Having fought a high-profile campaign on the issue of business rates, the Association of Licensed Multiple Retailers chief executive tells Neil Gerrard how she plans to fight for hospitality in the general election
What is the Association of Licensed Multiple Retailers (ALMR) and what does it do?
This is our 25th anniversary year and for the past 25 years we have been there as the voice and the champion of managed hospitality businesses. We represent 90% of pubs, bars, nightclubs and branded restaurants in the UK and we campaign to make sure the government understands the vital economic contribution the industry makes. As a trade body we also provide advice and guidance to our members to help them thrive, grow their business and explore new opportunities. A founding ethos of the ALMR was to make peer-to-peer networking and support a key plank of what we did.
You have seen membership rise substantially in recent years. What has driven that?
I took over as chief executive nearly three years ago and since then, membership has grown by a third each year. That's both through increasing the depth within the segments that we work in and also through broadening out into new segments.
For the first half of its life ALMR was very much focused on pubs. That was because it was set up for those pub companies that didn't brew and so we provided a voice for the new, innovative and entrepreneurial side of the sector. It is only in the past five years that we have had that acceleration of casual dining and, again, those brands that have no real home have looked to us to pick up the slack.
We have a general election next week. Were you expecting it and how are youpreparing for it?
To be honest, no, I don't think anyone was expecting an election this soon, particularly because the prime minister had quite explicitly ruled it out. However, we knew we would not be waiting five years. We knew that with what was going on with Brexit, the negotiations and the timetable involved, that an election that was sooner rather than later was something to work towards, so we were getting ourselves ready.
Hospitality is the third-largest private sector, and eating and drinking out employs 1.5 million people, but because it is thousands of small businesses, you don't get that scale and sense of importance you get with a manufacturing plant or a car plant. We are not as visible to the politicians.
What's your message to political parties during the election campaign? Is it generally about the impact the sector makes or are you focusing on specific issues?
I think it's both. I don't think you can do either or. We were already working on an industrial strategy and working very closely with the government on Brexit and what we need to do post-Brexit, so the two dovetail quite nicely, but we have not really gone in with a shopping list.
If you are working on a general election, you know there's a timetable. For the 2015 election we started in 2013 and we had a booklet that set out every single issue. We're not going to do that with a snap election. This is about the major priorities we have as a sector and it can be boiled down to two: one is about business rates and one is about Brexit. It's property and it's people.
Do you and your members have a preferred outcome to the election?
We always stay neutral when it comes to party politics, but what business needs and this sector needs is stability and certainty. We are not always top of the list for investment, and we've gone through a very intense period, particularly in the eating out sector, where it's been a bit of a rollercoaster because of the changes the government has made. From that point of view, a general election now, with a five-year timetable that takes us over the Brexit hump, is good news - but we need a clear outcome.
There's a rumour that the government is looking at imposing a quota on different sectors, so that the proportion of EU workers allowed in each sector will gradually be reduced and replaced with British workers.
What do you think of this?
It's never been our favoured approach. We've always taken the opposite view: that it would not be helpful to have a quota for EU workers, either for our sector or generally, because we know it would damage smaller businesses. The other reason is that the idea that you can phase out your reliance on EU workers and
upskill your UK workforce only takes you so far. The facts are, that in an almost full employment situation, with short-term unemployment below 3%, there simply aren't enough people. It's supply and demand. It's not that we're neglecting to train UK workers to fulfil those roles, it's that we don't have enough, so they have to come from somewhere.
Is there anything else you would like to see the government do to lessen the impact when it comes to Brexit?
I think there are some very clear messages that could come out in short order, either during the campaign or immediately afterwards, to guarantee the right to remain if you are already here working. This would stop the flow out of foreign workers and send a message that Britain remains open for business.
I think the barista visa [essentially a guest worker permit] is useful and something that we've been calling for - although I wouldn't have called it that myself. However, I think it needs to be for five years rather than two, and if it was renewable, and if people had a right, as they currently do, to apply for residency at the end of that period, it would be very helpful.
The other proposal we have put to government is more akin to a Swiss or a Jersey model, where we would have guest worker permits that are within EU rules and that allow for a degree of free movement across borders. There needs to be a recognition that we have a genuine labour need and that we're not actively recruiting foreign workers.
It sometimes seems that there is a lack of sympathy for hospitality among the public, especially when it comes to things like tipping and service charges, and Unite recently said the industry had brought the recruitment crisis upon itself.
Does this lack of sympathy extend into government?
I don't see a lack of sympathy; I see a lack of understanding, and that's why I yhink it is really incumbent upon us as a sector to make sure we have got the strongest possible representation and voice going into government to explain the facts.
We have found over the past 18 months that we are being listened to more and more as a sector by government and there is more understanding of pubs and restaurants. I think there's actually a great deal of sympathy for independent small businesses. The government has a lack of room for manoeuvre, and the election might give us some welcome clarity about where that room might come from.
You have won some important concessions on business rates, but many operators are still unhappy with the way the government handled it. Is there more that can be done?
There is always more that can be done and this is our number one priority after Brexit. Business rates are a huge issue, particularly in the restaurant sector, here we have been disproportionately hit. Restaurant business rates have gone up on average by 23% and pubs by 15%. That takes out the cushion operators had to invest in their property, to roll out new outlets and employ new staff, so it really does constrain what those businesses can do and the potential that they have to grow.
Over the past 10 years, eating and drinking out has grown by 8.2% per annum in terms of economic growth and employment in the sector has increased by almost 20%. We would love to be able to continue doing that over the next five years, but the reality is, with all the headwinds that the government has thrown at us, we not only have one hand tied behind our back, but some have had both hands tied behind their backs.
Our sector, uniquely, is not self-correcting, so the government and the Valuation Office will look at business rates and say that there is a relationship between rates and rents. In virtually every other sector the model has moved towards the short-term lease, which means that rent reviews go by the wayside.
In hospitality you need a long lease in order to realise your return on investment and you have upward-only rent review clauses. So this idea that if rates go up rents will come down might work for office space, supermarkets or retail, but it doesn't work for hospitality.
We communicated that to government, and there were some helpful concessions, but there is more that needs to be done.
Promoting the value of eating and drinking out
The ALMR has compiled a wealth of facts and figures to demonstrate the importance of the eating and drinking out sector, such as:
•Eating and drinking out is the third-largest sector in the economy. Only retail and manufacturing are larger.
•Eating and drinking out has a £60b turnover, £40b GVA and 1.5 million employees.
•SMEs make up 80% of pubs, clubs and restaurants.
•Eating and drinking out creates one in eight new jobs - and employment has
grown 16% since 2010.
•Eating and drinking out businesses are forecast to increase their output by 4% over the next three years and need to recruit 26,000 more people.
Kate Nicholls' career so far
Kate Nicholls' background has always combined hospitality and politics. She started her career in the European Parliament and the House of Commons, specialising in food and employment legislation. She often found herself being lobbied by the large hospitality chains and pub companies and was eventually
recruited by Whitbread to do government relations for the business in-house.
From there, she moved into consulting and, at that point, the ALMR became one of her clients.
She first started working with the ALMR in 1998 when the new Labour government came into power and was concerned with the minimum wage and drink driving.
"I've been working in this sector since 1993 and I think having that operational background and understanding from Whitbread, across hotels, restaurants and coffee shops as well as pubs and brewing, has been a real strength to the lobbying work we do and aligns with my political expertise to make sure we have a really strong and effective voice at the ALMR," she says.