for one year and intervene to introduce a non-tie option and legislate for a Beer Order to allow guest beers if these flexibilities are not introduced.

Press the industry to regularise equipment which measures beer flow (Brulines) and intervene if industry fails to respond

23. We will respond to the industry concerns over Brulines—these are the flow measurement devices that ensure the tie contract is being observed and that the tenant is not buying beer outside the contract. The industry should voluntarily ensure that all such measuring equipment is calibrated by the National Weights and Measurement Laboratory. Failure to do so will result in Government intervening to ensure fairness by requiring that equipment is calibrated.

Amusement Machine Licence Duty (AMLD) review of skill with prize machines

24. Following recent discussions with the gambling industry regarding machines commonly referred to as 'skill with prize' (SWP) machines, the Treasury and HM Revenue & Customs (HMRC), in consultation with the Gambling Commission and the Department for Culture, Media and Sport, will undertake a review of SWP machines and the games played on them for the purposes of amusement machine licence duty (AMLD).

25. The Review will report to Ministers in July 2010, to allow time for discussion with the gambling industry and other interested parties.

Relaxation of licensing requirements for live music in small venues

26. The Government will amend the Licensing Act 2003 to make it easier for community pubs and other small venues to put on live music without the need for a licence, subject to the outcome of the ongoing consultation and with the consent of Parliament. We currently propose that events with an audience of 100 people or fewer would be exempt. The new exemption will allow community pubs, which have not already done so, to provide live music to small audiences without having to apply for a costly variation of their licences.

3. Community and local authority action

The Government will publish a planning brief for all local authorities setting out the flexibilities and protections available to pubs under the planning system

27. The Chief Planner will publish a planning brief promoting the flexibilities and protections currently available to pubs under the planning system and promote this through a letter to all local authority Chief Planning Officers. For example, the existing Use Class Order allows pubs to diversify into food or to incorporate a shop without the need to apply for planning permission. The planning brief will make such provisions better known and understood.

Control the demolition of pubs and clubs to allow community intervention

28. We will further strengthen the planning tools for local authorities by amending the Secretary of State's Direction to define as development the demolition of community pubs and working men's clubs which are not attached to dwellings. This will give the planning authority time to consider before demolition can take place whether to require the owner to submit a planning application for the site and so ensure that the community are fully consulted before a pub is lost.

Removal of restrictive covenants

29. The Ministry of Justice will consult to remove the right for pub owners to place covenants on the land when they sell sites to stop the site being used for a pub in future. This also responds to a proposal raised by local authorities under the Sustainable Communities Act.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 25 March 2010