Late Night Levy (Application and Administration) Regulations 2012

Baroness Smith of Basildon Excerpts

Monday 8th October 2012 Grand Committee

[Baroness Hamwee]

My Lords, during the passage of the Act we debated the inflexibility regarding the fact that the levy, if it is applied, applies only to a whole local authority area, notwithstanding that the area is most unlikely to be homogenous. Few local authorities comprise only town centres; in fact, I am not sure that any do—I cannot think of any. Few local authorities comprise only rural areas. Open areas include suburbs, and they are very different from the central entertainment district area. Indeed, town centres in the same local authority area can be quite different. However, that is a matter of history—living history, to be sure, but it is fixed.

I understand that work has progressed and continues to progress on the exemption categories, and that is welcome, but exempting by type rather than geography does not deal with all the issues. One possible category floated during the consultation was “business improvement districts”, but Birmingham has been mentioned to me as having seven or eight BIDs, only two of which focus on the night-time economy, so it is not possible there to look at all the BIDs as if they raise the same issues.

I was quite startled to see that the number of responses to the consultation mentioned by the Explanatory Memorandum was 631, so I went on to the Home Office website—our old friend—to see what the Government’s response was to this. The first response from the website was, “There are too many pending search requests”. The noble Baroness, Lady Smith, looks as if she had a similar experience. I do not want to keep on whingeing but it is worth putting on the record that these things are noted. I rather doubted that the problems were a result of all the people who were planning to speak in this debate. I do not know whether the issue was too many requests overall or just to a particular part of the site, but the problems with the Home Office website are still being felt. However, I eventually got through and I am glad that I did because, to put the positive point, I could see that a lot of work had been done by the Home Office in pursuing the detail of these regulations and their application. With regard to BIDs, the government response indicates that we will have to await guidance on the eligibility of particular BIDs for exemption.

Given the concern not to have local authorities exercising their judgment over whether particular premises are operated responsibly, I was interested that premises within a business improvement district may be exempt if the BID has,

“a satisfactory crime and disorder focus”.

I am interested in how that judgment is to be made and in the point about discretion. Community premises must not only have had the designated premises supervisor requirement removed but have,

“demonstrated that they operate responsibly”,

which again seems to require a judgment by the local authority. I welcome the discretion given to licensing authorities in this area, but I wonder at the rather patchy provision for the application of that discretion.

On more specific points regarding the regulations—I warned the Minister that I was going to raise these points—under Regulation 7.3, the licensing authority has a discretion with regard to the reduction when the late-night authorisation lapses or is prohibited. Why should it have a discretion? Secondly, in Regulation 4.2, premises under construction are to go into one specific band, band C, apparently regardless of size. I would be grateful if the Minister could explain the thinking behind this. I would have thought that there would be a valuation and the attribution to a band after construction and before the premises were operating, so I do not understand the need to attribute a band when premises are under construction if they are not operating, nor why it should be the same band. There is no cost of the sort which the late night levy is aimed at meeting—no night-time economy cost.

Thirdly, under Regulation 4(4), when there are two or more hereditaments, the rateable value is not the aggregate, which would seem to be a common-sense response to that. However, I am sure that there is some more sophisticated thinking behind that. The noble Baroness ended by saying that she hoped that noble Lords would accept that this was a proper way to implement the provisions of the primary legislation. I certainly assure her that for my part I do.

[Baroness Smith of Basildon]

My Lords, I welcome the noble Baroness, Lady Stowell, to her new responsibilities. If the change from her previous responsibilities was done in an attempt to avoid my questions, I must commiserate with her as I think that we will face one another across the Dispatch Box on a number of occasions. I welcome her to her new position as she always takes great care to look at and respond to issues raised by noble Lords. I am grateful to her for her explanation of these regulations as I wish to raise some concerns and questions with her.

Few could disagree with the necessity of trying to find ways to support a safe night-time economy and take action against irresponsible drinking, which is a serious nuisance to others and can deter people from using other facilities in the evening, as the noble Baroness will understand. It is a hard issue to tackle. The previous Government looked at the establishment of alcohol disorder zones, which the noble Baroness tactfully did not mention, but that did not achieve the desired result. I have concerns around the detail of these regulations and wonder whether they will make a significant difference. Even the Government’s own impact assessment identifies a serious risk that they will not be used very much. Of the 349 licensing authorities in England and Wales, the Government’s own impact assessment gives a best estimate of 16 and a likely range of between eight and 40 using early morning restriction orders, so there is a question mark over how effective these measures will be if they are not used very much. The impact assessment also estimates that the loss of late-night alcohol sales in the area affected by the EMRO is a net total of £9.3 million but says that this is subject to considerable uncertainty. That makes me question whether the measure we are discussing is all that it is cracked up to be. Will it do the job that needs to be done? I am not necessarily criticising the measure. I merely ask that question as I recognise how difficult it is to address this issue. As the noble Baroness said in her opening comments, the measure is only a tool that can be used by local authorities if they wish to do so.

I wish to raise a number of questions. Given the uncertainty reflected in the impact assessment, to which she has referred, I welcome the Government’s commitment to review the operation of the regulations and the levy. I experienced problems trying to access information on the Home Office website. Unfortunately, we will frequently return to that point. Over the weekend I was not able to access the Government’s response to the consultation. However, I was able to ascertain that the Government intend to review and assess the levy after a minimum of five years. I welcome that commitment to review the operation, which is a positive step forward. However, a minimum of five years could mean that it is reviewed in 10 years’ time. What timescale does the Minister envisage we are talking about before a review takes place?

The Government have responded to the LGA and ACPO submissions to the consultation. The two bodies questioned the 30/70 split. The Local Government Association was concerned about the admin costs. It said that if there is a 30/70 split, with 30% of the revenue going to local government and 70% to the police, admin expenses would of necessity come out of the 30%. I want to clarify that because my understanding of what the noble Baroness has said is different from my understanding of the relevant documentation. My understanding was that the Government had accepted the representations from the Local Government Association that the 70/30 split would be net and that the admin expenses would be taken out prior to the 30/70 split, not out of the 30%. If the Minister could clarify that, that would be helpful. That creates a problem, because it was said at the beginning that the police would get at least 70% of the amount. Now it is going to be 70% of the net amount—less than 70%—it having been said that it would be at least 70%.

It would be helpful if there was some guidance on what would be reasonable expenses to come out of the levy. What can local authorities expect to be able to identify as reasonable charges? It would clearly be unacceptable if one local authority was charging five or 10 times as much as another on admin before the money taken by the levy was spent on services such as the Minister identified. Will there be any guidance on what are reasonable admin expenses, will that information be published and will there be any monitoring of how the money is spent on both admin and the provision of services?

I think that what the Government are seeking to address is that both local authorities and the police incur additional expenditure when there are problems caused by late-night drinking and anti-social behaviour. Publication and complete openness about where the money is spent would be useful for those businesses which will be paying the levy. They are currently already paying licensing fees and council tax, which they have been told for many years includes a proportion for the police. If the expenditure figures are published, it will be clear to them why the additional tax is needed—or otherwise.

One reason why I ask for that is that we are all aware of the financial pressures on local authorities and on the police. The danger is that the levy will not be an additional source of revenue for local authorities or the police but one to make up revenue that they have lost where they have cut services, so that it will be not new but replacement expenditure.

Judith Woodman is a councillor in Cardiff who in March was the deputy leader of Cardiff Council with responsibility for community safety. Over Christmas, they conducted something called Operation Mistletoe in conjunction with the police. She said how fantastic it was and that she wanted it to continue, but that it came at a cost. With further cuts to follow to the council’s budget, she could not say that they would definitely be able to carry it on. That is why, she said,

“the Late-Night Levy might prove very useful for us”.

So she is saying that this is not a new initiative that the late-night levy will fund; it is replacement expenditure for something that is to be cut. I am concerned that all businesses in the council area will be paying for something caused by a few when everybody is already paying.

In Essex, by 2014, my local police force will be losing one in 10 of our frontline officers. The previous Minister, the noble Lord, Lord Henley, said that the Government were introducing the levy for a clear and specific purpose, but if it is a success and money comes in, the temptation to plug existing spending gaps will be forced on the police and local authorities. That is why publishing that information and making it easy to access— that means not on the Home Office website—will clarify the justification for the levy: that it will be something extra, not replacement funding.

How many additional police officers does the Minister expect to be employed as a result of the levy? I appreciate that we do not know how many local authorities will be involved, but the Government’s estimate is between eight and 40, expecting about 16. If 70% of the money that comes in will be spent by the police, how many additional police officers can we expect to see employed as a result?

I am also slightly puzzled about the system of exemptions. It seems to apply to all licensed premises that have a late licence between the hours of 12 and six—or whenever the levy applies. What if those premises are open late at night only a couple of times a year on special occasions and for special events, not counting New Year’s Eve, which I know is covered? Say that there are two or three occasions on which they want a late-night licence. Will they be forced to pay in the same way as those that have a regular late-night licence? Will premises that have no history of ever causing problems, which consider that through their licence fees and their council tax they already pay for these services, also be expected to pay? So this concerns those that have an occasional licence to open late and those where there is no history of problems being caused.

The reason why I raise this is that the Minister was very specific in her opening comments about irresponsible licensed premises. My understanding is that the levy would be there to target irresponsible licensed premises but, if I understand correctly what has been said now, it would cover all licensed premises for those specific times when they were open in a council area. Would it include restaurants, for example? Also, if the Minister could say anything about the adjustments to payments in the order, I would be very grateful, because I got completely lost in that part of the order. Some further explanation would be helpful.

--- Later in debate ---

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Baroness, Lady Smith of Basildon, for her contribution, as well as my noble friend Lady Hamwee. I will seek to address the points that have been raised. I start by saying clearly that the late-night levy does not affect any pub or club that is open during standard opening hours—that is, not open beyond midnight. We are talking only about premises that are going to be late-night premises. It is important that I restate that because often, when we get into debates of this kind, when we are talking we quite naturally assume that everyone else knows that this relates only to a specific portion of a particular sector rather than to everyone.

I thank the noble Baroness for her warm welcome. In fact, one of the few things that have not changed in my range of responsibilities in the past few weeks is being Home Office Whip, so in fact I am staying put on this one. It is always a pleasure to face the noble Baroness at the Dispatch Box. I will try to address her points before I turn to my noble friend’s, which cover more specific points of detail, and it might be the simplest thing to take them in order.

The noble Baroness welcomed our commitment to review how the levy worked but asked why we said that we would do so a minimum of five years after it had taken place. To commit now to when we will conduct that review would be premature because we need to see how it operates before we can say that. However, I take the point on board; if the levy is not operating correctly, then we will need to review it sooner rather than later.

The noble Baroness asked about the 70:30 revenue split between the police and the local authority. I can confirm that the cost will be removed from the revenue before that split takes place. As to whether there will be any guidelines, or publication around those guidelines, so that a local authority prescribes costs at a reasonable level, we will specify in separate regulations the type of expenses that may be deducted by the licensing authority. There is a power in the regulations for a limit to be placed on the amount that licensing authorities can charge for certain administrative costs under the late-night levy, and this would be used only if it became clear that there was widespread overcharging of expenses by the licensing authorities.

I understand the noble Baroness’s wider point concerning transparency in how the money is spent, and people will want to see that. With regard to the use made by the police of the money they receive, I would expect the local police and crime commissioners, once they are in place and as part of their responsibility to make public how the police budgets are being used, to include some reference to this. However, that will obviously be a matter for them.

The noble Baroness, Lady Smith, asked how many police officers will be employed as a result of the late-night levy. It is not possible for me to be specific on that but I would reiterate a point that I made earlier. While, as I have said and she has acknowledged, the late-night levy is being introduced as a way of contributing to a range of measures to tackle late-night binge-drinking and all its effects, we are not expecting it to cover all policing costs around the late-night economy. It will make a contribution.

The noble Baroness asked about premises which are not currently open between midnight and 6 am, or which may want to take advantage of the window that will be open to them. Some establishments may decide to change their opening hours in order not to be caught by the levy, and there will be an opportunity for them to do so without incurring any costs. However, if there are premises whose licences allow them to open only prior to whatever time period the local authority decides to introduce, they will be able to apply for temporary extension notices for occasional events, as they do now.

[Baroness Smith of Basildon]

In those circumstances, I assume that they would not have to pay the late-night levy.

[Baroness Stowell of Beeston]

That is correct. The noble Baroness asked who is covered by the exemptions—a point also referred to by my noble friend Lady Hamwee. For the sake of accuracy, it is worth saying that the exemptions and reductions are not covered by these regulations; they are part of another set of regulations. However, the noble Baroness asked whether restaurants in particular would be exempt. A restaurant selling alcohol that was open during the period during which the local authority deemed the late-night levy would apply would be caught by the levy. However, excluded under the exemptions would be a hotel with overnight accommodation whose bar was open only to residents during the period of late-night levy that might be operational in another part of the authority. That hotel would not be caught.

My noble friend asked about exemptions. As I said, those are not strictly covered by these regulations, but I think that one of her points was to question why the exemptions are not by geographic area but by types of establishment—perhaps expressing her disappointment is a better way to define it. That is because it would be very difficult for the licensing authority to introduce the levy in that way. One of the things that we are trying to achieve is to make sure that this is the least burdensome that it can possibly be in terms of administrative cost. If a venue operating in a part of the licensing authority was caught by the levy charges, had opened in that levy’s time and had attracted any kind of policing need, policing costs would be involved by the very nature of the police probably having to leave the town centre to go to that area. However, there are specific exemptions, as my noble friend acknowledged. Venues such as country village pubs would fall under that heading.

The noble Baroness asked about the business improvement districts and how in particular they are caught by the exemptions. These matters are not the subject of the regulations today but we have made provision in separate regulations that business improvement districts with a crime prevention objective will be capable of being exempt from the levy, which addresses her concern on that. She also asked whether the licensing authority would have discretion on community premises. The authority will not have to make a new decision on community premises because they are already defined as a group of premises under the Licensing Act. If somebody’s premises fall under that heading, they are already identified as being premises of that kind.

Before I turn to the detail of my noble friend’s questions, the noble Baroness, Lady Smith, asked how many authorities we expect to introduce the levy. I think I am right in saying that the number she was referring me to was actually for the EMROs. As far as the late-night levy is concerned, we expect about 94 licensing authorities to take advantage of it.

As to the specific questions raised by my noble friend on why the licensing authority has discretion under Regulation 7(3), we believe that licensing authorities should have the discretion to adjust a holder’s liability if the licence is surrendered—for instance, because the licence holder ceases to trade. There is good reason for this. The availability of such discretion reflects the fact that the circumstances in which a licence holder may surrender the licence will vary considerably from case to case. For instance, a licensing authority might choose to exercise this discretion where the surrender is as a result of the licence holder suffering a long-term illness, but not in a case where a licence holder surrendered the licence in anticipation of it being revoked at a review hearing. We believe that it should be open to a licensing authority to decide that holders whose licences are revoked for contravening the licensing objectives should not be eligible for a reduction in their liability to the levy.

My noble friend also asked why premises under construction are to go into band C—a single band regardless of size—in Regulation 4(2). Premises that have a rateable value will be placed in the appropriate band. Regulation 4(2) addresses only those cases where there is no rateable value. Some premises, such as public parks or agricultural land, are exempt from rating. Where this is the reason that there is no rating, the premises are treated as being in the lowest band, band A. Where the premises have no rateable value because they are under construction, the premises are placed in band C.

Finally, my noble friend asked why, when there are two or more hereditaments, the rateable value is not the aggregate. The use of the higher band in Regulation 4(4), as opposed to the aggregate, is intended to reflect the way such a case would be treated under the current fees regulations as a matter of administrative convenience. It should be noted that this is expected to be a rare and temporary circumstance. Where there is identity of occupation, the premises will form a single hereditament.

I think I have covered the points that have been raised today. In conclusion, the levy is a key part of our work to rebalance the Licensing Act in favour of local communities. I am sure the Committee will agree that it is right that those businesses that benefit from selling alcohol late at night should make a reasonable contribution to late-night policing costs.

I am grateful for the support that has been voiced today by noble Lords.