On Wednesday 26th January, I had the opportunity to sit down with the Small Business Minister, Paul Scully MP and we went through the following agenda.
Introduction to the Forum of Private Business and Forum of British Pubs
The Forum of Private Business was set up in 1977. The Forum exists to help small businesses with 5-50 employees who have a responsibility to be compliant but do not have their own legal and HR resources. So, we offer practical, proactive support at a reasonable price as a not-for-profit membership organisation. We do not lobby as such but have consulted with government and regulatory bodies since our creation, giving our members a voice and hopefully helping create good governance frameworks, effective regulation, and a thriving small business economy.
We set up the Forum of British Pubs in the middle of the pandemic in 2020, as we saw many pub owners struggling to deal with their pub company owners. We deal with each member on a case-by-case basis, helping them with dilapidation charges, rent negotiations, contracts, MRO submissions. We offer practical help and advice if they are in trouble as well as trying to keep them out of trouble in the first place. We have also more recently been working with local regional planning officers to help them deal with Change of Use applications, where viable pubs are claimed to be unviable!
General State of Play SME’s
Finance – Dept, Late Payment
- Many of our members report being in debt or further in debt because of the impact of the pandemic. Some have taken the view that if they are taking on debt, having been previously risk-averse, they are now making sure the debt covers their needs and possible growth. For example, Digital opportunities – The cost is often more than the hardware, training, and development, so many small businesses are not only investing in the hardware and software but in the training and recruitment of staff to use these tools effectively and boost productivity.
- The Banks were poor in terms of issuing CBILs, mainly because they don’t know their small business customers, so had to go through extensive tests and information gathering before issuing them, this included customers of over 30 years in some cases. Bounce Back Loans then came in with little risk to themselves and they handed them out like smarties. The lesson I think is for the treasury to realise that the big banks are no longer the default choice for many SME’s and this in part has been driven by the Banks own behaviour towards SME customers.
- Use of alternative funders, rather than the big banks, see the comments above, there is a need for the treasury to better understand how SME’s access and use funding, including the start-up banks, Metro Bank were very successful in recruiting SMEs alongside Starling and tide. Many also look at holding on to capital and leasing rather than buying, vehicles and office equipment being a good example.
- Late payment seems to be on the increase, it’s a cultural issue and needs to be treated as such, use of the Small Business Commissioner if she has the resources to do the job.
Independent retailers
- Restore the High Street, smaller units are needed, places to learn the trade and develop your products and services, the demand Is there, artisan markets, it’s the leap from there to the high street that’s a big issue.
- Landlords, the good and the bad! Some Local landlords are adapting and responding to local needs, price and size. Larger more distant landlords are not adapting and are trying to maintain high rents, supported by RICS acting as agents, it could be argued RICS are conflicted.
Hospitality
- Good Capital reserves, quoted by the treasury, in the Grant announcement, if this came from listed businesses it could be argued it supports what we were saying about grants going into pubs then straight into the accounts of some of the pub companies. some big hospitality groups may have done well out of the pandemic.
- Forum of British Pubs Latest Survey, this was shared with you and the final document will be emailed once it is finalised, summarised, and fit for release.
- RICS Variances, it is difficult to understand how two surveyors from the same professional body can come up with wildly differing claims if they are looking at the same business and operating to the same set of professional standards, but variances of up to 100% are happening and RICS seem to accept this. Surely a variance figure could be given as a guideline, say 15% and anything over that needs investigating.
- The latest Consultation on the Pubs Code addressed the low hanging fruit, not the core issues.
- The PCA
- The BII expert panel, we strongly object to the PCA, in its latest update and the Government response to pubs code consultation highlighting the BII and its expert panel. The BII is a charity that relies on regulated pub company’s to fund its training courses and you have to join the BII to access its panel. So the PCA and Government advertising this BII service gives them an unfair commercial advantage. There are also questions, do the BII make money from their panel members in terms of commissions? And how do you become appointed to the panel?
- The Latest PCA Survey, where does the data that IPSOS Mori uses come from and why doesn’t the PCA publicise where it comes from? Because at the moment the trade feels the data comes from the pub co.’s who can manipulate those lists.
Final Questions, can you (Small Business Minister) help?
- Better engagement with us, particularly on the next Pubs Code review. We agreed to meet on a 6 monthly basis which is much appreciated and any help the Small Business Minister can give in promoting better relations between ourselves and the PCA would be appreciated.
- Pub companies provide an investment statement, annually, quantify the SCORFA. At the moment the publican can see the additional costs associated with being in a tied agreement, so rent, beer, wine and spirits. They are told they get benefits via the SCORFA, but this is currently not quantified. So why can’t the regulated pub company provide a simple annual statement which lists the investment made in the pub, structural, marketing etc with a value set against each? This statement could also list any outstanding works to be carried out by the tenant, so there are no surprises in dilapidation charges which may be applied. The PCA asked the BBPA to look at a solution to the dilapidations issue, something which we haven’t seen the result of, but this could be part of the solution to that!
- RICS as part of the wider rent issue, if the government is able to help prevent the wild variances and inflated rents that currently impact many UK towns and small businesses it would be most appreciated.