Memorandum submitted by The Association of Convenience Stores

 

ACS (the Association of Convenience Stores) represents over 33, 000 convenience stores (Annex 1). Many of our members sell alcohol and the introduction of the licensing act has had an impact, both financially and operationally.

 

Role of Alcohol in Convenience Stores

 

Alcohol is an important category for convenience stores, making up on average 12% of sales figures. However, this is a small percentage when compared to on-trade premises, whose primary business is alcohol retailing. Below are the 2006 figures on the sales contribution of alcohol in different types of convenience outlet.

 

Shop type

Sales Contribution of Alcohol (%)

 

 

Symbol group

16.3

Convenience multiple

12.6

Company managed forecourts

5.4

Co-ops

14.6

Sample average

12

Figure 1: source IGD Convenience Retailing 2007

 

Licensing Fees

 

The introduction of the Licensing Act 2003 had a financial impact on our members, many of whom ended up paying significantly more in licensing fees as a result. We do not believe that the current fees are allocated equitably and urge the Committee to take into account the detrimental impact the new fee structure has had on convenience retailers.

 

The cost of a premises licence for most retailers operating a convenience store falls into band A, B or C. As shown in Annex B, a retailer whose fee falls into band B has seen their statutory costs rise from 30 for three years under the 1964 Act to as much as 425 for the same period under the 2003 Act. This is an increase of up to 14 times for the premises licence only (personal licences incur additional costs). This increase has had a dramatic impact on business costs and ACS estimates suggest it may have resulted in costs to convenience stores in England and Wales of over 11.6 million. In most cases, there is no cost saving in terms of other licensable activities for the off licence sector.

 

 

As well as the statutory licence fee there are also a number of additional costs associated with obtaining an alcohol licence. Some examples include:

 

 

Advertising costs

120

Plan of the premises

125 (estimate based on quotes received)

Personal licence holder costs

Including

 

Statutory fee

Qualification

Criminal Records Bureau

 

 

 

37

150

30

Lawyer costs

200 (estimate based on quotes received)

 

We would strongly urge the committee to look at some of their costs, such as the requirement to advertise an application for a licence in a local paper. The advertisement is rarely seen and serves little purpose and we would recommend that the requirement was removed during future legislative simplification works.

 

In Annex B we estimate that an independent retailer should expect to spend between 1089 and 1289 on obtaining an alcohol licence. A large part of this fee is the same whether the retailer is large or small, located in an urban centre or rural area, whether the retailer sells small amounts of alcohol or it is the primary part of their business. ACS believes that these costs are disproportionate and contrary to the objectives laid down in the Licensing Act (2003)proposals and contrary to the principles of good regulation.

 

Associated Costs

 

There has also been a further burden that is less easy to quantify in monetary terms. The application process places a significant time burden on the applicant. Administrative requirements include:

 

Drawing or commissioning a scale drawing of the premises

Reading and understanding a bundle of legalistic and unclear application materials

Identifying and serving copies of applications to 8 different authorities

Arranging for a declaration of criminal convictions

Identifying and undergoing a course and examination

Sourcing photographs and arranging for them to be suitably endorsed

 

This burden was particularly intense during the transition and dual licensing period. Independent retailers are disproportionately affected by the burden on time since they do not have access to specialist administrative and legal resources. These accumulating bureaucratic costs demonstrate that the structure of fees associated with the Licensing Act 2003 have a disproportionate and debilitating impact on the off licence sector. The current structure fails to meet the aim of ensuring that fees are allocated equitably.

 

ACS urges the committee to look into the current licensing fee. In particular, the fee structure is unfair on convenience retailers for the following reasons:

 

1. Fee Reduction in other Licensable Activities

 

The significant reduction in the cost of obtaining a public entertainment licence for pubs and night clubs has been balanced with significant increase in fees paid by other licence holders. Off licences and convenience stores, in the overwhelming majority of cases, have not required any other form of licensable activity under the legislation. This has not been reflected in the allocation of fees.

2. Cost of Administration

 

Off licence applications do not require the same level of administrative and enforcement resource, to manage issues such as:

capacity limits

crowd control

noise pollution

cumulative impact

access for children

out of hours enforcement visits

 

Off licences require less enforcement resource than other types of premises. ACS urges the Committee to take into account the lesser cost of administering licences to off licences. The existing fee structure requires off licences to subsidise the administration of licences in other sectors which is not fair.

 

3. Non Specialist Alcohol Retailers

 

In the original consultation the Secretary of State stated her desire to ensure that the fee levels are fair and equitable. However the use of rateable value as a mechanic takes no account of the reality that in a convenience store alcohol accounts for an average of only 11.6% of turnover (see figure 1) compared to specialist on-licence premises where the vast majority of income is derived from alcohol.

 

Minor Variation Process

 

It is welcomed that the Government is seeking to introduce a Legislative Reform Order (LRO) to introduce a simplified minor variation process. The process will save retailers time and money. However, we are concerned that licensing hours will be exempted from the process. In the off licence sector it is highly likely that premises would want to make small changes to their opening hours. It is a significant frustration that the politicisation of this issue has overridden common sense. There is no logical reason why the issue of opening hours could not be a matter for Local Authority discretion as is the case with other small changes.

 

We understand that a premise seeking to extend their hours significantly especially late at night is a matter of considerable interest to responsible authorities and local residents and should be a major variation. However this is not the same as a premise seeking to extend their licensing hours by one hour, for example on a Sunday from 10am to 9am so as to be consistent with their opening hours for the rest of the week. Exempting small changes in licensing hours from the minor variation process means that for the off licence sector the deregulatory benefits of the process as a whole are significantly diminished.

 

Forms

 

The introduction of the Licensing Act 2003 has placed a bureaucratic burden on retailers. In particular the forms are very complex and the duty for the applicant to copy them to the relevant bodies can be confusing. The Act needs to be simplified to allow electronic forms.

 

Conclusion

 

ACS urges the Committee to reconsider current fee levels and structure before the interests of thousands of UK retail businesses, small, medium and large are severely compromised.

 

ACS welcomes the introduction of a light touch minor variation process and hopes that the licensing act will be further simplified in the future, particular in relation to forms. However, we would urge that Government looks again at exempting licensing hours from the minor variation process.

 

September 2008

 

 

 


Appendix A

 

THE ASSOCIATION OF CONVENIENCE STORES

 

ACS is the trade body representing the interests of over 33,000 convenience stores operating in city centres as well as rural and suburban areas. Members include familiar names such as Martin McColl, Spar and Thresher, as well as independent stores operating under their own fascia. Our members operate small grocers, off-licence or petrol forecourt shops with between 500 and 3,000 square feet of selling space.

 

 

Appendix B

 

Case study calculations ACS carried out for the original consultation on proposed licensing fees.

 

Example 1

 

Independent retailer operating a small town/village shop this retailer does not employ an advocate for licensing purposes. The retailer wants to make an application to vary the licence to match existing opening hours 7am to 11pm, 7 days a week.

 

The store is Band B operating on a rateable value of

 

 

Existing licence cost for three year period

 

Costs to incur during the first three years from February 7th 2005

 

 

Licence fee

 

 

 

 

 

 

 

 

 

Cost of newspaper advertising

 

30

 

 

 

 

 

 

 

 

 

120

 

Premises licence

Annual renewal fee 2006

Annual renewal fee 2007

 

 

Two personal licences

Drawing of plan of the premises

Cost of newspaper advertising

 

 

150

125

125

 

 

 

74

 

125

 

120

 

 

Total cost

150

Total cost

719

 

 

Additional costs if the retailer decides to employ an advocate

200

 

 

 

 

Total Cost

919

 

 

Example 2 (next page)

 


A small chain of convenience stores operating 12 stores based in a variety of urban, suburban and neighbourhood areas.

 

The first table sets out their estimated costs per site for the three years from 7th February 2004. The second table summarises the differences.


New Licensing Costs: Impact costing for chain of 12 convenience stores

 

 

 

 

 

 

 

 

 

 

 

 

 

R/V

year 1 licence

Assume a minimum of 2 Personal licence holders

Year 1 total

 

Year 2

assume just 1 change p.a. to licencees year 2

Year 3

assume just 1 change p.a. to licencees year 3

 

3year cost

1

12000

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

5

18500

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

7

17000

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

13

19900

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

14

28250

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

23

10750

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

25

13500

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

26

8400

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

37

 

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

39

24500

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

40

5300

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

72

25000

150.00

74.00

224.00

 

125.00

37.00

125.00

37.00

 

548.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,688.00

 

1,500.00

444.00

1,500.00

444.00

 

6,576.00

Example 2

 

Cost Comparison over 3 years

Current System

1,080

 

 

 

 

New System

6,576

 

 

 

 

Cost Increase

5496

 

 

 

 

Percentage increase

508.89%

 

 

 

 


Example 3

 

Example 3 is a national chain operating 30 newsagents with alcohol licences, based in suburban and urban areas.

 

The 30 stores are band A

In preparation for transfer 30 of the companies stores have had the Assistant Manager transferred onto the licence. They have incurred 30 BIIAB charges and 30 Court / Solicitors Fees, which works out at:

30 x 152.75 = 4,582.50        (BIIAB Costs)

30 x 165.13 = 4,953.90        (Transfer Costs)

                  9,536.40

Current licence fees: 1,530

 

Estimated licence fees under new system: 9,000

 

% increase: 588%