How would the Plough as a community hub and pub benefit Longparish?
Acquisition of the Plough will benefit the whole community: Experience elsewhere shows people will feel they are part of the project that saved their “local” - and take an active interest in the future prosperity of the pub and hub. Research studies have demonstrated that social cohesion is directly related to the village pub. The same study also noted that for more affluent communities having access to more than one pub helps even more!
As a community enterprise the Plough will:
Combat social isolation by providing a meeting place for the community, both as a traditional pub, and also as a place where new and existing groups can meet casually both during the day and evenings, perhaps offering a memory café in conjunction with a local Alzheimer’s group.
Support and complement other village facilities such as
Village Hall (e.g. providing catering facilities to support commercial hirers looking for a venue for seminars and training courses)
Church (A meeting place before, or after weddings, christenings and funerals)
School (Safe off-road parking, meeting place and café)
Work closely alongside Longparish Community Association (LCA) offering
A convivial venue for older people’s lunches and more frequently than the current once per month. (Currently held once per month in the village hall)
Regular charity fund raising events
Internet support sessions for the less tech-savvy
Have to reinvest profits back into the community.
Provide an accessible meeting space for both existing and new community groups
Currently small group meetings often need to be held in member’s homes – e.g. LCA committee.
Encourage the creation of new community groups – Sustainable Longparish, Crafts, Men’s shed, Quiz team etc.
Provide employment opportunities, especially for older teens looking for their first part time job.
Provide a base for walking and cycling groups to meet and socialise afterwards, and for users of the playing field immediately behind the Plough.
What about the potential impact on other community facilities, such as the village hall and the shop?
The Village Hall Management Committee issued the following statement in June 2019 about LCPL’s plans for the Plough
THE VILLAGE HALL AND THE PLOUGH
The Village Hall, the Plough and the Cricketers have happily co-existed for well over 100 years. We hope that the Plough will succeed in becoming a community pub and we anticipate that there will be a synergy to the advantage of both. For example:
• Parking at the Plough will relieve pressure on the village hall car parks;
• The Plough may be able to provide catering services for events in the hall such conferences;
• A community hub may be able to accommodate bookings when we aren’t able to help because we are already booked;
• Increased participation in village events resulting from a community hub may bring new business to the village hall.
The Londis shop offers a valuable convenience for many in the community; it is a lifeline for some. The village quickly rallied round to offer support to Anne and Pat to enable them to keep the shop open and stocked through the Corvid -19 crisis. With no staff available and the need to protect themselves, they would have had little choice other than to close the shop last March.
The LCPL business plan and every communication from the Plough Ahead Group have stated from the start that the Plough will not compete with Acre Stores as long as the shop is able to keep running.
However, should the need ever arise where an alternative location is needed for a shop and post office, there is space at the Plough that would provide a valuable safety net. Whilst some may see this as not a perfect location, it is surely a better option than having no shop in the village at all.
St Nicholas Church
The Plough is ideally located to allow gatherings before weddings, after christenings and funerals, provide additional parking or just somewhere to pop to the toilet before going into the church.
It has always been challenging to find a safe parking space to pick up and drop children during the school run. The parking area at the Plough is ideally located to help with this, especially on days when access to the parking area behind the village hall is otherwise occupied.
The Plough is right next to the football field and could provide an ideal place for changing, staying or for parents to wait while their children are playing sport. In time it might even be possible to use some of the unused space at the end of the pub grounds to provide a purpose-built changing facility.
Bed & Breakfasts
Tourist visitors to this area looking for somewhere to stay are far more likely to choose a village with two good pubs within walking distance than a village with one. The Plough is expected to offer rooms. We don’t feel that this will impact our present B&Bs as visitors looking for a quiet B&B are likely to have quite different expectations to visitors looking to stay at a local village pub.
We have a new landlord in the Cricketers who appears to be making a great new start. Can our community support two pubs?
The Cricketers is owned by Red Oak Taverns, a private company. The desires/needs of our community are secondary to their goals and purpose, which are focussed on maximising profits for their business.
The new tenant/landlord promises to be a great asset for the both the Cricketers and our community, but ultimately the success of the pub and whether it stays open or not is largely outside our control.
The Cricketers is not up for sale, but the Plough is and by not grasping the opportunity to buy it could mean ending up in years to come as a village without a pub.
Many communities the size of Longparish support two or more pubs, but for any village pub to survive today, it must be able to attract visitors from outside of the local community. Providing choice and healthy competition is never a bad thing in business.
The Plough and the Cricketers have co-existed for over 100 years. One pub complementing the other at each end of our long village, with the Cricketers reporting its best successes when the Plough was also at its most successful. LCPL fully expects to work closely with any landlord at the Cricketers to ensure there is workable differentiation and choice for customers.
Who on the Plough Ahead Group has ‘hands -on’ management responsibility and accountability for a pub operation?
The first management committee for the Community Benefit Society (LCPL), that will be responsible for the Community Pub Business includes someone with nearly 20 years owner/management experience with a pub company, owning/running 9 pubs (with rooms and dining) in South West and South East London, plus others including an owner director of an award winning specialist drinks retailing business, a corporate lawyer/solicitor, experienced (retired) business managers, sales and marketing communications, business development and a retired tax specialist. Two members of the management committee are former Longparish Parish Council chairmen.
The wider Plough Ahead group include management experience in business transformation, HR, Volunteer management, and huge amounts of enthusiasm.
What is a Community Benefit Society?
A Community Benefit Society is run primarily for the benefit of the community at large, rather than just for members of the society. This means that it must have an overarching community purpose that reaches beyond its membership. A Community Benefit Society has democratic decision-making built into its structure – one shareholder one vote – independent of the value of shares they hold. Although a Community Benefit Society has the power to pay interest on members’ share capital, it cannot distribute surpluses to members in the form of dividends. LCPL also has a statutory asset lock, which has the same strength as the asset lock for a charity and means all surplus profits must be used for the benefit of the community.
LCPL was formed as a Community Benefit Society and registered in December 2018 with the Financial Conduct Authority registration number 7951. Owned by its community of shareholders, LCPL will be the legal entity with ‘limited liability’ that will operate the community pub business, and protect the individuals running the business
Who will run the pub?
LCPL will be responsible for the overall management of the business. To create a successful pub will require someone with direct experience and drive to help build up the business. That could be either a paid manager, or tenant.
A tenant, or tenant couple would effectively manage their own business and is felt could be less likely to be open to significant changes whilst the community hub culture is being set up. Therefore, LCPL has elected to employ a professional manager for the first few years while the direction style and sustainability of the business are being established. The business plan has been written on this basis.
LCPL will take professional advice on any appointment and recognises that to set the Plough ahead of its competitors the manager will require a competitive salary, which is likely to include a performance bonus dependent on profits.
Once the culture and direction has bedded down, a tenant operation could be considered – and, indeed, the right, supportive manager could become the tenant.
Who will own the Plough?
The original intention was for LCPL and the Parish Council to jointly own the Plough. However, based on legal advice, the preference is for the Parish Council to own the Plough outright as it will make things a lot simpler to agree and organise.
The balance of the purchase price and associated legal costs, stamp duty etc. would be funded by LCPL. In return for this contribution the Parish Council would grant LCPL a long-term lease of the Plough at a much lower than market rent. The rent charged will be sufficient to enable the Parish Council to fund its loan repayments (including interest), and associated expenses. LCPL would also be responsible for refurbishing and developing the property as well as being responsible for all ongoing maintenance, and the running of the community pub business.
Why have the Parish Council been asked to borrow over 50 years?
When a business borrows money, the cash it receives now will be paid back with cash it earns later. A basic rule of inflation is that it causes the value of a currency to decline over time. In other words, cash now is worth more than cash in the future. Thus, inflation lets debtors pay lenders back with money that is worth less than it was when they originally borrowed it.
Interest rates are at historic lows today. Public Works Loan Board interest rates are considerably lower than those available from commercial lenders, and would fixed at the same low rate for the full duration of the loan.
How can it succeed this time when previous tenants have failed?
A Community Benefit Society owned pub is owned by the community, for the community; It is not something that is imposed from outside and can be so much more than a pub. It has its roots within the community and binds people together in a way that few other things are able to do.
As a freehold, thus free of any ties imposed by a pub company or brewery, and under community ownership, the Plough will have freedom to differentiate. The Plough will offer a broad range of locally sourced food and drinks and is also be well placed to offer services that are attractive to the numerous cyclists and walkers that frequent the area.
In order to survive and succeed, any business, any pub, has to be commercially viable. Assessing that viability is a vital part of the process and community ownership can contribute significantly to that viability; a powerful statistic.
In order to support the aim of creating a social hub for the community, the Plough must first and foremost be able to succeed as a pub business. The financial projections in the business plan show that the business could return a profit in the first year of operation, and thereafter expect to return a sustainable profit allowing for reinvestment into the business and the local community.
What about the impact of Covid-19? Is it really the time to buying a pub?
The Plough has served our village community since the early 1700s. Right now we have a once-in-a- lifetime opportunity to buy it. More normal times will return and if we fail to take this opportunity through a short term fear of an uncertain future, then the opportunity will almost certainly be lost forever.
If we grasp this opportunity now to create a community based asset, the Plough will continue to serve our community whatever the future holds. In community ownership the way we use the property can be adapted to meet the village needs as they change overtime. Please support us in taking the long-term view.
What happens if it all fails?
If despite a sound business plan, vigorous and sustained marketing and the support of members and other customers, the business does not develop as anticipated, then the Management Committee could be forced to close the pub.
Providing the CBS is still solvent and able to continue to pay its debts, then an option could be to seek a tenant, or tenant couple, to take on the day to day running of the pub. The tenant would pay a competitive (probably very competitive) market rate rental for use of the pub, which would be sufficient to cover the rental payments to the Parish Council and other costs such as insurance and other financial costs.
If, however, that is not viable, or the CBS is either forced to wind up, or elects to do so with the agreement of the members, there would be a number of options for the future of the Plough as community asset. These options will of course be subject to the terms contained in the legal agreement to be agreed between the Parish Council and LCPL, and designed to protect the interests of both parties.
This is clearly not an outcome that LCPL seeks, nor one that is likely, but this possible course of action could result in the investors losing some, or all of their investment.
Isn’t it going to be expensive to refurbish the building?
A survey carried out as part of a Business Buyers Report confirmed that the premises are suitable for on-going use as a pub. Visual inspection of the inside carried out in September 2018, again in September 2019, and in January 2020 suggests the property is weather tight and in a reasonable condition of repair overall when considering the time it has been closed.
A more detailed pre-acquisition survey will need to be carried out on the property to confirm the assumptions used for the refurbishment are valid.
While overall the property appears to be in reasonable condition, there are a few sections that are in a poor shape and have been badly maintained which will require repair before reopening as a pub. The objective for the initial refurbishment is to undertake essential works required to allow the pub to reopen; and to also complete any works that would be potentially disruptive to trade if carried out after reopening.
What about the roof? Does it need replacing?
Significant areas of the tiled roof will require restoration or replacement over the next few years. However, the building is currently watertight, and so the initial restoration will be limited to resetting and replacing tiles to the worst affected areas only. The business plan allows for maintenance and roof restoration to be funded after the first year.
How do we know if the current owner will agree to sell it to the community?
The short answer is that we do not know the owner’s mind.
The Plough was put on the open market in December 2019 as a closed public house. However, as an Asset of Community Value, there was a period of six months when the owner could only sell the Plough to a recognised community group; that period expired on the 16 June. Now that this moratorium has expired, it is possible a buyer who is prepared to invest in reopening the Plough as a pub may be found elsewhere, but the expectation of that happening is unlikely. If the current owner is unable to find another suitable buyer he might then sit on the empty property, or reapply to develop the pub, garden and car park as before.
The asking price of £550,000 (+VAT) is significantly higher than the independent market valuation commissioned by Plough Ahead, which was also confirmed by another industry valuer familiar with the property and pubs in Hampshire.
Our conditional offer, will be a ‘fair’ price, based on previous independent market valuations reflecting the work needed before it can be run as a pub again. Both the owner and his agent are aware of our intentions.
I can’t afford a large investment, why would I buy any shares?
While we are keen to actract investors to raise a significant sum of money, and this will depend upon some sizeable investments, we want everyone to be involved at whatever level they feel is right for them. The minimum investment needed to become a member is £50 and the maximum is £22,500.
In common with any Community Benefit Society, all investors have equal voting rights independent from the amount they have invested.
LCPL will run the Plough as a community owned pub. This will improve social cohesion and community development. Financial profits will be re-invested and used for community benefit, and the most significant benefit would be the positive social effects on our village community.
Everyone from the local community and anyone with an interest in the Plough is being encouraged to be a part of this once in a lifetime opportunity to secure the future of the Plough for the community today and for the foreseeable future. Having a large and engaged membership base will provide:
A larger number of people with financial interest in the pub who are therefore more likely to use it regularly.
A greater number of people to get involved with the Management Committee, attend meetings and positively contribute to the business’ overall direction.
A more accessible pool of people to draw on when committee numbers are falling, or when extra volunteers are needed.
Who’s going to profit from buying shares?
Anyone investing in shares will be a member of a Community Benefit Society. One of the key rules for qualifying as Community Benefit Society is that it is ‘Asset Locked’. This means that shareholders may only sell their shares back to the Society, and only if and when the Society has sufficient funds to support this without impacting on the underlying business. The most amount shareholders will ever receive back for their shares is the amount they initially invested.
A CBS is allowed to pay interest to encourage investors, and that is also dependent upon having sufficient funds to support payments. There is a cap on the amount of interest that can be paid of 5% above the banking base rate. The business plan assumes that interest would be paid at 3% from after the 3rd year, but that will be dependent on the Management Committee’s decision at that time, and agreement by the members at the Annual Members Meeting.