Plans to allow councils to set their own licence fees have been dropped by the government.

The proposals had attracted strong criticism from many licence fee payers in a consultation, with some fearing it could lead to unjustified increases in fee prices.

Crime prevention minister Lynne Featherstone has therefore confirmed that the idea will be put to one side, as the introduction of locally-set licensing fees "would affect a wide range of businesses and we need to get it right".

She said the government "strongly supports" the contribution that pubs, hotels and restaurants make to the UK economy and their communities. This, she stated, means it wants to avoid "putting undue burdens on them".

Nevertheless, Ms Featherstone said the government is also "committed to freeing up local communities to tackle alcohol-fuelled harms".

She explained this is why it has "made it easier for licensing authorities and the police to deal with problem premises".

The decision has been welcomed by several industry bodies, with the British Beer & Pub Association describing it as "great news".

Chief executive Brigid Simmonds said the government should be thanked for listening to the sector's concerns, as the proposals would have been damaging to small community pubs in particular.

She went on to note that pubs already "pay hugely into the public coffers" as a result of various taxes, duties and business rates, while they "do not enjoy any subsidy".

However, the Local Government Association (LGA) has lamented the decision as a missed opportunity and said it is disappointed the government has chosen not to "ease the burden centrally-set licensing fees are placing on council services".

Chair of the LGA's Safer and Stronger Communities Board Councillor Ann Lucas said the Home Office has "accepted the principle of locally-set licensing fees by introducing them as part of the recent Scrap Metal Dealers Act". As a result, she believes it "makes little sense to then decide they can't be introduced for the Licensing Act".

Robert Botkai, a partner at Winckworth Sherwood Solicitors, commented: "This is good news. Localised fees could have only meant increased fees and also greater uncertainty and inconsistency. We could have a licence in Stockport costing more than a licence in Manchester. Unfair fees would have been almost impossible to challenge. Multiple site operators would have had to build systems to ensure that the correct fees were paid. It is tempting to say that the government has listened to the trade but many licensing officers I spoke to were also against the idea as they would have had to consult on fees and face the prospect of legal challenges. Having celebrated long and hard on this one just a word of caution as the government may that an overall fee increase is a better option so let’s wait and see."