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4. Draft Regulatory Impact Assessment for consultation
Title of proposal
1. The Licensing (Fees) (Scotland) Regulations 2007
Purpose and intended effect
(i) objective
2. The purpose of the SSI is to prescribe the framework and levels of fees which licensing boards may charge in relation to the Licensing (Scotland) Act 2005.
3. The SSI will come into force on 1 February 2008.
(ii) background
4. The Licensing (Scotland) Act 2005 represents a major overhaul of the alcohol licensing system. In relation to fees, the Act allows Ministers to make provision for the level of fees to be charged by licensing boards. Latterly around 63% of the total costs incurred by the boards have been covered by income from fees paid by the licensed trade and it is the intention that fee levels for the new licensing regime should be set at a level which fully meets Licensing Boards' costs.
5. The draft regulations propose that the fee which will accompany an application for a Personal Licence fees should be a flat-rate regardless of the area in which the applicant resides, or the Licensing Board to which an application is made. For Premises Licences, the draft regulations propose that both the application fee and thereafter the annual fee should be determined by the rateable value of the premises concerned. Some exceptions to this rule are proposed.
6. The fee levels proposed reflect the research carried out for the Scottish Executive- "Licensing (Scotland) Bill 2005: Proposal and Analysis of Fee Charging Options". The research was shaped by the aims of the Licensing (Scotland) Act to provide a system which creates 100% coverage of Licensing Board costs, promotes equal treatment of fees across Scotland, and does not create a disproportionate burden on smaller business and clubs. The information which formed the basis of the report was comprehensive with all but one local authority providing information on their costs.
(iii) Risk assessment
7. Failure to fully provide for the costs to Licensing Boards of implementing the new regime risks undermining the objectives of the Licensing Act by leaving important innovations such as Licensing Standards Officers under-funded. The absence of any fees, or fees at too low a level, would create a funding gap that would need to be met from other local authority budgets to the detriment of other public services.
Benefits
8. The main benefits will be to the Licensing Boards both through full coverage of their costs and a more predictable income stream which will allow better planning. As the fees will also fund Licensing Standards Officers, there will be benefit to the public at large from the increased and dedicated supervision of licensed premises. The introduction of Licensing Standards Officers should also benefit the licensed trade if it helps to discourage breaches of licence conditions, or premises operating without a licence, with would provide an unfair advantage over those which are law-abiding and well run.
Costs
Personal Licences
9. The basis for calculating the proposed fee to be paid on application for a personal licence is the cost of administrative time and resource that will be used in processing the application and producing the licence. In the research document, this has been calculated at £42 and will recur every 10 years, upon renewal of the licence.
Premises Licences
10. The proposed method of determining the fees payable with an application for a premises licence premises fees is based on the rateable value of the premises. This fulfils the needs for the system to be simple, and, broadly speaking, ensures that businesses which take up more of the licensing board's time and resources pay more. Rateable values:
- are an indicator of business size/turnover
- take into account the location of the business
- are reviewed regularly
- are a known quantity.
11. There is an view that some premises with a high rateable value but which only generate a small proportion of their income from alcohol sales are disproportionately affected by these proposals. The research accepts that this is possible but concludes that the overall benefits of the system chosen far outweigh the disadvantages.
12. The research shows that the vast majority premises (82%) fall into the lowest 3 rateable value categories. Within that, 51% of premises will fall into either category 1 or 2 and will therefore pay application fees of either £100 or £400 and annual fees of either £90 or £110. It is important to note that category 1 contains premises, as set out in regulation 4, which are to be included in the lowest category regardless of their rateable value. For example, registered clubs are automatically included in the lowest category, along with visitor attractions and Bed and Breakfast type establishments where alcohol is only available to guests. This approach is considered proportionate and reasonable. In the case of registered clubs, it stems from a recommendation in the research report.
13. The fees proposed are set out the regulations and can be summarised as follows:-
Fig. 1
Proposed Rateable Value Categories |
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Cat. 1 | Cat. 2 | Cat. 3 | Cat. 4 | Cat. 5 | Cat. 6 |
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*as laid out in regulation 4 | £1 - £11,500 | £11,501 - £35,000 | £35,001 - £70,000 | £70,001 - £140,000 | Over £140,000 |
Fig. 2
Fees for New Applications for Premises Licenses |
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Cat. 1 | Cat. 2 | Cat. 3 | Cat. 4 | Cat. 5 | Cat. 6 |
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£100 | £400 | £550 | £650 | £850 | £1,000 |
Fig. 3
Annual Fees for Premises Licenses |
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Cat. 1 | Cat. 2 | Cat. 3 | Cat. 4 | Cat. 5 | Cat. 6 |
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£90 | £110 | £140 | £250 | £350 | £450 |
14. The application fee is at a higher level than the annual fee because, as the research points out, the costs of processing an application are likely to be higher than the ongoing costs of monitoring compliance with the new licensing system and the running costs of boards after completion of the transition period.
15. The draft regulations provide that the annual fee levels shown above are to be the maximum amounts chargeable - there is an expectation that licensing boards will require to charge the full fees shown above to cover their costs initially, (as anticipated by the research report, but thereafter may begin to benefit from the efficiencies of the new system and be able to pass these savings on to the trade.
16. The regulations also propose other fees payable in relation to certain activities under the Act. The effect of these fees on business will depend upon how many times a business requires the licensing board to consider various issues, for example, how many times it chooses to apply for an occasional licence. The fees proposed are considered reasonable to meet the costs that licensing boards will incur in dealing with these applications and requests.
Savings
17. It is expected that there will be savings to business from the removal of certain renewals required under the current licensing system, in particular:-
- removal of licence renewals every 3 years (£86)
- removal of need to obtain a regular annual extension to hours (£86); and
- removal of need to obtain a children's certificate (£86)
Small/Micro firms impact test
18. The use of rateable values as a determinant of fee level is specifically designed to make the fee proportionate to the size of the business. Small businesses will also tend to have less personal licence holders per premises, minimising the cost arising from personal licence applications and renewals of these licences 10 years thereafter.
Competition Assessment
19 . Since both new and existing premises will have to go through the same process and pay the same fees, the regulations will not be more detrimental to one premises over another and can be considered competition neutral in that respect. As the fees are scaled by business premises' rateable value, which is closely related to business size, it is not thought that there will be a disproportionate effect on either large or small businesses and the cost of the proposed fees will be small compared to the turnover of the business.
Enforcements and sanctions
20. The need for the owners of a premises to pay the application fee is immediate, in that the application will not be processed unless the fee is included. This also applies to personal licences.
21. The requirement to pay the annual premises fee is set out in both regulation 7(1) of the SSI and in schedule 3, paragraph 10 of the Licensing (Scotland) Act 2005. The latter provision ensures that the requirement to pay the annual fee is a mandatory condition of the licence and failure to comply will be dealt with by licensing boards in the same way as any other breach of conditions. Sanctions available include the suspension or revocation of the licence.
Monitoring and review
22. The effect of the regulations will be kept under review. The Executive retains the ability to review the fee levels as it considers appropriate and will do so in consultation with licensing boards and the licensed trade. It is also expected that any findings from Best Value audits of Licensing Boards' running costs will be considered as appropriate in determining fee levels in the future.
Consultation
23. This SSI will be distributed to all key stakeholders for the recommended period of 12 weeks which will allow a sufficient timeframe for all parties to consider the issues in sufficient depth and respond. The Scottish Executive will offer to meet key trade bodies and COSLA to discuss the regulations as part of the consultation process.
Summary and recommendation
24. The Executive considers that the regulations seek to cover the full costs of administration connected to the new system introduced by the Licensing (Scotland) Act 2005 with fee levels which are appropriate to the businesses concerned. It is considered that the regulations are proportionate to the risks involved. It is recommended that the SSI be implemented as described.
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