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
|
|
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%
