LGA seeks evidence on licence-fee setting ahead of Supreme Court hearing

The Local Government Association is conducting a survey of local authorities on licence fee-setting as part of preparations for a Supreme Court hearing next year in the Hemming case.

In a recent bulletin Cllr Tony Page, LGA Licensing Champion, said: “We believe this case could have significant, and worrying, consequences for council licence fee-setting if the judgement was that expenditure on compliance and enforcement cannot be included.

“Indeed, we know that many councils have already received letters from businesses seeking the reimbursement of fees they have paid previously.”

Earlier this summer the LGA advised councils to refrain from issuing refunds until the Hemming case has been heard and decided.

It is only at this point that there will be a definitive settlement to the case and it will become clear what the appropriate value of any refunds should be – if indeed any refunds are due, it said.

The Supreme Court is expected to hear the Hemming case on 11 and 12 January 2015.

Explaining the reasons for the survey, Cllr Page said that the Court of Appeal had in 2013 suggested there was little evidence in support of Westminster Council’s claim that the decision to exclude the cost of enforcement activity against unlicensed operators from licence fees would have an adverse impact on councils and other regulators.

The LGA hopes to submit a representation to the Supreme Court’s hearing on the financial impact of the decision on council licensing budgets.

“In particular, we need to put forward robust evidence on the level of expenditure on compliance and enforcement undertaken by council licensing teams, in order to illustrate the potential impact of a decision that would prevent councils from recovering these costs through the licence fee setting process,” Cllr Page argued.

The survey asks councils to respond across a broad range of licensing schemes, given that the implications of the Hemming v Westminster City Council decision are not limited simply to fee regimes covered by the Services Directive.

The Court of Appeal ruling in May 2013 left Westminster potentially having to pay out up to £2m. The council argued unsuccessfully that its fees were unaffected by the Provision of Services Regulations 2009, which transposed the directive into UK law.

The court held that licensing authorities could not charge licensees (sex shop owners in this case) more than the costs of the authorisation procedures themselves. While the costs of the authorisation process, including monitoring compliance of operators, were fairly part of the fee, the costs of enforcement against third party operators were not.

Philip Kolvin QC, the barrister acting for the shop owners, subsequently suggested in his book, Licensed Premises: Law, Practice and Policy (published in June 2013) that while the Licensing Act 2003 (Fees) Regulations 2005 were lawful when they were published in 2005, they became unlawful when the new European laws came into force in 2009.

He claimed that the fees regulations for 600,000+ licences were unlawful.