Independent Licensing Fees Review Panel


Sir Les Elton

Independent Licensing Fees Review Panel

Department for Culture Media and Sport

2-4 Cockspur Street

London SW1Y 5DH

17 August 2005

Dear Sir Les Elton

INDEPENDENT REVIEW OF FEE LEVELS ESTABLISHED BY REGULATION UNDER THE LICENSING ACT 2003

1. The Tourism Alliance was established in 2001 with the support of the Secretary of State for Culture, Media and Sport as the voice of the UK tourism industry and now comprises over 40 Tourism Industry Associations that together represent some 200,000 business of all sizes throughout the UK (See Appendix 1 for a full list of member organisations). The Tourism Alliance’s mandate is to work with government on issues relevant to the growth and development of tourism and its contribution to the economy and it is therefore responding to this call for evidence in that capacity.

2. Before discussing the Alliance’s thoughts on the new regime, it should be mentioned that, while appreciative of having this opportunity to provide comment, we are disappointed at the very short notice provided to do so. Giving interested parties just five working days to provide the views of their members is simply inadequate. This is compounded by the request coming during the height of the holiday season when many trade association officials are on holiday and businesses are at their busiest.

3. Not only does this mean that the information supplied by the industry is not as complete and considered as it would wish, it also reinforces the view of a significant number of business operators that the licensing process has been badly managed.

Initial Views of the New Regime

4. It should be noted that the Tourism Alliance was generally supportive of the principles on which the licensing fees were based – that they be set centrally at a level that provides for cost recovery for the licensing authority and be based on an equitable approach that takes account of regional differences in costs.

5. However, as can be seen below, the new fees structure does not, in a range of situations, adhere to these principles and needs to be modified accordingly. We therefore hope that the issues that we raise in this submission will help the Panel identify where the fee structure has deviated from these principles and assist with ensuring that amendments are made to rectify the situation accordingly.

Problems with the New Licensing Regime

5. The two main concerns of the tourism industry in the transition to the new licensing regime have been that is has proved to be a significantly more costly and complex process than was originally predicted and that there was a lack of timely guidance to both businesses and local authorities on the requirements for applying for a new licence.

1.  The Cost and Complexity of the Application Process

6. It is interesting to note that one of the purposes of implementing the new licensing system was to simplify the licensing regime. While this has been achieved, this improvement can come at the expense of increasing the cost and complexity of the application process.

7. Apart from the obvious increase in the cost of a license itself, the main problem has been that DCMS considerably underestimated the additional costs that businesses would occur in applying for a new licence. These costs arise from the increased complexity of the application forms and the approach taken by local authorities in processing applications.

8. One of the main features of the application process has been that some local authorities have rejected a high percentage of applications. This has often been as a result of simple errors or omissions on the application form, including cases where the wrong payment was attached to the application. Because of the high costs associated with an application being rejected, many businesses have sought legal help in order to complete and submit the application. This has significantly increased the cost of a new licence.

9. Another example of the unforeseen costs imposed upon businesses has been the requirement for a plan to be supplied of the premises drawn to a particular scale. This has often necessitated businesses employing an architect to provide the drawing and, although guidance was provided by DCMS to local authorities stating that fire safety plans should be accepted, this was issued too late to prevent many businesses bearing this cost.

2.  The Lack of Timely Guidance

10. There is a general feeling within the industry that the guidance to businesses and local authorities on the application process was too little, too late. The lack of guidance early on in the process meant that local authorities demonstrated considerable variation in the way that they interpreted and applied the licensing application requirements. As a result, trade associations and operators with chains of licensed premises where not able to issue blanket guidance. Rather, they had to respond to situations as they arose on a case by case basis, thus increasing the cost and frustration for all concerned.

11.  This lack of guidance is ongoing with there still being no guidance on the interpretation of “incidental music”. This is particularly important for the many businesses that are planning events for next year where, if it is deemed that a license is required, will have to bare a considerable additional cost that could make the event uneconomic.

Sectors Affected by the New Licensing Fees Structure

12. While all businesses are affected by the new fees structure, there are three categories of tourism-related businesses that we consider are particularly affected and on which the Panel

should focus their attention. These are;

1.  Businesses with Low Alcohol Sales

2.  Businesses with High Rateable Values

3.  Businesses that Hold Temporary Large-Scale Events

1.  Businesses with Low Alcohol Sales.

13.  It would seem that when the fee structure was developed, it was assumed that all licensed businesses made a considerable percentage of their turnover from alcohol sales and that these sales were a core component of the business. It is now apparent that there are a large number of businesses, both large and small, where alcohol sales are provided more as a service to customers rather than as a revenue generator. Examples include guesthouses and B&Bs where customers would like a drink with their meal or in their room. Please see Appendix 2 for evidence of the impact of the new fees structure on these businesses.

14.  Typically, revenue from alcohol sales at these places is less than £1000 per annum and the cost of a licence has increased from £30 for three years to approx. £300 per annum. As a result, it is now uneconomic for many of these businesses to provide alcohol to customers and they have either not applied for a new licence or have had to bare the cost with little prospect of recovering their outlay.

15. These businesses, because they do not have a bar and only serve guests, do not cause local authorities enforcement problems. It is therefore unreasonable that they should pay the same fee as businesses whose sole purpose is to sell alcohol. If these businesses decide that they can no longer afford to maintain alcohol licences the end result is that customer choice is diminished with no appreciable benefit being derived.

2.  Businesses with High Rateable Values and Low Alcohol Sales

15.  The second sector adversely affected by the new licensing fees structure are those businesses with high rateable values but low alcohol sales. Examples of businesses in this category include visitor attractions and holiday parks where alcohol sales are incidental to the core business activity.

16.  In holiday parks the licensed area is usually a small shop or a leisure room while, for an attraction, the licensed area is commonly a café where visitors can have lunch. Sales of alcohol in both holiday parks and attractions are therefore low and form a small percentage of the businesses total revenue. Nevertheless, because the fee is calculated on the non-domestic rateable value of the hereditament, the fee that these businesses are required to pay is disproportionate to both sales and the area in which alcohol is available.

17.  To ensure that these businesses pay a fee that is proportional to the scale of their alcohol sales, an amendment is required so that the fee is based on the rateable value of the area where alcohol is available rather than the value of the property as a whole.

3.  Businesses that Hold Temporary Large-Scale Events

18. The Tourism Alliance and other organisations raised the issue of the fee structure for temporary large-scale events with DCMS in January 2005. As a result of subsequent discussions, the fees for events attended by less than 30,000 people were reduced from between £5-10k to £1-8k in the resultant regulations. However, DCMS decided to increase the fees paid by events attended by over 30,000 people by up to £18k more than was originally proposed as a quid pro quo.

19. While the majority of temporary events will be attended by less than 30,000 people, the Tourism Alliance is concerned about the lack of analysis that has gone into determining the fee structure for temporary large-scale events. Even the DCMS consultation paper at the time stated that these fees are arbitrary and “can only be addressed – and possibly adjusted – with experience”.

20. The Tourism Alliance believes that it is unacceptable to charge businesses up to £64,000 for a licence to hold a single event on the basis of information that is clearly inadequate. Therefore, the Panel needs to examine the fee structure for temporary large-scale events to ensure that the fees are justified and that they do not jeopardise the many outdoor events such as agricultural shows, arts and craft shows and classical concerts in the grounds of historic houses that benefit local communities and have very low licensing and enforcement costs.

Proposals for the Independent Fees Review Panel

21 There is an obvious need to nurture and support businesses in the UK in order to provide for economic growth. Indeed, one of the main features of the 2005 Budget was the introduction of a range of measures aimed at reducing the administrative burden on businesses by removing unnecessary regulation and preventing the imposition of oppressive regulation. Therefore, the one of the key aims of the Review Panel should be to reduce the impact of the new licensing requirements and fees structure on businesses, especially those with low alcohol sales. This can be achieved through three mechanisms.

·  First, there should be nominal capped licence rate for businesses such as guesthouses with very low alcohol sales.

·  Second, for businesses with high rateable values and low alcohol sales, the fee should be based on the rateable value of the part of the property where the alcohol is sold (ie., the café or store).

·  Lastly, an analysis is required of the fee structure for temporary large-scale events to ensure that these fees are based on actual costs and that they do not adversely impact on events that little enforcement requirement and are of great social and economic benefit to local communities.

We look forward to meeting you and the rest of the Panel on 12 September 2005 to discuss and elaborate on the issues raised in this submission. In the meantime, if you would like any information or evidence to help you in your work, please do not hesitate to ask.

Brigid Simmonds

Chairman

President: Sir Digby Jones

Chairman: Brigid Simmonds

Policy Director: Kurt Janson,

Email:

Telephone: 020 7395 8246 Fax: 020 7395 8178 Mobile: 07964428123

Website: www.tourismalliance.com

Tourism Alliance: Centre Point, 103 New Oxford Street, London, WC1A 1DU