Review of Alcohol Licensing Fees

8 Alternative Alcohol Licensing Fee Structures

8.1 Research participants were asked if they had any proposals for alternative alcohol licensing fee structures or suggested amendments to the existing structure. This section sets out the suggestions and comments made by Stakeholders and Licensing Boards, which included:

• The introduction of additional categories at the lower end of the scale;
• A system based on the amount of alcohol sold;
• The Operating Plan of a Premises Licence already has a capacity that has been approved by the Board - it is suggested that the alcohol fee structure is based on this, either in terms of the number of persons for on sales and off sales or the size of the display areas. The capacity measurement would need to be banded, with those premises having a higher capacity in either respect paying a higher fee - exemptions for premises with large capacity but low alcohol turnover (such as cinemas, tourist attractions) would make the fee structure fairer;
• Retain the current structure based on rateable values but with increased flexibility;
• Review the current bandings so that annual fees can be increased to help Boards cover their costs;
• Make other fees subject to a cap rather than a set fee;
• Allow Boards to apply a proportion of rateable value if no separate RV is available for a small part of large premises e.g. college café;
• Licensing Boards should have a statutory requirement to produce an income and expenditure account in order to achieve the required transparency;
• Licensing Boards should establish a Good Practice Forum to share best practice and drive efficiencies;
• The licensing system should be based on the volume of alcohol sold. This information is readily available and a stakeholder commented that commercial concerns should not override the substantial benefits to public health that could derive from the introduction of this requirement.

8.2 Other interviewees raised the issue of linkages between public policy objectives and licence fees. It was felt that there were other tools in place to pursue public health objectives in this area - these included the Public Health Supplement and the potential Social Responsibility Levy.

8.3 In line with the brief a number of alternative options that could be introduced within the current fee structure were also considered. These alternatives are hypothetical rather than evidence-based, some having been raised by research participants, others suggested after detailed examination of the existing system. These alternatives have not been tested or considered by research participants. For each the implications and potential consequences of any change are discussed.

Occasional Licences

8.4 The fee level could be raised to more accurately reflect the actual time and resources spent on administration of the Licence. The current fee of £10 is too low to cover costs and it may be appropriate to consider an increase to a flat rate of £50, £75 or £100. The impact of this may be that for simple applications the cost of the Licence exceeds the cost of resources expended, and for more complex applications costs are still not covered. There would need to be more accurate recording of time spent on Occasional Licences to determine the most appropriate fee level to be introduced.

8.5 Once actual costs of administration of Occasional Licences are more fully understood there is scope to introduce an upper fee cap, although this would significantly complicate the system as Licensing Boards would be required to justify the costs charged for each Licence, adding to the administrative burden, thus being somewhat counter-productive.

8.6 In increasing the current fee level there is the danger that bona fide charities and voluntary organisations may be unable to afford increased rates. The local theatre group whose ticket price includes a 'free' glass of wine, but makes little if any profit from the event may decide not to provide alcohol; while charity events may be deterred from having a drinks licence if more of the proceeds intended for charitable causes are spent on licence fees. It is important to consider whether these types of organisations should be treated under the same regime as commercial applications for an Occasional Licence.

Members' Clubs

8.7 Members' Clubs are currently an issue in relation to the difference in type of activity undertaken by those that arguably operate on a commercial basis compared with those that do not.

8.8 Identification of which clubs fall into which category on the basis of verifiable evidence could be problematic. While the introduction of a turnover based system across the board is not advocated, an approach based on turnover could be introduced to determine the fee level that a Members' Club should pay. For example a Members' Club with a turnover over a certain threshold could be considered to be operating on a commercial basis and could be considered within the normal rateable value categories. On application for a licence applicants would be required to provide accounts disclosing whether turnover was above or below the threshold.

Introduction of Additional Bands

8.9 An option for consideration is to introduce additional bands to the existing system. This may include introduction of new definitions of Category One and the potential of a sub category such as the 'non-commercial' group discussed above. Within the current six-band system there has been some criticism of the current banding levels. An option could be to introduce additional bandings at the top end of the scale - for example Category Six could cover a rateable value of £140,000 to £200,000; Category Seven cover a rateable value of £200,001 to £500,000, Category Eight covering £500,001 to £750,000, Category Nine covering £750,001 to £1 million and Category 10 greater than £1 million.

8.10 The fees associated with each banding would reflect the rateable value of the premises applying for the alcohol licence. Again in order to fully understand the costs associated with administration of the licence, more detailed recording and analysis of Licensing Board activity would be required. Given that there was no confirmation that it costs more in time or resources to administer a licence for businesses operating from premises with a higher rateable value than those operating from smaller premises, it is anticipated that such a move would meet resistance from larger operators.

Adjust Existing Bands

8.11 The option to adjust existing bands is also worthy of consideration. Existing bands could be split into a larger number of bands. For example bands could cover:

• Rateable Value between £1 and £11,500;
• Rateable Value between £11,501 and £21,000;
• Rateable Value between £21,001 and £35,000;
• Rateable Value between £35,001 and £50,000;
• Rateable Value between £50,001 and £70,000;
• Rateable Value between £70,001 and £100,000;
• Rateable Value between £100,001 and £140,000;
• Rateable Value over £140,000.

8.12 Advantages of this system may be that a number of businesses would see their fees reduced. Those that do not may not support such a change. These changes would not address the issues raised by having Category Six cover all businesses with a rateable value over £140,000. A combination of the two options - increasing the number of bands both above and below £140,000 creates a further alternative. Although it should be noted that any option that increases the number of bands is likely to increase administrative burden and complicate the existing system.

Increase Certain Fees

8.13 The majority of Licensing Board survey respondents agreed that fees in the following areas were too low (current fee level is provided in brackets):

• Application to vary premises Licence under 31(1) (£31);
• Application to vary premises Licence - minor variation (£20);
• Extended Hours Licence (£10);
• Personal Licence (£50).

8.14 As Licensing Board respondents thought these fee levels were too low when considering the associated work carried out by Licensing Boards, there is clearly an option to increase fees in these areas. Again the level of any such increase should be based on analysis of resources and costs associated with administration of the activity. In considering this option, the feedback from some licence holders and their representatives, which indicated that, even under the current fee regime, licence holders are deterred from applying to vary premises licences due to cost and the required administration, should be noted.

8.15 Given the financial information that has been provided by a number of Licensing Boards, it would appear that current costs are not being met. If this were the case across all Licensing Boards, there may be an argument to increase fee levels in general to reflect the cost of administration. However, it would seem that some do cover their costs and many Boards did not provide this data so their financial situation is not known. This would indicate that this option might not be appropriate.

Discounts

8.16 Additional options suggested by the brief include the provision of discounts for small businesses, tourist attractions and business start-ups. These types of business (with the exception of business start-ups) are already in receipt of a discount by virtue of being classed within Category One. Additional discounts would require specific qualification criteria to be developed and may be difficult to justify.

8.17 To include new business start-ups would be relatively easy and could, for example, only require verification from Companies House of the registration date of the company. Rules would have to be in place setting out the period under which businesses are considered to be 'start up' businesses. It could apply for the first year only, the first two years, etc. This option may be beneficial in encouraging entrepreneurship and business creation during difficult economic conditions.