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Here are the questions we have been asked by villagers, with our answers.

We have put together this list to help you understand the Parish Council's proposal to take out a PWLB loan of £300k over 50 years to support the acquisition of The Plough for the community. We will add to this list as we receive more questions.

NEWS!

Plough Ahead have now published their Business Plan, available on their website here

1. Why is the Parish Council helping to buy The Plough?

This is a rare opportunity for our community to purchase one of its key assets. The Parish Council is very happy to support any well-planned initiative to preserve village assets and inject new life and opportunities, retaining key parts of our community for future generations. The Parish Council believes that Longparish Community Pub Ltd (formerly Plough Ahead) is well positioned to achieve this aim provided it has adequate funding.

2. What will happen to The Plough?

LCPL have worked on a comprehensive, costed Business Plan, which sets out everything you need to know about their proposal, including:

That Business Plan is now available from LCPL.

3. Where can I read the Business Plan?

The Business Plan is LCPL's document setting out everything out everything you need to know about their proposal for The Plough. The draft Plan was shared with the Parish Council in commercial confidence when LCPL asked for Parish Council support. You can read it here.

4. What does the Parish Council know about running a pub?

The pub venture will be run solely by LCPL. The Parish Council is simply acting as a source of low cost funding and will not play any role in the running of the pub.

5. What is a PWLB Loan?

Public Works Loan Board loans come from HM Treasury and are intended to help Councils and Parish Councils fund capital projects for their local communities. It is part of the Government’s drive for localism, to let communities decide what they need and to retain their heritage.

6. Who decides whether we can take the loan?

First, we need to show we have the power to take such a loan (we have already completed this step). Then we have to get approval from Hampshire Association of Local Councils for the size, duration and purpose of the loan. We must satisfy them that it is a sensible project worth supporting, and that we have considered potential risks. A lot of work is going on to ensure that the Parish Council fulfils these criteria, and if the loan is not approved we cannot proceed. We are not taking this process lightly.

7. Why £300,000?

LCPL asked for a sum that would give them enough to complete the necessary purchase and other costs as set out in their Business Plan. If LCPL cannot raise enough funds the project will not go ahead and the Parish Council will not take out any loan. The Parish Council’s exposure to this project will be limited to the £300,000 and it will have first call on the sale proceeds should the venture fail.

8. What is the planned total project cost?

The total budget (excluding VAT as that would reclaimed by the business) is £630k. In addition to the Parish Council's contribution using the PWLB loan, LCPL has received an offer for a grant and unsecured loan from The Plunkett Foundation, and the remaining balance of funding required for the purchase, refurbishment, legal expenses and working capital for the business will be raised through a community share offer.

9. Why such a long loan of 50 years? [extra detail added 5 June]

For two reasons. First, this is a long-term commitment to the project, which we hope will always be an asset to the village even beyond the lifetime of the loan. The building itself is historic and we expect it to last many more years.

Second, the annual repayments are lower for a longer term,  so this will allow the pub operator (LCPL) to operate with increased profit margins so they have a better chance of success. If and when they generate profits these will in turn be reinvested in local community projects.

[Added 5 June] LCPL asked for an investment of £300,000, to be added to funds raised from their other sources, to purchase and refurbish the pub ready to open in Spring 2021. We discussed the term of this loan with LCPL and within the Council, and decided upon a 50 year term primarily to keep PC repayments to a minimum. This will keep the initial costs for LCPL (rental payments) low, which will serve two key purposes.

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.

10. Why does the Parish Council think supporting this ‘village hub and pub’ project is a good idea?

Your Parish Council has done lots of research to assure itself that a loan of this type is a good investment in the future of our village. Many other villages have used PWLB loans to help fund village shops and pubs, and we have consulted The Plunkett Foundation which has lots of experience helping villages to buy and then run their pubs – to great benefit for the community! We have consulted other Parish Councils who have made similar investments and we believe this is the right thing for Longparish. You can read more about the experiences of Church Fenton,for example, here: Church Fenton Community Hub

11. Has Longparish done this before?

Yes. When we renovated the Village Hall, part of the funding came from a PWLB loan. The Parish Council has successfully funded the repayments of that loan as part of our day-to-day expenses. That is not what is being proposed with this investment. The repayment of this loan is intended to be self-funding.

12. Will we parishioners have to pay a higher Council Tax as a result of the Parish Council taking out this loan?

No. It is the intention of the Parish Council that there will be no cost to villagers. The full costs of applying for and repaying the loan will be met by LCPL. The only situation where any cost to the village is a possibility is if the venture were to fail, the community decides not to retain the property for other purposes, and it is sold for less than the outstanding value of the loan. We believe this to be a very small risk as it is likely the property will have a value higher than the loan itself, even before it is refurbished.

Also, if the pub fails and the community decides that there is no other reason to keep the property for other community purposes, we may be able to of apply for a change of use at that time. If granted, this would very likely mean an increased value to the site, so reducing the possibility of the sale value being less than the value of the outstanding loan.

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

13. Will the Parish Council become a joint owner of the pub?

Yes, that is the plan. At the time of writing the final legal structure has not been agreed, but our legal advisers have been instructed to ensure that the Parish Council has control in the event of the failure of LCPL to make rental payments and/or if the entire venture were to fail and the property is sold.

14. What happens if the pub operator fails to pay the rent?

This will be covered by the legal agreement between the Parish Council and the pub operator (LCPL), to give us full protection. Should any default in rental payments continue, the Parish Council will have the right to sell the property, if it chooses to do so, so that all outstanding costs and any outstanding loan are repaid.

15. What happens if the pub fails?

As above, our agreement with LCPL will ensure that if the pub venture fails (and the community does not wish to retain the property for other purposes) the Parish Council will have the first call on the sale proceeds so the PWLB loan would be repaid before any other commitments that need to be serviced.

The proposed loan-to-value of the PWLB loan against the expected current market value is low, because the PWLB loan does not represent the total purchase price, so the prospect of the sale value being less than the outstanding value of the loan is very low. We do understand that the market may go up or down, but we feel that it is unlikely that the value of the property will ever be less than the sum outstanding to the Parish Council.

16. What about COVID-19? How does this affect the viability of a pub and the risk that loan repayments are not met?

The day-to-day running of the pub business is the responsibility of LCPL so please consult their Business Plan* for details of their budgeting in a ‘worst case’ scenario.

The impact of COVID-19 has been considered carefully by the Parish Council and it is our belief that the future of pub businesses will be affected in the short term, but will continue to prosper once a successful vaccination has been found for the virus. We have no doubt that pub businesses will have to evolve and take the necessary action prescribed by the UK Government, but we think people will continue to seek public houses with a good range of beers, wines, spirits and food in the future.

Further, we believe that the virus has shown how important it is for a village to have resources which they can use in times of crisis. Our village community has responded wonderfully to the need to look after each other, and the repercussions have strengthened people’s understanding of the need to support village facilities. We believe that this once-in-a-lifetime opportunity is a good time to secure this attractive and useful pub as a village asset.

17. The Plough has failed as a viable business in recent years, so why does the Parish Council think it can be successful?

Please see LCPL’s Business Plan, as they will run the business. However, we have discussed this at length and one of the key reasons that many pub businesses have failed has been the high level of rent or other associated restrictions imposed, which make it very difficult to operate at a profit. LCPL’s proposed business model is to have a significantly lower rent and no ties, so that the pub is able to manage its costs far more realistically, be viable and generate profits that may be reinvested in the community.

18. Will anyone profit from the business ?

No. LCPL is deliberately set up as a Community Benefit Society, which is 'asset locked', meaning that all profits can only be reinvested in the business, or used for the benefit of the community. 

19. Does this mean that the Parish Council favours The Plough over The Cricketers?

Absolutely not. The Parish Council supports all local businesses within the community and would consider any application for support should it be required in the future. The simple fact is that The Cricketers is a part of a Pub Company business and is not for sale, so the community is not in a position to make a bid to purchase this even if it wanted to.

20. Does this affect the village shop?

Not at all. The Pub will be a pub and once again, we would refer you to the Business Plan prepared by LCPL. The village shop is a successful, privately owned business and the Parish Council has not received any requests for support at this time. If a request is received, it will be considered in the same way as any other request by other businesses in the community.

21. I have heard that there are early surrender charges if the Parish Council wishes to repay the loan early. Is this true?

It is possible that the amount to be repaid may be more than the initial loan if we want to make an early repayment. However, it is also possible that the amount may be less than the outstanding loan. This is largely down to the prevailing interest rates at the time the loan is taken and when it is repaid.

If interest rates are higher when an early repayment is made, then a discount is applied and the amount to be repaid is likely to be lower than the outstanding loan. If interest rates are lower at the time of an early repayment, the amount to be repaid may be higher. As we are in a time of extremely low interest rates, we believe the chance of a penalty on early surrender to be extremely unlikely, albeit not impossible.

22. Is there a way that we can all pay a little more Council Tax now so that the loan is repaid sooner?

This was considered by the Parish Council but we felt it was fairer to try to make this work without asking residents to contribute. We strongly believe that there is an excellent chance that LCPL will be able to re-open The Plough and to operate in a profitable manner, thereby avoiding the need to ask our residents for a contribution.

23. I don’t go to the pub. What’s in it for me?

One of LCPL’s key objectives is not only to re-open The Plough as a pub, but to provide many more, useful, local facilities for village groups, and a hub for activities. We believe villagers will want to use it even if they have never set foot in the pub before.

The intention is also to build a successful business which will then reinvest a large proportion of the profits back in to the local community. It is intended that this will be reviewed annually and any available monies used to support local initiatives at that time. Please refer to the LCPL Business Plan for more detail on how this may benefit you.

24. What if I don’t support this initiative?

The Parish Council has not applied for the PWLB loan and will not do so until we have consulted with the residents of our community. If you wish to ask any questions related to the proposals, or give us your view, please choose from one of the following options:

25. What steps has the Parish Council already taken?

We have discussed LCPL’s request for support and agreed that we think it worth trying to facilitate funding for LCPL’s plan for The Plough as a village amenity. We have agreed to research PWLB loans and what needs to be fulfilled to make an application. We have also agreed to consult the village community to hear their views. This FAQ is part of that process, to help you understand what the loan is and what it involves.

26. Where can I find more information?

We have been reporting Parish Council meetings in Hill & Valley (the Parish Magazine) and on the village website. LCPL / Plough Ahead has also been sharing lots of information about the proposal. You can find much of this information in Parish Council Minutes and past copies of Hill & Valley on this website. We have also delivered information to households in the village, so that you can read more and discuss at home. More information about the project itself can be found from LCPL / Plough Ahead through their members or on their website at www.ploughahead.co.uk

27. How do I let you know my view?

28. How soon do you need to know what I think?

We will discuss this PWLB loan at our next Parish Council meeting on Monday 8 June at 19.30. We would like to hear your views so please let us know if you would like to attend the meeting to let us know what you think. Alternatively, please contact one of the Parish Councillors as indicated above.

Date for closure of Community Consultation

Given the unavoidable delay LCPL have faced in releasing their Business Plan, the Parish Council will not vote on the proposal to take out this loan until the community have had a proper chance to digest the information and tell us their considered views.

The revised date for closure of the community consultation will therefore be Sunday 21 June (the Business Plan was released on Saturday 6 June). 

Please let us have your view in writing (by email, post or hand-delivered letter) by Sunday 21 June.

 We hope these answers reassure you, please get in touch if you have any further questions.