By Professor Dan Herbert and Dr Sarah Montano
Birmingham Business School
“You want to go where everyone knows your name and they’re always glad you came!” – Cheers theme tune
A recent report found that over the last decade the total number of pubs in England and Wales has dropped to below 40,000. This represents a loss of over 7,000 pubs in the last 10 years. Of note, the West Midlands saw one of the largest losses across England, with 28 pubs closing in just 6 months in 2021. In this post, we explore why pubs have closed, what this means for communities, and what can be done to stop this significant trend.
Why have so many pubs closed?
Pubs have closed due to several reasons, most notably the impact of COVID, which saw mandatory pub closures due to the lockdown legislation. Furthermore, there is the impact of the cost of living crisis, inflation, and increasing energy costs. These rising costs will lead to a reduction in profits, which may make some pubs no longer viable. These rising costs are compounded by the reduction in consumer confidence and therefore consumer spending. In May 2022, consumer confidence fell to its lowest level for nearly 50 years. As consumer confidence falls, consumers may be less likely to spend on non-essentials, such as going out to the pub.
Common pub ownership models also lead to closures. Most pubs in the UK are owned by a pubco (a company whose sole business is owning and renting pubs). The business model of pubcos is complex; these companies charge a pub tenant a rental for the pub but also insist that they buy most of their alcoholic and non-alcoholic beverages from them (often at a price above the open market, leading to the common term ‘beer tax’ for this practice). This model often makes tenancy of pubs unattractive, as tenants struggle to generate an adequate income. Most pubs that close do so as it becomes impossible to find tenants willing to take them on. In many areas, the attractiveness of selling a closed pub for redevelopment as housing also leads pubcos to prefer the cash generated from a sale to insecure rental income.
The community pub
We argue that pubs are the centre of a community and such a loss can have a real impact on community building and relations. In virtually every soap opera/series, there is a pub or bar at the centre of the community that life revolves around. Notable fictional pubs include the Cheers Bar (Cheers); Queen Vic (Eastenders); The Rovers Return Inn (Coronation Street); The Nag’s Head (Only Fools and Horses); The Railway Arms (Life on Mars), The Bull (The Archers) and Moe’s Tavern (The Simpsons).
As we can see from our fictional list of establishments, pubs are integral to building communities. There is a theory known as Third Places (Oldenburg, 1999) that helps us understand why pubs are so important and that as a society, we need to help support pubs and reduce the number of closures. Third places are places that are not work or home – rather they are neutral places where people can gather and almost become a home away from home.
Third places create welcoming environments where everyone knows everyone (cf. the Cheers theme tune “You want to go where everyone knows your name and they’re always glad you came!”). Importantly, pubs and third places create welcoming places for those retired or who live alone. Third places are levellers – where status is not important. The core activities undertaken in a third place are not special, but rather mundane and often taken for granted. Sociability and conversation are the essence of the third place. The sense of community created in the third place supports the very community that surrounds it.
So, what can be done?
Recognising the value of their local pub, communities around the country are finding ways to buy and run their local when threatened with closure by a pubco.
There is significant support for this approach. In 2012 the UK government allowed pubs to be deemed as Assets of Community Value. This secures their use as a pub and places restrictions on their sale. This protection opens the door for community purchase. If a pub is to be closed and sold, then the community have the first chance to buy it. This process usually involves the sale of community shares. These shares are not tradable but can offer to pay a return to investors. A mix of share sales and borrowings can be used to purchase the pub. A current example of a community attempting to purchase their pub is the Brewers Arms in West Malvern.
Once running, the business model is far more favourable to tenants. Whilst a rental is still charged, tenants are free to purchase from any source at more favourable prices. This also allows them to support local brewers. The model works; Plunkett Foundation research found that of the pubs purchased by communities, 99% were still operating, despite the impact of COVID on the sector.
The Plunkett Foundation is a charity that supports groups setting up community businesses and has supported many pub purchases. They also publish research on the sector. In their latest work they found that there are now 147 community owned pubs in the UK. Whilst the community ownership is a model often associated with rural areas, there is now evidence of groups purchasing pubs in urban areas, often where there are high levels of deprivation.
The community ownership model seems to be a strong candidate for the preservation of local pubs as third places. It’s a model that means we need not lose the last pubs of England.
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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.