Pub companies are creaming off huge profits from neighbourhood pubs leaving their licensees to survive on earnings less than the minimum wage, according to FSB evidence to be submitted to a committee of MPs this week.

Following a campaign by the FSB, the influential Trade and Industry Select Committee announced in May that it is investigating the relationship between pubcos and their tenants. 

The submission from Britain’s biggest business group shows that whilst pub company profits soar, many publicans are forced to work more than 90 hours a week for a wages under £200.  Almost a quarter of couples who run pubs have to take a second job in order to make ends meet.

• The submission quotes a publican in the Midlands who earns £10,400 a year (an hourly rate of just over £2.20) compared to the £48,000 taken last year by the company which owns the pub, 

• Another pub company licensee in the West Country has provided profit and loss accounts which show that his annual income is less than £8,000.

Just two pubcos, Enterprise Inns and Punch Taverns, now own 25% of all pubs in the UK -  some 16,000 pubs.  Last month Enterprise Inns reported a 16% increase in profits.

Against this backdrop most tenants are disillusioned – and more than 60% say they would be unlikely to take out another lease with their pubco.  The average time a tenant stays in a leased pub is now 3 years.

John Walker, FSB Policy Chairman said:

“Pub companies say that their behaviour can’t be that bad because they have people lining up to run pubs.  People may still dream of running a pub but the reality is that if they are tenants of a pubco they don’t like it much when they get there.”

“Pubcos have their tenants over a barrel.  Their licensees pay far more than the market price for beer, give up most of their income from fruit machines, and are subject to ‘surprise inspections’ at any time because the companies enjoy ‘rights of entry’ to their premises.”

“Ten years ago the Beer Orders were introduced to transfer some of the power enjoyed by the big brewers to their licensees.  But this power has been transferred from large brewers to large pubcos and tenants are still losing out.”

Notes to Editors:

1.     The FSB is Britain's biggest business organisation with 185,000 members including over 5,000 publicans.  It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

2.     The Trade and Industry Committee announced an inquiry into pubcos on 6^th May 2004.  The deadline for written evidence is Wednesday 2^nd June.  Further information about the enquiry is available from the committee office on 020 7219 5777.

Contacts:

FSB Chief Spokesman:

Stephen Alambritis:             07788 422155

FSB Press Office (ISDN available):

David Bishop:                     020 7592 8113    07740 076848

Daniel Mazliah:                   020 7592 8128    07717 861605