Licensing Act 2003: Post-Legislative Scrutiny (Licensing Act 2003 Report)

Lord Smith of Hindhead Excerpts

Wednesday 20th December 2017 Lords Chamber

[Lord Smith of Hindhead (Con)]

My Lords, it was an honour to serve on the Licensing Act Select Committee under the chairmanship of my noble friend Lady McIntosh of Pickering. I refer to my various interests as set out in the register—in particular, as the CEO of the Association of Conservative Clubs and, more recently, as the chairman of Best Bar None, a Home Office-backed scheme that works with licensing stakeholders to promote responsible alcohol consumption and higher professional licensing standards.

The Select Committee’s report was widely regarded by the industry and applauded in the licensing media as both fair and relevant. Today, I would like to limit my contribution to a total of four topics raised within our report where I consider that the Home Office response could have been more positive, but I shall do so as promptly as possible due to the restrictions of time.

I think it would be useful to underline that the Licensing Act is the legislative backbone of the hospitality industry, which is the third-largest private sector employer. Three million jobs are directly supported through “hospitality UK”—that is, 9% of all UK employees. If we take out from that figure the statistics relating solely to eating and drinking, our pubs, clubs, bars and restaurants generate £63 billion turnover each year, returning a third of that in taxes and funding vital public services. In fact, one in three of all new jobs created last year were created by the eating and drinking industry.

Turning to my first point, I believe that the late-night levy effectively remains a form of additional taxation on some businesses which operate during the evenings and night time. The fact that since its creation in 2011 only nine of the 350 local authorities in England and Wales have introduced a late-night levy, while 13 others have issued consultations on it but have not subsequently introduced it, makes me really wonder why the levy has been kept, particularly as councils are obliged to spend their 30% late-night levy share on tackling alcohol-related services connected to the management of the night-time economy, whereas the police have no obligation to spend their 70% on any such measures but can in fact spend it on anything of their choosing. This simply does not seem fair to me.

I wish to make the point that the contribution made by the night-time economy and licensed trade generally already helps to pay for the police and other public services either directly or indirectly through tax, business rates and high-street spend. I would also like to point out that much of the alcohol consumed during the evening, or preloaded before the evening, is purchased from the off-trade supermarkets and convenience stores, which contribute little or nothing to counterbalance the effects of late-night drinking, despite the fact that more alcohol is now purchased through the off-trade than the on-trade sector, with possibly one-fifth of all alcohol off-sales now being purchased online. It is astonishing to me that there is not more parity between on-trade and off-trade in terms of regulatory responsibilities and liability. I do not believe that the current late-night levy, even with the suggested amendments, will achieve this. Generally, I believe that we should be wary of adding financial burdens to on-trade premises when night-time economy premises are very often day-time premises as well—hurt them in one respect and you hurt them in every respect.

That leads on to my second point, which concerns a further form of indirect—and, in my view, unfair—taxation of the licensed on-trade by way of the additional fee paid to councils known as the “multiplier”. This increased annual fee is charged to reflect the fact that consumption of alcohol will take place on the premises. The multiplier effectively doubles or triples the fee paid depending on the rate band. Therefore, for example, the Dog and Duck pub located across the road from a 24-hour supermarket pays, in most cases, a significantly higher annual fee to the council just to maintain its premises licence, even though it is selling a fraction of the amount of alcohol. In our report, we recommend that the fee multiplier should at the very least be extended to supermarkets, but my own view is that, following the case of Hemming, which is also referred to in our report, doubt has been cast over the legality of the fee multiplier as it is currently enforced. It will be interesting to see whether in the future there is a legal challenge on whether the multiplier is in fact lawful.

My third point concerns early morning restriction orders, or EMROs, which were introduced following the repeal of the even less popular alcohol disorder zones. For some reason, EMROs continue to be defended by the claim that aspects of the processes that were identified as problematic have now been addressed. Given that more than two years have passed since these problematic processes have been addressed, with no greater enthusiasm for them, I maintain that EMROs are a draconian measure, fundamentally in opposition to the liberalising spirit of the Licensing Act, impossible to implement and unworkable in practice. As with the late-night levy, I consider that business-led partnership approaches are much more effective. Can the Minister please give these issues some further consideration?

The final point that I would like to make—it is one which stuck out like a sore thumb from the evidence we heard—is that the current appeals system is not working as it should in an industry that is so important to the UK economy. I was pleased that the Government agreed that this too was an area that needed to be addressed, although it would seem that they do not wish to go quite so far as our report recommended. In my view, the beneficial elements of our recommended changes to the current appeals system were: having an expert decision-maker experienced in the field; flexibility and choice of procedure, not necessarily a full re-hearing but possibly an appeal on the papers where appropriate; a dedicated tribunal not competing with a criminal list of cases to get through; decisions as precedents; and time efficiency.

Clearly, however, the best way in which to avoid the need for any appeal is to ensure that councillors sitting on the licensing sub-committees are adequately trained in the subject of licensing. If a person wants to run a pub then they must be trained and qualified to hold a personal licence. The same does not apply for the person granting the premises licence to the property. To me, this seems counterintuitive. It is a matter which could be very easily resolved without having to create something from scratch or break the bank, since there is a lot of expertise in this field which could be harnessed and training already in place that could be adapted.

The Licensing Act 2003 was created before Google, Facebook or online shopping, and is increasingly looking like a cheque book in an online world, with too much emphasis and regulatory liability on the on-trade compared with the off-trade. Whatever the final outcome of our report on the Licensing Act, I hope that our conclusions will at least be a reference point in future years when the subject of licensing is debated. I also hope that it will create a better understanding between those who are tasked with enforcing the Act and those who are obligated to operate under it.