Fee for all
The change from a national standard licensing fee structure to locally set fees on a cost recovery basis is sure to grab the attention of local authorities and operators alike. Colin Manchester assesses the potential changes.
Fee levels under the Licensing Act 2003 are determined centrally by the Secretary of State and have continued to remain unchanged since they were originally set, but this position may change in due course when s. 121 of the Police Reform and Social Responsibility Act 2011 is brought into force. Under s 121, the Secretary of State has power to make provision through regulations for licensing authorities themselves to determine the amount of a fee payable to them, with a view to them securing full cost recovery from licence fees.
New sections 197A and 197B are inserted into the 2003 Act by s. 121 and these set out the broad framework within which the Secretary of State will enable licensing authorities to determine fees, with the detail to be contained in subsequently enacted regulations. Section 197A(4) makes express provision for regulations to specify constraints on the power of licensing authorities to determine fees and the government has indicated that constraints will include a nationally set cap on fee levels. The licensing authority’s power is likely to extend to fees for all forms of authorisation – premises licences, club premises certificates, temporary event notices and personal licences – and authorities will be able to revise fees from time to time. Fees set can differ for different classes of case, although only when these are specified in regulations.
When determining the fee, an authority must equate fee income ‘as nearly as possible’ to its costs, a difficult task, and this is reflected in the broad measure of discretion given to an authority when for making the assessment of income and costs, which can be ‘in such manner as it considers appropriate’ (s. 197A(7)). Two types of costs can be taken into account, all of the ‘costs referable to the discharge of the function to which the fee relates’ and a ‘reasonable share’ of ‘general costs’ (s. 197A(7)). These costs are further explained in s. 197B(2) and (3) respectively.
The first type of costs is expressed to include the administrative costs of the licensing authority and costs of the authority when acting otherwise than as the licensing authority. Administrative costs will most obviously include costs incurred when dealing with applications, for example, officer time, members’ expenses, any advertising costs, legal advice and appeals, as well as related costs, for example, keeping a licensing register, which authorities are required to do under s 8 of the 2003 Act. These costs are referable to the discharge of the function to which the application fee relates. An authority’s costs when not acting as a licensing authority will include its costs when acting as a responsible authority in relation to areas such as environmental health, planning, and health and safety.
In some cases, the licensing authority may also discharge responsible authority functions of child protection and trading standards, although these may alternatively be discharged by other bodies such as a local safeguarding children board or a county council trading standards department. Where these functions are discharged by the local authority, which may be the case where it is a unitary authority, the costs will fall within s 197B(2)(b) but not where they are discharged by other bodies. Government support for these costs to be taken into account when discharged by other bodies was not forthcoming when an amendment was introduced to the Police Reform and Social Responsibility Bill seeking to include these costs. The lack of support, which led to the amendment being defeated, was on the grounds that the "practical difficulties unfortunately outweigh the benefits" and "would result in substantial extra bureaucracy" (see HLDeb, vol 729, cols 876-880, 14 July 2011).
The second type of costs is general costs and three such costs are specified in s 197B(3). The first is costs referable to the authority's functions under s. 5 of the 2003 Act, which are the costs involved in the licensing authority determining and publishing its Statement of Licensing Policy. The second is costs involved in monitoring and enforcing Part 7 of the 2003 Act on Offences and Part 8 on Closure of Premises. The third is costs incurred by the authority in determining and publishing the amount of licence fees under s. 197A. Not all of the general costs can be taken into account when determining the licensing fee, for s. 197A(7)(b) provides only for inclusion of ‘a reasonable share of the licensing authority's general costs’. What proportion constitutes a reasonable share has been (deliberately) left to the broad judgment of licensing authorities and, provided the share is not regarded as wholly unreasonable in the Wednesbury sense, an authority’s decision should be beyond challenge. Indeed, given that the Government has indicated that locally set fees are based on full cost recovery (see HC Public Bill Committee, col 718, 17 February 2011), it may not be wholly unreasonable to take into account most, if not all, of the general costs.
The costs specified in s. 197B(2) and (3) are not the only costs that might be taken into account when determining licence fees, since the reference to costs in each subsection is expressed to ‘include, in particular’ the ones specified. These subsections therefore provide only a partial definition and costs other than those specified might be taken into account. Licensing authority costs associated with website maintenance and development, for example, might be included within the general costs, although not specified within s. 197B(3). This is, of course, subject to whether regulations preclude the recovery of any specific costs in accordance with the power in s. 197A(4) to specify constraints on the power of licensing authorities to determine fees. The regulations will provide the crucial detail of how expansive or restrictive the power of licensing authorities is to determine fees and it remains to be seen how far they will go towards enabling licensing authorities to secure full cost recovery.
Colin Manchester is a consultant at Woods Whur. He is author of Manchester on Alcohol and Entertainment Licensing Law (3rd Edition), which will be published by Taverna Publishing. Colin can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it..
