Select Committee on Deregulation and Regulatory Reform First Report

Appendix 2

Memorandum prepared by The Department for Culture, Media and Sport (dated 27 September 2001)

1.  This memorandum replies to the points raised by the Clerk to the Select Committee on Deregulation and Regulatory Reform in his letter of 19 July concerning the draft Regulatory Reform (Special Occasions Licensing) Order 2001. It addresses the points made by the Clerk on behalf of the Committee in the order his letter took them.

I  Title of the draft Order

2.  The title of "Special Occasions Licensing" was chosen for the draft Order because it was intended that further proposals concerning the Golden Jubilee and possibly, subject to our review of New Year's Eve 2001, subsequent New Years' Eves should be given effect by amendments to the Special Occasions Order, and not by amendment of the Licensing Act 1964 itself. The Government did not comment on this in the Explanatory Statement because the legal issues surrounding this matter do not arise in the context of the draft Order currently before the Committee, but would arise when the Government presented its proposal concerning the Golden Jubilee licensing hours. As was explained in the Department's letter to the Clerk to the House of Lords' Delegated Powers and Regulatory Reform Committee, we understand the Committees' desire to resolve this issue now because of its potential impact on the Government's proposal to relax licensing hours during the Golden Jubilee. The legal issues in question were raised by the Committee in point 2 below.

II  The "two year rule" (Section 1(4) of the Regulatory Reform Act 2001)

3.  The Government is grateful to the Committee for setting out its concerns that the effect of section 1(4) of the Regulatory Reform Act 2001 could preclude a future Regulatory Reform Order from relaxing licensing laws at the Queen's Golden Jubilee. We consider however that the Special Occasions Order enables a future Regulatory Reform Order which amended licensing hours on that occasion to be drafted in such a way that it would not fall foul of the restriction in section 1(4). The essence of our argument is that the Special Occasions Order transfers the burden of restricted hours currently contained in Part III of the 1964 Act into the Special Occasions Order itself: a future Regulatory Reform Order would operate not by amendment of the 1964 Act, but by amendment of the 2001 Order. This is permitted under section 1(2) and (4) of the Regulatory Reform Act.

4.  We would concede that the approach described above B i.e. drafting in such a way that a future order can operate by amending the free-standing Regulatory Reform Order, rather than by amending the 1964 Act B is a device which is necessitated by the need to avoid falling foul of the provisions of section 1(4). But we submit that this Order is fully within the spirit, as well as the letter, of section 1(4). That provision was inserted in the 2001 Act at Lords' Committee stage so as to discourage any temptation for primary legislation to be over-hastily drafted in reliance on the fact that mistakes could be put right later. But the mischief which the provision is intended to prevent would not arise if Parliament approved legislation establishing a procedure by which licensing laws could be relaxed on special occasions, with the express intention that Parliament could subsequently prescribe other such occasions. The Golden Jubilee is manifestly a unique occasion and it seems clear that a Regulatory Reform Order which makes provision for relaxations of licensing law at New Year does not raise issues over which relaxations, if any, are appropriate for the Golden Jubilee. An amendment to the 1964 Act in relation to a particular day does not affect its operation in relation to another day. It therefore seems legitimate to make two such Regulatory Reform Orders within two years of each other, and it is proper and acceptable to proceed by amendment of a free-standing order.

5.  In response to these concerns we would be happy to redraft the Order before it is laid before Parliament, if the Committee thinks it would be helpful, to make it clearer that it is the Order rather than the Act which imposes a burden. We envisage that the Order could be redrafted so that it relaxes the permitted hours on all New Years, but so that it also imposes a limitation by providing that the relaxation will not apply to years after 2001.

6.  The Committee argues that the Order will be spent after 31 December 2001, and therefore will not impose a burden thereafter. However, we submit that the Order will not be spent but will continue to have force. After 1 January 2002 the new section 83A of the 1964 Act will remain on the statute book. This section provides that where the Order applies, the permitted hours are to be extended in accordance with the Order. The Order, too, will still be live both because it will continue to contain a restriction in article 3, which limits the application of the Special Occasions licensing hours to 31st December 2001 only, and also in the sense that its provisions setting out the Special Occasions licensing hours are capable of being applied to future occasions. The position will effectively be similar to what would pertain if the Order contained a (sub-delegated) power allowing the Secretary of State to prescribe that the special occasions relaxations applied on future dates. We have not adopted that drafting approach, because it is not covered by previous consultation and because we consider it appropriate that the designation of future special occasions should be scrutinised by the Parliamentary Committees of each House. There seems very little distinction between an Order containing such a power and an Order without such a power but which it is intended should be amended under the existing power in the 2001 Act.

7.  As a further indication that the Order will continue to impose a burden after New Year's Eve, we would point to the title of the Order, which indicates that it is concerned with special occasions in general, not merely New Year's Eve 2001.

8.  Again, we would be happy to consider ways of redrafting the Order to make it clearer that the Order will continue to have life after 1 January 2002, if the Committee considers that that would be helpful.

9.  In response to an argument that a future Order would effectively be amending the law contained in Part III of the 1964 Act (which prohibits the sale or supply of alcohol outside the permitted hours) rather than amending the restrictions in the Order, we would observe that the wording of section 1(4) offers a certain latitude. What is prohibited is the reform of the law contained in "any provision" of an Act if "that provision" has been amended. Section 1(4) could have said

"No order under this section may be made for the purpose of reforming the law contained in any provision of an Act if that law has been amended...".

10.  This would have more clearly precluded two successive amendments to any provisions relating to the permitted hours. But instead, section 1(4) applies only if the same provision has already been amended. We acknowledge that section 1(4) must be read as relating to the substantive reform of burdens in legislation, rather than being unduly limited to the textual amendment of particular provisions. But we nevertheless maintain that even if the law read as a whole relating to the prohibition on the sale or supply of alcohol outside the permitted hours had already been amended, section 1(4) would apply only to prevent a second successive amendment to the same provision.

11.  Moreover we submit that a "provision" of an Act means a section or a Schedule, or any division or sub-division thereof. (Although we have not found any express judicial authority for this assertion, in the absence of any contrary authority we submit that this is the usual meaning of that word and should be applied in this context.) A Part or a Chapter of an Act, by contrast, is a grouping of provisions. So we do not think that the restriction in section 1(4) would prevent a future Regulatory Reform Order being made merely because it reformed the law contained in Part III of the 1964 Act. Only if a future Order amended the same provision within that Part would section 1(4) bite.

III  Consultation with Members of Parliament

12.  Prior to publishing a consultation document, consideration is always given as to who should be directly consulted. Such consideration has always turned on the requirements of the Deregulation and Contracting Out Act 1994 and more recently, the Regulatory Reform Act 2001, the nature of the proposal made, any groups or individuals on which it could be expected to have any kind of impact, and those who have previously indicated an interest in amendments to licensing law. We have particular regard to those who may consider themselves to be adversely affected by any proposal. In addition, we have built up knowledge from previous consultation exercises, seminars, meetings, general correspondence and responses to the White Paper on licensing reform of which groups are likely to have anxieties about such proposals. We also issue press notices about the consultation to generate awareness and publish the document on the Departmental website to improve accessibility. Our aim is always to be as inclusive as possible, rather than exclusive, and to follow guidance, issued by the Cabinet Office from time to time, on consultation exercises such as the Code of Practice on Written Consultations and the specific material on Regulatory Reform Order consultations, which Cabinet Office Ministers tabled as advice for Departments during the Commons Committee stages of the Bill and which will shortly be updated and published on the Regulatory Impact Unit website.

13.  The issue of specific consultation with Members of Parliament was not raised during the extensive debates on the Bill's consultation provisions and in relation to proposed RROs of much larger consequence.

14.  On this occasion, we were also aware that in their Third Report of the 1998-1999 Parliamentary Session, published on 15 June 1999, the House of Commons Deregulation Committee had suggested that that proposal was of such significance to have justified sending it to all Members of Parliament. However, the proposal included in the consultation document published in November 1998 was, in our view, of much greater significance than that proposed on this occasion. The proposal in 1998:

—   was the first to advocate a period of up to 36 hours continuous opening between New Year's Eve and New Year's Day; and

—   included the option of making a permanent change in the licensing laws of England and Wales in respect of Millennium Eve and all subsequent New Year's Eves.

15.  Whereas the consultation document published on 19 March this year was judged to be less significant because:

—   it proposed only a test of such arrangements on a single New Year's Eve in 2001, with further proposals only to be brought forward if the impact of the Order was beneficial;

—   no permanent change to licensing law would be given effect;

—   a further consultation would have to take place before any permanent changes could be introduced; and

—   the Golden Jubilee proposal would have a similar temporary effect on one night, and the relaxation of only two hours would not be disimilar to the impact of special orders of exemptions and special hours certificates on such nights normally.

16.  It has not been our normal practice to consult individually each Member of Parliament as part of every deregulation or regulatory reform public consultation. In the past, we have done so exceptionally only when a very significant and permanent change to alcohol licensing law is being proposed. In considering this matter, we were also aware that:

—   copies of consultation documents are always placed in the Library of the House on publication which is announced by press notice; and that

—   both the 1994 and 2001 Acts provide for the necessary Parliamentary scrutiny to be conducted by Committees elected by each House for that purpose. Each House then receives the recommendations and advice of their Committee before Parliament considers any proposal and votes on whether to approve the proposed Order.

17.  If the Committee conclude that all individual Members of Parliament should be directly consulted on all regulatory reform proposals, the DCMS is prepared to give an undertaking now that this will be done in respect of all its future proposals.

IV  Premises affected

18.  The figure of 134,000 premises comprises all on-licensed premises (about 111,000) and all non-profit making registered members' clubs (about 23,000), which include for example, Labour, Liberal and Conservative clubs, working men's clubs, Royal British Legion, armed forces clubs and a range of sports clubs. Under the terms of the Licensing Act 1964, these clubs are also subject to permitted licensing hours. Our advice from industry is that virtually all 134,000 premises would normally seek a special order of exemption allowing them to sell or supply alcohol later than usual on a New Year's Eve when most hold some form of special celebration. The saving of 9 million, which is explained in more detail in Annex C to the Explanatory Statement, relates to this position.   

19.  Our advice from industry is that the vast majority of licence holders and clubs would not have considered applying for special orders of exemption until the Committees of each House had issued their first reports on this proposal in November. By law only 24 hours notice to the courts and the police is required and applications are made to the magistrates' courts (or in Greater London to the Commissioners of the Metropolitan Police Area and the City). If the Committees' reports were unfavourable, many could then have been expected to apply for special orders of exemption rather than risk waiting on the outcome of the full regulatory reform order process. If the first stage reports indicated that the Committees of each House were content with the Government's proposal, most would have considered it unnecessary to apply.

20.  However, we understand that the situation altered with the issuing of the press notice by the House of Commons Deregulation and Regulatory Reform Committee on 19 July; and as a result of letters written on the same day on behalf of the House of Commons' Committee to representative organisations in the licensed trade. The Government has not seen copies of these letters. But we understand that the letters were based on the Committee's serious concerns about timetabling. Although it may not have been the Committee's intention, we understand that many in the trade and the trade press took the letter to be a clear indication that a regulatory reform order could not be made in time for New Year's Eve 2001. A report from the Morning Advertiser (one of the two main licensed trade press organs) of 30 August quoting the letter and the reaction of the various industry bodies is attached at Annex A. While it is clear from the article and from our subsequent discussions with representative organisations in the trade that most on-licensed premises still want the regulatory reform order to proceed, it appears likely that a high percentage of premises will apply for special orders of exemption as soon as possible as a precautionary measure. This would remove the saving of 9 million to the businesses involved, which might otherwise have been generated by this proposal.

21.  The Government does not believe the lack of this financial saving to industry of itself negates the need for the draft Order. The length of extension sought under special orders of exemption would of course vary with, for example, nightclubs often seeking much longer extensions than, for example, traditional pubs or registered members' clubs. However, the length of extension that has normally been sought in previous years generally reflects an expectation of what is likely to be granted by the courts. For example, last year the Magistrates' Association's Licensing Committee issued general advice to local licensing committees that extensions to 12.30am on New Year's Eve were considered appropriate save in exceptional cases. As a result of another letter of 19 July by the Clerk to the House of Commons' Committee to the Magistrates' Association, the Association intends to issue similar advice in respect of this year.

22.  However, despite the Magistrates' Association's best efforts, extensions under special orders of exemption on New Year's Eve granted by the courts across the country vary from licensing district to licensing district. Last New Year's Eve, a very small number allowed no extensions whatsoever; 12.30am and 1.00am were relatively common; some allowed extensions to 2.00am, 3.00am and 4.00am; and a small number granted a 12 hour relaxation. With regard to 12 hour relaxations, the response of Devon and Cornwall Constabulary (see Annex B to the Explanatory Statement) is particularly relevant. In those districts with a more restrictive approach to special orders of exemption, some businesses will experience a loss in trade which they could otherwise expect to generate if permitted hours were relaxed for twelve hours.

23.  Accordingly, even if virtually all of the premises affected now obtain special orders of exemption, the trading hours of the vast majority will still be restricted in a way that neither they nor their customers would like. The Government believes that it would still be valuable — even if the financial savings described in the draft regulatory impact assessment could not be realised — to relax licensing hours for 12 hours between 31 December 2001 and 1 January 2002 for several reasons:

—   discussions with representative organisations of the hospitality and leisure industry indicate that the industry still believes that removing this restrictive burden would better enable them to meet their customers' expectations;

—   the draft Order would facilitate New Year's Eve celebrations across England and Wales, enabling large numbers of people to have a better time without an unnecessary restriction on the hours at which they may attend on-licensed premises and registered members' clubs;

—   the draft Order would remove inconsistencies in licensing hours between licensing districts, and fixed closing times in any area, which in the Government's view contribute to crime and disorder by encouraging binge drinking close to earlier closing times and producing large numbers of people on the streets simultaneously; and

—   as a pilot, it would provide the evidence the police and the magistrates have requested before supporting any permanent relaxation for future New Years' Eves, help the Government in deciding whether to bring forward such a proposal and better inform the Parliamentary Committees if such a proposal is brought forward for their scrutiny.

24.  The penultimate point above leads to the Committee's fifth question concerning the removal of inconsistencies in licensing hours.

V  Consistent licensing hours

25.  Except in London, where chief officers of police are responsible, applications for special orders of exemption are made to the magistrates' courts but decisions in respect of holiday extensions are generally made by members of the Licensing Committee sitting as a magistrates' court. There are over 370 licensing districts (petty sessional divisions) established under the Licensing Act 1964 for England and Wales and the licensing justices for these districts normally establish, for purely practical reasons, policies for the governance of applications for special orders of exemption, and in particular, for occasions such as Christmas Eve, New Year's Eve and New Year's Day. Although each application should be considered individually by the justices, in practice, these policies are the main determinant of the hours granted in any district where applications for special orders of exemption are successful. The problem of consistency arises where different policies (and therefore hours) apply in adjoining petty sessional divisions. As explained above in response to question 4, last New Year's Eve, no special orders of exemption whatsoever were allowed in a handful of licensing districts; extensions to 12.30am and 1.00am were granted in many others; some districts permitted extensions to 2.00am, 3.00am or 4.00am; and a small number granted a 12 hour relaxation. The Magistrates' Association attempts to encourage consistency, but as can be seen from the variations described significant numbers of licensing justices do not follow their advice. The effect is that there may be a common closing time of 12.30am in a district adjoining another with a common closing time of 3.00am. This can result in significant movements of people across licensing district boundaries in pursuit of venues still open and later drinking. This can cause increased concerns about drink-driving, noise in the streets as people move and public order problems. At various seminars around the country attended by DCMS officials to discuss licensing hours generally, police officers and local authorities have raised concerns about the movement of people across district boundaries resulting from inconsistent hours.

26.  If the draft Order was to be given effect, permitted hours in all licensing districts would be relaxed universally and all on-licensed premises and registered members' clubs could supply alcohol to their customers or members from 11.00am on 31 December 2001 until at least 11.00pm on 1 January 2002, unless the premises was subject to a restriction order. The Committee has questioned whether the system of restriction orders might undermine the desired consistency. We do not think so. The number of restriction orders is expected to be relatively small as explained in our response to question 7 below. However, whatever the position with regard to restriction orders, premises within each licensing district could in any event be expected to close at a variety of times, some very much later than others. The advantage of the situation created by the draft Order would be that later celebration and later service of alcohol could be expected to be available in some premises in virtually all licensing districts and there would be no advantage in customers moving significant distances to find open premises in other districts. Problems of drink-driving, noise nuisance and public order should therefore be reduced. Furthermore, the disadvantage of artificially early fixed closing times on New Years' Eves is that it can lead to binge drinking close to the end of permitted hours, with all the customers of on-licensed premises arriving on the street simultaneously. This causes peak density and peak noise at one time within a licensing district, and queuing for transport and late night food. Queuing in turn creates a volatile situation generating public order problems. A wide variety of later closing times within a single licensing district should not produce the unseemly dash to consume drink before closing time and reduce congestion on the streets at any particular point in time. This should therefore reduce crime and public order problems.

27.  The Committee also suggest that the mixed regimes which would be in place if the draft Order is not given effect before December, would actively produce inconsistency, with special orders of exemption running alongside special occasions licensing hours and restriction orders. It is correct that the two regimes would run alongside each other, but we do not agree that this will in practice lead to any inconsistency. The draft Order adds special occasions licensing hours for premises from the time that their permitted hours end. Accordingly, if premises have been granted a special order of exemption until 1.00am, special occasions licensing hours would be added until 11.00am on 1 January 2002. So premises with or without special orders exemption would enjoy the right to the same hours. Any inconsistency could only arise as a result of the fact that restriction orders may only be applied to the period of special occasions licensing hours and not to any hours authorised by a special order of exemption. However, inconsistency should not arise for two reasons. Firstly, it is conceded in this Memorandum that as a result of the Committee's announcement in July most licensed premises and registered members' clubs can now be expected to apply for and be granted special orders of exemption. In each licensing district the hours to which restriction orders can be applied will therefore be similar in respect of all relevant premises. Secondly, as our estimate is for a maximum of 700 restriction orders to be made (see Question 7 below), or on average less than two per licensing district, we do not consider that the system of restriction orders could in any case cause any significant inconsistency.

28.  We therefore remain confident that the draft Order would provide for greater consistency of permitted hours across England and Wales.

VI  The late introduction of the Order

29.  It may be helpful to the Committee to explain some background to the timing of the consultation document.

30.  The Committee will be aware that until late October 2000 Home Office Ministers were exchanging correspondence with the House of Lords Delegated Powers and Deregulation Committee about possible interpretations of the Deregulation and Contracting Out Act 1994 which would permit a Order to be made within a shorter period than would be usual for New Year's Eve 2000. This culminated in a decision that such an approach would be open to legal challenge and the statement made by Mike O'Brien in a Parliamentary Answer on 26 October 2000 which confirmed that no Order could be sought in respect of New Year's Eve 2000. It was not therefore until November that it was known:

—   whether or not relaxed licensing hours would apply at New Year's Eve 2000, and therefore serve as the pilot requested by the police and the Magistrates' Association;

—   whether or not it would be necessary to review the impact of any Order made in respect of New Year's Eve 2000, before finalising proposals in respect of New Year's Eve 2001; and therefore

—   whether or not any proposal in respect of New Year's Eve 2001 would involve a proposal for permanent or temporary change.

31.  Accordingly, the process of drafting an appropriate consultation document concerning New Year's Eve 2001 and the Golden Jubilee could not commence before November. The process of developing proposals and preparing a consultation document is not straightforward. Policy decisions are not made by Home Office Ministers in isolation. After Home Office Ministers initially agree the terms of the policy and the consultation, it is necessary for them to secure the collective agreement of other interested Government Departments to the proposals and to address any points of concern those Departments raise. Once the terms of the consultation document are agreed, collective agreement to the date of publication must also be sought and publishing arranged accordingly. The Home Office sought to complete this process as quickly as possible.

32.  While there was some uncertainty as to when the Regulatory Reform Bill would receive Royal Assent, we did not think, given the additional burden of the restrictions order procedure, that it would have been appropriate to have tabled the proposal for scrutiny as a deregulation order. While that may have saved some time, it may have also caused greater difficulties. Nonetheless, to save time, we took advantage at the Bill's 2nd Reading in the Commons of the ability in section 5(4) to consult in advance of Royal Assent as a prospective Regulatory Reform Order.

33.  We recognised that timing for such an Order was critical, and that the number of days available for Parliamentary scrutiny prior to the summer recess would be crucial, given the possibility of a General Election during the period of the consultation.

34.  In discussion with the Cabinet Office at the start of the new Parliament, we took the view that timing was so critical that the proposal would need to be tabled before the two Committees were established. If we had not done so, there would simply not have been enough time for the scrutiny and approval stages to be completed before New Year's Eve, especially given that it took longer than anticipated to appoint the Commons Committee. We very much regret the inconvenience that this caused to Members of both Committees, which the Cabinet Office tried to minimise by discussing the case with the Committees' officials in advance. The Government regards the circumstances as unique and does not intend to cite the case as any kind of precedent to support future proposals.

35.  We agree with the Committee's assessment that the likely earliest date that the draft Order could be brought into effect is 11 December. We consider that this would still allow the police, local authorities and local residents to apply for restriction orders in respect of licensed premises which might give rise to problems. The period of notice to be given has been reduced to 5 days in the draft Special Occasions Order from the 21 days cited in the Millennium Order. This change is to the advantage of applicants for restriction orders and was originally introduced at the request of the police to ease their handling of such applications. The change slightly disadvantages businesses operating licensed premises as less time is allowed for the preparation of a defence against an application for a restriction order.

36.  We expect there to be no more that 700 applications in all (see answer to question 7), which on average would be less than two per licensing district, although we acknowledge that some districts will attract more than others. We expect the majority of these applications to be made by the police. Their licensing officers are generally well aware of which premises in their divisions pose problems on busy nights. There is also nothing to prevent applicants preparing a case for a restriction order ahead of the Order coming into force.

37.  We acknowledge the points made by the Committee about the value of the appeal procedures, and if the Committee considers it appropriate, we are prepared to amend the draft Order by removing the relevant provisions. We are satisfied that licensees will still have the benefit of fair and independent decisions by the courts on restriction order applications.

38.  The Committee requested that we should consider a proposal that "an objection raised by the police, local authorities or local residents might be enabled automatically to negate extended hours, thereby ensuring that local residents would not lose necessary protection as a result of their applications for restriction orders not being able to be made and heard in time." We have the following comments on this proposal.

39.  In its reference to "objection" we assume that the proposal is that any application for a restriction order should be automatically granted. We do not think such a process would be feasible. The draft Order provides that restriction orders should only be available for good reasons, mainly the potential for disorder or disturbance. This is important because the denial of the right of individual licensees to engage in legitimate commercial activity and members of registered clubs to make the use of their own property, should only occur when it is clearly in the wider public interest. Finally, we have serious concerns that such an automatic procedure, without any proper scrutiny by the courts, would be open to potentially malicious manipulation by unscrupulous traders (who would often themselves be local residents) who wished to gain an advantage by damaging a rival business. We do not therefore consider that the proposal is feasible or desirable.

40.  As we explained above, the Government's position is that there would still be sufficient time for objectors to seek restriction orders, and therefore necessary protection would be maintained by that system. In that context, it is important to note the existing licensing provisions on a normal New Year's Eve. The vast majority of on-licensed premises and registered members' clubs are granted special orders of exemption for a normal New Year's Eve at the discretion of magistrates allowing various extensions of permitted hours up to 12 hours. Only 24 hours notice has to be given of such an application. The arrangements and provisions relating to the application for and grant of special order of exemptions are set down in sections 74 and 75 of the 1964 Act. The application does not have to be advertised, though the chief officer of police must be notified. Only the chief officer of police has a formal right to object and there is no requirement on the justices to hold a public hearing. The Act provides no entitlement to appeal, either by the applicant or a third party, against the grant or refusal of a special order of exemption. Parliament has therefore not given either local authorities or local residents any locus in the existing procedures. We therefore consider that even if only a very short period is allowed in which to seek a restriction order, the draft Order provides them with more influence than they have now in respect of such nights.

VII  How many restriction orders?

41.  Further information on why we have worked on the basis of an estimate of a maximum of 700 restriction orders is provided in the draft regulatory impact assessment at Annex C to the Explanatory Statement. Any figure necessarily involves a degree of reasoned speculation. In calculating this figure, we took account of the only existing precedent which is Millennium Eve (restriction orders forming no part of Devon and Cornwall's own experiment last year). We will be tracking the number of restriction orders applied for and granted under this pilot regulatory reform order, as essential information for use in drawing up our proposal for permanent reform of licensing hours at future New Years' Eves.

42.  Our survey of the courts, which formed part of the review of Millennium Eve which was included in the public consultation document, and discussion with the Association of Chief Police Officers, Magistrates' Association, the Justices' Clerks' Society and the industry, indicated that only a very small number of restriction orders were sought and made for Millennium Eve. We estimate that there were no more than 12 in the whole of England and Wales, which is 0.008 per cent of all on-licensed premises and registered members' clubs. However, the view of the police is that Millennium Eve could have been atypical with a greater degree of tolerance than might normally be expected during a normal New Year's Eve. The most recent licensing statistics indicate that the licences of about 400 on-licensed premises (or 0.4 per cent of the total of 111,000) are revoked by magistrates each year, and this provides a useful estimate of the number of what might be described as "problem" premises in existence at any one time. We considered that the figure of 400 needed to be increased for two reasons. Firstly, the draft Order would also affect registered members' clubs of which there are about 23,000, and secondly, restriction orders might be sought and granted in respect of premises for reasons which would not necessarily in ordinary circumstances give rise to revocation of a licence. We therefore concluded that a reasonable estimate would be 0.5 per cent of all on-licensed premises and registered members' clubs (or 0.5 per cent of 134,000). This gives a figure of 670, which has been rounded for the purpose of this exercise to 700.

43.  The draft regulatory impact assessment also explains that the experience of the Millennium suggests that most of these restriction orders would be sought by the police (our estimate is 500), with local authorities accounting for 150, and local residents no more than 50.

44.  It may be helpful to the Committee to know that we consider the figure of 700 to be a high estimate, but that we thought it right to provide it so as not to risk exaggerating the potential savings to industry which we wished to present conservatively. The reason we think the figure may be high is that the Government expects to bring into force Section 17 of the Criminal Justice and Police Act 2001 by the beginning of December. This will provide the police with new powers to close down instantly disorderly and excessively noisy on-licensed premises at any time. Some senior police officers may therefore decide that it is better to give some premises the benefit of the doubt, by not seeking a restriction order in advance, knowing that they can use the new powers on the night if problems of disorder or disturbance do arise. In addition, at a meeting of the Magistrates' Association Licensing Sub-Committee held on 13 September, experienced licensing justices expressed the view that they expected very few applications for restriction orders if the Order is made. The DCMS estimate of a maximum of 700 can therefore be regarded as a very cautious and high estimate.

VIII  Savings to the industry

45.  The Committee are correct that the same error was made in calculating the potential savings to industry as was made in 1999. The reason is that new draft regulatory impact assessments are developed afresh on the basis of the most recently available information. The figure included in the consultation document was based on our estimate of the unit cost to industry of an application for a special order of exemption in England and Wales. Most special orders of exemption are not granted for national occasions, but individual special celebrations. For example, the vast majority of special orders of exemption are issued by magistrates' courts (and in London by the police) for wedding parties, Silver and Golden Wedding anniversaries, 21st Birthday parties, local charity balls and events, festivals, and other similar special occasions. The unit cost has two main components: legal costs and court/police fee. The overall unit cost is estimated to be 210 (without any element for the business' own administration and licensee's time which would be marginal at this holiday time of year as more than one special order of exemption would be sought). In using the unit cost figure of 210 we failed to note the information contained in the explanatory statement of 1999 to which the Committee refer. Accordingly, the figure given in the current consultation document was too high. In response to the consultation document, the industry, some magistrates and some court Chief Executives again advised us that the saving would be reduced because of the effect of bulk applications in some licensing districts. It was at that stage that the error was recognised.

46.  Although the law requires individual consideration of an application, on national special occasions like Christmas Eve and New Year's Eve, for purely practical reasons some courts accept bulk applications, applying policies by which similar hours are granted to all applicants in the licensing district. Some courts do not approve of this practice. We therefore re-drafted the regulatory impact assessment with this information in mind to ensure that Parliament was clear about the potential savings to the industry.

47.  On presenting the Explanatory Statement to Parliament we explained the amendment to the original estimates and set out the details in the draft regulatory impact assessment at Annex C of that statement.

48.  The Committee would like to know why our revised estimate is higher than that given by the Home Office in 1999. In preparing the White Paper "Time for Reform" published in April 2000, the Home Office had collected a good deal of new information from a larger sample of licensed premises than previously available about the amount the industry paid in legal costs in connection with certain types of licensing applications to the courts. We therefore had more information available than in 1999 when we came to revise the draft regulatory impact assessment. On the basis of the information available, we concluded that notwithstanding the bulk nature of some applications, the figure given in 1999 was in fact an underestimate of the cost to industry and registered members' clubs of obtaining a special order of exemption for New Year's Eve, because the legal costs would be slightly higher than originally thought even for bulk applications. The savings would therefore have been consequentially higher than predicted. The average figure of 70 was considered to be a better estimate of the cost per business across England and Wales, and this figure was used to estimate the potential savings across 134,000 premises. However, we have also estimated that more premises may be the subject of applications for restriction orders than at the Millennium, and that the legal costs of contesting such applications would reduce the potential overall saving by around 0.4 million. Accordingly, we believe the hospitality and leisure industry saved around 9.4 million as a result of the Millennium Order, but would save only 9 million on this occasion.

IX  The draft Order

49.  With regard to the two points raised in respect of the terms of the draft Order, we are grateful to the Committee for these comments. We will remove the superfluous words from the title page. We also agree that the words "in any year" in article 3 can be omitted, since the Order is currently expressed to have effect only in relation to 31st December 2001.

X  The cost of preparing the proposal

50.  The Committee raise two related questions:

—   How many officials have been involved in the preparation of this proposal since it was first conceived at the time of the consultation on the 1999 proposal?

—   What has been the cost to the taxpayer in terms of those officials' time of bringing forward this proposal?

51.  The original consultation was conceived, prepared and published in 1998. Between 1998 and 2001 fifteen officials in seven posts have been involved at various times in the Home Office, and more recently the DCMS. This figure does not include staff in Ministers' private offices in the Home Office and in other Government Departments during internal Government consultations on the policy. It also does not include Cabinet Office staff who monitor and provide advice on regulatory reform policy, issues and legislation across Government. At any particular time, the majority of the work is mainly done by four administrative staff and one legal adviser.

52.  We estimate that the cost to the taxpayer in terms of officials' time between 1998 and 2001 to be just over 47,000 up to and including the preparation of this Memorandum. Again, this figure does not include private office and Cabinet Office staff costs which would be marginal to their general work.

53.  The work since 1998 has facilitated a major national celebration to the benefit of taxpayers and has so far generated an estimated saving to industry of about 9.4 million, but we regret that it has not been more productive since 2000.

54.  We estimate that the current proposal, which cannot be wholly distinguished from that concerning the Golden Jubilee period, has so far cost 10,300 between 2000 and 2001 in terms of officials' time. This is part of the overall figure of 47,000 quoted above.


55.  The Committee also raised the general question of whether the DCMS considers it appropriate to continue with the proposal, their desire to take oral evidence on this proposal and the wider points raised by the Committee's final Report of the last Parliament.

Appropriateness of continuing with the proposal

56.  As we hope is clear from our comments above, the Government does still believe that the draft Order is lawful under the terms of the Regulatory Reform Act 2001. It also believes that it is possible to give effect to the draft Order in time for New Year's Eve 2001 and that sufficient time would be available to allow restriction orders to be sought. The Government also considers that despite the fact that considerable numbers of on-licensed premises and registered members' clubs can be expected to seek special orders of exemption between now and December and thereby reduce or remove any potential savings, the proposal continues to be worthwhile. It still has the potential to remove a burden which prevents the industry from meeting their customers' desires on such nights, to facilitate the national celebration of New Year's Eve 2001 and to improve objectors' rights. Indeed, the Government believes that Millennium Eve showed the popularity of such measures and its beneficial impact.

57.  It should be noted that if a trial of such hours on a normal New Year's Eve cannot be conducted on New Year's Eve 2001, it would be necessary to treat New Year's Eve 2002 as a trial before any final decision could be taken on any permanent arrangement for subsequent New Years' Eves. If it is the Committee's view that the timetabling of this year's Order is unacceptable, it would be impossible to conduct the review of the impact of an Order in respect of New Year's Eve 2002 and to complete the consultation, scrutiny and approval stages of a further proposal in respect of subsequent New Years' Eves in time for New Year's Eve 2003. No permanent arrangement could therefore be put in place before New Year's Eve 2004.

58.  The Committee may also wish to be aware that we decided that designating those provisions that would need amendment if the order were to have annual rather than once-off effect as subordinate would not be an appropriate way forward. Doing so would have provided the Committee, if it agreed, with the opportunity of specifying whether the order should be made by affirmative or negative resolution procedure. The Deregulation and Regulatory Reform Committee, rather than the JCSI, would then be responsible for considering the draft order when tabled. It would also mean that the Government would not need to follow the full regulatory reform order-making procedure given that the policy has been thoroughly consulted upon and given both the unique circumstances of the Millennium Eve deregulation order and of the pilot deregulation this coming New Year's Eve. In view of earlier views expressed by the Committees and the sensitivity which they attached to the proposal, we decided that it would be better, subject to the operation of the Order on New Year's Eve 2001, to proceed in relation to years after 2001 by way of a fresh proposal for an RRO.

The Cumulative Impact of Licensing and Gambling Regulatory Reform Orders

59.  In the Committee's Final Report of the last Parliament, concern was expressed in paragraphs 6 to 8 that the cumulative effect of small changes to liquor and gambling licensing law is to produce a substantial shift of policy in these sectors which the Committee suggest should be taken forward by Ministers as primary legislation. Elsewhere in the Report, the Committee suggest that this cumulative effect could be significant and manifestly controversial.

60.  It may be helpful to the Committee for us to make some general points now explaining the Government's views. We do not think the charge described in the paragraph above can be laid against the present Government in the context of either its proposal concerning New Year's Eve or that in respect of restaurant hours. Although a number of deregulation measures were proposed by the previous Government between 1994 and 1997 (including that resulting in the Deregulation (Licence Transfers) Order 1998), the present Government has so far brought forward only three proposals which could have resulted in permanent changes to the alcohol licensing laws. These were:

-   The proposal to relax permitted hours for all on-licensed premises at all subsequent New Years' Eves;

-   The proposal to allow special hours certificates to be granted on Sundays but only up to 12.30am for about 5 per cent of on-licensed premises; and

-   The proposal to remove the requirement to hold a supper hour certificate for restaurants holding Part IV licences that wish to serve alcohol between 11.00pm and 12 midnight; and to abolish the requirement for such restaurants to provide "live" entertainment to obtain an extended hours order permitting them to serve alcohol between 12 midnight and 1.00am.

61.  Of these proposals for permanent change, the first was withdrawn following receipt of the views of the House of Lords' Committee and replaced with a proposal to relax permitted hours temporarily on a single New Year's Eve (1999). The current proposals with regard to New Year's Eve 2001 and the Golden Jubilee again represent temporary changes on single nights and make no permanent change in the law. Accordingly, since coming to the power in 1997, the present Government has proposed and made only one permanent change to the alcohol licensing laws using a deregulation order. This was the Sunday Licensing Order which affected only 5 per cent of on-licensed premises on one day each week. The proposal regarding restaurant hours is therefore only the second proposal for a permanent change in the alcohol licensing laws and would affect about one fifth of on-licensed premises. We do not consider these two Orders cumulatively amount to a potentially radical shift in alcohol licensing policy.

62.  As Members of the Committee will know, the Government set out its proposals for the modernisation and reform of the alcohol, public entertainment, theatre, cinema and late night refreshment licensing laws in a White Paper published on 10 April 2000. The proposals involved the complete re-structuring of eleven statutes currently governing these licensing areas. There is no doubt that the White Paper reforms are radical and a substantial policy change affecting the lives of everyone living in England and Wales. The Government received and considered 1214 responses to those proposals. On 2 May 2001, the Government announced its intention to give effect to the vast majority of these proposals by introducing primary legislation as soon as Parliamentary time permits. Although a Bill could not be included in the Queen's Speech on 20 June, it remains Government policy to introduce primary legislation as soon as Parliamentary time permits. Such a Bill is likely to be substantial - a minimum of 150 clauses. We do not therefore think that it is correct to suggest that two minor permanent changes and others that are temporary in nature represent substantial shifts in policy when set against the Government's published policy for the reform of the licensing laws. The permanent changes to the existing laws proposed in respect of Sunday Licensing and Restaurant Hours do not and could not give effect to the Government's White Paper proposals.

63.  Turning to gambling, we note the Committee's comments and recommendations in its Final Report of the last Parliament. The Committee will now be aware that the report of the independent gambling review, chaired by Sir Alan Budd, was published on 17 July. The report makes 176 recommendations for reform, many of which would, if implemented, require changes to the Betting, Gaming and Lotteries Act 1963, the Gaming Act 1968, the Lotteries and Amusements Act 1976, the National Lottery Act 1993, and other primary and secondary legislation.

64.  The Government has launched a period of public consultation on the report that will last until 31October. The Committee might wish to note that in undertaking this consultation the Government has taken full account of its views, as set out in the Final Report of the last Parliament, about the need to consult more widely on gambling reform proposals. In particular we have taken steps to ensure that a wider cross-section of religious organisations and those concerned with the welfare of young and other vulnerable persons are identified and formally consulted. Once the consultation has concluded the Government will need to decide which of the review body's proposals it intends to accept, and how they are to be implemented as a part of a coherent strategy for the reform of gambling law. Without wishing to pre-empt those decisions, the Committee should be aware that we will want to consider the extent to which the regulatory reform process might play a part in the delivery of that strategy.

65.  The Government notes the Committee's specific comments, in its Final Report of the last Parliament, about the Deregulation (Bingo and Other Gaming) Order 2001 and in particular the Committee's concerns about Proposal 2: Mix of Gaming Machines. The Government will wish to consider the Committee's conclusion that this proposal should be deleted from the Order in light of the responses to the current consultation on the gambling review report (which includes a similar recommendation) and we will revert to the Committee in due course.

66.  The Government's view is therefore that it remains open to the Government to consider delivering the White Paper reforms, at least in part, and any reforms of gambling law it decides are appropriate, not by means of primary legislation but by means of regulatory reform orders. The Government introduced the Regulatory Reform Bill in order to allow policy changes to be introduced provided that they were suitable and properly scrutinised. It should therefore be legally feasible to deliver large parts of the Government's licensing and gambling reform policies by this means. However, the Government recognises that the use these procedures to deliver certain major reforms is as much a question of appropriateness as it is of vires. The Government therefore fully understands the concerns which the Committee has expressed, and recognises that it is important for Ministers to engage with the Committees about the potential future use of regulatory reform orders. However, we do not consider that the issue of appropriateness arises in the context of the lesser and temporary amendments such as New Year's Eve 2001, the Golden Jubilee, and restaurant hours.

The Regulatory Reform Act 2001

67.  In a separate Memorandum Cabinet Office Ministers will be responding to the Committee on the broader issues raised about regulatory reform.

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