It seems to me that the public perception of banks and those that run them has taken two major changes of direction since the credit crunch arrived in 2007. Pre-2007 a general view prevailed that was personified by the avuncular figure of the bank manager. This genial representative of the bank was normally a revered figure in the local community, a stalwart of local business clubs and community groups, deserving of the same respect as the local headmaster or vicar. Your local manager might not have cut the most dynamic of figures, but this was a positive. The best kind of bank manager was a slightly dull accountant type, someone who would advance money to businesses based on a sound assessment of risk and security. There was nothing flash about the bank staff you met and it seemed like a thoroughly good thing.

The high street banks held the trust of most people, a safe repository for your money where most services seemed to be offered for free or at very little cost. For sure, the general public had heard stories of flashier banking types in London who were paid footballer-size wages. But, we were assured, they were paid so much because they were unusually highly skilled in ways too complicated to fully understand, creating algorithms that forecast currency movements or chopping risk into smaller and smaller packages in a way that made us all more prosperous and secure. Most people regarded this part of banking as on a different planet to mainstream high street banking, a fundamentally straightforward business – pay savers a lower rate of interest and then lend the same money to borrowers at a higher rate of interest. 

The credit crunch heralded the first major change. The general assumption that highly paid bankers dealing in complex financial instruments in tall Canary Wharf buildings were smarter than the rest of us was holed. In fact, as stories of crazy deals and lending emerged it was hard to resist the conclusion that a mixture of stupidity and short-sighted greed were the main character traits on show. The guiding principles of commonsense and decency had been abandoned as complex derivatives had been created around vast swathes of debts advanced to people who had a high probability of not making their repayment schedule. The loans even had a name that provided a neon indicator of their dodginess – subprime. For the period since 2007 the collective reputation of this type of banker has suffered on-going erosion. But a second stage began around a year ago. The banks began to admit that vaulting profits in the boom years had been fuelled by wholesale mis-selling of financial products to ordinary customers. I remember the dismay I caused in my local branch when I declined an insurance policy against a small personal loan I took out in 2007. There was considerable pressure to take the insurance that only ceased when an older member of staff stepped forward to agree the insurance was not necessary.

In July this year, the Financial Standards Authority concluded that the banks had taken part in a wholesale mugging of small and medium-sized businesses by insisting they took out interest rate hedging products – small pub and restaurant companies were a particular target. It’s a minor miracle that a first-class multi-site restaurant company I’m acquainted with is still around given the £500,000 cost of its absurd swap. Yesterday, the FSA produced a report that listed the many and varied ways in which high street banking staff have been bonused to extract money from customers by selling them unwanted financial products. Martin Wheatley of the FSA said: “Some time ago, financial institutions changed their view of consumers from people to serve, to people to sell to.” The public perception of high street banks has taken its second post-crash ratchet down – bank staff need to be treated with the same suspicion as time-share salesman.

Businesses I talk to report that the prevailing mood at their banks is one of extreme caution, with even the most solid of businesses required to travel through the sort of paperwork exercises they’ve never seen before. The banks have had their confidence shattered and the mood I sense in our sector is one of quiet anger at their behaviour – then and now. Normal seems like a very long way off. 

I’ve recently reviewed the written evidence given to the Commons Select Committee on Health in respect of the Government’s Alcohol Strategy, and in particular the responses on minimum pricing.

 

What struck me first is that 50 of the 62 responses were from organisations representing public health professionals, temperance organisations or religious groups like the Salvation Army. Without exception these organisations support minimum unit pricing (MUP) and would like to see further restrictions on advertising, promotions, packaging and availability. Most of these respondents support the ‘whole population’ approach to alcohol harm reduction that would, if implemented, consign licensed retail to the status of a sunset industry.

 

Of the 12 remaining respondents only three were from licensed retailers directly and only two of these, Heineken and Greene King, run pubs. Heineken is opposed to MUP, but Greene King supports it. The other response was from Waitrose that also supports MUP. There were responses from five trade bodies all of whom either oppose minimum pricing or, as is the case with ALMR, take a position that has evolved somewhat in that direction. Oh yes, lest I forget – there was a sparkling piece of straight-from-the-shoulder evidence against nanny-state intervention from well-known libertarian Christopher Snowdon that is well worth a read!

 

Two things occur to me: firstly, that written evidence from those who basically see alcohol consumption as a vice outnumbered the evidence from those prepared to defend the industry by almost five to one, and secondly: they’re united and we’re not.

 

And this brings me to the thorny and divisive issue of minimum pricing. I know this issue has been debated to death, but I really feel that it is still not fully appreciated just what a Trojan Horse this proposal really is. The headline in the PMA “Publicans back minimum pricing” reported on a BII poll of 345 licensee members that tested opinion on this issue. Apparently 265 of them (77 per cent) were in favour. Peter Thomas, BII’s chief executive commented “The frontline of the pub industry has spoken and it is clear that the majority of our members support minimum pricing and of establishing the level of minimum price at 50p per unit.”

 

Leaving aside that this is a very small sample, I suspect he may be on to something in suggesting there is widespread support for this measure amongst publicans. But it is incumbent on those in leadership positions to understand why certain opinions are held and not just to parrot them uncritically to government. Do publicans really support minimum pricing as such, or is it a level playing field they’re after? I totally understand why publicans see cheap supermarket booze as an existential threat. And because publicans have been led to believe that MUP will only ever affect the off-trade, and in particular supermarkets, they’ll support it because it narrows the price gap and seems like a one-way bet that can only benefit them. For sure they understand that this proposal isn’t designed to help pubs, but if you’re up against it at the sharp end you’ll take any help you can get – why look a gift-horse in the mouth?

 

Well, I think that’s a question that deserves an answer. It’s worth remembering that ‘evidence’ in support of minimum pricing comes from the price and consumption model set out in the ‘Sheffield Report’. There are a number of versions of this, and the Scottish government has a particular affection for this model. I’d recommend all publicans to read it. In particular they should read the Sheffield Report compiled for the Scottish government in 2009. There is a common misconception that ‘Sheffield’ only modelled the impact on consumption and health of a minimum price for the off-trade. In fact the report is far more wide ranging than this.

 

A key point is an analysis of differential minimum pricing for the off-trade set at 40p and for the on-trade set at £1. The model indicated that “differential minimum pricing for on-trade and off-trade would lead to somewhat greater reductions in consumption.” The report goes on “higher on-trade thresholds would produce a greater overall effect”. Given that 50p minimum price now looks the most likely starting point then the corresponding MUP for the on-trade would be set at £1.25 if the differential was to be maintained.

 

The 2009 Report also looked at wider interventions - including restrictions on advertising, a complete ban on price promotions and reducing “outlet density and licensing hours”. So, the point I would make to hard-pressed publicans is this: whilst a MUP isn’t currently proposed for the on-trade it is unwise to treat the proposals of those opposed to the industry as an a la carte menu from which you select the dishes you like and reject the ones you don’t like. It’s a shopping list. They’ll take whatever they can get, put it in the bag, and then come back for the remaining items.

 

Perhaps the BII could ask the 265 publicans who support MUP for the off-trade whether they would support it if it might apply to them? Once licensees realise this isn’t a one-way bet from which they can only benefit, but a measure that could be extended to them as part of a wider package of measures designed to shut premises, restrict promotions and reduce licensing hours – I suspect that support for MUP would wane somewhat. It’s the job of leaders to lead, challenge and inform opinion. Trade bodies and company chairman like Tim Martin and Ian Payne are doing so. Others need to consider their position on MUP in the light of the bigger picture.