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Baroness Buscombe: My Lords, it would be worthwhile for the Government to consider my point. We entirely support Amendment No. 194: I hope that there is no misunderstanding there. It involves an important step forward. The area of copyright needs constant revision. A generation of people who are growing up now simply do not believe that it involves theft; they do not even look on what they do as piracy. They believe that the more that they can borrow each other's records and other material, use that to their own ends and share and multiply it among themselves, the better. They do not believe that there is anything wrong with that.

Lord McIntosh of Haringey: My Lords, I hope that I can be of more help to the noble Baroness. I should have said that Schedule 4 and Clause 111 refer to personal licences. She rightly said that personal licences apply only to premises for the sale of alcohol. Premises licences, to which she seeks to extend this arrangement, cover any of the licensing activities, including entertainment, and they can be reviewed if there have been copyright infringements. That is already the case.

Baroness Buscombe: My Lords, I thank the Minister for that clarification. We should continue to watch and

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review this matter. We are grateful that a step forward is being taken in the Bill. We and the Government know that this matter concerns the industry. There is a huge difference of opinion in this regard beyond your Lordships' House about whether people who are effectively stealing sound recordings, films, cable programmes and so on, are doing anything wrong. We are grateful to the Government. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Blackstone moved Amendment No. 116:

    Page 29, line 30, leave out "Regulations under this section may" and insert "The Secretary of State must by regulations under this section"

On Question, amendment agreed to.

4.45 p.m.

Clause 51 [Determination of application for review]:

[Amendments Nos. 117 to 119 not moved.]

Lord Brooke of Sutton Mandeville moved Amendment No. 120:

    Page 31, line 3, at end insert "or

( ) to take such other actions as it deems necessary in the circumstances"

The noble Lord said: My Lords, I shall be extremely brief. The amendment deals with the need to give the licensing authority powers to act proportionately. The steps in Clause 51(4) do not allow the licensing authority to issue warning letters, for example, which may be the most appropriate outcome of a review in many cases. I have reason to suppose that my noble friend Lord Hodgson will disagree with the amendment. I hope that I have given him a reasonably narrow target at which to aim.

Lord Hodgson of Astley Abbotts: My Lords, I shall not disappoint my noble friend, although he has given me a very narrow target indeed! When we have applications for review, open-ended provisions of the sort proposed in my noble friend's amendment are undesirable because they open up a wide, as opposed to a narrow, target. I have been critical of the Government when they sought to add such catch-all phrases in various clauses in the Bill. I feel that logic means that I must oppose my noble friend's proposal.

Baroness Blackstone: My Lords, once again, the question of balance comes in. As I explained in Committee, the ability to seek a review of premises licences and club premises certificates, which is set out in the Bill, is new. At present, licensing justices have two routes open to them if a licensee has failed to observe his obligations. They can either revoke the licence altogether or do nothing at all. The licensing justices are often reluctant to take any action, particularly for minor transgressions. There is no ability or opportunity to consider a justices' licence in the absence of a breach of obligation. It severely undermines the ability to regulate the licensed trade.

That is why the Bill introduces a much more flexible arrangement through which an interested party or a

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responsible authority may seek a review of a licence or certificate on a ground that is relevant to one or more of the licensing objectives. The steps available to the licensing authority in determining a review include the following: to modify the conditions of the licence or certificate; to exclude a licensable activity or qualifying club activity from the scope of the licence or certificate; to remove the designated premises supervisor where one exists; to suspend the licence or certificate for a period not exceeding three months; or to revoke the licence or certificate.

I am sure that the House will appreciate how much finer the degree of control will be under the new system and the review process will be available even where there has been no breach of obligation. The review process is a significant and powerful one. The steps that the licensing authority may take following a review provide it with all the levers it needs to monitor and regulate the licensed trade effectively in the absence of non-compliance. At the same time, they ensure fair treatment for industry. The steps are the result of long consultation with stakeholders and I believe that it would be unwise to unpick them at this stage.

Finally, Amendments Nos. 120 and 160 would allow the licensing authority to impose its own bespoke outcome to a review process. That would completely undermine the openness and transparency that we have sought to achieve. It must be remembered that the system of review is just that—a review—and is not an alternative to the taking of proceedings. It is designed to allow the continuation of an authorisation to be considered in the light of an application that sets out grounds that are relevant to the licensing objectives. The steps available to the licensing authority in determining the review must be proportionate and consistent. The amendments would make the system arbitrary and introduce widespread inconsistency throughout the country.

If we really want to inflict damage on the industry, I suggest that we go ahead and agree to the amendment. If, on the other hand, we want to operate a system that is fair and transparent and which is completely clear about the duties of licensees, and the steps that might be taken where a review identifies concerns, we cannot agree to the amendments. On that basis, I hope that the noble Lord, Lord Brooke, will withdraw them.

Lord Brooke of Sutton Mandeville: My Lords, I must necessarily have a certain protean quality if I can provide simultaneously both a narrow and a broad target. I am perfectly clear what target my noble friend Lord Hodgson was aiming at, but at whichever target the noble Baroness, Lady Blackstone, was aiming, she has reasonably hit it in my case. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 54 [Fees]:

[Amendment No. 121 not moved.]

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Baroness Thornton moved Amendment No. 122:

    Page 32, line 12, leave out paragraph (b) and insert—

"(b) prescribe guidance for licensing authorities when setting the amount of the fee and what may be charged for under the fee."

The noble Baroness said: My Lords, in moving Amendment No. 122, I shall speak also to Amendment No. 162. Both address the same issue, with one amendment relating to premises and the other to clubs. First, I apologise to your Lordships for not being in attendance to speak on these issues in Committee as I was ill. I thank the noble Lord, Lord Redesdale, for conveying my apologies to the House as we were speaking to the same amendments at that time.

The reason for returning to this question is that there has been a material change in the reasons that the Minister gave in her answer to the Committee on these amendments. In addition, the discussions between the Local Government Association and the DCMS on this situation are ongoing. I thank the Local Government Association and, indeed, Camden Council, for the briefing and information that they provided for me. Perhaps I should also declare an interest as a council tax payer in the London Borough of Camden.

The current statement in Clause 54 refers to regulations that may,

    "prescribe the amount of the fee".

The DCMS has said on numerous occasions that it will ensure that the centrally set application fee and annual fee will cover all the associated costs. That is a welcome assurance. By costs, I assume that the DCMS means the costs of policy development, pre-application discussions, adequate consultation, hearings, mediation, inspections and enforcement, and not only processing applications. However, it is hard to envisage how the DCMS will come up with a one-size-fits-all fee that does not involve local authorities either making a loss or making a profit.

The amendments that I propose today would still impose statutory regulations on fee setting as it would tightly control what may be charged for under the fee and how the fee should be calculated. But within those guidelines, local authorities would set their own fee in consultation with licensees, residents and business.

I wonder why the DCMS would want to involve itself in that kind of local government business. My assumption is that, in principle, this Government would normally, I hope, allow independent decision-making to be taken at the lowest level. That, in any event, seems to fly in the face of that principle. Therefore, why would one size not fit all?

In Committee, the Minister said that the DCMS was considering introducing a separate fee band for London and the South East because of higher costs. That would be a step in the right direction. But that alone will not achieve a fair licensing fee for both local authorities and licensees. Apart from anything else, what about places such as Manchester, Newcastle and Leeds?

I understand that DCMS civil servants are due to meet the LGA to discuss the results of an LGA fee questionnaire of rural, town, metropolitan and

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London local authorities. That will demonstrate that in every possible area of the licensing process—from numbers of full-time staff to average salaries to numbers of inspections, and administrative costs for processing applications—rural, town, metropolitan and London councils have varying costs. I do not want to pre-empt the questionnaire results or the meeting, but I want to give noble Lords two examples of the differing costs that local authorities incur.

In terms of the associated costs for local authorities, I shall name but two. The first is wage costs. Those will impact on the cost of every part of the application process, from policy development, inspections, enforcement and the actual processing of applications. London weighting is an obvious example of that. If the DCMS calculates an "average" wage cost for the whole of England and Wales, London boroughs and metropolitan councils will lose money but rural councils, with lower wage costs, may make money.

The second is travel expenses. In rural districts where licensed premises are spread over a wide area, travel costs associated with inspections and enforcement will be far greater than, for example, those in inner-city boroughs, notwithstanding the congestion charge. Therefore, it is not appropriate for the DCMS to give a petrol allowance as part of the fee, as many urban local authorities do not use vehicles to get around. So, again, there may be an unwelcome result, with some local authorities making money on travel costs and some losing money. I believe that those are legitimate questions that need to be addressed.

The DCMS and some groups within the licensing trade seem to believe that some local authorities are currently making vast profits from their licensing fee. In Committee, the Minister said:

    "Local authorities have had their chance [to set fees] and they have failed".—[Official Report, 16/1/03; col. 343.]

As a result, as my noble friend argued, imposing a nationally set fee was justified.

As the basis both for the argument for a nationally set fee and to guide the setting of a national fee in the regulatory impact assessment, the DCMS has used figures from a CIPFA report. However, I am informed that the CIPFA figures on the annual profit that local authorities make from fees were misquoted in the Committee debate on 16th January. In the debate, a figure of £8.9 million was quoted as the net profit made by local authorities nationally. My understanding is that, in reality, local authorities nationally make an annual loss of £7.1 million. Therefore, it appears to me that the DCMS's argument for taking fee setting out of the hands of local authorities is fundamentally flawed.

I am grateful to the Minister, who acknowledged in a letter to me that there will indeed have to be some reassessment of the RIA. I ask what exactly that would mean, because it seems to me that there needs to be a complete reinterpretation.

However, the LGA acknowledges that a minority of councils make a profit from the licensing fee. But the vast majority operate at a loss—and sometimes a huge

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loss. I want to take Camden Council as a case study of how the £100 to £500 regulatory impact assessment might work.

At present, Camden Council's licensing responsibilities involve 175 premises. That number will rise to 1,500 when all the premises with liquor licences are included. The guidance framework for the Bill notes that the Government's expectation is that local authorities will receive "a very considerable income" during the transition period. That is based on the fee income expected to arise from existing premises transferring their licences to the new regime. Under the regulatory impact assessment, all licensed premises will be required to pay a one-off fee of between £100 and £500 during the transfer from the old to the new licensing system.

If we assume that the midpoint of that range is £300, then Camden can expect revenue of around £0.45 million from its 1,500 premises. The inadequacy of such fee levels is exposed by the fact that Camden's current licensing costs are more than £0.5 million. That is for processing some 300 licences annually, including some occasional licences. Therefore, current costs already exceed the expected fee income, and I believe that there is a problem here.

Camden Council also estimates that the volume of variations likely to be received during the transition period could be considerable. A preliminary survey of business responses suggests that between 400 and 500 existing businesses will apply for a variation in the licence. Again, that is a conservative estimate as many businesses are not yet familiar with the Bill and have not yet considered what changes they may make.

Surely a much fairer system for both licensee and local authority would be for the Government to prescribe guidance on how to calculate the fee and what may be charged under the fee but not to prescribe the amount of the fee. That is why the amendment has been tabled. Regulations would need to make clear the process for calculating fees and would need to be transparent and open to scrutiny. Local authorities would then need to consult local businesses and residents and so on before setting the charge. Indeed, auditing and scrutiny of local authority systems are already in place. That would also ensure that local authorities do not make money out of the fee.

In conclusion, I reiterate that if the fee is set centrally, not only will thousands of local authorities lose money but, perversely, some local authorities which have lower costs will make money. I suggest that that is not a welcome scenario for the Government, the licensees or the local authorities. I beg to move.

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