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Lord Luke: My Lords, these regulations provide for the determination of the fees to accompany the making of applications and the giving of notices under the Licensing Act 2003 and the payment of those fees.
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Further, they make provision for the payment of annual fees in respect of premises licences and club premises certificates granted under the Act.

The problem, as the noble Lord, Lord Clement-Jones, has highlighted so eloquently, is that the Merits of Statutory Instruments Committee has drawn them to the attention of the House, as it feels they,

The regulations seem to satisfy no one. The Local Government Association argues that the fees are not high enough to cover the cost of implementation; that the penalty fee is not significant enough; and that there are problems with the interpretation of the regulations. Indeed, as an example, Westminster City Council, which was looking forward to having the power Tessa Jowell outlined in a press release,

now feels that this "driving seat" does not have a steering wheel, let alone a brake or an accelerator. The higher fee levels still inhibit the ability of local authorities to deliver an effective local licensing regime with a significant deficit expected of £20 million to £30 million in the first year.

Local governments feel particularly let down by the DCMS's failure adequately to consider, draft and consult on these regulations. It criticises the draft regulations for making no reference to the notion of an additional fee for variation or an additional multiplier fee, which explains why those on the other side of the coin are just as upset.

These increases in fees do not bode well for sports clubs in particular. I ask the Minister why the promise made in Committee on the Bill in the other place to reduce fees for such clubs has not been delivered. The noble Lord, Lord Clement-Jones, spoke powerfully and most effectively on this and we strongly support him.

The British Beer and Pub Association is up in arms about the large hike on the original proposals, which themselves are a significant increase on the current fee arrangements; about the new introduction of a multiplier for large premises; and about the timing of the annual fee—the due date for which falls long before the annual anniversary of the licence. Indeed, the BBPA feels that the fees in these regulations,

On top of the new fees, the Government are also asking the industry to pay an estimated £200 million in advertising costs as part of the transitional costs when applying for variations to existing licences. I understand that that was unbudgeted and uncosted in the original Act and contradicts the advice of the Government's own advisory group, which agreed that newspaper advertising for this object was both ineffective and an unnecessary cost burden. We really feel that the Government need to explain their choice
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of fee increases, and I hope that the Minister can go some way to satisfying in particular the criticisms of the Merits of Statutory Instruments Committee.

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, none of this comes as a surprise to me. I have had the advantage of reading the briefing from the British Beer and Pub Association, the Local Government Association and the Central Council for Physical Recreation. My only surprise is how noble Lords opposite can stand up and quote both views at the same time. The Local Government Association wants higher fees and the British Beer and Pub Association wants lower fees. Yet, somehow, the noble Lords, Lord Clement-Jones and Lord Luke, manage to straddle that contradiction and argue in one part of their speeches for higher fees and in another part for lower fees. When they have sorted that out with themselves and with their own consciences, perhaps we may have a more rational debate than we have had today.

I shall do my best in the time available to answer the points that have arisen, but there are some fundamental points that I must make first.

The transitional period required to implement the Licensing Act 2003 began on 7 February this year. Fees are already being paid. The flow will steadily increase. Licensing authorities and industry have already invested a great deal in terms of effort and resources in preparing for the transition; and licensing authorities cannot begin to recover their existing expenditure until fees are paid. It would, therefore, be extremely disruptive if the House were to support the Motion and to deny local authorities the ability to finance the new regime for which they are now responsible.

The second point that I must make is to emphasise what fees may not do. Fees are not an alternative source of revenue. They cannot function as taxation. Fees can only recover the costs of the services provided in carrying out the legislative function approved by Parliament. Fees therefore have nothing to do with what any individual, business or club can afford to pay. They have nothing whatever to do with what anyone should pay, based on moral ground.

Fees are not a substitute for the taxation needed to police the streets and control the behaviour of individuals once they are beyond the control of licensed premises and licensees. The policing of criminal and anti-social behaviour on our streets late at night must be properly funded and we are not ignoring those issues.

The House will have noted the contents of our consultation document published on 21 January, Drinking Responsibly, which includes proposals concerning alcohol disorder zones and charges which might be imposed on businesses in such areas. The Alcohol Harm Reduction Strategy, published last year, also includes proposals under which the alcohol industry might make voluntary contributions to the costs of policing alcohol-related problems in our communities.
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The new legislation is entirely about the control of premises where licensable activities take place to ensure the promotion of the four licensing objectives: the prevention of crime and disorder; public safety; the prevention of public nuisance; and the protection of children from harm.

So the focus of this debate on fees must be on the recovery of the full costs associated with the administration, inspection and enforcement required to deliver the new legislation in operational terms in respect of those premises.

It has been suggested that the consultation on fees was too short and that the changes were made too near to the first appointed day for businesses and others to adjust. We initially published estimates of the fee levels in April 2000, when we estimated that fee levels would be between £100 and £500 on application, with annual fees of between £50 and £150. We said that personal licences would cost about £30. A full public consultation followed. The same estimates were debated during the parliamentary stages of the Bill between 2002 and 2003. Again we consulted between November and December last year. That represents almost four years of consideration and debate.

No one can reasonably suggest that we have arrived at these levels of fees hastily and no one can honestly claim to be surprised by them.

Of course we have introduced new elements as a result of the consultation. That is what consultation is for. First, a general uplift across the board, because evidence was produced that the levels on which we consulted would leave a significant number of licensing authorities in deficit; secondly, a multiplier that increases the fees for large premises that are predominantly and exclusively about selling alcohol for consumption on the premises, because many consider they will attract disproportionately high enforcement costs; and, thirdly, a relatively small additional fee for those varying their licences in respect of the supply of alcohol for consumption on the premises—for example, where extended hours are sought, because these cases will attract more representations and generate more hearings. We would have been rightly criticised if we had ignored the evidence emerging from the consultation.

It has been argued that it was an error to apply the multiplier only to pubs and not to nightclubs because customers coming out of nightclubs cause just as much trouble on the streets. The noble Lord, Lord Clement-Jones, made that argument. He said that they should be charged the same fee as high-volume vertical drinking establishments. But that misunderstands the function of licence fees. The policing of the behaviour of customers after they leave premises is a matter for general taxation, which is a quite separate debate.

Fees can legitimately cover only the costs of carrying out licensing functions and enforcing licensing offences on the premises themselves, not outside. The difference between nightclubs and pubs goes directly to that issue. Nightclubs all have capacity limits to prevent overcrowding. Some people, including myself, think that pubs should have the same limits, but not all of them do. Nightclubs all have security teams to
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prevent disorder and criminal activity on the premises. The consumption of alcohol in nightclubs must also be ancillary to the provision of dancing and substantial refreshment—that is, food—otherwise, they lose their late licence. Those are all conditions and embedded restrictions that they carry over when they convert licences to new ones under the 2003 Act. Large public houses are not subject to all those arrangements, and the evidence from the police and others is that costs relating to the enforcement of licensing law on those premises are likely to be higher than those relating to nightclubs. My answer to the noble Lord, Lord Clement-Jones, is categorical: no, we do not propose to make nightclubs pay the multiplier that applies to pubs.

Before leaving that issue, the noble Lord, Lord Luke, made the argument of the British Beer and Pub Association that it should not be subject to advertising. He did not make clear what the advertising was for. Advertising in this case is to tell people in the surrounding area what applications are extant, in order that, should they wish to, they have the opportunity to object. That was the subject of great debate when the Licensing Bill was going through, and everybody in the House, from all sides, was clear that it was essential that people should have a proper opportunity to object. The advertising is for that purpose, and it is, I think, entirely proper that it should be paid for out of licence-fee income.

At the end of the consultation, we set ourselves three tasks: first, to ensure as far as possible that the costs did not fall on any taxpayer, and that the costs falling on the licensing authorities were fully recovered; secondly, to ensure that the fees properly reflected the fact that certain licensing authorities have overhead costs higher than others—for example, costs of labour and accommodation; and, finally, to ensure that fees were fair and proportionate in respect of licence and certificate holders operating in different ways and on different scales. In setting about the first task, we were aware that some existing licensing fees were failing to recover the expenditure of the courts and local authorities now and were imposing an unjustified burden on taxpayers. There is no reason why taxpayers should subsidise, in particular, the consumption of alcohol by others.

I am confident that the changes we made have satisfied the vast majority of licensing authorities. During the consultation, the Local Government Association claimed that our proposals would leave them £41 million in deficit nationally. We looked at those figures; some authorities had made an excellent case, and we engaged consultants to assist us in examining it. However, we could not accept all of their case. Inevitably, we would be unable to satisfy a handful of authorities whose estimates, in terms of deficit or surplus, were completely out of kilter when set against the forecasts of the vast majority of authorities. The example of Westminster, cited by the noble Lord, Lord Clement-Jones, is one of those. Westminster of course has a particular concentration of premises; it has 2 per cent of the licensed premises in
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the country. Yet, it claimed 10 per cent of the total deficit claimed by the LGA as a whole. There is something wrong there.

After the consultation, the LGA welcomed the changes that we made. The fee levels increase the level of income that they can expect by £22 million during the nine months of the transitional period and by £21 million in each subsequent year. Yet we do not claim that our forecasting is perfect. The noble Lord asked us to re-examine the figures. That is why, when we published the fee regulations and the order, we announced that fee income and expenditure would be closely monitored from the outset and that there would be a full and independent review that would examine the period of transition and the first full year of operation. The LGA has welcomed our commitment to a full and independent review, once the system has been running fully for 12 months. We will look at the review's outcomes, and the fees will be adjusted if they are too high or too low.

The issue of sports clubs was cited by both noble Lords. Most sports clubs—including political, ex-services, working men's, community and social clubs—will fall into bands A and B, as described in the regulations. The noble Lord, Lord Clement-Jones, queried that, but 79 per cent of all such premises will be in band A and B. That means that, most commonly, the fee on application for a new club premises certificate will be £100 and on each subsequent anniversary of the certificate being granted it would be required to pay £70. Those smaller clubs in band A would pay 19 times less than a large town centre pub in band E that is primarily or exclusively engaged in selling alcohol for consumption on the premises. We think that is a fair reflection of the differences and of the costs that each is likely to generate in licensing authority activity.

It is important to remember that a club must have at least 25 members to qualify for a club premises certificate. Even in the smallest club, during the first twelve months, each member would need to contribute only £4—less than eight pence a week. That £4 is the price of two pints of beer over a whole year. In subsequent years, those figures fall to under £3 annually—around five pence a week. Even if clubs elected not to charge members those amounts, the money could be recovered by an extremely small amount added to the price of drinks. Most sports clubs with bars have considerably more than 25 members, and the cost per head is even lower. I completely understand why sports clubs want to minimise their costs, but it is nonsense to suggest that any club would be threatened by the fees.

I have examined the campaign by the Central Council for Physical Recreation against the fees. The noble Lord, Lord Clement-Jones, quoted the two examples that it gave us. Let us look at them. The Heaton Tennis and Squash Club in Bradford has three indoor and six outdoor tennis courts, a 1,300 square foot gymnasium, a fully licensed lounge bar, a sports shop, a dining restaurant area, its own in-house caterers, and it puts on functions for up to 450 people.
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The annual fee for that club will be £295, which is less than the subscription for one member of the club. Can that conceivably be unreasonable? The other example, a hockey club, has 180 adult members apart from its 200 junior members. Since 1988, that club has invested close to £900,000 on its facilities. The licence fee would not be £370 in the first year, as the noble Lord suggested. It would be £190 for the initial licence, and then £180 per year. Surely that is not a small club in jeopardy from licence fees.

I completely reject the idea that the fees in any way diminish the extraordinarily valuable effort that the Government are making to support sport. Between 2002 and 2008, the Government are investing £1.5 billion in school sport, £60 million over three years in community sport through the Community Club Development Programme, and a further £45 million over three years through the Football Foundation. Government investment in the Football Foundation also leverages in an extra £45 million from the Premier League and the Football Association. We have put sports clubs at the forefront of our investment plans with the Community Amateur Sports Club scheme, which includes mandatory rate relief at 80 per cent for registered clubs, worth up to £10 million a year. In those circumstances, subsidising the consumption of alcohol in sports clubs is not the best way to support sports.

Another classic example is in the Daily Express this morning. It says that singalongs will be banned if more than two join in. I am sorry that noble Lords missed that one, but it is a real joy. It says that a group of pensioners has been banned from holding its weekly sing-song after a killjoy council said that it needed an entertainment licence. It goes on to say that they will have to pay huge amounts. It is true that under existing licensing rules, they would. Under the Licensing Act, when it is implemented, because we are encouraging live music, there will be nothing to pay.

I am sorry. I understand the passion with which the arguments have been advanced, but I have answered all of them. There is no case to answer.

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