Thank you, Chairman. The Vintners Federation of Ireland represents approximately 4,300 publicans in the 25 counties outside of Dublin. We represent a range of various publicans, from those in very rural pubs to those in bigger outlets in towns and cities and destination-type outlets. There are various types of pubs: some do food and others do not; some have late bars and others do not; and we represent all types of pubs outside of Dublin.
The drinks industry is very significant in the overall scheme of things. It employs approximately 78,000 people, of whom 69,000 are engaged in our sector, which is the labour intensive pub trade sector. Last year, €1.15 billion was paid in wages and salaries in the pub sector. The pub trade is a major employer of people, particularly in areas where jobs are generally quite scarce and this is quite important. In addition, the drinks industry provides in excess of €2 billion to the Exchequer each year by way of VAT and excise. In many ways, it is a significant contributor to the Exchequer. However, it is a business in turmoil. Alcohol sales decreased by 14% in the first eight months of this year and have decreased by approximately 24% in the past three years. Sales in pubs have been significantly replaced by sales of alcohol, sold below cost, in the supermarket trade. As a result of this, and some of the other issues to be referred to later, many pubs have gone out of existence. The most recent Revenue figures for the licensing year 2009 to 2010 show that more than 900 licences were not renewed. This represents approximately 14% of the total stock of pubs in the country.
The pub trade is highly regulated in terms of legislation and rightly so. Alcohol can be a mood-changing product and a licence is required to sell it; as a result there have been reams of significant legislation covering the operation and control of licensed premises. Some of this legislation dates back to the mid-1800s and has been constantly changed and updated in the decades since. While elements of the overall regulation are understandable and acceptable, it is the cumulative effect of certain aspects that cause considerable issues and are a distinct disincentive to employing people in the sector. While this regulation is rigorously imposed on the pub sector, one has to ask whether the overall regulation is even-handed when one considers the laxity with which the supermarket trade is regulated.
Before we set out the framework in which a pub operates it is important to understand that our main competitor is allowed to sell alcohol below cost, market it and promote it in a somewhat cavalier way and treat it as a loss leader in the same way as it might otherwise treat biscuits, bananas, beans or any other grocery product. It does this against the background of a so-called "voluntary code of practice" which is allegedly independently monitored. However, it is very difficult to see the independence in the monitoring when the watchdog is financed by the operator.
The 4,500 publicans whom I mentioned earlier must negotiate with their major suppliers as independent operators; they cannot come together for the purposes of buying alcohol. Competition law prohibits any combined use of buying power for alcohol by publicans at a time when the supermarkets, under the strength and guise of one commercial organisation, can use the combined power of hundreds of outlets to achieve very significant price reductions. They can then sell these below cost on occasion and use alcohol as a loss leader to entice customers into their premises where they have thousands of other products whose prices they can increase. In one case, it was admitted the prices of staple items were increased to compensate for selling alcohol below cost. In effect, in this instance competition law works against the possibility of giving the consumer better prices in the pub but it also works to the detriment of the small operator and in favour of the international giants.
For clarity, I will set out the regulatory framework in which a publican must operate. There are many arms of the State with which a publican must interface. The Garda Síochána has a role primarily in ensuring compliance with the licensing laws. We accept the total legitimacy of this, but are concerned at the lack of even-handed enforcement of these laws, particularly in respect of shebeens and registered clubs. Shebeens operate in many parts of the country, and they seem to be able to operate with impunity. Registered clubs constantly and continuously flout the registration under which they are supposed to operate. All our members ask for in this area is a level playing field and that the rigors of the law be applied evenly.
Our members deal with Revenue for licensing, VAT and PAYE. We accept this as a legitimate part of the business but many of the Revenue audits can be time consuming, laborious and of significant cost to members. The amount of bureaucracy demanded by the National Employment Rights Authority, NERA, particularly with regard to maintenance of records of various types, is a major imposition on small businesses employing between four and ten people. It must be remembered that most of these employers are not human resource specialists and do not have the scale to employ human resource managers; they are entrepreneurs who have built up a business over a long period who give employment with good conditions. In cases where the spirit of the law has been complied with, one wonders whether these police need to ensure that operators are penalised for not having a piece of paper telling them when and where somebody was employed two or three years previously. Recently, I had a case where a publican allegedly owed a foreign national who left him 18 months ago less than €10 and he was told by the inspector to find the individual because the inspector would return after a month to see whether he had paid. It is this type of nit-picking that drives people to despair. Some of these inspectors see themselves as being on a crusade and this was never intended by the legislation.
Environmental health officers, EHOs, have a particular role in respect of food and food preparation and many of the sentiments as expressed with regard to the NERA also apply to EHOs. The smoking ban has been accepted by the vast majority of our members and the latest figures show 98% or 99% compliance, which in real terms is full compliance. Again, we must ask whether it is necessary to come with slide rules and measuring tapes to assess whether an area is 49% or 50% enclosed. The real issue is whether the spirit of the law is being complied with and there are too many cases where a level of common sense is not applied. Last night, I spent an hour with a publican who wants to spend money to employ people in the construction sector to build a reasonably elaborate smoking area. His premises are more than 50% open, probably 60% or 65% open, but because of a problem with the definition of the word "perimeter" the inspector is telling him that if he does so he will close him down. This is where regulation loses its good name. There is a very significant on-going cost in dealing with the demands and the whims of some of the inspectors in this area.
Health and safety officers perform a particularly useful function in respect of ensuring the health and safety of employees and customers. By and large they do not present major problems, except those who seem to have a particular interpretation of some of the laws. With regard to litter, as a result of a recent High Court case a publican is now responsible for the area outside as well as inside the premises even though the premises may not be open. If litter is found in the precinct of the premises the publican can be charged even if he or she has cleaned outside the premises at closing time and the litter is there before opening time. Publicans pay rates, part of which was deemed to cover street cleaning. However, it now appears that these rates are nothing more than a tax on business.
The Consumers' Association of Ireland takes an interest primarily in weights and measures and ensuring that the product sold complies with what it says on the label. The Consumers' Association of Ireland also has a role in ensuring that prices displayed comply with the prices being charged. There is no significant issue in respect of this, provided the duties are carried out in an even-handed manner. Local authorities provide little by way of service but plenty in terms of charges by way of rates and water rates. Publicans engage with the local authorities in respect of planning and in many cases, with fire officers who have a role in the licensing of premises with dance licences, and so on. I am aware of one county where the fire officers charge an inspection charge of €700. This is for a service that probably takes a maximum of two hours. We suggest that any charge for this type of service is not defensible as such services are paid for in the rates.
It may be argued that all these arms of the State are necessary. We argue that the combined effect of all these regulatory authorities, rather than the particular effect of any one individual, is what causes increased costs, significant management time and the disincentive to invest in premises and people. It can be seen from what I have said that a small operator employing half a dozen people needs to be an architect, an engineer, a human resource specialist, a tax specialist, a licensing law specialist, a hygiene specialist and many other things before he or she learns anything about customer care, marketing, running a business or dealing with customers.
We do not suggest that there should be no regulation. We saw the results of that in other areas. We suggest rationalisation of the various arms of regulation where there is more of a one-stop shop rather than having competing agendas at play from different agencies, as often happens. The combination of all this regulation puts small operators at a particular disadvantage as the time spent in dealing with various agencies could be better spent looking towards developing and building their businesses. There is also the clear additional cost of employing accountants, hygiene specialists, engineers, and so on, to assess the requirements and to provide advice. We would like a situation where the relevant labour, hygiene, safety, refuse and other issues are dealt with by one quango rather than six. This would lead to significant streamlining and the greater possibility of generating additional jobs and providing more secure businesses. We are already dealing with approximately 12 arms of the State. I have not yet mentioned the smoking ban and drink driving laws, which have led to the loss of thousands of jobs in the sector. Leaving those to one side as I do not think there is time to rehash those issues again, I hope my presentation shows the rather unfair environment in which small operators are at a distinct disadvantage against the large competitors. This disadvantage is unfortunately copper-fastened by the regulatory framework in which they have to operate and survive. This regulatory framework is costing jobs and will continue to cost jobs in the years ahead, as it is unfair and is working against the operator who provides the five, six, eight or ten jobs, the type of business on which the economy has been built over the years.