Review of Alcohol Licensing Fees
The aim of the research was to evaluate the current alcohol licensing fees regime and consider the efficacy of other potential structures to inform the Scottish Government’s proposed reform of the fees regime
4 Factual Baseline
4.1 This section sets out some of the key findings that form the factual baseline. The majority of findings in this section come from the online survey of Licensing Boards.
4.2 From the survey of Licensing Boards the total number of Premises Licences held (as at 31st March 2012 in the areas of the 28 Boards that provided responses to this question) was 13,609 - this figure comprised 5,536 Off Sales Premises Licences; 6,571 On Sales Premises Licences and 1,502 Members' Clubs Premises Licences. The average number of each type of Licence across each local authority area was: 198 Off Sales Premises Licences; 235 On Sales Premises Licences and 54 Members' Clubs Premises Licences (28 responses).
4.3 Liquor licensing statistics (Scotland): 2011-12 (a National Statistics publication - http://www.scotland.gov.uk/Topics/Statistics/Browse/Crime-Justice/PubLiquor) stated that there were 16,391 premises licences in force on 31 March 2012. This is the total for all Boards across all 32 local authority areas in Scotland and is thus higher than the figure reported in paragraph 4.2.
4.4 Graph 4.1 shows the number of Premises Licences for Off Sales ranging from 33 in the Western Isles to 1,351 in the City of Edinburgh (28 responses). If Glasgow had submitted a response, it is likely that its figures would have been similarly high.
Source: Survey Question 2
4.5 Graph 4.2 shows the number of Premises Licences for On Sales ranging from 51 in Clackmannanshire to 902 in Highland (28 responses).
Source: Survey Question 2
4.6 Graph 4.3 shows the number of Members' Clubs Premises licences ranging from 7 in the Western Isles to 173 in Fife (27 responses).
Source: Survey Question 2
Case Study about Members' Clubs
Members‟ Clubs do not incur any greater use of resources than other types of licence application, but issues have arisen due to the reduced fees paid by Members‟ Clubs.
An issue raised at the two case study visits and in the scoping exercise visit, and by a number of survey respondents, was that some Clubs have been marketing their premises through press advertising as function venues, something that the Licensing Boards are trying to discourage. Members‟ Clubs can decide on the content of their own constitution and set out how many visitors each member may sign in - this could be 100 or 200 members, if they so wished. Cases like this mean that Members‟ Clubs are sometimes perceived to be operating on a commercial basis, some with turnover arguably higher than some pubs. Members‟ Clubs pay reduced fees and this is seen by some as unfair when they are generating considerable income. The licence fee is disproportionate to the income in these cases, although some Members‟ Clubs will not operate in this manner.
Another point raised was that Members‟ Clubs are not required to have a Premises Manager. This can mean that there is no responsible individual who can be held accountable if problems arise with the operation of the Club.
4.7 A total of 31,812 Personal Licences had been issued up to 31 March 2010, an average of 1,136 per local authority area. Graph 4.4 shows the range stretching from a low of 217 in the Western Isles to a high of 5,881 in City of Edinburgh (28 responses).
Source: Survey Question 3
4.8 The survey asked for numbers of personal licences as at 31 March 2010 because personal licence holders are required to undertake training every five years and produce to the Board evidence of having done so. In the financial year 2014-15, Licensing Boards will experience a peak in workload in connection with collecting this evidence for all those who gained a personal licence in the first year of operation of the new system, 2009-10.
4.9 Liquor licensing statistics (Scotland): 2011-12 stated that there were 46,701 personal licences in force on 31 March 2012. However, as there is a relatively high turnover of staff in the licensed trade, the number of active personal licence holders is likely to be substantially smaller than this. Licences last for 10 years irrespective of whether they are in use.
Licensing Board Income
4.10 Graph 4.5 shows income received by Licensing Boards in addition to that generated through Alcohol Licensing Fees during 2010/11 and 2011/12. During both years, 26 authorities collected income from Gambling, two received local authority funding, while one collected income from 'other licensing activity' (30 responses).
Source: Survey Question 4
4.11 Income generated from Alcohol Licensing Fees for the 18 Boards that submitted an income spreadsheet totalled £4.66m in 2011/12. About 71% was from annual fees, 18% from variations, transfers and substitutions, 5% from applications, 3% from personal licences, 2% from occasional licences and 1% from other types of licence.
4.12 Of the 18 Boards that returned income spreadsheets, 11 charged the maximum fee for applications and for annual fees, one charged the maximum for applications but less for annual fees, three charged less than the maximum for applications but charged the maximum for annual fees, and three charged less than the maximum for both applications and annual fees. Where less than the maximum was charged, the range was from 65% to 85%.
4.13 Of the seven Boards that did not charge the maximum for application fees and/or annual fees, six made a deficit and one made a surplus.
4.14 Respondents were asked to provide an analysis of their budgets in a format that included separate identification of staffing costs. They were also asked whether this budget included all the costs of staff who were involved in any way in the operation of alcohol licensing. If there were staffing costs over and above those in the budget, respondents were asked to provide information that would enable us to estimate these.
4.15 11 of 28 survey respondents stated that their budgets did include the costs of all staff, although four of these gave information about staff involved in alcohol licensing whose costs were not included in the budget. It would seem therefore that the budgets of seven of the 28 respondents include all staff costs but that in the other 21 (75% of respondents) there are staff costs over and above those included in the budget.
4.16 Within the smaller group of respondents who provided sufficient information to allow staff costs to be analysed (13) there were three with no additional costs, i.e. their budgets included all staff costs. Across the other 10, including the additional staff costs resulted in an uplift of staffing costs of 125%. Across all of the 13 analysed responses, these 'hidden' staff costs amounted to 42% of total resources.
4.17 According to Liquor licensing statistics (Scotland) 2011-12 there were 63.6 full-time equivalent licensing standards officers employed in Scotland at 31 March 2012.
Licensing Board Surplus and Deficit
4.18 Five local authorities reported a surplus on their licensing fees account as at 1st April 2012. In two cases this was held as ring-fenced for the Board, in two others it was used by the local authority. The fifth respondent did not know how the surplus was used. The two respondents whose surpluses were
ring-fenced reported that they were to be used for the on-going administration of the licensing scheme, especially where staff costs were increasing when fees were fixed. One respondent specifically identified the purchase of an improved IT system.
4.19 Seven local authorities reported a deficit, nine stated that the balance was zero and seven respondents did not know. One noted that, if there were a surplus, it would be ring-fenced and would be used on Licensing Policy Statement Consultation, participation in local initiatives, and promoting Licensing Objectives.
4.20 Of the 15 authorities that supplied both income and expenditure spread sheets, 10 did not cover the costs shown in the expenditure spread sheet with fee income, while five appeared to make a surplus. After estimating 'hidden' staff costs, two of these five appeared to have made a surplus overall and another was close to breaking even. One of those that made a surplus charged the maximum for annual fees but less than the maximum for application fees. The others that appeared to be in, or close to, surplus charged the maximum for both applications and annual fees.
4.21 In addition to evidence provided through the spreadsheets, which demonstrates that the majority of those Boards were not covering their costs with their fee income, the results of an internal exercise carried out by a Council that was not one of the 15 to provide expenditure data were also submitted. This demonstrated that their income from alcohol licensing fees covered just 56% of the associated costs.
4.22 To develop an approximate overall deficit figure for Boards across Scotland an estimate of the hidden staff costs was first added to the reported figures for the 15 Boards. This brought the total expenditure of the 15 Boards to £6.1m, which equates to an average of about £673 per premises licence, with a range from £271 to over £1,200. Multiplying this average by the total number of premises licences in Scotland would indicate that total expenditure, across Scotland, was about £9.5m. This compares with a similarly estimated fee income of about £6.9m. Fee income therefore covered about 72% of costs and the overall deficit incurred was in the order of £2.6m.
4.23 Because premises licenses are only part of the work of Boards this method of grossing up is not accurate but it provides an indication of the order of magnitude of the deficit across Scotland. There are also other reasons why these figures have to be treated with some caution. Treatment of overheads such as property costs, IT and other support services varied between Boards. Although they were asked to include an estimate, some Boards were not able to and others expressed some concern about the accuracy of the estimates they had provided. Having fewer than 15 sets of information, some of which were not reliable, did not provide a robust basis for estimating support service costs across other Boards.
4.24 Critically, basing a grossed up estimate for the whole of Scotland on just 15 sets of information, even if those 15 had been entirely reliable, could be open to challenge, especially since some of the larger authorities have not submitted data and have therefore not influenced the results.
Most Resource Intensive Activity
4.25 Survey respondents were asked to indicate which areas of activity were most resource intensive. Each respondent allocated a percentage of overall activity to each of the following categories:
- Applications Premises Licence;
- Applications Personal Licence;
- Applications Major Variations;
- Applications Minor Variations;
- Applications Occasional Licence;
- Applications - all other;
- Annual Fees;
- Attendance at Board meetings;
- Attendance at Court;
- Support to/ attendance at each Local Licensing Forum.
The analysis has shown that the activity most frequently cited as the most resource intensive was Applications for Occasional Licences. This can be demonstrated through the use of cumulative totals as shown in Graph 4.6.
Source: Survey Question 17
4.26 The second most resource intensive activity as shown by cumulative totals was Applications for Major Variations. While no respondents indicated that this was the outright most resource intensive activity, seven respondents indicated it was first equal to another activity.
4.27 The third most resource intensive activity was indicated to be 'Compliance'. Six respondents thought that this was the most resource intensive activity, while two thought it was the second most resource intensive. The remainder of respondents ranked compliance far lower in this respect.
4.28 Those areas that respondents indicated were the least resource intensive were: Attendance at Court, Support to/ Attendance at each Licensing Forum; and Appeals (30 responses).
Meetings of the Licensing Board
4.29 An average of 15 full days each year was said to be spent by each Licensing Board in attending Licensing Board meetings each year. This ranged from 1.5 days in the Western Isles and South Lanarkshire to 15 in both Edinburgh and Fife, and 17.5 in Dumfries and Galloway. Three respondents (Argyll & Bute, Moray and Renfrewshire) only held full day meetings and these ranged from seven to 13 meetings per year; 16 respondents only had half day meetings and these ranged from three (Western Isles) to 35 (Dumfries & Galloway) meetings per year; nine had both half day and full day meetings and the number of meetings ranged from two (South Lanarkshire) to 19 (Edinburgh) per year. There was no evidence of correlation between the number of premises licences issued and the number of Licensing Board meetings held (30 responses).
Source: Survey Question 18
Forward Planning - Workload
4.30 Respondents were asked if they made any future projections of workload - 57% did, 33% did not and 10% did not know (30 responses).
Forward Planning - Financial
4.31 Less than one third of respondents (26%) had a forward financial plan beyond the 2013/14 budget, 54% did not have such a plan, while 20% did not know if such a plan was in place (30 responses).
4.32 Those respondents who did have forward financial planning were asked what they thought the additional workload and costs associated with the five-yearly Personal Licence Holder (PLH) refresher would be. There is no fee for this process so these will be additional costs for Licensing Boards. Five responses were provided covering the following impacts:
- A large urban authority suggested that there would be an additional burden on the Licensing Section because there would be at least 800 PLHs who will be required to notify the Board that they have undertaken refresher training by December 2014.
- Another large urban authority reported that the PLH refresher may involve the use of agency staff and increased costs associated with postage and reminders.
- While one large, mixed urban/ rural authority had a three-year budget plan, the detail for 2014/15 and 2015/16 had not yet been agreed. They were unable to estimate precise costs of letters to 2,200 licence holders but expected the costs to be absorbed in overall running costs.
- One rural authority indicated that tasks will include: statutory notification to licence holders of refreshment requirement, receiving and checking training certificates, updating training records on internal records and national databases, reissue of amended licence.
- An influx of further grant applications for licence holders who do not meet the requirements for refresher training was expected by one rural authority.
Local Licensing Forum Costs
4.33 When asked about annual costs of the Local Licensing Forum (see paragraph 3.5) during 2011/12, 30 respondents completed the question and 29 completed the question for 2010/11. For 2011/12, 15 of the 30 respondents said that this information was 'not known', 'not applicable' or did not enter meaningful data. Of the 15 who were able to provide Licensing Forum costs five were estimates or approximate figures. Licensing Forum costs were shown to range between £261 in a large Board and £24,500 in a smaller Board. Similar levels of responses were provided for 2010/11 and the figures during this year ranged from £322 to £21,000. Based on this data it was not possible to extrapolate total costs across Scotland (29 responses 2010/11; 30 responses 2011/12).
4.34 Of the 15 expenditure spread sheets returned, five stated that their expenditure figures included local forum costs, six stated that they did not, one stated that local forum costs were zero, while one stated that they did not have the information and two respondents did not provide the information.
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