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Morning Briefing Strap Line
Fri 16th Nov 2012 - Friday Opinion
Subjects: Minimum pricing, planning and a great local
Authors: Paul Chase, Ian Fozard and Kate Nicholls

The future of minimum pricing by Paul Chase
Those of us who see minimum unit pricing (MUP) as a Trojan horse, rather than a gift horse, might be tempted to relax now that the issue is mired in legal dispute. Comments I have received along the lines of “It’ll be at least two years, if ever”, “It’s been shelved because of legal objections”, and “It won’t happen – too much opposition from Europe” are, in my opinion, wide of the mark.

We need to separate the policy issues from the legal issues. I’m opposed to MUP because I think it’s a misguided policy, not because I think it’s illegal. I feel qualified to engage in the policy debate, but I’m not a lawyer and I don’t feel qualified to engage in a technical, legal debate about whether legislating such a policy is outwith the Scottish Government’s legal competence under devolution rules, or whether the policy offends against EU competition law.

So, what is the position? At least for now, the window has closed for opposing the introduction of MUP politically. The Scottish Government has legislated, and the UK Government has indicated that they’ve made the policy decision and there will shortly be a consultation exercise. So, the only avenue those opposed to MUP can pursue is legal challenge.

Both issues (legal competence and EU competition law) were supposed to be heard in the Scottish Court of Sessions starting on the 23 November and set for a six-day hearing. That hearing has been adjourned following a large body of evidence presented by the Scotch Whisky Association (SWA) that challenges the validity of the Sheffield Model. ‘Sheffield’ is the predictive mathematical model, produced by academics from Sheffield University, that models the relationship between MUP at various levels, and the impact that will have on consumption and alcohol-related hospital admissions.

This model has been systematically misrepresented by supporters of MUP as constituting evidence of its effectiveness in combating alcohol-related health harms – in fact it is simply a model, nothing more, nothing less. Although the SWA’s evidence was submitted within the agreed timeframe, the Scottish Government has successfully petitioned the Court for more time to construct a rebuttal. Given that this is their Bible, it is somewhat surprising that all the arguments for its defence have not already been thoroughly rehearsed.

If the case is decided in the Scottish Government’s favour, there is the possibility of an appeal to the Supreme Court in London. Without commenting on the legal issues directly, my gut feeling is that any UK court will be extremely reluctant to reverse a policy decided by a democratically elected parliament, unless the legal arguments for doing so are overwhelming. Since this is a policy argument as much as a technical, legal argument, I would be surprised if the legal challenge to MUP succeeds in Scotland or in London.

The Scottish Government has agreed to await the outcome of domestic legal proceedings before implementing MUP (and Westminster will await the outcome too). But they have not agreed, so far, to delay pending the outcome of any legal challenge that might be heard by the European Court of Justice. EU objections only require them to delay until the end of December. So, in respect of EU objections, the Scottish Government could implement MUP from January onwards, subject only to the delay created by domestic Court hearings. I suspect that if the legal challenge is to succeed, it is most likely to succeed in the ECJ, because eliminating trade barriers is what the EU is about and the ECJ is specifically there to consider issues of competition law.

So, what are the prospects for a political challenge to MUP in the future? I think this depends on two things: firstly, how long the legal challenge can delay implementation, and, secondly, what happens in respect of the Scottish independence referendum in two years’ time. If the SNP fail to win a majority for independence, then a subsequent parliamentary election may put them back into the position of being a minority government, and then the opportunity to reopen the issue of MUP might present itself. In the alternative, if the SNP wins the independence referendum their application to join the EU will be an issue of paramount importance. At this point EU member states that oppose MUP will find themselves in a position of maximum leverage.

But no one should think this is all over bar the shouting. To do so would be to underestimate the moral certainty of MUP’s supporters and their determination to inflict a defeat on their opponents.
Paul Chase is a director of CPL Training and a leading on-trade alcohol policy commentator

Use Classes and the other supermarket threat to the pub by Ian Fozard

Much has been made of the threat to pubs from predatory supermarket pricing. However, as is increasingly becoming obvious, there is a pernicious trend developing, whereby viable pubs are being sold to supermarket chains for conversion into convenience stores - which can be achieved without planning (change of use) consent. Yet, perversely, the way in which the law has been re-drawn in recent years means that the odds are stacked against the creation of new pubs, especially in some residential districts.

This is because the 2005 Use Classes Order changed the way that pubs were viewed in planning law allowing pubs to become retail outlets without the need for consent, whilst making an artificial separation of pubs/bars and restaurants into separate use classes. Prior to this change they both fell into the old A3 use class meaning that it was previously lawful, without planning consent, to turn a restaurant into pub, subject of course to upgrading the licence. Now it is not.

Further, the 2003 Licencing Act, by removing jurisdiction from magistrates and giving it to the same local authority that oversees planning, has exacerbated the situation, meaning that it is now much more difficult to create new pubs/bars in certain residential locations as planners and licensing officers often work to the same agenda.

There are, in my view, two related consequential issues - one being the scandalous ease by which pubs can be sold off for retail use by unscrupulous owners; the other being the artificial bureaucratic divide between restaurants (seen as good) and pubs (seen as bad). But this artificial divide in Use Classes is nonsensical! How does one define a pub? For example, many of Mitchells and Butlers “pubs” look like pubs but, based on sales split are, in fact, restaurants. There are many more examples.

The boundaries between pubs and restaurants are continually being blurred as customer preferences develop and the leisure industry matures and innovates. This is a good thing. It represents a “continental” approach to hospitality in keeping with changing social habits which makes the old, artificial, pub / restaurant divide seem out-dated. Our company’s successful experience is that significant numbers of people like to take their refreshment in surroundings that do not necessarily fit easily into the category of a traditional pub. This does not mean that such premises cannot major on cask ales and traditional pub values, but it does mean that we can offer them in more up-to-date female friendly surroundings.

So why rigidly attempt to keep these uses separate in some arbitrary “Use Class”? And why not give the pub some common sense protection under the law?

A case in point is in Harrogate where we have two pubs. Recently, Marston’s sold the only pub in a good suburb of the town to Sainsbury’s and it has now become a convenience store threatening other, smaller, local shops. Yet I am in no doubt that were our company to seek to create a new bar on the adjacent shopping precinct, possibly by converting a restaurant or shop, we would struggle to achieve the requisite planning consents and Premises Licence.

Of our 15 taverns, only five were originally pubs; six were restaurants, three were shops and one a bank. The six that were converted from restaurants happened pre-2006, without planning consent and under the old magistrates’ licensing regime. I know that today, there would be many more obstacles to achieve these successful conversions.

It should matter that pubs can be closed and turned into bland convenience stores by a faceless mega – corporation in the same way that it matters (as has been acknowledged) that village inns should not become housing just because of the perverse incentive of property values.

True, pubs always have and always will close. Many of the pubs located in former “heavy industry” towns are clearly not viable as the workers who used to frequent them are no longer there. But these closures are logical due to genuine market forces and demographic changes.

The British pub is a truly wonderful institution providing valuable social cohesion. Many (but not enough) of our finer pubs are protected by listing. That apart, there would seem to be little protection for the pub; instead there are ever increasing barriers to creation and innovation!

It’s time that government realised that, once destroyed, Britain’s unique pub heritage will never return. And it’s also time to acknowledge that allowing innovation is one sure way of creating much needed jobs and national wealth.
Ian Fozard is managing director of Market Town Taverns

What makes a good local great by Kate Nicholls

A few weeks ago Ann Elliott wrote a compelling piece about what puts people off pubs. Like Ann, I am a firm believer in trying to put yourself in your customers’ shoes and look at what you do from their perspective – and I know that Ann and her team add valuable insights by helping their customers to do so. But I am a firm believer in accentuating the positive: I hate the doom and gloom about pub closures, I always want to celebrate the innovation and entrepreneurship driving pub openings – up 52 per cent last year according to CGA Strategy, and two thirds of those food-led.

So, with that in mind, I wanted to look at the other side of Ann’s coin and look at what people like best about pubs – what attracts them, what makes them stay and what turns a good pub into a great local. It is a sentiment clearly shared by London’s Time Out Magazine – which last week published their “totally subjective survey of the city’s best boozers” and asked their readers to nominate a great London Local.

Here is their list of what the qualities that make up their favourite pub:

1. Proper food - pub food has come a long way from a lukewarm pie, a curling sandwich or a packet of crisps, but today’s customers were wanting more than just a cure for alcoholic munchies and expect a higher quality of bar snack too. Now, I know this survey was London-based, so talk of honey-coated, mustard cocktail sausages on the bar as well as cashew nuts and olives may sound positively continental, but it is an indication of the direction of travel, and most interestingly in the Time Out customer survey it came above number two in this list.

2. Great drinks – to quote Time Out “get this wrong and which might as well just visit the offy”. And, it is more than just beer. The range and quality of drinks across the bar is important and as Nick Griffin, of Pleasure, pointed out last week, there is an opportunity to upsell. The message was clear – choose what you do and do it well.

3. Character – you can’t buy it, and you can spot operators who try to a mile off. Geronimo Inns are one of those who get it right, but you can’t bottle it. So many others try and fail - interior decorating by numbers, anyone? Time Out says the best London pubs are “invested with decades of mild debauchery” - and I would have to concur. But there is a lesson here for all – be true to yourself and your customers.

4. Take Comfort – I have always had a theory that pubs try to recreate the hearth away from home of their customers – the scrubbed pine kitchen table of the metropolitan middle class, the comfy den, the sitting room. Whatever your target market, the aim here is to make customers feel at home so that they want to move in and never leave. Drake and Morgan do it particularly well – and I love the blankets for outside. Those plastic wicker chairs or leatherette cubes – forget it!

5. Beyond booze – here, I think Time Out is in a different operating zone from most operators. I think if I said vintage jumble sales and cabaret, most operators would think I had taken leave of my senses. But again, there is a key overriding message – most customers wanted something other than just a drink. They wanted a sense of community, a feeling of belonging; flashing machines are a big turn-off, what they want are innovative events.

6. Civil service – I would probably put it top of the list, because if you get this right, then the rest will follow. And, of course, this is the best way of making sure that we meet expectations and turn customer into regulars. But, regular or first-timer, Time Out customers wanted to be met and greeted by staff for whom serving them was a complete pleasure.

I am sure we can all add to the list, but these are the top six requirements of London’s most picky customers. Put it together with Ann’s list of ‘don’ts’ and you have a comprehensive list of what today’s ever-more-sophisticated customers look for. Equipped with that knowledge, the challenge now is to look at how you capture their attention, convince them you will fulfil their needs and, most importantly, how you can exceed their expectations. The answers to that are what we will be considering in the ALMR’s Spring Conference on 24 April next year in London. Join us to add your views to the debate. 
Kate Nicholls is strategic affairs director of the Association of Licensed Multiple Retailers

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