Local authorities have been accused of acting irresponsibly by charging pubs and clubs excessive fees for public entertainment licences (PEL).
The accusation provides further evidence that local authorities are ill-equipped to handle licensing control and confirms trade fears that shifting control away from magistrates will lead to higher costs, political bias and additional red tape.
House of Lords minister Baroness Tessa Blackstone spoke out at the latest committee meeting claiming that the government has been forced to set licensing fees centrally because of the failure of local authorities.
She said: "Local authorities have had their chance and have failed. We need to provide everyone involved with an assurance that they may not use the licensing system as a way of raising revenue for other purposes."
This is good news for licensees who fear that local authorities will try to charge them additional fees for licences unless they are set centrally.
Research by the Chartered Institute of Public Finance and Accountancy proves that some local authorities are making money out of PEL fees.
It is estimated that between 2000 and 2001, 46,000 PELs were granted at a cost to the trade of £16m.
The cost of administering the licences was only £7.1m - giving a net profit to local authorities of £8.9m.
New licensing fees are expected to be between £100 and £500 and annual charges of between £50 and £100, Baroness Blackstone confirmed. But the government is considering a geographical element to the charges, with pubs in London and the South East being charged higher rates.
There are many concerns among members of the trade that local authority control will lead to massive problems.
Only last week the House of Lords voted to give local authorities extra power to restrict late-night drinking, a move that could put all extensions in jeopardy.
Kill the Bill campaigner Stuart Neame said: "I think Baroness Blackstone has to be warmly applauded for saying that local authority costs are currently excessive and unjustified.
"The government has recognised that local authorities have ripped off the pub trade ever since they got the right to grant PELs.
"The worry is that local authorities see licensing as a chance to rip us off even more."
Mark Hastings, spokesman of the British Beer and Pub Association, said: "We are pleased to see the government has yet again put on record the level of fees they have been discussing with us for some time."
Although fees are to be set centrally other groups are still concerned about the bill, which is due to go on to the report stage in the Lords in mid-February.
Baroness Peta Buscombe, who is leading the Conservatives against the government, has told thePublican.com it is not too late for licensees to make their objections known. She is happy to receive letters as long as they reach her before February 5. Write to: Baroness Buscombe, House of Lords, London, SW1A 0PW.
The Conservative Party is thought to be concerned over the transfer of licensing to local authority control from magistrates.