It comes after the Local Government Association (LGA) claimed a delay to a reform in licensing rules has seen taxpayers spend £1.5 million per month subsidising the drinks industry.
The Government committed to introduce locally set fees as part of the Police Reform and Social Responsibility Act.
The LGA has called on the Government to honour its promise to allow councils to set flexible, cost neutral licensing fees which fairly represent their costs.
It believes that a more tailored approach would allow authorities to set in place licensing arrangements which encourage responsible enterprises, reflect the type and size of venue and can more effectively penalise businesses which flout regulations or encourage anti-social behaviour.
All venues in England and Wales currently pay fixed national licensing charges, depending on the type of application.
However, the LGA said the true cost of licensing – which includes site visits, public consultation, liaising with police, committee hearings, investigating and taking action on breaches - can be several times higher.
Whilst councils are not permitted to make a profit on licensing fees, the LGA believes reforming the system would enable them to recover the actual costs of an application from those who will benefit from it.
Councillor Mehboob Khan, chair of the LGA’s Safer and Stronger Communities Board, said: “It’s clearly wrong that taxpayers are subsidising the drinks industry. Councils want to support good local pubs but cannot be expected to continue picking up the tab for licensing fees which are outdated and not fit for purpose.
“As well as meaning more taxpayers’ money could be spent on frontline services, a more flexible licensing system would help councils support responsible venues which enrich local communities and put pressure on those which encourage excess drinking, noise and high street mess.
“The Government needs to stop dragging its feet and deliver on its promise to allow locally-set fees. It’s costing councils almost £1.5 million for every month which passes without government delivering on its promise. This is money which could be spent on filling potholes, libraries, caring for the elderly and protecting children.”
A Government-commissioned independent review of licensing fees, chaired by Lord Elton, found that between the financial years 2004/05 and 2009/10 there was an estimated deficit of around £100 million, equating to just under £17 million per year.
A Home Office spokesperson said: “The Government has acted swiftly to give local councils much stronger powers to tackle irresponsible premises and cut red tape, including enabling them to charge a late night levy to businesses which sell alcohol late at night to help fund the associated enforcement costs and council spending.
“We have introduced a power for local councils to set licensing fee levels and will shortly consult on regulations governing the fee structure before introducing them in the summer of 2013.”