Seventh Report
Instruments Reported
The Committee has considered the following instruments
laid under the Licensing Act 2003, and has determined that the
special attention of the House should be drawn to them on the
grounds that they give rise to issues of public policy likely
to be of interest to the House and that they may imperfectly achieve
their policy objectives.
Introduction
1. The Licensing Act 2003 ("the 2003 Act")
seeks to integrate various licensing regimes into a single, coordinated
scheme covering the retail sale of alcohol, the supply of alcohol
in qualifying members' clubs, the provision of regulated entertainment
and the provision of late night refreshment between 11 pm and
5 am. Unless exempted, all those who engage in such activities
will be required to do so under the various authorisations provided
by the 2003 Act, for which fees will be charged. The transitional
period, during which existing licences and certificates can be
converted to new forms of licences and certificates, commences
on 7 February 2005.[1]
Fees will be payable from then onwards. The new licensing regime
is expected to become fully operational in November 2005.
2. The Committee first considered licensing in
its 2nd Report of Session 2003-04,[2]
when commenting on the statutory guidance. We noted then that
matters of particular interest to the House included "the
fee structure and funding of the licensing regime, the definitions
of what constituted licensable entertainment, and how guidance
to licensing authorities would foster consistent decisions".
3. We have grouped the current instruments under
two headings: the mechanics of the new licensing system and the
fee regime.
The mechanics of the new licensing regime
SI 2005/40 Licensing Act 2003 (Transitional
provisions) Order 2005; SI 2005/41 Licensing Act 2003 (Personal
licences) Order 2005; SI 2005/42 Licensing Act 2003 (Premises
licences and club premises certificates) Order 2005; SI 2005/43
Licensing Act 2003 (Licensing authority's register)(Other information)
Order 2005; SI 2005/44 Licensing Act 2003 (Hearings) Regulations
2005; SI 2005/78 Licensing Act 2003 (Hearings) (Amendment) Regulations
2005[3]
4. This group
of six statutory instruments provides for the mechanics of the
new licensing regime, such as application forms for the various
types of licences. Neither the Explanatory Memorandum nor the
Final Regulatory Impact Assessment (RIA) accompanying the instruments
addresses the points raised in the Committee's earlier report.
We therefore requested the Department for Culture, Media and Sport
("the Department") to provide additional information.
This information is printed at Appendix 2 to this Report.
GUIDANCE AND TRAINING
5. Questions 1 to 3 of the additional information
provide some clarification about arrangements relating to guidance
and training. Whilst we welcome the Department's efforts so far
to produce and disseminate appropriate guidance, the House
may wish to seek an assurance from the Government that all the
necessary materials and training will be in place by the time
the new system begins on 7 February. The House may also wish to
ask the Government to respond to a concern we expressed in our
earlier report about how guidance will foster consistent decisions.
HEARINGS
6. Question 4 of the additional information concerns
the timescales set out in the regulations on hearings.
7. The Committee remains concerned about the
tightness of some of the timescales. Regulation 6(2) of SI 2005/44
states that for specified types of hearing, the licensing authority
need give only two working days' notice of when the hearing will
take place and Regulation 8(3) allows the applicant only one day
to respond. In other specified circumstances, Regulation 6(3)
states that the licensing authority need give only five working
days' notice and Regulation 8(4) allows the applicant only two
working days to respond. The House may wish to invite the Government
to explain the need for such timescales.
8. We also note that Regulation 14 provides that
the public, including the applicant and any person assisting or
representing the applicant, can be excluded from the hearing "where
it is considered that the public interest in so doing outweighs
the public interest in the hearing, or that part of the hearing,
taking place in public". (This does not relate to disruptive
behaviour since powers to remove anyone causing a disruption are
given separately in Regulation 25.) The House may wish to invite
the Government to explain more fully the purpose of Regulation
14 and the circumstances in which it might be used.
CONCLUSION
9. Whilst we have commended the efforts of the
Department to provide appropriate guidance, we remain uncertain
as to whether the practical requirements to implement these regulations
will be in place by the date when they come into effect. We
therefore draw this group of statutory instruments to the special
attention of the House on the grounds that they give rise to issues
of public policy likely to be of interest to the House and that
they may imperfectly achieve their policy objectives.
The fee structure of the new licensing regime
SI 2005/79 Licensing Act 2003 (Fees) Regulations
2005 and SI 2005/80 Licensing Act 2003 (Transitional conversions
fees) Order 2005
10. The 2003 Act requires that the fee levels
be set centrally by the Secretary of State. Estimated fee levels
were first published for consultation in April 2000 as part of
a White Paper.[4] They
were published again in the RIA which accompanied the Licensing
Bill in November 2002. Finally, the fee estimates were published
for further consultation during the period 3 November to 23 December
2004.
11. No detailed analysis of the 427 responses
to the most recent public consultation is available. The Final
RIA accompanying these instruments, however, indicates that the
original proposals have been changed to reflect comments received,
although not all suggestions could be accepted:
"Responses to the recent public consultation,
proposed various alternative methods for calculating individual
fees, including:
- Relating fees to the capacity of the premises
involved;
- Sub-delegating powers to licensing authorities
to set or waive fees;
- Basing fees on the hours at which premises are
open, or the hours after midnight that they are open; and
- Basing fee levels on a detailed risk assessment
relating to the impact of the premises, its activities and its
customers on the surrounding environment.
These were not regarded as viable options by the
Government either because they are outside the powers given to
the Secretary of State in the primary legislation or because they
are impractical (for example, not all premises have formal capacities
and the only mandatory conditions which can be imposed on individual
licences are on the face of the primary legislation and cannot
be added to by subordinate legislation)."[5]
12. The original proposal linked the level of
the licensing fee to the non-domestic rateable value (NDRV) of
the premises. Suggestions from the consultation, which have been
adopted in the revised proposal, are set out in Option 3 of the
Final RIA:
"This approach has been suggested by some licensing
authorities as being fairer than NDRV alone in allocating premises
to fee levels.
The option would involve:
- a general uplift across the board
for fees relating to applications for and variations of premises
licences and club premises certificates and in respect of the
annual fees to be paid, recognising increased volumes of applications,
increased levels of representation by residents and responsible
authorities, increased numbers of hearings and reviews of licences;
and higher appeal costs than were originally estimated. This would
add approximately £15 million to overall income during the
period of transition, and £19 million in the first year after
transition and each year thereafter;
- requiring an additional payment during the period
of transition for the variations of converted existing licences
which relate to sales of alcohol, recognising the higher level
of representations which are likely to be made in respect of applications
to vary the hours during which alcohol is sold compared to variations
in connection with other matters. This is estimated to add £4.4
million to overall licensing authorities' income during the period
of transition only;
- applying a multiplier (and therefore a higher
fee) for larger premises which are exclusively or primarily engaged
in the sale of alcohol for consumption on the premises, recognising
the potentially disproportionate costs expected to be incurred
in enforcing licensing law in respect of town and city centre
public houses (and what are commonly called "High Volume
Vertical Drinking Establishments"). This is expected to add
about £3 million to overall income in the period of transition;
and about £1.8 million in the first year after transition
and thereafter.
This is the Government's preferred option and responds
directly to the more detailed information provided in responses
to the public consultation. In comparison with Option 2 [the scheme
proposed in the consultation document], it would cost applicants
applying for licences or certificates or giving notices under
the 2003 Act approximately £22 million more in the period
of transition and £21 million in the first year after transition
and each year thereafter. However, the Government believes that
this is a truer reflection of the costs of the new regime and
the flexibilities included are fairer to the applicants involved."[6]
13. Much of the media attention has been devoted
to the financial aspects of the new licensing regime and queries
have been raised as to whether all the associated costs of an
extended licensing regime, in terms of policing, health and environmental
matters, have been adequately assessed. The revised proposals
now include an additional premium for large drinking establishments:
"The public consultation strongly suggested
that such premises, and particularly those in town and city centres
and those described as 'high volume vertical drinking' establishments,
generate disproportionately high enforcement costs to which it
would be unreasonable to expect other businesses to contribute.
Accordingly, Option 3 includes a multiplier applied
to town and city centre public houses, primarily or exclusively
engaged in the sale of alcohol for consumption on the premises
and currently falling in Bands D and E. Premises in Band D would
pay twice the normal application fee and annual fee; and those
in Band E would pay three times the normal application fee and
annual fee."[7]
14. It seems clear that the base data on which
these fees are calculated is incomplete and that the proposed
fees are based on best estimates. The consultation process has
provided better information and as a result "the Government
has concluded that there needs to be a general uplift in the proposed
fee levels in order to generate the income needed nationally to
cover the costs of the new licensing regime".[8]
However data remains patchy and the Government recognises that
the fee structure set out in these instruments relies heavily
on assumptions and projections.
15. As a result, the Government has undertaken
to take three steps in order to improve the accuracy of their
estimates:
- the actual costs of the regime
will be closely monitored in partnership with the Local Government
Association and in consultation with industry;
- if there are early indications that the costs
are not as predicted, the Government will amend the fee regulations
and order; and
- an independent review of the costs and fees will
be conducted approximately one year after the Act has been fully
implemented, which will inform any necessary further revisions
to fee regulations.[9]
CONCLUSION
16. The Government has stated that its policy
objective is to ensure that the costs of local authorities' administration,
inspection and enforcement associated with the new regime should
not fall on central or local taxpayers, but on those choosing
to engage in licensable activities. The Government has also stated
that cost recovery should, so far as possible, be of the full
legitimate and efficient costs falling on local authorities under
the 2003 Act and not just those costs falling on them under their
role as licensing authorities. Given the uncertainties about the
base data, there must be some doubt as to whether the fee structure
set out in the current regulations will achieve these objectives.
We therefore draw these instruments to the special
attention of the House on the grounds that they represent a matter
of public policy likely to be of interest to the House and that
they may imperfectly achieve their policy objectives.
1 See SI 2004/1739. Back
2
2nd Report, HL Paper 72, Session 2003-04. This report drew the
special attention of the House to the Draft Guidance issued under
Section 182 of the Licensing Act 2003 and the Draft Guidance to
Police Officers on the Operation of Closure powers in Part 8 of
the Licensing Act 2003. Back
3
This inserts an omission from the planned text of SI 2005/44 omitted
at proof stage. The subsequent instrument was laid on 20 January. Back
4
Time for Reform: Proposals for the Modernisation of Our Licensing
Laws (Cm 4696). Back
5
Final RIA, pp 5-6. Back
6
Final RIA, pp 8-10. Back
7
Final RIA, pp 24-5. Back
8
Final RIA, p 23. Back
9
Final RIA, pp 15-16. Back
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