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Morning Briefing Strap Line
Fri 14th Jun 2013 - Friday Opinion
Subjects: Soft lobbying, chips and the public’s health, EMROs and Enterprise Inns
Authors: Nick Bish, Paul Chase, John Gaunt and Steve Haslam

Soft lobbying, hard sell By Nick Bish

If you find yourself in striking distance of Hitchin, Hertfordshire, do make a point of visiting Hermitage Road Bar and Restaurant. It’s a stunning, high ceiling, industrial-chic, great service and better food venue by Anglian Country Inns that would hold its own in any cutting edge metropolis. That’s the recommendation, but not the reason for this article.

The ALMR regularly talks to government at the most senior level. With others recently we had a really positive meeting with the Chancellor of the Exchequer, and there is a succession of briefings with Ministers, Backbench committees and All Party interest groups. But there is another way in, and that’s from the local level with retailers talking to their constituency MPs.

Thus, the lunch in Hitchin was the idea of Anglian’s boss, Cliff Nye and the purpose was to brief two local MPs on sector issues. But these were no ordinary MPs; one was Oliver Heald who is no less than the current Solicitor General and the other was Peter Lilley who held a series of Cabinet appointments in the Major government. These are politicians that many lobbyists would give their eye teeth to get in front of, and there they were, in listening mode, with us. Other guests included other Hertfordshire operators, Propel’s Paul Charity and me. We agreed beforehand that we wouldn’t whinge and seek special favours but rather explain what we do and what contribution we make. The venue was evidence itself that there is innovation, excitement and success aplenty in the industry; the statistic that Hermitage Road alone employs 40 staff raised appreciative eyebrows and the evidence of training and development convinced the two parliamentarians that this is a great example of a great industry. Becky Salisbury and Peter Borg-Neal endorsed all this good news while making the point, gently but firmly, that it would be great to have a level playing field in tax and legislation to support this wonderful business platform.

That was the extent of the lobbying at lunch that day. Will the world turn overnight? Will VAT be halved? Will EMROs and the Late Night Levy disappear in a puff of smoke? None of these, not now. But we can’t judge success like that. ALMR and other trade associations grind away at the government coal face and the detailed, forensic stuff with officials in their departments gets done and very well. But influencing the mood music is another matter and this ‘soft lobbying’ is a vital part of that. We need to be in a place where the reputation and contribution of our sector is seen in a positive light, especially when the law and order activists and the anti-alcohol campaigners are on the rampage. We need important, influential politicians to be on our side saying, “Hang on! It’s not like that! Restaurants, pubs and bars bring employment and revenue and are brilliant at what they do in the heart of the community”.

This is much more than the kudos and publicity of a minister opening the newly refurbished pub, this is about serious businessmen making a serious case to those who influence the world we live in. It is an almost infinitely repeatable activity and the formula is great. Gather a couple of colleagues or competitors in the best available example of the great places we have – invite the constituency MPs and show off. Show off about the standards and the style, the employment, the apprenticeships and the pivotal role that pubs and bars play in the scheme of things.

They will ask what the industry’s priorities are and you will not miss the opportunity to highlight some key items. You will certainly make the point that our GVA growth is three times the average of the private sector and there are three openings for every closure in food-led businesses. You could mention a ‘home authority’ approach to an aligned planning and licensing regime and a return to a single use class for eating and drinking; and a single date for annual licensing fees, first proposed in 2007, would be really helpful for multi-site operators. And then you would remind them that 70% of alcohol consumption is away from the twice-licensed environment of the pub or bar. You might suggest that off-licences should be scrutinised just as carefully as the on-trade and that councils can and should impose controls on supermarket hours, in-store display and promotions where appropriate.

Notwithstanding the hard-won and valued concession on beer duty the taxation imbalance is still skewed against operators. Any and every move to make it easier and cheaper to eat out will be welcomed. It seems ridiculous, almost offensive, that Marks & Spencer can feature a ‘Gastro Pub Meal’ in its ‘Dine in for £10’ offer when the gastro pub in real life has to charge 20% VAT on the real thing. Some people may pooh-pooh the idea of a VAT cut; it’s certainly a big ask but the maths works for jobs and business growth so – keep chipping away.

The new political thing is localism – and therefore it makes eminent sense to adopt that approach ourselves and sell the local story on growth and jobs and style and standards to local MPs and execute the perfect pincer movement on public policy.
Nick Bish stepped down as chief executive of the ALMR last month and continues to work with the trade body as an advisor. This article appears in the summer edition of Propel Quarterly

Calling time on chips by Paul Chase

Did you know that local councils have now been put in charge of promoting public health? Perhaps predictably this has created a whole new batch of public health trolls who make it their business to mind other peoples’ business. For example, in Salford the council is considering banning the sale of chips, and other hot foods, in areas around schools until 5:00pm, in an attempt to combat childhood obesity. This will affect any business that sells any kind of hot takeaway food within 400 metres of a school in Salford.

Councillor Margaret Morris, whose title is ‘Assistant Mayor for Health’ at Salford Council, said in a statement: “Takeaways create jobs and provide a service, but these ideas are to make sure that they are opening in the right places and not having a negative impact in our city. We don’t think they should be selling hot food over the counter before 5:00pm near schools, as children should be encouraged to eat healthily.”

Well, aren’t the parents of Salford lucky to have this meddling busy-body making decisions about the food their children are allowed to buy and eat? When I was at school we weren’t allowed off school premises at lunchtime, for fear we might pillage local shops or enjoy a crafty drag on a ciggy. But now children have to be protected from local shops, rather than shops being protected from local children!

Meanwhile, Eric Appleby, chief executive of Alcohol Concern, is also worried about children; in fact so worried that he’s recruited a committee of Young Nannies to serve on the grandly titled Youth Alcohol Advertising Council (YAAC). Apparently YAAC’s job is to trawl the media looking for alcohol advertising whose content they consider irresponsible, and then complaining to the Advertising Standards Authority. So far, ten of their 13 complaints have been rejected – still, repetition is the mother of learning - so perhaps Eric could arrange an apprenticeship in Public Health Trolling so they can get it right more often. In the alternative, aren’t there any street corners they could hang round on?

But perhaps the YAAC is just Eric’s way of gaining a bit of street cred for his report on alcohol advertising and young people. The report calls for the introduction of a model similar to the Loi Evin in France, a 1991 law which has forbidden alcohol brands from sponsoring cultural or sporting events. Regulator Ofcom has revealed that children saw an average of 3.2 alcohol adverts a week in 2011 as compared with 2.7 in 2007. Alcohol Concern said that as a result many young people recognise more alcohol brands than those of ice cream or cakes. Careful Eric – Councillor Margaret Morris might be listening – didn’t you know that ice cream and cakes are bad for you? But here’s the rub: underage drinking is declining in this country, where we have alcohol sponsorship and advertising of this kind, but is going up in France, where such sponsorship is banned.

Meanwhile the New Puritan assault on pleasure isn’t limited to alcohol and food. A government quango called the Medicines and Healthcare Products Regulatory Agency has announced that e-cigarettes are to be regulated as a medicine. Apparently 1.3 million people in the UK use e-cigarettes as a tar-free method of enjoying nicotine. Chief Medical Officer Professor Dame Sally Davies said: “Smokers are harmed by the deadly tar and toxins in tobacco smoke, not the nicotine. Whilst it’s best to quit completely, I realise that not every smoker can and it is much better to get nicotine from safe sources such as nicotine replacement therapy. More and more people are using e-cigarettes, so it’s only right these products are properly regulated to be safe and working effectively.”

But e-cigarettes were not intended for use as a nicotine replacement therapy, but as a safe alternative for people who just enjoy the relaxing effects of nicotine. If nicotine in and of itself isn’t harmful, why do we need to regulate it, much less define it as a medicine? And why is it “best to quit completely”? Here we come to the ‘gateway argument’. This is a crafty one. If e-cigarettes are used for pleasure they become a ‘gateway product’ that will lead to the smoking of the real thing. But if they’re defined as a medicine – a ‘nicotine replacement therapy’ – they become useful in helping people quit. Work that one out.

Which brings me back to trolls. As commentator Jeff Jarvis wrote in an article entitled ‘Redefining Rude’: “Do we let the trolls destroy every sprout of optimism with their curmudgeonly naysaying and ad hominem spite? Do we really want to encourage their mean-spirited destruction? Do we want to give them the last word?”

I certainly don’t intend to!
Paul Chase is a director of CPL Training and a leading commentator on trade alcohol and health policy

EMROs and the Late Night Levy – what is the fuss about? By John Gaunt

We all know that the Late Night Levy is a locally adoptable ‘tax’ on late night licensed premises trading beyond midnight or such later time as the Local Authority might determine. The Early Morning Restriction Order (EMRO) is similarly a power devolved locally to restrict the trading hours in a defined area between midnight and 6:00 am and as with the Levy, at a time beyond midnight as determined by the Local Authority.

Whereas our survey of Local Authorities earlier in the year indicated that the vast majority (being over 75%) were disinclined to pursue either of these powers, the proactivity of the remainder is on the increase. The risk to the industry is that it becomes blind to the danger and possibly complacent about the consequences. It cannot afford this and must guard against it. 

So where are we at now?

The Levy
A consultation in Newcastle, to which we responded on behalf of clients, has now concluded. The council has promised to publish the responses received but has yet to do so. They indicate that they will be reporting the outcome of the consultation to the Council’s Licensing Committee on 19 June, to Cabinet on 26 June and Council on 3 July. They will decide whether or not the council will introduce the levy with effect from 1 November 2013. Unlike EMROs there is no hearing and therefore no further opportunity to state the case for businesses.

Milton Keynes has also concluded its consultation with a decision due late June. Cheltenham Council launched a consultation on 3 June which runs until August. Woking Council has launched a consultation on the Levy but (in our view confusingly) also seeks views on an EMRO which if popular would then be the subject of a separate consultation.

City of London Corporation also launched a formal consultation on the Levy this week. Other councils are at various stages of consideration or pre-consideration.

Early Morning Restriction Orders
As you will be aware, Hartlepool were first out of the blocks and perhaps proved to be an object lesson to councils in how not to do it! We both responded to the consultation and attended the hearing at which the decision was taken not to impose an EMRO at this time. The data relied upon was out of date, the request from the police was manifestly resource driven, levels of crime in the proposed area and in the rest of the town showed substantial reduction and the original hearing had to be scrapped because inadequate notice was given – you get the picture.

Ormskirk (West Lancashire) conducted a pre-consultation on a possible EMRO which has concluded and to which we again responded. We await further developments. Chesterfield has determined to launch a formal consultation, imminently due, on an EMRO over a wide part of the town centre. And then Blackpool. As widely reported (but engendering how much interest nationally beyond the Trade Associations?) Blackpool is set to launch a formal consultation on the adoption of an EMRO on 13 June. The evidence in support will need careful scrutiny – and we anticipate that, as with Hartlepool, we will be instructed to engage in this process of consultation.

We would welcome a broad response from businesses in Blackpool who may be affected. There is already a wide body of opinion which believes that the adoption of an EMRO will have a profound adverse impact on the night-time economy there. The council has already pencilled in a two day hearing in early September and so they are clearly anticipating objections – and well they might.

But why? This brings us conveniently to the nub of our concern. The danger for the hospitality industry is that it will not actively and directly engage in these consultations and proposals, but the consequences, direct or indirect, are too great to ignore. We do not believe that it can be left to trade bodies (national or local) alone to fight the fight. As we saw in Hartlepool, some national operators who were concerned about the possible indirect impact took up the cause (to their credit) and actively participated and raised objections. The proposal died in part as a result of such actions and scrutiny of the evidence and procedure adopted. The potential economic impact of adoption eloquently set out at individual company level appeared to concentrate minds of councillors in a way that a general view could not have done so effectively.

Indeed – no one knows what the knock on effect that the adoption of an EMRO or the Levy may have on the pubs, bars and nightclubs or the late night economy or more generally. The knock on may also affect other businesses such as late night refreshment and the taxi trade leading to closures and reduced employment. How will the transport infrastructure cope with a common closing time for all affected premises? What possible dispersal might there be to other areas not affected and what will be the wider impact of this? 

These are some of the material considerations why these consultations (and Blackpool being the second, and with its very valuable night time economy) cannot and must not be ignored.
John Gaunt is a founding partner in John Gaunt & Partners, a niche licensing practice operating throughout England, Wales and Scotland for a significant number of operators. The firm has been at the forefront of involvement in the EMRO and Levy consultation processes

Our Enterprise experience by Steve Haslam

My company, TLC Inns, has six venues: three Enterprise leases, one free-of-tie retail park unit with a private landlord and two freehold village pubs. We entered the retail side of the industry in 2006 with our first venue, The Cutter Inn, Ely, which was an Enterprise lease we purchased on assignment from Greene King. Our second and third openings were also with Enterprise Inns. In total we now have circa 15 trading years under our belt with Enterprise – I have a duty to my trading partner in the current political climate to be open and honest with regards to our long relationship. Our company has been very successful thanks to a good working relationship with Enterprise and because I believe our retail offer has looked to the future. Enterprise has provided us with good properties where we have been able to put our retail skills to work. In a complex business environment where parties willingly contract, a landlord like Enterprise Inns can only take so much of the blame when things don’t work out. We have entered into a contractual relationship with Enterprise three times – and have made good profits at every site, each and every year.

We entered the industry in 2006 just prior to the smoking ban. Recognising the need to evolve the standard pub offer to encompass the opportunity that would be presented by the ban was vital – the industry was about to change forever. Whilst others were wasting time arguing about the ban, we were evolving to cater for the future. Unfortunately, many people running pubs, whilst very good old-style publicans, are somewhat lacking in business acumen and have not progressed from being turnkey operators.

With the economy also starting to falter within a couple of years many operators were caught paying far to much money for assignments of leases – in some cases hundreds of thousands of pounds, remortgaging houses using savings or taking loans. The pubcos were powerless to stop them – the economy and individuals with rose-tinted glasses have led to many pub failures.

Have the pubcos played their part? Yes – in the form of tied beer and full repairing leases and buildings that had been underinvested. But as individuals we all had the opportunity to say no and not take the lease and move on to something else.

The industry as a whole has changed exponentially over the time I have been involved. The power of the branded managed pub companies has increased, new branded outlets and multiples have grown on a daily basis, grabbing consumer spend through wider choice, cheaper options and quality operations. Alcohol has also been available at give away prices through supermarkets, which has become a major factor in people’s mindset when visiting the pub. Many now pre-load on cheap alcohol – the customer is happy, the pub powerless to compete.

Pubs, as we once knew them, are finished. We need to evolve to survive. We need to offer more. We must put the H back into Hospitality and work harder to give consumers a reason to visit our pubs.

So will getting rid of the tie solve this? Not a chance. We must realise to compete with the branded managed outlets is impossible – they rely on smaller margins and succeed on volume. This is not going to work in smaller venues in secondary positions generally operated by leasehold operators.

Leased pubs, the people running them and their corporate owners need to look at high streets up and down the country and draw the parallel. Fail to compete and evolve and you fail to exist – look at Woolworths and many others. Investment in pubs with a future and closure of the ones that don’t is the start. Snuff out corporate profit and this can’t happen. Pubcos need to be aware of the danger of failing to invest in the underinvested. 

Abolishing the tie is so not the answer. Investment in the future is the key – massive debt piles don’t help in this. If the profits accruing from the tie are applied to greater investment the future is bright for the industry. Working together with our pubco partners we can grow and succeed. It’s been the story of our time with Enterprise.
Steve Haslam is the founder of TLC Inns

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