Alcohol Licensing (Coronavirus) (Regulatory Easements) (Amendment) Regulations 2023
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Lord Sharpe of Epsom
That the Grand Committee do consider the Alcohol Licensing (Coronavirus) (Regulatory Easements) (Amendment) Regulations 2023.
Relevant document: 53rd Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, these regulations, which were laid before the House on 11 September, contain measures that are intended to continue to cut unnecessary red tape in order to support the hospitality sector in light of the ongoing residual effects of the Covid-19 pandemic.
As your Lordships may be aware, the Licensing Act 2003 enables licences to be granted to sell alcohol for consumption on site, for consumption off site, or for both. In the event that a business obtains an on-sales only licence and subsequently wishes also to do off-sales, it can apply to its licensing authority for a variation that would add off-sales to its licence.
The Business and Planning Act 2020 included a temporary provision that meant holders of licences that covered only on-sales would automatically be entitled to make off-sales, removing the need for businesses to apply for a variation, thus saving them time and money. In practice, this has enabled pubs and restaurants that have only an on-sales licence to sell alcohol for takeaway, to operate alcohol delivery services and to extend their service outdoors. Specifically, the measures have enabled businesses to serve alcohol in the area covered by any pavement licence they had, facilitated by a parallel but independent easement to pavement licensing. This parallel easement created a temporary streamlined process to apply for and have granted a pavement licence. The Levelling-up and Regeneration Bill, currently completing its passage through Parliament, will make the changes to pavement licensing permanent.
The off-sales provision has benefited at least 38,000 licensed premises in England and Wales that previously did not have an off-sales licence, and, having previously been extended twice, it was due to expire on 30 September 2023. These new regulations extend this measure until 31 March 2025 to ensure that businesses will continue to benefit from these provisions for a further 18 months. During this time, the Government will explore the creation of a unified pavement licence that includes the consumption and sale of alcohol in the outside pavement area. Work is already under way to establish how this will work in practice. We intend to have permanent arrangements in place that can take effect when the extension expires.
I am confident that extending the off-sales provision is the right course of action in order to provide vital ongoing support to the hospitality sector. Although the immediate Covid-19 crisis has passed, the residual effects continue to have an immense impact, especially for businesses in the hospitality sector. Many continue to face high levels of Covid-related debt, with some reporting in July that their debt repayments exceeded 100% of their turnover.
For the purposes of clarity, I note that another regulatory easement set out in the BPA relating to temporary event notices—TENs—will not be extended. The provision temporarily increased the annual number of TENs that a licensed premises user can have in respect of a premises from 15 to 20 per year and increased the maximum number of days on which temporary events may be held at such premises from 21 to 26 per year. We have decided not to extend this easement for the simple reason that the additional TENs provided for in the BPA have been underutilised and are no longer deemed necessary. As such, on 31 December 2023 that easement will lapse.
These measures will continue to benefit a wide range of businesses, including pubs, restaurants, wedding venues and small festivals. The hospitality industry needs our support, so I commend these regulations to the Committee and beg to move.
Lord Smith of Hindhead (Con)
My Lords, I am grateful to my noble friend for introducing these regulations and I declare my interests as set out in the register. I rise briefly to add my support to my noble friend and this measure, and to thank the Government for the support given to the hospitality industry over the last few difficult years.
Personally, I am a supporter of these provisions becoming permanent, and I hope that will come, but in the meantime, I am happy that these regulations will bring 18 additional months of advantage to hard-working, tax-revenue-paying businesses. This extension enables businesses to continue to serve alcohol in the area covered by a pavement licence, for takeaway and for delivery, as my noble friend said, all without the need to apply for a variation to their licence. I am confident that this will continue to benefit thousands of licensed premises across England and Wales. I also applaud the Government’s commitment to explore the creation of a unified pavement licence that includes the consumption and sale of alcohol in the outside pavement area.
In the middle of one of the most joyless events known to mankind—“Sober October”—it is heartening to see some positive news for the hospitality industry. Clearly, the UK’s unelected temperance movement has decided that “Dry January” is no longer enough and wishes to spread even more misery. As far as I am aware, the National Police Chiefs’ Council said that, when the regulations were first introduced and then extended, no increase in crime and disorder resulted. That shows that most people—the vast majority—can enjoy a modest drink without incident.
We know the hospitality sector has taken a huge hit in recent times; although recovering, there is still a way to go for the industry to get back on its pre-pandemic feet. The instrument, as extended today, has helped and will continue to help businesses diversify. Figures reveal that 383 pubs closed in the initial half of this year, to be demolished or converted, the equivalent of two every day. In the whole of 2022, 386 such venues ceased to exist. The overall number of pubs in England and Wales, including vacant ones, now stands at 39,404. The total number of closed clubs is currently not known but the social club sector has seen a number of closures, although not on the same scale.
The reasoning is clear. Let us continue to make things easier and give opportunities to businesses to survive and thrive—positives which we know trickle down to employed staff and to customers who still enjoy socialising. Let us also remind ourselves that, when the Licensing Act was passed in 2003 and introduced in 2005, it was hailed as a means to help create a café society, something which is more easily achieved with the ability to drink al fresco.
Lord Sharpe of Epsom (Con)
I thank all noble Lords who have contributed to this debate. I am pleased that this measure, which ensures continued support for the hospitality sector, has been generally recognised as a positive move. I reassure my noble friend Lord Smith that I have no intention of embracing sober October, and I will happily join him in that.
As I have already indicated, the long-term goal is to create a unified pavement licence that includes licensing consent for the consumption and sale of alcohol in an outside pavement area. This 18-month extension will provide the time necessary to establish how this will work in practice to bring about the necessary legislative changes.
I will try to respond to the specific questions, starting with the points raised by the noble Lord, Lord Coaker, about the consultation. Earlier this year, the Government consulted on whether to make permanent the alcohol licensing regulatory easements that were set out in the BPA 2020. A majority of respondents indicated that they did not wish the off-sales easement to continue and the Government initially decided not to continue with it. Of those who responded, broadly speaking, industry was in favour and local residents and licensing were not. However, I do not have the precise proportions. The Government later reviewed this decision and decided to provide additional support to the hospitality sector by extending this off-sale provision for a further 18 months. I recognise that this has caused confusion for stakeholders, but it will ensure that the hospitality sector can maximise every opportunity to recover fully from the ongoing residual effects of the pandemic on an industry that, as has been broadly noted, is vital to our economy and culture. I will come back to the evidence of the economic impact shortly.
The noble Baroness, Lady Finlay, talked about the broader health evidence that we need to seek. She made some very interesting and sound points about health, but we believe that the existing provisions to consider health matters in relation to licensing applications are sufficient at present. Difficulties remain in establishing direct links, as the noble Lord, Lord Coaker, alluded, between alcohol-related harms and specific premises. Evidence from Scotland so far is not particularly compelling, but we will consider any new evidence. As a general rule, directors of public health are responsible authorities under the Licensing Act.
I go back to the confusion that may have been caused between the publication of the consultation results and the decision to extend the provisions. We apologise for that confusion—I completely accept that it was not ideal. However, it is right that we considered all the relevant factors in detail, and we are confident that extending this easement for an additional 18 months represents the best outcome for the industry. The noble Lord, Lord Coaker, asked what the point of consulting is if we just ignore the results; I think there is a legitimate expectation that government will consult on matters of policy or legislative change to allow interested parties and citizens the opportunity to contribute their views. They are a vital part of how government engages with the public and stakeholders, and we have to acknowledge the role they play in decision-making. However, they are only one factor among many that must be considered and it is important that the Government retain the ability to make different decisions where other concerns need to be taken into account. The Government have the luxury of seeing the bigger picture, which local residents who object perhaps do not.
My noble friends Lady McIntosh and Lord Smith and the noble Lord, Lord Coaker, made some very good points about the importance of the hospitality sector to the country and the difficulties it is facing. It continues to feel the effects of the coronavirus pandemic; there are no remaining restrictions in place, but many businesses continue to face significant debt burdens, as the noble Lord, Lord Coaker, pointed out, as a result of the pandemic. Industry survey data shows that the hospitality sector emerged from the pandemic with, as has been noted, £10 billion of Covid-related debt. ONS data shows that 6.6% of hospitality firms reported that their debt repayments exceeded 100% of their turnover in July 2023, which is above the economy-wide average of 1.9% and up from 5.1% in May 2023.
Operating costs reached record levels in 2021 at 55.2%, compared with 52.5% pre pandemic. Industry data suggests that, while turnover was up 6.7% in the last year to £137 billion, when compared to 2019 it remains almost 20% behind in real terms when accounting for inflation. Following the withdrawal of Covid-related government support in autumn 2021, the number of hospitality business insolvencies has steadily risen, as my noble friend Lord Smith noted. According to Insolvency Service data, hospitality insolvencies in the six months to July 2023 were 58% higher than the 2019 average, as cost pressures place significant demand on profit margins. I think that makes a clear economic case for the reasons and rationale behind doing this now.
A number of noble Lords asked about our long-term plans and ultimate goal, which is to create a unified pavement licence that includes licensing consent for the consumption and sale of alcohol in the outside pavement area. The Home Office is working on a permanent solution in conjunction with the Department for Levelling Up, Housing and Communities, which is responsible for pavement licensing. While related to these regulations, this is ultimately a separate issue that will be worked through over the coming months. I hope that noble Lords will understand that I cannot discuss that work in any detail at the moment, but I very much noted what my noble friend Lord Hayward said about the experience of the Lionesses and will make sure that that is passed back, in particular what he was saying about how common sense prevailed.
My noble friend also mentioned licensing extensions in relation to that situation. As he noted, extensions of licensing hours support communities who wish to come together to celebrate events, particularly those of national importance, by enabling hospitality venues to open for longer. We are looking at how best to streamline that process for such extensions and will continue to do so.
I understand that any relaxation of licensing law naturally results in concerns about potential crime and disorder, but I can provide your Lordships with considerable reassurance on this point. We have consulted the National Police Chiefs’ Council about the effects that the temporary off-sales permission has had. The view of the police is that the temporary off-sales permission has not caused any clearly identifiable increase in crime and disorder.
On concerns raised about premises whose irresponsible approach to off-sales leads to anti-social behaviour, I refer the Committee to Section 76 of the Anti-social Behaviour, Crime and Policing Act 2014, which provides councils and policing with powers to issue a closure notice if there are reasonable grounds that
“use of a particular premises has resulted, or … is likely … to result, in nuisance to members of the public, or that there has been, or … is likely soon to be, disorder near those premises associated with the use of the premises, and that the notice is necessary to prevent the nuisance or disorder from continuing, recurring or occurring”.
I hope that answers the point from the noble Baroness, Lady Finlay, about crime and the powers that are already available to have an effect on the grant of these types of licence.
Concerns were also voiced about the off-sales permission leading to excessive noise late at night. The temporary off-sales permission is limited to the hours of on-sales permitted by the licence, with the cut-off at 11 pm. That applies to all premises that receive the permission. Furthermore, should issues of noise and nuisance arise from off-sales of alcohol, environmental health officials can seek an expedited off-sales review. Within 48 hours of an application for such a review being made, the licensing authority must consider whether interim steps are necessary to prevent further problems. Those interim steps may modify the licence conditions, suspend the off-sales permission or exclude the off-sales permission altogether. A review hearing within 28 days has the same option. So there are plenty of safeguards that are sufficient to ensure that problems of noise and nuisance are quickly tackled.
The noble Lord, Lord Addington, asked me about broader work to tackle alcohol-related harms. Preventing alcohol-related harms requires a sustained commitment from across government, but also from local authorities, the police, health partners—to which I have already referred—and, of course, businesses. There really is no easy answer to tackling alcohol-related harms. Every part of the system, from early intervention to brief advice, treatment and access to criminal justice powers, has to work together. We have an ambitious programme of work in train across departments to tackle these harms and I am sure that we will respond to them in due course.
My noble friend Lord Bourne raised some very good points in his question about the lessons learned more broadly from Covid. I am not in a position to guarantee him the debate that he seeks, although I think it is a very good idea, but I point to the way things are changing at pace. I happened to read an interesting article in the Times this morning, which talked about working from home and how, apparently, a majority are now working back in their offices— I believe that that was from Hays, the employment agency. That should be good news for the sort of hospitality services that we are talking about, but I accept and respect the point he made about the fact that society changed in many ways that we ought to spend more time considering, particularly regarding the overall volunteering principle and the civic responsibilities that so many people embraced. Those were good points and we should return to them.
I have spoken enough and answered as many questions as I can. I cannot make any commitment on the agent of change principle, which my noble friend Lady McIntosh asked about, but it is a broad-ranging consultation and work is being done across government on it. I have no doubt at all that it will be considered.
As I said, the hospitality industry is at the heart of many of our communities. It is vital to our economy, as evidenced by the numbers I read, provides employment and boosts tourism. We have to do all we can to ensure it recovers from the effects of the pandemic. The modest extension will allow businesses to continue to benefit from these measures while steps are taken to put in place a long-term solution. I hope that will meet the needs of all interested parties. Therefore, I commend the regulations to the Committee.