The Government introduced the late-night levy in October 2012, giving councils the power to raise revenue for the cost of policing the night-time economy in their area through charging an additional annual fee to operators permitted to sell alcohol under their premises licence or club certificate for a period between midnight and 6am.
The levy runs from £299 to £4,440, depending on the rateable value of the property and whether the property is used exclusively or primarily for the sale of alcohol. There are a limited number of permitted discretionary exemptions for certain premises and reductions for certain best practice schemes and for low-rated properties.
Currently 10 councils across England have the levy in place – far less than the Government had predicted (80) would opt for the levy. Although across the country as a whole it is fair to say there has not been great enthusiasm for adopting a levy, within the London ‘bubble’ at least the levy has found a home. The last three levies have been adopted by London Boroughs (Hackney, Tower Hamlets and Southwark). On top of that more than half of the total number of levies adopted in England are within London (the others being City of London, Islington and Camden). There may be myriad reasons for this, including the concentration of licensed premises and demands on policing the night-time economy in the capital, and that in a time of reduced budgets for local authorities, in London at least, an additional revenue stream may be a temptation difficult to resist.
Outside London, the levy is more widely spread, with levies being adopted in Newcastle, Liverpool, Chelmsford and Nottingham (Southampton and Cheltenham had a levy in place but both removed the measure and as we know Nottingham are now consulting on doing the same).
In a time of reduced budgets for local authorities you would think an additional revenue stream would be welcomed with open arms, however, on the whole, councils have resisted the temptation. One reason for this is that some councils and licensing officers share operators’ views, considering the power too blunt an instrument which lacks flexibility. It either applies to all relevant licensed premises in the council area or not at all – with significant numbers of operators outside main city centres seen to be unfairly affected and some giving up later hours to avoid the levy as a result.
There is also a feeling amongst operators and trade bodies that this is an unjustified additional cost and there are some challenges with regards to transparency on spending of the revenue.
Use of BIDs over the levy
Many within the trade feel BIDs (Business Improvement Districts) offer a more effective, targeted approach, where businesses are part of developing solutions which can target those areas of greatest concern and needs within a council area.
Importantly, all businesses within the BID area pay towards the BID as opposed to simply those premises licensed for sale of alcohol late at night, which can generate more money as a result compared to a levy. This view is most evident in the case of Cheltenham where the levy was adopted but only collected half the revenue anticipated and was swiftly replaced with a BID (the adoption of the local BID was key in the decision to remove Southampton’s levy).
The pandemic and lockdown
The pandemic demonstrated the current inflexible nature of the levy. Lockdown meant premises were liable to pay the levy even though, for a time, they could not trade at all, since the levy is payable where the licence authorises late night alcohol sales, whether the premises is open or not.
The levy scheme does not provide the flexibility to cater for this unforeseen circumstance because there is no discretion to allow councils to waive the levy and non-payment of the levy results in suspension of the licence under section 55A of the Licensing Act 2003. Notwithstanding this, some councils did take a pragmatic approach to not chasing for the fees or suspending licences during the pandemic with some using local funds to reimburse fees paid.
What next for the Levy?
The House of Lords Select Committee’s report on the Licensing Act 2003 and developments in licensing published in 2017 suggested the levy had “failed to achieve its objectives”, was not an effectively targeted mechanism and perhaps should be abolished or, at the very least, reviewed.
The Government has already made changes to the levy through the Policing and Crime Act 2017, which introduces flexibility to allow councils to ‘localise’ the levy to certain areas rather than applying it to the whole council area, so it is more geographically focused on the perceived source of late-night problems.
The changes also allow the levy to apply to late-night refreshment premises that serve hot food and operate beyond midnight – think your local late-night kebab shop. Yet a few years on, these changes have still not come into force with a Government consultation on the level of charge appropriate for late-night refreshment premises still required.
If the Government retains the levy and these changes come into effect, councils put off by the inflexible nature of the levy may have a renewed interest – even then, whether this ‘levy lite’ will be preferable to BIDs, only time will tell. But until then, appetite for adopting the levy is likely to remain mild at best.
