Police Reform and Social Responsibility Bill

Memorandum submitted by The Association of Licensed Multiple Retailers (PR 33)

POLICE REFORM AND SOCIAL RESPONSIBILITY BILL

Part 2 Licensing (Clauses 103-138)

1. The Association of Licensed Multiple Retailers (ALMR) welcomes the opportunity to submit written evidence to the Public Bill Committee ahead of its consideration of the Police Reform and Social Responsibility Bill. As the only national trade body dedicated to representing the interests of pub and bar operators, we are well placed to provide information to the Committee on the likely practical implications and commercial impact of the proposed reforms on business.

2. By way of background, between them our 82 member companies operate just over 8,800 pubs, bars and restaurants. Two-thirds of our members are small independent companies operating 50 outlets or fewer under their own branding, predominantly suburban community outlets. These pubs are valuable social and economic assets – community centres, social spaces, tourist attractions and significant revenue generators – as well as providing a well regulated and controlled environment for people to enjoy alcohol responsibly and socially.

3. This short briefing sets out the views of those operators and is focused on those clauses of the Bill which give rise to the greatest concern. It is, however, worth noting that a number of additional licensing measures will be taken forward independent of the Bill. It is important that an holistic approach is adopted in order to assess the true impact of the changes.

Overview & Background

4. The Bill introduces amendments to the Licensing Act 2003 in eight distinct areas and creates a new category of ‘late night levy’. It is the fourth overhaul of the Act’s provisions in the five years since it took effect. The changes which have been introduced over that time have been far reaching, and many are still bedding down. Successive reviews of the Licensing Act 2003 have highlighted that powers recently granted to local authorities are either not being used or are being exploited inconsistently across the country. Greater efforts should be directed towards ensuring better, more effective use of existing powers.

5. Home Office briefing papers published at the same time as the Bill make clear that the drivers of reform are two fold: firstly, a legitimate concern about levels of alcohol related crime and disorder and the need to reduce them; and, secondly a perception that the 2003 Act has made it harder to resist the granting of new applications, imposed stringent curbs on local authority discretion and high evidence requirements. These perceptions are never justified or evidenced and in many cases are overstated.

6. In fact, the 2003 Act introduced a right for the first time for residents to oppose applications, engage the licensing regime and call for reviews of licences. Moreover, local authorities were given the power for the first time to control licensed retail development in their jurisdiction – to place a cap on new applications. For the first time, hours were set locally rather than centrally by statute and licences could be removed from problem premises. These were major and significant shifts towards introducing a more accountable, more responsive local licensing regime. The Act is by no means perfect, but it has already gone a long way towards redressing the balance and ensuring community input into decision-making.

7. In this respect, the Act is patently working. In 2008/9, half of all new applications were subject to a hearing as a result of an objection being lodged by local residents or responsible authorities, including the police. In 6% of these cases, the licence was refused. Moreover, there was a 10% increase in licence reviews over the same period. Over 1,000 outlets were subject to review proceedings and in a third of cases the licence was revoked or suspended.

8. The introduction of the Licensing Act 2003 did result in a significant change in the way in which alcohol sold and consumed. Prior to its introduction, no supermarket or off-licence could sell alcohol beyond 11pm, sales had to be made from a separate area of the store and restrictions were placed on sales in wholesale quantities. Significant levels of loss leading and below cost selling of alcohol only emerged after the Act took effect and these legal constraints were abolished. At the same time, the costs of drinking in a pub have been increased as a result of legislative and tax changes. Pub prices have increased by around 40% since the introduction of the Act, whilst supermarket prices have declined in real terms; as a result around 70% of alcohol is now consumed at home or away from licensed premises.

9. The Bill and supporting Home Office documents fail to take account of this changed commercial dynamic. It is clear that adverse public order/health issues arising since 2005 are not necessarily the direct result of the 2003 Act as the Home Office appears to claim. There is equally no evidence produced that the proposed reforms will result in a reversal of recent trends. The fact that the Bill proposals are based on perceptions of the current regime which are not necessarily reflective of the way it works in practice means there is a real danger that the stated public policy objectives of reducing alcohol related crime and disorder will not be delivered.

10. Whilst the proposals are aimed primarily at late night club and bar operators, they will affect all licensed premises – from pubs to theatres, cinemas to late night food outlets and many community and social halls. Care should therefore be taken before pressing ahead with proposals which will impose additional minimum annual costs of between £37-52million on the sector. We estimate for pubs and bars, the average annual cost will be between £1842 and £5280 depending on the size of premises and the size of the late night levy. This is an unsustainable cost burden for many operators in the current economic climate.

11. It is worth noting in this context that the accompanying Regulatory Impact Assessment makes clear the detrimental impact the Bill will have on pubs and bars – a fragile but vital economic sector. The calculations in the RIA are premised on the assumption that the Bill will result in increased numbers of refused or deterred applications and restrictive review hearings resulting in more licences being revoked. It goes on to predict increased administrative costs and more onerous operating conditions. These costs are in addition to the late night levy. The reality behind these assumptions is business failure, job losses, reduced business value and investment.

12. We are equally disappointed that the Bill does not take forward the stated Ministerial objectives set out in the consultation document – namely to encourage individuals to take responsibility for their own actions rather than imposing additional rules and regulations. Taken as a whole, the proposals set out in the Bill will significantly increase the regulatory burden for all businesses and represent a very real threat to the social and economic contribution of responsible operators.

Key Concerns

13. Clause 103 - Licensing Authorities as Responsible Authorities: As Local authorities and members of the licensing authority are already able to object to applications and call for licence reviews, we believe that this proposal is unnecessary and unhelpful. We remain concerned that the dual role proposed for licensing authorities will have an adverse effect on the impartiality and fairness of the decision making process. The Explanatory Memorandum accompanying the Bill acknowledges the validity of these concerns and suggests that Statutory Guidance will be amended to address them. As Guidance is not binding, we urge the Government to amend the Bill to require a separation of responsibilities as per the Gambling Act 2005.

14. Clause 105 - Removal of the vicinity test: The vicinity test is currently used to determine whether those seeking to make representations about an application or a premises are directly affected by its operation. Whilst it is based on geography, in our experience, most licensing authorities take a pragmatic, proportionate and common sense approach to its application. The prospect of representations being made by anyone and anywhere – including those totally unconnected with and unaffected by the premises in question – may result in the voice of the silent majority as well as genuinely affected residents being drowned out. This was the only proposal in the consultation to attract a majority negative response (64% not in favour), including a majority of resident and licensing enforcement respondents; trade responses account for just 15% of this total.

15. Whilst we accept that it would be beneficial to clarify the Act in respect of representations – not just in respect of geography but also to allow for positive representations in support of an outlet - we do not believe that the total removal of any form of impact test would be helpful. It is also questionable whether the reform is necessary given that licensing authorities are to be allowed to make representations, arguably taking into account these broader concerns. We urge the Government to allow the definition of an interested party to remain within the Act, but amended to reflect Section 158 of the Gambling Act to require representations from outside the immediate vicinity of the premises to demonstrate direct impact or effect. This is where the interested party "(a) lives sufficiently close to the premises to be likely to be affected by the authorised activities, (b) has business interests that might be affected by the authorised activities, or (c) represents persons who satisfy paragraph (a) or (b)."

16. We may be prepared to accept the removal of the vicinity test if clearer guidance is given in respect of broader representations. We note that Clause 105(3) section 17(5) which deals with the advertising of applications refers to a definition of "persons who live or are involved in a business in the relevant area [ie licensing authority area]". We recommend that this definition be applied throughout the Act where references are made to ‘other persons’ or ‘any person’ eligible to comment on the application or review proceeding. Furthermore, we urge the Government to amend the Bill to make clear that those wishing to comment should be able to demonstrate that they are directly affected by the operation of the premises as well relating to the licensing objectives. This will avoid raising unrealistic expectations and to ensure that the views of those genuinely affected continue to pre-dominate.

17. We also recommend that the Government consider abandoning the proposal that both the licensing authority and the applicant advertise new applications and variations. Applicants already face £350 costs to advertise in local newspapers. If the licensing authority is to be obliged to ensure that applications are drawn to the attention of the broader community – mirroring the planning regime – then this burden could be removed from operators. This would help to offset the additional regulatory costs being imposed through the Bill, as recommended by the Independent Fees Review Panel (Elton Report 2006).

18. Clause 109 - Reducing the evidence burden: The requirement for licensing authorities to justify that their decisions are ‘necessary’ to secure the licensing objectives is a fundamental cornerstone of the Act. The Home Office has consistently overstated the burden that this imposes on licensing authorities in order to justify the proposed change. Contrary to Home Office assertions that it requires local authorities to justify that their actions are ‘absolutely essential’, Stroud’s Judicial Dictionary of Words and Phrases makes clear that it "does not mean absolutely, essential or inescapable [but] a reasonable requirement or need for something". In contrast, legal advice obtained by the Association suggests that the lower test of ‘appropriate’ would allow decisions which are "reasonable and expedient ….reached on a subjective view of the situation".

19. The change from ‘necessary’ to ‘appropriate’ is not a semantic one. It has potentially far reaching implications. As the Explanatory Memorandum makes clear, it is essential to ensuring compliance with the European Convention on Human Rights (ECHR). The high evidence threshold ensures that any restrictions on the licence or its removal are proportionate and justified and hence do not infringe Article 1. Legal advice obtained by the Association makes clear that there is greater risk of the ECHR being infringed if previously granted permissions are taken away from businesses trading with existing goodwill and in the absence of any problem or evidence to justify it. The necessary test ensures that this is not the case and that local authorities do not open themselves to costly ECHR cases. Its removal makes that more questionable and uncertain.

20. Subsections (2) to (14) of the Clause list 9 areas where the new ‘appropriate’ test would apply. We recommend that the Government retain the necessary test in certain specific circumstances and in particular where a decision involves a refusal to grant, a licence review, the removal or suspension of a licence or the withdrawal of a previously granted permission to trade. This is because adverse decisions in these areas can result in business and personal failure, loss of job and home and income.

21. Clause 119 - Early Morning Restriction Orders: Early Morning Restriction Orders were introduced as part of the Crime and Security Act 2010, but are powers which have yet to be enacted. The clause introducing them was not subject to public consultation and was inserted late into the Bill after Second Reading. At the time, the then Licensing Minister gave undertakings in the House that the implementation of the new power would be subject to detailed consultation: that has yet to happen. We would urge the Government to deliver on this pledge as a matter of urgency and provide full details on how this new power is to be deployed during the passage of the Bill.

22. The retroactive nature of an EMRO – the ability to take away previously granted permissions from a business irrespective of the way in which it is trading – raise particular concerns under ECHR. For this reason, we believe the Government should retain the ‘necessary’ test to justify the imposition of an EMRO on responsible operators. Furthermore, detailed Statutory Guidance should be produced setting out the evidence required before an EMRO may be applied (this should mirror the statutory guidance on Cumulative Impact Policies), making clear it should be a weapon of last resort after other specific interventions have been applied to address concerns about crime, disorder and public nuisance. It should also be noted that where these concerns relate to specific, identified premises, action should be taken against those individual outlets under the review proceedings rather than a blanket EMRO being applied.

23. We note the suggestion that the introduction of this new power will only affect late night operators; this is far from the case. The introduction of an EMRO will affect a large number of community and suburban pub operators who may have permissions to trade beyond midnight on only a small number of occasions throughout the year. The ability to trade continuously for 72 hours over the New Year period was a right granted to all operators prior to the introduction of the Licensing Act 2003 and was grandfathered under the transitional provisions. The introduction of an EMRO would over-ride this and prevent traditional New Year’s Eve parties as well as the ability to apply for extended hours on occasions such as the Diamond Jubilee or Olympics.

24. Clause 124-128 - Late Night Levy: As the Home Office briefing notes on the Bill make clear, alcohol related crime and disorder may arise in the early hours of the morning but be directly attributable to consumption patterns taking place earlier in the evening, including at home as part of the increasingly prevalent trend to pre-load. In contrast, the levy will only apply to those premises which sell alcohol after midnight, irrespective of how well they are managed and any steps they may take to control public order and mitigate any adverse effects.

25. As noted above, the late night levy will not just apply to nightclubs and late night bars, if introduced in a licensing authority area it will apply to any business trading after midnight even if they only do so on a limited amount of nights in a year. A DCMS Evaluation of the Impact of the Licensing Act revealed that whilst the average opening time had only been extended by half an hour, many traditional pubs and bars had taken the opportunity to extend their hours to midnight or 1am over the weekend or during holiday periods. These outlets would be deterred from opening later, resulting in effect to a return to national permitted hours with the associated, the peak in crime and disorder as a majority of outlets stop serving alcohol at the same time.

26. We are particularly concerned at the paucity of detail provided surrounding the way in which this new power will be introduced and deployed in practice. This makes it difficult to determine the true impact on individual businesses or the sector as a whole. We would urge the Government to provide full details on how this new power is to be deployed during the passage of the Bill to avoid a blank cheque being signed by the industry.

27. We note that indicative costs have been provided which suggest that the fee level will be in the region of £220-4400 depending on the size, location and rateable value of the premises in question. These costs are not inconsiderable but it is highly likely that they will escalate during the discussion of the secondary legislation. In the case of the Licensing Act 2003, indicative fee levels of £150 were continually referred to during the passage of the Bill, but in the event a town centre multiplier was introduced and eventual fee levels were some 10 times higher. We are therefore reluctant to place too great a reliance on these figures.

28. There are a number of amendments which could be made in order to minimise the potentially adverse effect of the late night levy on responsible businesses. As per paragraph 23 above, we believe that the implications of the levy are so significant that they should remain subject to the ‘necessary’ test and a similar procedural approach be adopted. In particular, the imposition of a levy should be excepted from the delegated powers of the licensing authority and be subject to a decision of the full council. This will help to ensure that the decision making process is more rigorous and broader economic considerations are taken into account.

29. Finally, we believe that there is a very real danger of imposing a levy on a specific business sub-set to provide services of a general nature which will benefit any business trading late at night. The fact that up to 30% of revenues may be used by the local authority for street cleaning and other generic services remains a matter of concern and we therefore urge the Government to consider that the levy should be payable by any premises licensed under the Licensing Act 2003 and trading after midnight, not just those selling alcohol. Fast food outlets and late night refreshment providers can act as hot-spots for late night crime and disorder.

Conclusion

30. The proposals set out in the Bill will have very real – and largely unintended – consequences for the majority of responsible operators. The new powers will not be limited to problem premises or the irresponsible minority but will affect all premises regardless of trading history. The increased uncertainty introduced as a result of changes to the legal process, and in particular the evidence base used to justify decisions, will have a significant effect on business confidence and inherent value, jeopardising investment in the sector. As the RIA makes clear, these changes are designed to deter individual operators from making applications and will result in more restrictive and costly conditions being imposed and permissions removed from existing operators. The reality behind this is business failure, loss of livelihood and jobs.

31. The proposed changes set out above would help to militate against this and prevent a misuse of the new powers being granted to local authorities. A great deal depends on the scope and content of the Guidance which has been promised, but the sector is being asked to take much on trust. For this reason, we believe that the proposed review of the impact of the changes should be brought forward. We note that an evaluation of the Licensing Act 2003 was carried out within three years and that an immediate review of the costs of the change took place within a year of implementation. We suggest that this approach is mirrored in respect of these changes.

32. We should be happy to provide additional written or oral briefing on any aspect of the proposals.

January 2011