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Call for more time at M&B

As the group faces a future dominated by asset strippers, MPs should stop pubs disappearing from less well-off areas

There are some lovely pubs in the Mitchells & Butlers collection. The Old Wellington in Manchester and the Black Friar in London have history and fine ales in abundance. M&B, on the other hand, has a less illustrious history and, unforgivably, a future dominated by aggressive asset strippers.

For the last two years the Irish horse-racing tycoons JP McManus and John Magnier and their Bahamas-based partner, the billionaire Joe Lewis, have dominated the boardroom. They appear lured by the prospect of selling the company’s huge estate of freehold pubs, exiting with the cash and leaving punters to pick up the shattered pieces.

It was tried before by M&B’s previous owners, including Robert Tchenguiz, but scuppered by the banking collapse. Another attempt is inevitable.

Hold your shire horses, say the current management, no decisions have been taken and talks with the Association of British Insurers on Monday show it is behaving responsibly.

Hugh Osmond, another buccaneering entrepreneur, set the trend in the pub industry a decade ago with his creation of Punch Taverns. This private equity-style vehicle began the upending of a industry that served millions of people a week, many of them on low incomes and with few alternative venues for socialising. Osmond hoovered up independent pub chains with borrowed money to create a giant firm now weighed down by £3.5bn of debt.

To pay the debt interest, prices were forced upwards. Twenty years ago a pint cost £1.26 or £2.03 in today’s money. It now costs about £3.10 on average. Since 2002 the pub industry has suffered a 25% fall in alcohol sales. Hundreds of pubs and social clubs have closed.

The GMB union, which represents many pub staff, has called for the Office of Fair Trading for a full-blown review to tackle the concentration of ownership and restriction of pubs to better-off areas where customers can afford the high price of a pint. The Old Wellington has the clientele and location to survive. Punch has more closures in the pipeline, showing many others will not.

The OFT has refused the GMB’s request. Maybe it is right. It is not a City corporate governance issue or even a competition issue, but one that MPs should tackle because pub companies have diminished all but the wealthiest areas. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds