Memorandum submitted by the British Hospitality Association





1. The British Hospitality Association is the national association for the hotel, restaurant and catering industry. Our members operate over 40,000 establishments, employ over 500,000 people and turnover in excess of £20 billion a year. Of the establishments in membership, some 40 per cent are contract catering sites, only a small number of which have Premises Licences, but almost all of the remainder in England and Wales (20,000 +) will be licensed.





2. The Licensing Act 2003 represented a widely supported reform, but its introduction was accompanied by significant bureaucracy in terms of paperwork and preparation of plans, as well as related costs. Some issues relating to the increases in fees have still not been addressed. Post-Act developments have potentially increased complexity.


3. The Inquiry seeks evidence on five topics, but we are able to comment only on two of them, relating, respectively, to bureaucracy and to savings.





4. We begin with a general comment: there was widespread industry support for reform of the licensing legislation in England and Wales. The 1964 Act was widely agreed to be 'played out,' with every attempt to correct anomalies leading to more complications. The long thread of liquor licensing law, going back to the First World War and beyond, needed to be broken. The hospitality and tourism industry needed to offer its customers a café, rather than a cloth cap culture.


5. The 2003 Act was therefore widely seen as the 'right answer' long term and we still adhere to that view, though (see below) we have considerable concerns that the new regime is already being amended in unhelpful ways and that there seems to be a never ending stream of new government interventions.




6. However, so far, the 2003 Act has not led to a net reduction in bureaucracy. This is not surprising: licensees who had previously appeared before the local magistrates every three years at a cost of £30 now had to complete two sets of application forms during 2005, one for themselves to be Personal Licence Holders, the other for the Premises Licence.


7. In addition, the uncertainty over the requirements related to Designated Premises Holders and to Personal Licence Holders' attendance on the premises led many businesses to arrange for other staff to seek Personal Licences: for those staff who were not already licence holders, this meant learning the new law and taking an exam in it.


8. Businesses had to have detailed 1:100 plans prepared to accompany their Premises Licence applications. The complexity and time involved in the process led many to seek professional assistance, for example from licensing lawyers. One point which emerged was that many premises had renewed their licences every three years for many years, but had failed to update them to reflect the actual operations. As a result, there were problems over applications which were prima facie simply making use of grandfather rights, but were in practice expanding their operations beyond those agreed over the years by the Licensing Justices.


9. In short, the application process was an unwelcome interruption to the business of serving customers. This led to applications being delayed by inertia, with a very high proportion submitted only in the last week (in August 2005). In turn, this meant applications which had errors were delayed, giving rise to a vast number of potential appeals. Fortunately, the realisation that a bureaucratic nightmare was at hand did lead to a common sense approach by many Councils, though some members have wasted much time subsequently, in chasing up missing or error-strewn licences.


10. A positive message would be that, for most licensed premises, the application process is over. The proposed introduction of a Minor Variations procedure should help to reduce the number of full applications which would otherwise have been required when changes were made to premises. And members will no longer need to visit the magistrates every three years to prove they are a 'fit and proper person' to hold a licence.




11. The above paragraphs indicate that there were clearly costs involved. The anticipated fees for Premises Licences were increased twice before being finalised at a level well above those payable under the old regime. A general industry estimate is that the costs for the average establishment of applying for a Premises Licence were in the region of £2000 (the application fee; legal costs; plan preparation; and so on). Given that most hotels and restaurants simply applied to retain their grandfather rights, it could be said that they paid £2000 to end up where they started.


12. A particular problem, which is still unresolved, arose with such premises as small hotels and guest houses which had high rateable values (the basis for calculating the fees) in relation to alcohol sales (usually just of a few bottles of wine for consumption at dinner). They had the unpalatable option of paying a fee which was in many cases higher than their turnover from selling alcohol but which would help to maintain the value of the business in the event of a sale or of ceasing to be licensed and losing business value. The issue was raised in the Elton Report, but, though action is being taken to remove some premises from the fees regime, such as shops selling communion wine, the problem faced by small hotels remains.





13. It would not have been unreasonable to assume that the very involved process in developing the Act and regulations under it would have been sufficient and that a settling in period would have followed for a number of years. This has not happened and there have been some ill-judged changes to the regime, the most obvious being the powers to introduce Alcohol Disorder Zones.


14. Nor has the process stopped there: the recent consultation paper from the Department of Health, Safe, Sensible, Social, proposes a mandatory code on alcohol retailing, which would imply further changes to the Act. A number of associations have been sent further information by the Department on how this approach might work in practice. What we have seen so far suggests a bureaucratic nightmare.





15. I confirm that we have no objection to this response being made publicly available.


September 2008