Practice Note 12/1: Licensing in relation to the sale of alcohol and related activities
The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.
The Licensing Act 2003 establishes a single integrated scheme for licensing premises in England and Wales that are used for the sale or supply of alcohol, to provide regulated entertainment, or to provide late night refreshment. Permission to carry on some or all of these licensable activities is now contained in a single licence — the premises licence — replacing several different and complex schemes. Responsibility for issuing licences now rests with local authorities, specifically London boroughs, Metropolitan boroughs, unitary authorities, and district councils, who took over this power from the Justices of the Peace. These authorities are each required to establish a Licensing Committee, which acts in a quasi-judicial capacity under the Act. The powers of the Act came fully into force at midnight on 24 November 2005.
Under the 2003 Act, permitted hours were scrapped, as was the concept of ‘drinking up time’, in the hope that a more relaxed and flexible approach, with premises staggering closing times, would ensure that police resources would no longer have to be concentrated at a universal fixed closing time. The objectives of the Licensing Act 2003 are the prevention of crime and disorder, public safety, prevention of public nuisance and the protection of children from harm.
Businesses, organisations and individuals who want to sell or supply alcohol in England and Wales must have a licence or other authorisation from a licensing authority - usually a local council. The law and policy governing this area is overseen by the Home Office.
In the Licensing Act 2003 ‘alcohol’ means spirits, wine, beer, cider or any other fermented, distilled or spirituous liquor, but does not include:
(a) alcohol which is of a strength not exceeding 0.5% at the time of the sale or supply in question,
(b) perfume,
(c) flavouring essences recognised by the Commissioners of Customs and Excise as not being intended for consumption as or with dutiable alcoholic liquor,
(d) the aromatic flavouring essence commonly known as Angostura bitters,
(e) alcohol which is, or is included in, a medicinal product, or a veterinary medicinal product,
(f) denatured alcohol,
(g) methyl alcohol,
(h) naphtha, or
(i) alcohol contained in liqueur confectionery.
For the purposes of the Licensing Act 2003 the following are licensable activities:
(a) the sale by retail of alcohol,
(b) the supply of alcohol by or on behalf of a club to, or to the order of, a member of the club,
(c) the provision of regulated entertainment, and
(d) the provision of late night refreshment.
The types of businesses and organisations that need alcohol licences might include:
- pubs and bars
- cinemas
- theatres
- nightclubs
- late-opening cafes
- takeaways
- village and community halls
- supermarkets
The types of licences required are defined as follows:
- any business or other organisation that sells or supplies alcohol on a permanent basis needs to apply for a premises licence
- anyone who plans to sell or supply alcohol or authorise the sale or supply of alcohol must apply for a personal licence
- qualifying members’ clubs (such as the Royal British Legion, working men’s clubs and rugby clubs) need to apply for a club premises certificate if they plan to sell or supply alcohol
To apply for a licence, an application form must be completed and sent to the local council, along with the fee. Copies of the form (depending on the type of application being made) should be sent to the police and other ‘responsible authorities’.
A premises licence authorises the use of any premises (which is defined in the Licensing Act 2003 as a vehicle, vessel or moveable structure or any place or a part of any premises) for licensable activities as defined in section 1 of the 2003 Act.
A personal licence is not required to be employed in a pub or other business that sells alcohol. However, premises licensed to sell alcohol must have a designated premises supervisor (DPS), who holds a personal licence. The one exception is a community premises that has successfully applied to waive the DPS requirement under section 41D of the act. Anyone who does not hold a personal licence must be authorised to sell alcohol by a personal licence holder. There is no such requirement for the supply of alcohol in a members’ club.
Personal licences permit the sale of alcohol on behalf of any business that has a premises licence or a club premises certificate. The personal licence is designed to ensure that anybody running or managing a business that sells or supplies alcohol will do so in a professional fashion. Once a person has a personal licence, they can act as the designated premises supervisor for any business that sells or supplies alcohol.
Members’ clubs can operate under club premises certificates instead of premises licences. This means, for example, that they are not required to have a designated premises supervisor, and sales of alcohol do not need to be authorised by a personal licence holder.
To be classified as a club for the purpose of this certificate, a group must meet several conditions. These include:
- legitimacy - each applicant must be a real club with at least 25 members
- a membership process that takes at least two days between application and acceptance
- alcohol must not be supplied on the premises other than by the club
- alcohol must be purchased by a committee made up of members all of whom are at least 18 years old
- alcohol for the club must be purchased legally
Other legal restrictions for clubs operating under a club premises certificate are in the Licensing Act 2003.
The Licensing Act 2003 (Mandatory Conditions) order 2014 banned the sale of alcohol below the cost of duty plus VAT.
The remaining mandatory conditions are set out in the Licensing Act 2003 (Mandatory Licensing Conditions) (Amendment) Order 2014:
- a ban on irresponsible promotions
- mandatory provision of free potable (drinking) water
- adoption of an age verification policy
- the mandatory provision of smaller measures
Part 8 of the Licensing Act 2003 significantly extended the existing powers of the police (a) to seek court orders to close licensed premises in a geographical area that is experiencing or likely to experience disorder; and (b) to close down instantly individual licensed premises that are disorderly, likely to become disorderly or are causing nuisance as a result of noise from the premises.
These powers are available in relation to premises licensed for the provision of regulated entertainment and late night refreshment and to premises for which a temporary event notice has effect.
On 6 April 2007, the Violent Crime Reduction Act 2006 amended Part 8 of the 2003 Act to insert a new offence of persistently selling alcohol to children and related closure powers where there is good evidence that a premises licence holder has committed this offence.
The objectives of the Licensing Act 2003 were felt not to have been fully achieved and to the Police Reform and Social Responsibility Act 2011 introduced stricter provisions to control licensing.
It will now be more difficult to obtain a new premises licence because objections can now be made by bodies regardless of where they are located rather than previously where only those located in the ‘vicinity’ were able to object. Primary Care Trusts and local health boards are set to join the likes of the police and environmental health by being able to object to applications.
The same principle will also apply to variations to existing premises licences (for example, to increase hours or add permitted licensable activities). The chances of an application receiving a representation will also increase as Reducing evidential burden.
Not only will more applications proceed to a licensing subcommittee hearing to be determined, but the likelihood of an application for a new premises licence/variation being refused is also set to increase. At present, licensing subcommittees have to take action that is “necessary” to promote one or more of the four licensing objectives: the prevention of crime and disorder; public safety; the prevention of public nuisance; and the protection of children from harm. However, the Act substitutes “necessary” for “appropriate”. This could result in more speculative findings by licensing subcommittees since it provides them with greater freedom and flexibility when considering applications.
Since the introduction of temporary event notices (standalone licences that permit licensable activity to be carried out for a period of up to 96 hours), they have proved extremely useful to operators that wish to remain open later for up to 12 occasions a year. At present, provided that the police have no concerns, a pub, for example, may obtain a temporary event notice to extend its ability to sell alcohol from midnight to 3.00am to accommodate a birthday party. Even if the police do object to such extensions, much to the chagrin of residents that reside near licensed premises, this can only be on the grounds of crime and disorder. However, the Act will in future permit environmental health officers, in addition to the police, to object on any one of the four licensing objectives.
Therefore, issues of noise and nuisance will become relevant that could put pay to late night revelry which, although not causing actual crime and disorder, is still a nuisance to those living nearby. The licensing authority may impose conditions on the notice if it considers it appropriate for the promotion of the licensing objectives. In one of the few concessions to the industry, the number of temporary event notices permitted per premises per year is to rise to 21 and these will be able to last a week. The Act also introduces the possibility of ‘short notice’ temporary event notices by giving five rather than 10 working days’ notice, thus reducing the risk of having to cancel pre-arranged events due to an operational administrative oversight.
The government’s continued commitment to reducing underage drinking is reflected in the doubling of the maximum fine for persistent underage sales to £20,000 and closure notices (whereby licensed premises have to close for certain periods of time) being imposed on premises that persistently sell alcohol to children will range for periods from 48 to 336 hours – a sufficient period to destroy a licensed premises goodwill.
The payment of fees is a common gripe for operators and local councils alike with both sides suffering acutely from the economic downturn. However, it would appear that, at least in the short term, local councils are to be the winners. The Act will permit them to set their own fees based on full cost recovery (subject to a cap that has yet to be decided). It will also become more costly for operators that wish to open into the early hours as local authorities have the option to charge premises a “late night levy” partially to fund the additional costs of policing in order to reduce crime and disorder between the hours of midnight and 6am. The amount of such fees will be set by regulation.
The above measures will have the greatest effect in large towns and cities. It will become increasingly difficult to convert premises into licensed establishments and those already existing will have to be extremely careful to ensure that they uphold the licensing objectives at all times to ensure that they can remain open. This, coupled with the increased costs, will no doubt make it even more difficult to lease large city centre premises for late night use due to the risks associated with operating in the late night entertainment sector.
Although the Act is set to hit the trade, it could have been worse. Certain initial proposals have been watered down or abandoned following amendments from the Lords and lobbying. Having said that, it is only when the regulations to the Act are published next year that the true extent of the reforms will become clear. As they say, the devil is in the detail.
Early morning alcohol restriction orders (EMRO) enable a licensing authority to prohibit the sale of alcohol for a specified time between the hours of 12am and 6am in the whole or part of its area, if it is satisfied that this would be appropriate for the promotion of the licensing objectives. EMROs are designed to address recurring problems such as:
- high levels of alcohol-related crime and disorder in specific areas at specific times
- serious public nuisance
- other instances of alcohol-related antisocial behaviour which are not directly attributable to specific premises