Questions raised at the Parish Council meeting on 8 June

Here are the questions raised by at the Parish Council Meeting (by Zoom) on Monday 8 June. We hope these help you - please let us know if you have any more unanswered questions. 

(for earlier FAQs please see separate article here)

1. Would it be better to take a 25 year loan as the total payable would be lower?

See our answer to Q9 (Why 50 years) in our original FAQs.

Interest payments would be higher on a 25 year loan, and since our aim is to help the community business become profitable (so it can benefit the community) we believe it is worth taking a longer loan so as to reduce annual repayments.

As with any loan, the total amount repaid over the term of a 50 year loan is greater than over a shorter term. However, this does not take in to account the 'time' value of money, in that the repayment due in year 45 will be far less, relative to the contemporary value of the pound £, than in year 1, taking into account inflation and Parish Council income at that time.

This is also the case with regards to the pub, as the fixed rental payment will gradually decrease in real terms, generating more profit which will be reinvested in the community. Put simply, the real cost of repayments will reduce as time passes and without the Parish Council incurring any additional costs in the process.

2. Why only £300,000?

See our answer to Q7 (Why £300k) in our original FAQs

LCPL asked for a sum that would give them support towards their project rather than providing the entire finance. They identified that a PWLB loan of £300k would provide enough to top up funding from other sources (as set out in their Business Plan). We are considering helping them keep costs low through a PWLB loan that has minimal risk for the Parish Council. It is important that there should be community buy-in for the project, so LCPL want to engage the village in supporting the funding and giving practical help too. This sum also limits the Parish Council’s liability to an amount which should easily be returned through sale of the property if for any reason the business fails.

3. Is the loan at variable rate, so are payments liable to go up?

No, we would take a Fixed Rate loan from PWLB. The interest rate offered varies by the day, so we can’t say what the exact rate will be right now. But once we apply and if our loan application is approved, the rate will be fixed and the payment will remain at the same figure for the duration of the loan. So, at today’s rate of 2.83 % the exact payment of £5,625.10 would be due every 6 months for 50 years.

4. Is this loan ‘cheap money’

Yes. It is extremely unlikely that you would be able to secure commercial lending at the rates quoted above.

Like any loan, the total paid to PWLB will be more than the £300k borrowed, but the reason why the PWLB is such a low rate is because Parish Councils are considered secure borrowers due to the assured income that they receive via the Council Tax payments (this is known as the precept).

This loan provides a way for the Parish Council to buy in to a community asset and support its development (via LCPL) as a thriving community business. We would pass on the benefit of this ‘cheap loan’ to LCPL by offering them the use of that property (The Plough) at a much lower rate than commercially available, so that we can help them get the business up and running as quickly as possible, so that they are able to generate a profit which will be reinvested in community projects.

5. Will the pub be in competition with The Cricketers and the shop? Can the village support two pubs?

The Plough will not be in competition with the shop as there is no plan at present to offer any shop or post office facilities.

It is true that there will be some overlap of customers between the two pubs once they are both open, but please see the Business Plan for ways in which the Plough will differentiate their offer so that each pub attracts a different customer base. It is likely that with two thriving pubs the village will attract more customers from outside, which should benefit both.

6. Why not just support The Cricketers now there is a new, enthusiastic landlord?

We are delighted to welcome Matt to the village and agree he is doing a wonderful job of getting the pub back on its feet. However, The Cricketers remains under the ownership of a pub company which has only a commercial interest in the village. It is possible for them to increase the rent or insist on a specific business style without a care for what the community might need. Who knows what the future holds? At least if we have control over The Plough we can influence how it does business, ask for use of the car park and so on.

7. The Plough is not in the part of the village with largest population. Will it get enough footfall?

North Acre is lucky to have both the shop and The Cricketers on its doorstep, but other village residents could more easily reach The Plough. However, we do not see this as a competition, since the Business Plan for The Plough identifies passing walkers from the Test Way, travellers along the A303 and visitors from new settlements this side of Andover as likely to be attracted to The Plough. LCPL has researched this issue, please see their Business Plan.

8. Have you considered the impact of COVID-19 on disposable income?

Yes, we have discussed the various impacts of coronavirus, including whether people would be more or less likely to spend money at the pub. Individuals may be more likely to spend locally when they do not want to travel far but need some pleasure, and it seems likely that people will remain willing to spend on ‘treats’, especially if in doing so they are supporting a village enterprise. LCPL have considered this, too, and have been conservative in their figures for expected income.

9. Is the project viable? It looks like a speculative venture that should be approached with extreme caution.

We are being cautious as a Parish Council and have researched PWLB loans, the experience of other Parish Councils, other community pub businesses and the potential risks and benefits of taking out this loan. We have explored LCPL’s Business Plan with them and taken steps to ensure that the Parish Council’s interests would be protected so far as possible in our relationship with them.

We have weighed all this against the risks and benefits to the community and are minded to believe this is an opportunity to secure an asset for the long term benefit of the community.

We are also consulting you, the community of Longparish, to see what your views are and how we can address any issues that we raise. We will consider all these aspects before making our final decision on whether to apply for the PWLB loan (and if the PWLB don’t think it is a good idea we will not gain approval).

10. Have you spoken to other similar pubs to analyse whether this would work?

Yes, we have done lots of research on Parish Council support for community pubs using PWLB loans, and have had long meetings by Zoom with PC and pub representatives from two villages to find out what issues they faced. All are doing well! LCPL has also researched the pub business both locally and nationally and you can read more in their Business Plan and associated documents.

11. Is the PC taking a risk and liability they should not take?  Edited 15 June to provide more information

No, we believe any risk is minimal and worth taking in relation to the benefits provided by the project. We have researched the risk and liability carefully. LCPL will be solely responsible for the day to day operation of the pub business, and maintenance of the property, while the Parish Council’s only involvement will be as a joint owner of the property. Commercial risks will be properly insured (at LCPL’s cost) and our contract with LCPL will protect the Parish Council’s financial interests so far as possible.

To reiterate, there is no intention to raise the precept (the portion of your Council Tax that is received by the Parish Council). We expect that if LCPL cannot meet repayments to the Council to cover the loan as planned, they may be able to advertise the pub lease more widely and take on a commercial pub letting, or the Council may have some input into alternative ways to raise the relatively low rental payments. If there is no prospect of any such income, the property will be sold, and the Council will have first charge over the proceeds to repay any monies owing, including loan repayments.

In the very worst case, ie if such a sale does not cover the total loan payments, these would be added to the village precept. It is highly unlikely that the entire cost of those yearly payments would remain outstanding, but if every penny for every year was still owed, this would incur an additional charge of £2.69 a month on a Band D property (which over time will likely be worth much less in real terms). Here are the figures:

Council Tax  Additional   Cost in £
Band Month Year
A 1.79 21.56
B 2.09 25.14
C 2.30 28.73
D 2.69 32.32
E 3.29 39.50
F 3.89 46.68
G 4.49 53.86
H 5.38 64.64

12. Isn’t there a greater risk if we do nothing?

Yes, we think so. This is an opportunity that may not arise again and we welcome the chance to secure a community asset for our village. If The Plough is sold as a commercial pub it may well fail again, and the property is then likely to become residential accommodation. We don’t know whether we will always have a village shop and The Cricketers. Both are independent commercial businesses that could be sold or disappear, we have no control over them and cannot support them at the moment in the same way. (If in the future there is a similar appetite to buy or run the shop or pub, with a proper business plan, the Parish Council would consider this in the same way).

13. Morally and ethically you need to ask the whole village community, are you doing enough?

We agree. We are doing our best to give every household the chance to let us know what they think. Legally we do not need to get full community support, since the project should not have any financial effect on your taxes (the loan payments and costs will be paid by LCPL). But we are working hard to ensure that everyone can have their say as we do believe that we have a moral obligation to seek the views of the community.

We had a good turnout at the Parish Council meeting on 8 June and a healthy and good-natured exchange of views and information. We have hand-delivered clear information to every household in the village, with encouragement to contact us in a range of ways to let us know what you think. We have used the village website and LCPL’s email and Facebook channels to share information and seek your views, as well as Hill & Valley, the village noticeboards and personal conversations direct with villagers. Many of you have already let us know your views, and we encourage all of you to tell us what you think before this consultation period closes on Sunday 21 June.

14. Has thePC already made up its mind?

The PC has not made a final decision as we are waiting for this community consultation period to end before we consider all your views and decide whether to apply for the loan.

However, we have agreed that in principle it is a good idea, which allowed us to undertake all the research that we needed to give us a proper picture of the potential risks and benefits. There is a lot of work being done to ensure that we make the right decision, whatever that turns out to be.

Please contact us to let us know your views

You can 

You can remain anonymous if you wish

You will need to give your name and address to the Clerk but if you wish your comments to remain anonymous please let her know.

End of Consultation : Sunday 21 June

Please let us have your views on or before Sunday 21 June so that we can take them into account at our meeting on Monday 21 June.