Memorandum submitted by the Association
of Licensed Multiple Retailers (ALMR)
INTRODUCTION
1. The Association of Licensed Multiple
Retailers (ALMR) welcomes the opportunity to submit written evidence
as part of the above inquiry. As the only national trade body
dedicated solely to representing the needs and concerns of pub
and bar operators, and a member of successive Ministerial Working
Groups looking at the development and implementation of the Act,
the Association is well placed to comment on its effects.
2. By way of background, the ALMR was formed
in 1992 specifically to represent the interests of those companies
operating a small estate of pubs or bars, but without any interest
in brewing. At the time, such companies were not eligible for
membership of the then Brewers' Society. Lobbying for a change
in the licensing regime to reflect the needs and concerns of this
new type of entrepreneurial business was high on the new Association's
list of priorities and, during the 1990s, we chaired the industry
working group developing proposals for new personal licences;
which directly fed into the 2000 White Paper, Time for Reform.
3. Today, just under 100 companies are in
membership, representing 15,200 pubs and bars. Between them, ALMR
members operate around half the UK managed estate; that is, those
outlets directly operated by the company owning or leasing the
property. Whilst we have a number of national companies within
membership, over two-thirds of members are small independent companies
operating 50 pubs or fewer under their own branding. As well as
pubs and bars, our members operate restaurants, clubs and café
bars. These are predominantly suburban community or neighbourhood
outlets.
LICENSING ACT
OVERVIEW
4. The Licensing Act 2003 was a significant
and substantial piece of legislation which introduced a seismic
shift in the way in which the industry was regulated—from
a regime based around the separate licensing of different activities,
to one based around the premises in which those activities were
carried out. It consolidated six regimes for different types of
outlet into one, harmonising the sale of alcohol with the provision
of regulated entertainment and the sale of late night refreshment.
At a stroke, the number of forms required for a diverse, multi-faceted
business was reduced from 200 to 20, the plethora of licensing
authorities businesses needed to deal with—and the fees
they had to pay to them—was consolidated into one.
5. From a business perspective, it is this
simplification of the regulatory regime which is the most significant
and practical effect arising from the new Act; and one which must
be protected and retained at all costs. The Licensing Act 2003
is a rigorous and robust piece of legislation which allows a licence
and conditions to be tailored exactly to the needs of a specific
business. We would strongly urge politicians to resist calls for
special and additional licences to be applied to certain sectors
of the entertainment industry, such as those operators providing
adult entertainment. This would be a wholly retrograde step and
would unravel the most beneficial commercial effect of the Licensing
Act 2003. We fear that special treatment of one category of outlet
would swiftly see the return of different categories of licence
for other types of outlet.
6. A single premises licence for multiple
licensable activities has also encouraged the development of hybrid
style businesses—a move away from the traditional pub model
based on consumption of alcohol alone and towards an adaptable
social space providing morning coffee, quality food and entertainment
within the same venue. There has been much scepticism about whether
the Act has delivered a "café society" and more
diverse evening economy, but evidence from the ALMR's Annual Industry
Benchmarking Report suggests that it is having an effect.
7. The UK pub, club and bar market has contracted
over the past decade and a half. Since the introduction of the
Licensing Act 2003, the number of outlets has declined by 3.5%.
In the case of managed estate—ALMR members—the decline
has been more pronounced. This overall trend masks some distinctive
shifts in trading style, however.
UK MANAGED PUB/BAR ESTATE
|
| | October 2004
| October 2006 | October 2008
| % Change
2004-08
|
|
| Community local | 4,311
| 3,225 | 2,750
| -36% |
| Food led outlet | 3,180
| 3,039 | 3,045
| -4% |
| Town centre bar | 3,428
| 3,478 | 3,260
| -5% |
| Accommodation led | 641
| 374 | 488
| -24% |
| Nightclub | 421
| 470 | 485
| +15% |
| Seated café/wine bar | 1,053
| 1,198 | 1,211
| +15% |
| Total Managed Estate | 13,034
| 11,784 | 11,239
| -14% |
|
| Source: CGA /ALMR Benchmarking Survey.
|
8. As can be seen from the above table, it does appear
that the Licensing Act has encouraged a shift towards a more café-style,
seated operation in which food is as important as alcohol sales.
Last year, the spend on casual eating out overtook spending on
drinks for the first time. Change has been gradual and organic,
with outlets broadening the scope of their offering. There has
undoubtedly been a move away from the traditional public house
model with the pub as an outlet for driving beer sales and now
towards a more diverse commercial offering. The trend is undoubtedly
market led, arising from demographic change, but it has nevertheless
been accelerated in recent years as a result of regulatory change.
9. It was also anticipated that the introduction of the
Licensing Act would result in a significant deregulation of outlet
closing times. Change here has been evolutionary rather than revolutionary.
Research conducted by CGA suggests that one in five pubs still
closes at 11.00 pm and over 80% of outlets are closed by midnight.
Fewer than 1% of pubs, clubs and bars (450) have a 24 hour licence,
and we are only aware of two of those currently using that permission.
10. In contrast, however, there has been a significant
shift in trading conditions in the off-licence sector which is
directly attributable to the Licensing Act. Under the previous
licensing regime, hours during which alcohol could be retailed
in the off-trade were strictly regulated. No outlet could sell
alcohol after 11.00 pm and product could only be retailed from
a separate section of the store. These restrictions have been
swept away. The presumption now is that alcohol can be sold at
any time when the store is open and in any position. This has
resulted in alcohol being actively promoted and price used as
a key footfall driver. As a result, sales of alcohol through the
pub channel have declined and the market share of the off-trade
has increased significantly.
11. It is also worth noting in this context that the
Act has directly contributed to an increase in professionalism
and training in the sector. Since its introduction, over 250,000
individuals working in the sector have been issued with a personal
licence.
Change in levels of nuisance, night-time offences or perceptions
of public safety
12. When the Licensing Bill was being debated in Parliament,
there was much concern that it would lead to a 24 hour, 7 day
a week drinking climate, with a correspondingly adverse effect
on crime, disorder and anti-social behaviour. Thankfully, the
perceptions played out in the media at that time have not been
reflected in the experience of our members and other operators.
As has already been noted above, the change to licensing hours
has been gradual and the impact on levels of nuisance, night-time
offences and perceptions of public safety has been correspondingly
limited.
13. In terms of perceptions, the effect of the Act has
been undoubtedly positive. Half of all police licensing officers
believe that the Act has had a positive impact on crime and disorder.
There has been no statistically significant change in the proportion
of people perceiving there to be high levels of anti-social behaviour
over the past two years since the Act was introduced. Alcohol
is also perceived to be less of a factor in overall levels of
crime, disorder and public nuisance. In 2004, the British Crime
Survey suggested that alcohol was perceived to be a factor in
48% of all crimes. That has now fallen to 44%, and the perceived
risk of being a victim of crime is also at an all-time low of
24%.
14. Looking at actual night-time offences, police recorded
crime statistics also show a significant drop in crime levels.
Crime peaked in 1995 and has fallen by over 44% to 1981 levels
since that date: 8.5 million fewer crimes. Indeed, there has been
a 5% drop in violent night time crime and a 3% fall in less serious
woundings since the introduction of the Licensing Act alone. It
must be borne in mind that over half the offences included within
the definition of violent crime involves no injury.
15. Official Home Office statistics show there have been
28,815 fewer offences since the Licensing Act was introduced.
The decrease has been particularly pronounced in the early evening
period to midnight.
|
| Serious violent crime | -1,592
|
| Less serious wounding | -20,620
|
| Assault | -2,815
|
| Harassment | 3,627
|
| Criminal damage | -6,078
|
| Net fall | -28,815
|
|
16. It is true that the same statistics do show a small
increase in crime between 3.00 am-6.00 am—up 22%—but
this is from a very small base and represents just 10,000 additional
offences over the course of the two year period. Crime during
this time period is a very small proportion of overall crime,
and the small increase is more than offset by the fall at all
other times.
17. The ALMR Annual Industry Benchmarking Report suggests
that the industry has made considerable levels of investment in
security in and immediately around their premises which have contributed
to the decline in crime and disorder (see table on Ev 68). This
reveals an investment in door supervision and security of some
2.33% of turnover (averaged across the sector as a whole). This
ranges from just under 1% of turnover for food and accommodation
led outlets, to almost 9% for late-night businesses.
18. This decline in levels of crime is under-scored by
other social indicators to suggest that the Licensing Act has
had no adverse effect on anti-social behaviour and public safety.
Analysis of A&E admissions suggests that there have been 6,000
fewer alcohol-related admissions since the introduction of Licensing
Act. Office for National Statistics data also shows a steady decline
in alcohol consumption in all age groups and across both sexes
over the past decade, and more particularly since 2004.
19. Average weekly consumption for men has fallen 13%
since 2000 to 14.9 units and for women by 3% to 6.3 units (having
risen to a high of 7.6 units in 2002). The decline is more pronounced
amongst younger age groups, with consumption levels for young
men down 37% and for young women down 29%. The UK is now 14th
of 20 EU countries in terms of per capita alcohol consumption.
20. Turning to look at nuisance, there is no evidence
to suggest that the introduction of the Licensing Act has led
to an increase in statutory or public nuisance. The most obvious
source of this is noise nuisance, but evidence from the Chartered
Institute of Environmental Health shows no change as a result
of the Licensing Act and also suggests that noise nuisance from
licensed premises is less of a problem than may be perceived.
21. The CIEH Annual Survey of Noise Enforcement for 2006-07
shows that noise from all leisure and commercial premises (not
just entertainment venues) accounts for just 13% of all noise
complaints and enforcement actions. In terms of incident numbers,
there are 845 per million population for commercial uses as opposed
to 4,329 per million population for domestic premises. The Live
Music Forum report suggested that noise from entertainment venues
constituted just 7% of all complaints, with six times as many
complaints arising from domestic music.
22. The DCMS Statistical Bulletin for the period April
2006 to March 2007 suggests that the new Act is also having a
positive effect in tackling any problems which may arise with
particular premises. During that year, almost 700 licences were
reviewed—the final and ultimate sanction after other powers
of enforcement has been deployed. As a result, 92 were revoked
and a further 91 suspended.
Impact on Live Music
23. The introduction of the Licensing Act has not led
to the promised increase in live music. The removal of the old
"two in a bar" rule, which allowed small pubs and bars
to host small scale live music events without the need for a separate
licence was completely swept away. The increased costs and difficulties
of applying for a variation to an existing licence had a significant
deterrent effect for many operators, resulting in an immediate
decline in live music venues at the point of transition.
24. Those who did continue to include live music in their
list of licensable activities have found that the controls applied
to the business are often disproportionately costly. As a result,
they seldom make use of their permission. In our experience, many
local authorities automatically assume that live music will automatically
result in a noise nuisance and place extensive and costly pre-emptive
conditions on a licence.
25. The ALMR's Annual Industry Benchmarking Report highlights
the effect this has on operational practice. The report looks
at common controllable site costs and asks operators to express
these as a percentage of turnover. This reveals the true cost
to the business. The results for entertainment are set out in
the chart below, and show a 19% decline in music and live entertainment
costs as a percentage of turnover across most sectors; in the
case of community operators they have halved. With live entertainment
costs going up in the club sector and remaining static for town
centre outlets, the only logical explanation is that music and
live entertainment is being sacrificed in order to keep a lid
on costs.
26. We believe that there are some simple steps which
could be taken to reverse this decline in live music within small
venues. The existing exemption is only partial—disapplying
conditions related to public nuisance at certain times of the
day when live music is being played and then only for venues with
a very restricted capacity—and its use is limited by being
too complicated for most operators to understand and too complex
to have practical application. We would therefore support the
Live Music Forum's recommendation that live unamplified music
be exempted from the list of licensable activities. We also recommend
that a form of the "two in a bar" rule be re-introduced
to allow venues to offer live music performed by fewer than two
musicians before 11.00 pm without the need for specific permission
on their licence. The review process provides a mechanism for
complaint and redress should the practical implementation of this
cause problems to neighbouring residents.
Has the Act led or is likely to lead to a reduction in bureaucracy
and have the anticipated financial savings been realised?
27. The ALMR has chosen to respond to these two questions
together, because the answer to the latter is largely dependent
on the former. The original Regulatory Impact Assessment to the
Act estimated that the introduction of a new single licensing
authority and the merging of six regimes into one would result
in savings of some £1.9 billion over 10 years, or £190
million annually. DCMS itself estimates that the new regime has
saved only £99 million per annum in red tape.
28. The anticipated savings to the industry have yet
to be fully realised. This is in part due to the fact that the
annual recurring costs to the industry are considerably higher
than predicted. During the passage of the Act, the annual fees
were estimated as being between £50-150 per outlet. In reality,
they are between £70-350. We estimate that the transition
to the new Licensing Act resulted in a one-off cost of £99
million to the industry, with ongoing costs of £40 million.
29. The second reason is that measures to remove additional
unnecessary bureaucracy and costs for the industry appear to have
stalled. The Government has recently announced that it will be
introducing a new minor variation process, which should result
in further cost savings, but this is an isolated move to further
realise the cost savings anticipated in the Regulatory Impact
Assessment.
30. In 2005, the Independent Fees Review panel recommended
a series of measures to be taken to further simplify the licensing
regime. This included a move to a common payment date for all
annual fees, simplified advertising requirements and the introduction
of electronic application. No progress has been made towards addressing
these measures, despite them being included in the DCMS Better
Regulation Simplification Plan 2006. All three of these measures
would reduce bureaucracy and costs to businesses.
31. The average cost of applying for a straightforward
licence is some £2,000, but it ranges from £1,000 to
£4,000. The requirement to produce seven certified hard-copies
of the application is a significant element of this. Making it
mandatory for licensing authorities to accept electronic forms
would allow for reduced costs. Equally, simplifying advertising
requirements, and particularly abolishing the requirement to advertise
in a local newspaper, would reduce costs for the business by some
£400-600. The copying and advertising requirements are particularly
onerous if small errors or omissions are made in the application
requiring it to be resubmitted.
32. The move to a set day on which all annual fees would
be payable would equally reduce administrative burdens, particularly
on multiple businesses. At present, the fee is due on the anniversary
of grant of the licence, and the onus is entirely on the business
to remember to pay the fee on time; no reminders are sent out
and often no invoices either. It is therefore incumbent on the
business to log the date on which the fee is due and put in place
a mechanism for ensuring it is paid. It is worth noting in this
context that the Scottish Executive, in its proposals for a new
licensing regime, have moved to a single payment date and also
require licensing boards to send out reminders.
33. We estimate that these three measures would save
the trade an estimated additional £20-25 million per annum.
CONCLUSION
34. The Licensing Act 2003 represented a significant
change in the way in which the sale of alcohol, provision of entertainment
and late night refreshment were regulated. Such a complex and
detailed piece of legislation takes time to bed down, and many
of its effects can only fully be assessed now.
35. The single most beneficial change for operators was
the reduction in red tape and bureaucracy resulting from the simplification
of the old regime, based around the separate licensing of different
types of activity, to a single premises licence allowing a range
of different activities to be provided. This also allowed the
licence to be exactly tailored to the needs of the business and
the risks it posed to public order, safety and nuisance. As a
result, despite extensive deregulation, the introduction of the
Act has not had a harmful effect on any of these. There may now
only be one type of licence, but in reality there are over 57,000
different and individual licences in the on-trade alone.
36. The second most significant effect has been the positive
response of the industry to that liberalisation. There is now
real evidence of a move towards a more diverse and broadly based
offering, with a significant shift towards seated café-style
operations—the only sector to buck the trend of a contracting
market. The industry has also invested heavily in security and
staff training on the back of the Act.
37. Despite this, however, the Licensing Act has failed
to deliver in full its promise of financial savings and reduced
bureaucracy. Less than half the anticipated savings set out in
the initial Regulatory Impact Assessment have been realised. This
is in part due to the slow progress of further reform. Problems
with the Act were identified by the industry and other stakeholders
in early 2005 following our experiences during transition. Changes
were recommended by the Independent Fees Review panel in 2005
and again in 2006. Despite issuing a departmental simplification
plan in 2006 committing to further deregulation, the Government
has yet to formally respond to—let alone take forward—the
panel's recommendations.
38. If the full positive benefits of the Act are to be
delivered, we recommend the Government take the following actions:
— exempt unamplified live music from the scope of
the definition of regulated entertainment;
— re-introduce the "two in a bar" rule
to allow smaller premises to continue to provide live music before
11.00 pm free from the fear of unnecessary interference from the
licensing authority;
— move immediately to common payment date for annual
fees;
— make it mandatory for licensing and other regulatory
authorities to accept electronic applications and fees; and
— abolish the requirement to advertise applications
in local papers.
39. We would be happy to expand on any of the points
raised in this paper, and would welcome the opportunity to present
oral evidence as part of the inquiry.
October 2008
| 
