Blow for councils as Home Office rules out locally-set licensing fees for now

In its response to a consultation on the issue, the Home Office said its next step would be to invite local government to provide evidence of its costs before proceeding.

Provision was made for locally set fees in the Police Reform and Social Responsibility Act 2011. A consultation held last year sought views on aspects of locally-set fees, such as:

• the maximum amount that can be charged for each fee-paying process (the “caps”);
• whether and under what circumstances licensing authorities should be able to charge differing amounts for different types of premises, including whether the use of National Non-Domestic Rateable Value (NNDR) should be retained; and
• the mechanisms designed to ensure transparency and cost-effectiveness in setting fees.

Licensing authorities were asked to complete a survey of their costs for each fee-paying process. However, only 20 of 350 licensing authorities responded to this request.

The Home Office suggested that those responses that were received presented a "limited and inconsistent picture" of the relationship between licensing authority costs and income.

“They do not enable the Government to make evidence-based decisions on the details of the new regime with confidence or offer reassurance to fee-payers, many of whom are small businesses or community premises, on the consequences of moving to locally-set fees,” it added.

The Home Office said the responses made it difficult to set the caps, “as the responses are not sufficient to indicate the extent to which authorities reporting higher costs are outliers or not”.

Likewise, it continued, various estimates had been made of the overall relationship between costs and income, but the responses to the surveys did not provide clarity as to whether licensing authorities were experiencing a deficit overall.

“Therefore, they do not support the development of a credible impact assessment of the introduction of locally-set fees,” the Home Office said.

The consultation response added that the limited response from local government “implied that not all licensing authorities have the necessary capacity to estimate their costs, which is a pre-requisite for setting fees”.

The Home Office said it would work with the Local Government Association to ensure that local government was clear about what sort of evidence would be required.

Philip Kolvin QC, head of Cornerstone Barristers, who is representing sex licensing fee payers in the Supreme Court case of Hemming, said: “The most worrying aspect of the Home Office response is their conclusion that not all licensing authorities even have the capacity to estimate their costs, which they correctly state is a prerequisite for setting fees.

“Given that licensing authorities already have to set fees for other licensing regimes, including sex establishment and taxi licensing, the announcement ought to sound a clarion call to authorities to get their house in order.”

The consultation also looked at the question of a single payment date for annual fees. In this regard the Home Office has decided to consider further an option under which licence holders can nominate their payment date by notifying the relevant licensing authority, rather than introducing a universal date.

Cllr Ann Lucas OBE, chair of the LGA’s Safer and Stronger Communities Board, said: “It is hugely disappointing for the Government to miss an opportunity to ease the burden centrally-set licensing fees are placing on council services, which are already under pressure from a 40% cut to local government funding since 2010.

“Not letting councils set their own licensing fees and recover the full costs of applications from pubs, nightclubs and off-licences means that around £170m of taxpayers’ money has subsidised the drinks industry in the past decade. This bill is rising by around £1.5m a month."

Cllr Lucas noted that the Home Office had accepted the principle of locally-set licensing fees by introducing them as part of the Scrap Metal Dealers Act.

"It makes little sense to then decide they can’t be introduced for the Licensing Act," she argued. “Licensing fees haven’t risen in a decade despite an independent review calling for an increase in 2006. We will continue pressing the Government to ensure fees are increased and this subsidy is ended once and for all.”

The Home Office announcement was, however, welcomed by the British Beer & Pub Association.

Chief executive Brigid Simmonds said: “This is great news – in not moving ahead with locally set fees, the Government deserves our thanks for listening to our concerns. Such a change would have damaged small community pubs, which the Government is rightly keen to support. 

“Pubs do not enjoy any subsidy; they pay hugely into the public coffers through the taxation system, through beer and other alcohol duties, business rates, and a host of other taxes, which is why we are campaigning for more business rates reforms for pubs and a third beer duty freeze in the March Budget.”