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Memorandum submitted by Central Council of Physical Recreation
1. Introduction
CCPR is the umbrella body for 280 national governing and representative bodies of sport and recreation, which in turn represent some 151,000 sports clubs. As CCPR's expertise resides in community sport, this submission does not address the Committee's interest in public safety or live music.
The Department for Culture, Media and Sport estimates that around 20,000 private members clubs hold liquor licences, and CCPR estimates that 10,000 of these may be sports clubs. This submission addresses the financial and administrative impact of the Act on these clubs.
2. The sporting context
Sports clubs play a key role in local communities, providing affordable opportunities for people to participate in healthy physical activity. Sports clubs therefore contribute to health and community cohesion. Sports clubs' bars play a major role in the social and economic viability of many community-based amateur sports clubs. Many of these sports clubs operate a bar only on competition days for use by members and visiting teams and on a relatively small scale. It is the small surplus from bar revenues that helps to keep a club alive, enabling it to invest in new equipment or improve to its facilities on behalf of participants.
Under the 2003 Act, sport and recreation clubs are treated in the same way as commercial high volume drinking venues. For example, the Minima Yacht Club, with an annual bar turnover of approximately £3,500 is now paying the same for its licence as the wine bar situated next door, which is open until 2am and whose turnover is likely to be nearer £3,500 per week. Meanwhile another club has found that its licence fee has increased dramatically even though the club bar was usually only open for seven hours a week.
CCPR believes that this fundamentally unjust and that sports clubs' licensing fees should reflect the fact that the primary purpose of a sports club is to provide physical activity, and that the sale of alcohol is ancillary to this.
3. The financial impact of the Act on sporting and social clubs
"We've just completed the process of renewing our licence. The cost was £120 to the local council and £200 to the local paper for the compulsory advert. Our bar profit in a year is about £2,500 so this has taken 15% of that in one swoop."
Danny Sillman, Treasurer Guildford Rowing Club
On 11 July 2005, Richard Caborn MP, then licensing minister, informed the House of Commons that the "vast majority of sports clubs will fall in a band between about £70 and £100". However, evidence collected by CCPR from 2430 sports clubs demonstrates that the vast majority fall outside the lowest fee band.
Table 1: Respondents to CCPR survey
CCPR's figures represent an estimated 25% of all sports clubs with bars, therefore giving the following total cost to sport in the first year of the Act's implementation:
Table 2: Estimated total cost to sport of first year of Licensing Act 2003
This table outlines that the new fees cost voluntary sport over £2.6 million in their first year. In addition to this clubs incur other costs associated with the Act including advertising in local newspapers, obtaining floor plans, and in some instances legal fees. For instance 20% of bowls clubs have incurred costs of over £1,000 as a result of the Act. These costs are excessive for clubs whose bars are open on selected occasions only.
The impact of these increased fees is demonstrated in CCPR's Sports Club Survey 2007, to which 2022 clubs responded. The survey found that in 2006:
· 39 per cent of all clubs reported a surplus; · 35 per cent of clubs reported a break-even situation; · 16 per cent of clubs indicated a deficit.
However, clubs in most sports were experiencing a downward trend, with reduced surpluses compared to the previous financial year. This is indicative of increased operating costs for sports clubs, and signals a danger that more clubs will over time move into a deficit position. The increased cost of licensing fees will add to this burden. The annual renewal fees are marginally cheaper than the initial licence fees. However, the annual cost to sports clubs remains at nearly £2.3 million.
Table 2: Estimated annual cost to sport of Licensing Act 2003
4. CCPR's proposal to reduce the cost to sport
CCPR has worked closely with DCMS to promote the Community Amateur Sports Club (CASC) scheme. Under this scheme a sports club that registers with the Inland Revenue as a CASC is eligible for 80% mandatory rate relief. This sets a precedent for the treatment of sports clubs that could also be applied to the licensing regime.
The CCPR proposes that all sports clubs, regardless of whether they are registered CASCs, be placed in a fee band based upon 20% of their rateable value. This would mean that:
· many of the 47% of clubs in Band B (all those with a rateable value of £21,500 or less) would move into Band A; · the 5% of clubs in Bands C and D would move into Band B; · no club would be likely to remain in Band E.
This solution builds upon existing practice and offers due recognition of the fact that sports clubs are not profit-making bodies, but instead make a valuable contribution to the health and quality of life in the community.
5. Whether the Act has led, or looks likely to lead, to a reduction in bureaucracy for those applying for licences under the new regime and for those administering it;
Clubs responding to CCPR's survey were keen to offer their views on this issue. It is clear from this feedback that rather than reducing bureaucracy for sports clubs, the Act has led to a significant administrative burden for club volunteers during its first year of implementation:
'The new scheme required a considerable amount of time and expense to complete and the generation of various documents all of which had to be copied 8 times and posted to the different regulatory bodies some of which were in the same building! The whole exercise was over bureaucratic even to specifying the colour of the paper for the notice for display outside the Club!'
'Race days and times are dependent on the tides, which of course vary from year to year. As we could not stipulate these dates, we were not able to apply to open for our mid-week evening races.
'The
application was more onerous and costly than previous applications/renewals
through the Magistrates' Court, with a higher degree of red tape and
'A complex process which probably took about 100 hours of my time, which as a volunteer is free but would have cost £2000 at least if professionals had been involved.'
'The
'Despite an absolutely clean operating record we had to convince both police and a local councillor that we simply want a bar for members and guests, and do not wish to operate a drinking club! To achieve this we had to use the services of a solicitor and a barrister, hence the high cost of application.'
Whilst this administrative burden is not repeated year on year, the Act does bring with it other burdens. For instance:
· at present a club wishing to make any change to its premises - even if unrelated to the licensed area, such as an alteration to the changing rooms - must apply for a full variation to its licence. This has to date been a costly and expensive process for both clubs and local authorities. Fortunately a Legislative Reform Order now being proposed by Government will amend the process for 'minor variations', making it more streamlined and less costly;
· The Government is currently consulting on a possible code of practice for responsible alcohol sales. Should such a code be introduced its requirements would need to reflect the capacity and nature of voluntary sports clubs.
6. Whether the anticipated financial savings for relevant industries will be realised.
As outlined above the Act has led to increased financial costs for sports clubs, rather than cost savings. The total annual cost to sport of maintaining liquor licences within clubs is £2,272,600. This is a significant sum that community sport can ill afford to lose.
7. Conclusion
The Licensing Act 2003 has placed a significant financial and administrative burden on sports clubs. Its major flaw is that it does not distinguish between commercial, high volume drinking venues and voluntary, not for profit sports clubs, in which the sale of alcohol is an adjunct to the provision of sporting activities.
CCPR believes this situation can be rectified by calculating the licence fees of Community Amateur Sports Clubs (CASCs) upon 20% of their rateable value. This would be commensurate with the 80% mandatory rate relief provided to CASCs. This approach would reduce the annual cost of licensing to sports clubs to just £454,520, at a cost of just £1,818,080 to the Government.
CCPR would welcome the opportunity to provide oral evidence to the Committee in support of this evidence.
September 2008
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