The opening paragraph of the latest Government Consultation on 'Fees under the Licensing Act 2003' (which can be found here) starts with the worthy claim that the "coalition government is committed to cutting red tape in the licensing regime for responsible businesses."

The consultation - which only affects alcohol licensed premises in England and Wales - also appears committed to significantly increasing the cost to those who operate alcohol premises in obtaining and maintaining those licences.

Although a fee cap would be set, it seems inevitable that most operators would end up paying more for their alcohol licence if the proposals are adopted.

Current fee system

Licensing fees are currently based on the non-domestic rateable value of the premises and are separated into Bands A to E. The application fee varies from £100 (Band A) to £635 (Band E). The government proposes to abandon this method for calculating licensing fees.

The Government's proposals

  • Locally set fees

The Government has proposed that local licensing authorities should be able to set their own fees, which should recover the council's reasonable and proportionate costs of dealing with an application.

The fees would be set locally to take into account the different costs faced by some  licensing authorities, e.g. some authorities are more likely to have to hold hearings due to the involvement of local residents or a cumulative impact zone. If the fees were set nationally this would unfairly disadvantage applicants in areas with lower application costs.

  • Proposed classifications

It has been proposed that the fees should be based on the classification of the premises. The classifications are proposed to be based on whether premises are:

  1. authorised to provide licensable activities until a late terminal hour (see below) and/or
  2. used exclusively or primarily for the sale of alcohol for consumption on the premises
  • How would the proposed classification work in practice?
    •  if neither option is applied then there would be single rate for all premises.
    • if the first option was applied premises authorised to open later would pay an additional amount.
    • if both options were applied, premises open later and used primarily for consumption of alcohol would pay each additional amount cumulatively. It would also be possible to only set the higher fee when both criteria are met.
  • Exemptions

It is proposed that premises which only open late on certain nights of the year e.g. New Year's Eve would not be included within the class of premises open past a terminal hour.

There are also proposals that premises which may be liable to pay the higher amount be exempt from paying at this higher rate because they are not associated with higher enforcement costs (for example theatres, bingo clubs0

  • When is the late terminal hour?

It is intended that this will be set locally but within the legislative limits. The Government has proposed that this should be between midnight and 6am, the same hours as can apply to a Late Night Levy or an Early Morning Restriction Order.

National payment date for annual fees

The consultation also asks for views on whether there should be a national payment date for annual fees, rather than them becoming due on the anniversary of the date the licence was granted.

Comment

The proposed caps are all significantly higher than the current fees paid under the rateable value bands system.

Although these are supposed to represent the highest fee a licensing authority can set when exceptional circumstances are involved, there is a genuine risk that this could encourage authorities across the country to not only raise their fees but set them at the higher end of the scale (as has been experienced by the gaming industry where councils can set their own fees subject to a cap under the Gambling Act 2005).

It is important that operators take the opportunity to respond to the consultation, which is open until 10 April 2014, to ensure that their views are considered.