Campaign for Pubs
Campaign for Pubs challenges the Chancellor over pub rent levels
The Campaign for Pubs letter to the Chancellor is here.
Pub tenants up and down the country were astonished when on the Andrew Marr Show on Sunday 28th February, Rishi Sunak stated that the average rent payable by a typical pub was in the region of £14,000-£20,000 a year. The Chancellor quoted the figure within the context of a conversation about the level of support the Government has provided to pubs, which led to concern among publicans that support has been based on erroneous information.
The exchange sparked uproar amongst the nation’s tenant publicans, and also within the wider hospitality sector, as the figure quoted by the Chancellor is a gross underestimate of the rent paid by most pubs and restaurants up and down the country, many of which have hugely higher annual rent bills. The Campaign for Pubs has called urgently for the Chancellor to reveal the source of his figures, which they describe as wildly inaccurate.
Research conducted by Campaign for Pubs, direct from a large number of UK publicans, found the lowest rent reported was £21,000 with the average appearing to be around £39,000. This would certainly be in keeping with the 2017 RICS benchmarking figures which placed the national average at £37,691.
However, there are many publicans whose rents are far higher still, with many reporting rents above £80,000 and indeed some well over £100,000, especially in London and other busy city settings. Such high rents are of course accompanied by high Rateable Values, meaning that many such tenants (many of whom are individuals or very small businesses) missed out entirely on Covid grant funding in the first lockdown, due to the Government’s unfair and arbitrary decision to exclude businesses with rateable values over £51,000 from any grant support.
The situation for many pub tenants has been made much worse by continued demands for excessive rents during enforced closure by pub-owning companies and commercial landlords, a scandal that has already caused some pubs and restaurants to closed their doors. Some publicans have disgracefully received no rent reduction at all in cases where their commercial landlords have openly ignored the Government’s voluntary Code of Practice.
The levels of Government support for pubs has in reality not even covered ongoing fixed costs including rent and other bills, so most pub tenants have been getting further in debt. The worry now is that if the Government are basing support measures for pubs upon the huge under-assessment of rent expressed by the Chancellor in yesterday’s interview, the support may be falling short by over 50% of what is really needed to get pubs through the pandemic. With pubs still not allowed to open indoors till May at the earliest, and even then still with restrictions that will make it difficult or impossible for some pubs to trade profitably, support needs to continue until the summer and it must be worked out on the basis of the reality of rents and costs for pubs, not false figures.
Paul Crossman, Chair of the Campaign for Pubs and a publican in York said:
“In common with publicans across the country I listened with disbelief to the rental figures quoted by the Chancellor in yesterday’s BBC interview. If the Government is working on the assumption of such gross underestimates then it goes a long way to explaining why inadequate support has meant so many publicans have already lost their businesses and homes for good, and why so many more are facing enormous mounting debts that threaten their future.
We can only hope the Chancellor’s forthcoming measures will be based on the reality faced by small business operators, some of whom, for example, have continued to face demands for full rent during closure at levels at least four or five times higher than those the Chancellor quoted. If this crucial Budget does not reflect the actual reality for pubs on the ground then huge numbers will not make it through to the summer, with dreadful consequences for publicans, their families and their communities, not to mention the wider economy.
Dawn Hopkins, Vice-Chair of the Campaign for Pubs and a licensee in Norwich said:
“It’s deeply worrying that the Chancellor is so out of touch with the reality of rents on the nation’s pubs. Publicans up and down the country spat out their tea when they heard him giving such a low figure and if Treasury support has been based on this, that explains why it is so far short of what is needed to get pubs through this crisis.
“The reality is that Government grants don’t get close to even covering ongoing rent and costs, never mind providing any income support for publicans and their families. So we’d urge Rishi Sunak and the Government to start talking to the people who actually run pubs and then they’ll get a better idea of the desperate situation many publicans are really in”.