Pub co-operatives: creating a dream team

Pub co-operatives are one way of saving community locals under threat. Phil Mellows investigates the effectiveness of the business model.

There can be few pub-goers who don't, in those idle moments of reverie over a quiet pint, dream of owning their own local. And now, for many of them, it's become an urgent consideration.

Pub closures are forcing the issue, to the extent that the prime minister himself, in his elaborations on the theme of the Big Society, said that the Government wants to encourage communities to take over failing houses.

Exactly what that might mean should become a little clearer later this autumn when the Department of Communities & Local Government tables its Localities Bill, which is expected to give people the right to buy "assets of community value".

If by "asset" you mean a service with social and environmental value, and not just economic, that could include many of the country's pubs.

Yet one of the first acts of the new Government was to chop £3.3m of funding for a pilot scheme for 50 community-owned pubs to be set up through the Plunkett Foundation.

The clear message is, we want you to do it, but you're going to have to do it without state support.

The Plunkett Foundation, with 82 communities already knocking on its door, called an emergency summit that was held last month at the country's best-known pub co-op, the Old Crown in Hesket Newmarket, Cumbria. From this has emerged a new support package that includes advice and the possibility of cash backing (see box, right).

"We all felt a strong moral duty to help these communities on which the Government has turned its back," says Plunkett's chief executive Peter Couchman. "The support will not be at the same level as it would have been, but those choosing to go down the co-operative pub route will get help from highly experienced co-operative developers and have access to finance."

Pub is the Hub​

Meanwhile, Pub is the Hub, which over the past five years has helped 30 communities take over their pubs, and is currently advising 15 more, has been expanding its network and has appointed former

Jennings Brewery managing director Mike Clayton as special community advisor. The organisation also lost £1m in the cut, but, for director John Longden, funding is not the

biggest obstacle for communities looking to buy their pub.

"Pubs run by co-ops come with a big health warning," he says.

"It's not a problem getting finance, but there are huge problems running them. Half the groups we've helped don't realise the hard work that's involved."

There have been casualties, like the Dykes End at Reach, Cambridgeshire. It was saved by the community, but in the end they had to sell it to a regular freetrader, unable to keep up with the demands of running a pub themselves.

"It's a lot of hard graft," says Malcolm Harrison, who heads Pub is the Hub's new Welsh division. "There's an initial enthusiasm, they get the money together, then it's the day-to-day operations that trip them up. You need attention to detail in a pub. You've got to be on top of everything that's happening 24 hours a day, seven days a week.

"It's important to have the right blend of people in the co-op, too. They've got to have the nous, the experience — and still get on with each other. You can have the most enthusiastic licensee running the pub, but it's not going to work if the community falls out."

Lease option​

To reduce the risk, Pub is the Hub is now advising communities to consider leasing rather than plunge all their cash into a leasehold.

"You don't necessarily have to buy the pub," says Longden. "The most successful co-ops have been where landlords have let the pub to the community. It's a kind of try-before-you-buy option where you have an exit route if it goes wrong."

There are, in fact, as many different models for a co-operative pub as there are communities that want to run them. It's vital they get good advice and come up with a way of running the operation that suits them.

Some co-ops are all hands-on, with volunteers doing the work and making the day-to-day decisions. Others let a professional licensee get on with it. There's no one solution.

Indeed, a co-op may not be the right solution at all, as Longden points out. "Can the co-operative model stop pubs closing? No, it can't. It's only one model. It may be better for the pub to be privately owned and be profit and turnover driven in the usual way.

"We don't want to con loads of communities into thinking that running their pub is easy. They will need all the help they can get. And even then we have to accept that many pubs will still have to close. But in the right scenario, a co-op can work."

Case study: the George & Dragon, Hudswell, North Yorkshire​

One of the newest pub co-ops in the country is the one that, since June, has owned the George & Dragon at Hudswell, North Yorkshire.

The only pub in the village, it closed in the summer of 2008 when the licensee was made bankrupt in the credit crunch. When no buyer had emerged by the following spring, a small group of locals got together and started to raise the money to take it over.

"We faced a number of doubts and difficulties," recalls Martin Booth, secretary of the co-op, Hudswell Community Pub. "Why should anyone invest in a business that had just failed when pubs were closing all over the country?

"We were unincorporated, had no funds, no track record and little experience of the licensed trade. The bank, which had repossessed the pub, did not take us seriously, and there were village sceptics who thought our enthusiasm was naïve idealism."

But most villagers were behind the idea and it won the support of community enterprise organisations such as Key Fund Yorkshire and Mutual Solutions, and it had the offer of a grant from Yorkshire Forward. Encouraged, the group registered as an IPS for community benefit — a kind of co-operative, but with limited liability — and published a prospectus to invite investors.

"We needed a minimum of £220,000 to complete the purchase and we needed quite a bit more than that to bring the pub back into use. The money flowed in, but, as the deadline set by the bank approached, we were still short of our target."

Key Fund Yorkshire came to the rescue, chipping in £20,000, and in February this year the pub was finally bought by a total of 160 investors, nearly half of them villagers. The pub was put back into trading shape and volunteers restored furniture, painted and decorated, and cleared the land at the back to create allotments.

Now the hub of the community, the George & Dragon is home to a shop and a small library, as well as providing free internet.

"We've employed tenants to run the business — they're the experts," says Booth. "We have a board of directors, 11 people with a range of skills, and 30 or 40 people have given their time and practical skills, decorating and plumbing and so on. They've even produced a book of walks around the pub.

"We opened at a good time of year and got a lot of publicity. Trade's good so far. A lot of people were sceptical at the start, but what I'd say to other communities is you can do this."

Case study: the New Inn, Shipton Gorge, Dorset​

Five years after the New Inn at Shipton Gorge, Dorset, was written off as unviable business by local brewer Palmers, the community-owned pub is now at the heart of village life with a listing in the Good Beer Guide.

The community, with help from Pub is the Hub and the Campaign for Real Ale, raised £25,000 among themselves, secured a £15,000 grant from the Department of the Environment, and four years ago persuaded Palmers to let the pub to them on a six-year lease.

Trading as New Inn Support, led by four unpaid directors from the village, they invested in a new toilet block and cellar, then sub-let the pub to a licensee couple with 30 years' experience, Gary Pellow and Sandra Tyson.

"It was a very tired pub when we took it over," says Pellow. "Now it's clean and co