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Locally set licence fees shelved

The Government has today announced that it will not be introducing locally set licensing fees under the Licensing Act 2003.

The decision will come as a bitter blow to local authorities who have argued for 10 years that the fees set under the Licensing Act 2003 are insufficient to cover their costs.

It seemed that locally set fees would be introduced when provision was made for them in the Police Reform and Social Responsibility Act 2011. But the Government has performed a U turn following consultation on the detail of the new fees regime, including the level of fee caps to be imposed. The Home Office has today announced that local authorities had failed to provide sufficient evidence to justify the introduction of the new regime.

In fact, only 20 out of 350 licensing authorities responded to a survey of their costs which even then presented "a limited and inconsistent picture of the relationship between licensing authority costs and income." The responses, it was said "do not provide clarity as to whether licensing authorities are experiencing a deficit overall."

Philip Kolvin QC, the Head of Cornerstone Barristers, who is representing sex licensing fee payers in the Supreme Court case of Hemming commented:

"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 Home Office has stated that it will work with the Local Government Association to ensure that local government can in the future provide useful evidence of its costs.

The Home Office has also decided to reject the idea of a single payment date for annual fees, which was strongly opposed, but is to explore the possibility of licensees being able to nominate their own payment date, which will help businesses with multiple licences. This change will require a change to the Licensing Act 2003 itself, so is unlikely to occur before the election.

Note: The setting of licence fees locally was a key plank of Government policy, included in the Government's July 2010 document "Rebalancing the Licensing Act" which stated:

"Licence fees have not been increased since their introduction and therefore some sort of increase is long overdue. This would be hugely welcomed by local authorities who have long argued that their enforcement costs exceed their fee income. The government commissioned Elton Report in 2006 concluded that there was a £43m shortfall for the three year period 2004/05 to 2006/07 and recommended an increase of 7% for the three year period 2007/08 to 2009/10. This has never happened and the Government therefore proposes to enable local authorities to increase the licence fees so that they are based on full cost recovery."