The Licensing Act and its Implementation: Nanny knows the ‘Third Way’ is best

Dr Adrian Hunt

School of Law, University of Birmingham

a.hunt@bham.ac.uk

and

Professor Colin Manchester

School of Law, University of Warwick

colin.manchester@warwick.ac.uk

Copyright © Adrian Hunt and Colin Manchester 2007.
First published in the Web Journal of Current Legal Issues

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Summary

The Licensing Act 2003 purports to establish a radically different approach to political and legal control of licensing decision making in the United Kingdom. In place of top-down, broad discretion-based decision making which previously characterised licensing, the new regime seeks to be principally rule based, but deregulatory, and has been said to represent applied ‘third way’ methodology. The first licences issued under the new scheme came into force in November 2005, and this article analyses the principal features of the regime, as well as the process of implementing the scheme with a view to exploring the extent to which in practice the new regime lives up to the deregulatory principles which were said to be the basis for this initiative.

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Contents

Bibliography

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Introduction

The Licensing Act 2003 establishes a single integrated licensing regime overseen by local authorities which replaces the previously existing “mishmash” of legislation (Light 2005) which governed provision of alcohol, various forms of entertainment (principally music and dancing, indoor sports entertainments, films and plays), and late night refreshment. The Act deregulates opening hours by permitting licensees to choose when they wish to open, though it does allow local residents, along with the police and other statutory agencies, to object to applications. Furthermore the new scheme standardizes the substantive legal bases for adjudicating upon licensing matters by setting out four objectives which govern licensing decisions, thereby ostensibly removing the broadly-framed discretion which previously dominated licensing decisions. The scheme purports to be a marked departure from traditional approaches to licensing control - which tended to be epitomised by “top down” and command control style regulation - and has been characterised as reflecting New Labour’s ‘third way’ political philosophy. Here the role adopted by the State is typically styled as falling somewhere between the “free-for-all” of neo-liberalism and the overweening intervention of the “Nanny” State (Giddens 1998, 2000; Favretto 2002; McCellan 2004).

This article explains and examines the principal features of the new scheme, as well as its implementation since November 2005. In the first section we look at traditional approaches to licensing control under the previous system and in the second section we examine licensing control under the 2003 Act, proceeding to examine the relationship between the principal features of the new regime and the ‘third way’ as a putative political programme concerning the role of government in British society. In particular, we explore how the new scheme attempts to give precedence to the Government’s deregulatory instincts by establishing an expectation that “decisions” about licensing will be taken by suppliers (e.g. pubs) based on their perception of what the market (i.e. the consumer) wants, subject to intervention only in respect of specific criteria (i.e. licensing objectives) which bear upon the social impact of individual licensed premises. This section also explains how the new regime purports to reflect process-based approaches favoured in ‘third way’ thinking, notably aspirations that institutional design should focus on the process of decision-making, with input from those with an interest in the outcome (so-called “stakeholders”) as well as on the decision-making criteria for determining outcomes. At the heart of this approach is the view that Government and public actors should “steer rather than row” (Blair and Schroeder 1999): that the role of the State and public authorities is to provide a framework for decision-making, rather than dictate substantive outcomes which, it is claimed, are best determined by local stakeholders.

In the third section we examine implementation of the new scheme, proceeding to identify and explore an apparent dissonance between aspects of the scheme’s theoretical and conceptual underpinnings and its practical implementation. It is apparent that tensions may develop between the underlying substantive deregulatory philosophy and the notion that the decision-making process should be driven by local communities. Closer analysis of the scheme’s operation in practice indicates that licensing authorities may adopt strategies which, although lawful, are inconsistent with the “light touch” deregulatory philosophy claimed to underpin the regime. Yet the Government, through its power to issue statutory guidance, has simultaneously sought to direct licensing authorities towards outcomes that are compatible with its prevailing deregulatory market-based preferences, although this is inconsistent with the view that these matters should be decided by local stakeholders. The result is a complex and highly ambiguous site of conflict and interaction between central government, local decision-makers and interest groups which, at best, only partly reflects the principles claimed to underpin the new scheme and, at worst, may significantly diverge from them.

Traditional approaches to licensing control

Licensing schemes have usually been introduced to provide protection for the public in some way (e.g. from disorder or nuisance, or to ensure public safety) and the rationale historically for regulation of activities covered by the 2003 Act was, for the most part, to prevent disorder. This was the main reason for licensing alehouses by an Act of Parliament in 1552 and for licensing public music and dancing under the Disorderly Houses Act 1751 (as is apparent from the Act’s title). Risk of disorder was also the rationale for requiring licensing of refreshment houses under the Refreshment Houses Act 1860 (see Parl Debs, vol 157, col 1308, 26 Mar 1860, where the Chancellor of the Exchequer declared: “The ground on which that proposal is made is that many of these houses are both the receptacles of disorderly characters and the scene of very disorderly transactions”) but not for the licensing of theatrical performances under the Playhouses Act 1736 and film exhibitions under the Cinematograph Act 1909. These were exceptions where the rationale, respectively, was the need to protect public morality and to ensure public safety (as early celluloid films were highly inflammable). Although prevention of disorder was the primary justification originally for regulation, during the 19th and 20th centuries additional justifications emerged. These included prevention of nuisance and disturbance to those living in the vicinity and ensuring premises were safe for those attending, and the rationale and bases for licensing came to encompass a plethora of different justifications. This was especially true for alcohol licensing, where the law

“sought to balance a wide range of views on the morality of alcohol, its effect on productivity and safety at work, its physical consequences, the levels of safety and hygiene necessary in places where it is supplied and the implications of social drinking for public order, crime, neighbourhood/amenity values, families and young people” (Better Regulation Task Force [BRTF] 1998, para 3.1)

Although a range of different justifications for licensing control had emerged, neither the objectives of the different schemes nor the grounds for refusal of licences were specified in the relevant legislative provisions. Considerations regarded as legally relevant to licensing decisions were therefore determined principally by licensing authorities themselves, through their exercise of a broad and largely unfettered discretion as expressed in the relevant statutory provisions e.g. under the Licensing Act 1964, justices could grant a licence “as they think fit and proper”. There was, however, no clear ranking in importance of these considerations and authorities might (or might not) be receptive as to arguments in respect of relevance. For alcohol licensing, in particular, a wide range of factors influenced how justices exercised their discretion and what licence conditions they might attach. Since some of these factors also fell within other regulatory schemes (e.g. safety and hygiene at premises where alcohol was sold were covered respectively by health and safety and food law), exercise of the discretion inevitably trespassed on ground covered by other schemes. At best, this led to unnecessary duplication and, at worst, confusion and uncertainty in the event of conflicting requirements. Duplication was only one instance of over-intrusive regulation and other instances included highly prescriptive requirements for licence transfers and a tendency to attach detailed conditions to licences (BRTF 1998, para 3.3). Further, there was centralised regulation of licensing hours for the sale of alcohol, where “permitted hours” were fixed by statute (Pt III, Licensing Act 1964) and had national application. Although there was some flexibility through the granting of extensions, these operated by individual justification and there was no system of assessment criteria allowing more local flexibility in opening hours.

Furthermore, the courts permitted the justices to exercise their discretion in a restrictive way so as to limit the number of licences, having regard to the legitimate “need” of the population. Therefore licences might be refused if there was no “need” for any additional licensed premises (Sharpe v Wakefield [1891] AC 173), although in more recent years justices were less inclined to exercise their discretion in this way. Restricting the number of licences had certainly fallen from favour with government, with the Conservative’s Deregulation Task Force expressing the view that:

“the State should not intrude on matters of this nature. If there is no ‘need’ for a facility, it will go out of business. Consumers, not the authorities, should decide what premises are needed and where.” (Deregulation Task Force 1995, p 9; and see also Justices’ Clerks’ Society 1999, paras 3.24-3.30)

The hallmark of the previous system therefore was its highly regulated and intrusive approach to regulating licensable activities, with licensing authorities at its centre controlling and directing the activities in question. Although authorities had regard to previous case law as a source of guidance, they were not constrained by any specified licensing objectives and their role was to regulate in accordance with the public interest as they saw it. In doing so, they exercised a largely unfettered discretion to decide the ground rules for regulation. This included raising objections themselves to licensing applications and imposing conditions even in the absence of any objections, in order to address matters which they considered important (R v Howard ex p Farnham Licensing JJ [1902] 2 KB 363).

Licensing control under the 2003 Act

In the mid 1990s it became apparent that there was movement in government to reform the licensing system. The matter was looked at by the Conservative Government’s Deregulation Task Force and New Labour’s Better Regulation Task Force. These groups highlighted the absence of clear statutory criteria governing the exercise of regulatory discretion, the tendency towards over-regulation, the duplication of regulatory effort, and the inconsistency of regulation from one locality to another.

Principal Features of the new regime

The process of review culminated in a Government White Paper (DCMS 2000) in April 2000, which formed the basis for the integrated system of local authority licensing control of alcohol, entertainment and late night refreshment set out in the 2003 Act. Under this system the main form of authorisation for these activities is a premises licence; however, the sale of alcohol on such premises must also be made or authorised by a personal licence holder. Personal licences are “portable” and mutually recognised across the country and throughout the trade, which avoids each licensing district having to satisfy itself afresh as to an applicant’s suitability to hold a licence.

There is clarification of the legal purposes of regulation, with four “licensing objectives” set out in s 4(2). These are prevention of crime and disorder, prevention of public nuisance, public safety, and protection of children from harm. Wide inconsistencies in administration under the previous scheme are addressed by secondary legislation through various regulations (e.g. introducing centralised forms and fees) and statutory guidance issued by the Secretary of State to licensing authorities on the discharge of their licensing functions (DCMS, Guidance, 2004). Uncertainty amongst operators as to how authorities might discharge their functions is addressed by requiring them to draw up, following wide consultation, a Statement of Licensing Policy (SLP), to which they must have regard when discharging their licensing functions. (Licensing Act 2003 s 5(3) and s 4(3)(a) respectively).

'Third Way’ values

The 2003 Act and the new scheme are not merely concerned with eliminating historical anomalies, such as allowing a five-year-old to drink spirits in a beer garden (for other examples, see HCDeb, vol 402, col 56, 24 Mar 2003), streamlining bureaucratic requirements (forms needing completion for licensed premises ranged from over 120 to just a handful), or deregulating opening hours. Rather the new scheme is seen as a flagship or exemplar of core elements of ‘third way’ politics which Tony Blair explained as requiring government to do

“all it can to support enterprise but never believes it is a substitute for enterprise. The essential function of markets must be complemented and improved by political action, not hampered by it. We support a market economy, not a market society … The belief that the state should address damaging market failures [has] all too often led to a disproportionate expansion of the government's reach and the bureaucracy that went with it. The balance between the individual and the collective was distorted. Values that are important to citizens, such as personal achievement and success, entrepreneurial spirit, individual responsibility and community spirit, were too often subordinated to universal social safeguards.” (Blair and Schoeder 1999)

Of course there is much which is not new about such an approach, and many would locate it within developments in governmental processes originating in the privatisation initiatives of the 1980s, and the simultaneous development of the “regulatory state” (Majone1994: Osbrone and Graebler 1992; Ayers and Braithwaite 1995; Scott 2004; Gray and Jenkins 1995; Held 1995; Rhodes 1997). However, the ‘Third Way’ has been explained as not simply postulating a new substantive programme for reconciling the public interest with the market. It also may reflect a particular approach to the process of decision-making, reflected in an emphasis on styles of “governance”, rather than the “government”, which owes much to thinking associated with the developments in theories of New Public Management, and “responsive regulation”. Thus rather than being at the apex, the State’s role is conceived as facilitating stakeholders to find “solutions to problems;” to “steer rather than row”; and to provide a framework where interested parties and civil society arrive at decisions about issues rather than the State directing outcomes in a command and control manner. The emphasis of the approach is on quality of governance, rather than the Government; where the process of interaction between interest groups and government/public decision-makers is the focus of attention, rather than the institutions themselves. As one commentator has noted, “perhaps the Third Way is as much to do with how decisions are going to be made as it is with what decisions finally emerge from that process” (Courouble NEXUS).

Detailed institutional design and the ‘Third Way’

The detailed institutional design of the new regime seems to be constructed with a view to reflecting the substantive and process-based elements of ‘third way’ values just explained. According to the Culture Secretary, Tessa Jowell, the Act sought to walk “the tightrope between liberalisation and laissez-faire”. This was to be achieved by keeping red tape to a minimum, increasing “choice” for consumers and avoiding “well meaning interferences” in people’s lives, whilst at the same time ensuring that the “peace of residents and communities” was safeguarded, and “the vulnerable, the young and the wider public interest” were protected (HCDeb, vol 402, col 52, 24 Mar 2003). The Act and scheme were said to be an example of New Labour’s “coherent moral and intellectual position” on drawing the boundaries between “individual freedom, community interest and state intervention” (Jowell 2004).

Market-based decision-making and the State as facilitator rather than player

Fundamental to the theoretical and conceptual underpinnings of the Act is the fact that the new scheme calls upon operators in the first instance to make market-based decisions about how they wish to undertake licensable activities at their premises. These are to be set out in an “operating schedule” where, for example, public house operators will indicate what areas of their premises they propose to use for the licensable activity of the sale of alcohol and at what hours they propose to do so. Also in keeping with the ‘third way’ approach is the fact that responsibility is upon operators in the first instance to explain in their application what steps they propose to take to promote the licensing objectives. Thus the system purports to proceed on the basis that operators know more than the licensing authority about how their businesses will impact upon licensing objectives, and should first consider and address these issues. The importance of the operating schedule lies in the fact that if no objections (“relevant representations”) are raised on an application, the licence must be granted and matters set out in the operating schedule included as conditions on the licence (Licensing Act 2003 s18(2)).

Indeed, the Guidance (para 5.67) envisages that such applications “must be granted in the terms sought” and that this

“should be undertaken as a simple administrative process by the licensing authority’s officials by whom the proposals contained in the operating schedule to promote the licensing objectives should be translated into clear and understandable conditions consistent with the proposals in the operating schedule.”

This may prove to be easier said than done and may not always be a simple task, as recognised in para 7.15:

“Some applicants … supported by legal representatives or trade associations can be expected to express steps necessary to promote the licensable objectives in clear and readily translatable terms. However, it must be recognised that some applicants will express the terms of their operating schedules less precisely or concisely. Ensuring that conditions are consistent with the operating schedule will then be more difficult.”

Nevertheless, it is clear that the logic of the new scheme is that, if there are no objections, the operator’s market-based judgement should be allowed to stand without interference from the licensing authority. This should ensure no risk of a “disproportionate expansion of the government's reach and the bureaucracy that went with it” (to use the Prime Minister’s words – see Blair and Schroeder 1999). This is a significant change in the role of licensing authorities which previously were not obliged to grant licences even if there were no objections from other parties and which could raise objections themselves. However, now the State in the person of the licensing authority is not, and should not regard itself as, a “player” in the licensing process. As Baroness Blackstone explained:

“[w]hat we are not doing, is allowing the licensing authority to make representations in its own right. One of the fundamental principles of the Bill is that applications should be granted administratively where the experts have not raised any concerns about them. Where those circumstances apply, there is no reason for the licensing authority as regulatory authority to give a second opinion to those experts, and it would be wrong to give it that opportunity.” (HLDeb, vol 645, col 400, 27 Feb 2003)

Constraining the basis for objecting to applications

The twin themes of market-led approaches and State as facilitator rather than player are also evident in the arrangements when objections are made to applications. The Act provides that “relevant representations” can be made by interested parties (residents or businesses in the vicinity of the premises or bodies representing them) or responsible authorities (e.g. police, fire authority). Both restriction of the capacity to make representations and the permissible content of representations are specifically connected with the four licensing objectives. On capacity, the Government explained:

“Judgment of the merit of an application against the licensing objectives should be left to the experts. The experts on crime and disorder, and the protection of children from harm are the police, and so the police have a voice. The experts on public safety are the health and safety and fire authorities, and so they have a voice too. The experts on public nuisance are the local environmental health authority. It follows that they should have a voice too, and the Bill provides them with one. The experts in what it is like to live and do business in a particular area are local residents and businesses ...” (HLDeb, vol 645, col 400, 27 Feb 2003)

By the time the Bill had completed its passage, other responsible authorities with “expert voices” in respect of licensing objectives had been added to those mentioned here e.g. the local planning authority (for full details of those included, see s 13(4)).

On content, representations have to be about the likely effect of the grant of the licence on promotion of the licensing objectives (Licensing Act 2003 s 18(6)(a)) e.g. the police have to be satisfied that allowing premises to be used in accordance with the operating schedule would undermine the crime prevention objective. There are, in addition, other requirements, set out in s 18(6)(b)-(d) and 18(7), that need to be met for “relevant representations” but representations unconnected with the licensing objectives will have no relevance.

Constraining the discretion of licensing authorities

When relevant representations are made, the licensing authority’s discretion is engaged and it must hold a hearing to decide whether to issue a licence at all, and if so, what conditions to apply (Licensing Act 2003 s 18 (3)(4)). Whereas similar decisions were made by justices and local authorities under the old scheme, a rather different role is ascribed here. Regulations governing hearings envisage the authority’s role as referee (or umpire or mediator) seeking to reach a workable resolution of the differences between various competing interests. Thus the Licensing Act 2003 (Hearings) Regulations 2005 provide:

“A hearing shall take the form of a discussion led by the authority and cross-examination shall not be permitted unless the authority considers that cross-examination is required for it to consider the representations, application or notice as the case may require.”(SI 2005/42, reg 23)

The view of a hearing as discursive represents a marked change from previous practice, where hearings generally followed a court-like procedure in which there was an opportunity for cross-examination. Further, under the previous law, parties could generally, at least as a matter of practice, call any witnesses in support of their application without the need for the authority’s permission. A hearing taking the form of a “discussion” suggests a less formal, less adversarial process with those having an interest in the outcome of the application all working together in partnership towards a mutually acceptable outcome. The Guidance (paras 5.103 and 7.3) supports this view, stating that:

“It is important to recognise that the promotion of the licensing objectives relies heavily on a partnership between licence holders, authorised persons [those authorised to carry out various functions under the Act e.g. inspection of premises – see s 13(2)], interested parties and responsible authorities in pursuit of common aims … All interests – licensing authorities, licence and certificate holders, authorised persons, the police, other responsible authorities and local residents and businesses – should be working together in partnership to ensure collectively that the licensing objectives are promoted.”

When reaching a decision, whether granting a licence subject to conditions or refusing a licence, the authority is required to take such steps as it considers necessary to promote the licensing objectives.(Licensing Act 2003 s 18(3)(b) and (4)). Licensing authorities are thus confined to taking steps to promote the licensing objectives and, as the Guidance (para 2.6) makes clear: “It is important to note that there are no other licensing objectives, so that these four objectives are paramount considerations at all times.” Although paramount considerations, only steps which are necessary to promote the licensing objectives can be taken, which should keep regulatory interference to a minimum and enable the Government to do “all it can to support enterprise”.

Whilst promotion of the licensing objectives is paramount in deciding individual cases, the licensing authority must also have regard to its Statement of Licensing Policy (SLP) when discharging its licensing functions. Drawing up the SLP is itself a licensing function and therefore this task has to be undertaken with a view to promoting the licensing objectives. Furthermore, licensing authorities are required to consult widely before drawing up their SLP, enabling those with a direct interest in the outcome of applications (operators, responsible authorities such as the police, and interested parties e.g. residents), as well as those less directly involved (e.g. small businesses, transport, health authorities and others involved in Crime and Disorder Reduction Partnerships) to have an input into the formulation of the SLP (Licensing Act 2003 s 4(2)(a) and (b), and DCMS Guidance para 2.15). Again therefore it can be seen that an important feature of this process is that the State’s role is conceived as facilitating a process where stakeholders work together to produce a clearly articulated SLP, which can be rationalised by reference to licensing objectives in the context of local conditions.

The Act also requires licensing authorities to have regard to Guidance issued by the Secretary of State when discharging their licensing functions and this applies therefore to taking individual decisions on licences as well as formulating SLPs. According to the Guidance, “the legislation is fundamentally based on local decision-making informed by local knowledge and local people” and the purpose of statutory guidance is “to encourage and improve good operating practice, promote partnership and to drive out unjustified inconsistencies”, rather than “eroding local discretion.” Promotion of partnership and greater consistency provides support for enterprise in accordance with the ‘third way’ philosophy, making it easier, in particular, for national operators to make informed decisions in relation to their activities.

Enforcement and Sanctions

The Act’s approach to enforcement and sanctions reflects a philosophy of giving greater freedom to premises not giving rise to problems and applying stronger sanctions where they do. Interested parties and responsible authorities can apply for review of a premises licence where there are problems and the authority can take such steps as it considers necessary for the promotion of the licensing objectives (ss 51-52). Thus a range of “graded” sanctions depending on the seriousness of the case can be applied, including modification of licence conditions and exclusion of a licensable activity from the scope of the licence, with revocation of the licence as the ultimate sanction. In cases of urgent difficulties the police may make a closure order where this is reasonably believed necessary for public safety on account of disorder or to prevent public nuisance because of noise. This provides for more focused and directed regulation, as the Secretary of State explained in the Foreward to the Guidance such that “premises which are causing problems within our communities can be dealt with appropriately” whilst “a much lighter touch [is adopted] for those businesses and community activities which benefit and enhance people’s lives by providing important opportunities for the enjoyment of leisure time.”

The new regime and the ‘third way’: a summary

The Act has been said to seek to promote a market-based approach, which supports enterprise and avoids a “disproportionate expansion of the government's reach and the bureaucracy that went with it”. It aims to establish a framework which encourages stakeholders to work together collectively to promote the licensing objectives with a view to addressing local needs and concerns. The Act might be said to be designed to avoid a situation where the State decided which was the right course to take between the Charybdis of over-intrusive regulation in the public interest and the Scylla of a free-for-all where only the laws of the market held sway.

According to the Culture Secretary the new regime embodies the philosophy that “better regulation is not about Whitehall nannies claiming to know best”; rather, “credible and workable regulation only comes about through government and the people it serves negotiating a sensible framework within which choices can be made” and there has to be “as much emphasis on the quality of the debate as the policy outcome” (Jowell 2004a). Thus the new scheme purports to eschew a top-down, command-based approach to regulation where Parliament dictates to local communities where the boundaries are to be drawn between freedom and regulation (Jowell 2004b). It also rejects a regulatory approach under which licensing authorities themselves decide the ground rules for operation and have a broad, unfettered discretion when exercising their licensing functions. In sum, the new regime in large measure reflects ‘third way’ thinking that, at both central and local government level, the State should “steer rather than row” in order to enable communities to make choices where there are conflicting interests.

Implementing the new scheme: trouble in paradise?

When examining implementation of the new scheme one experiences some difficulty in identifying the ‘third way’ idyll outlined in the previous section. Rather, throughout the transition period from February to November 2005 leading up to full implementation, trenchant criticisms were raised in respect of the new scheme and it also became clear upon closer inspection that the extent to which it delivers a deregulatory, “market-based” system may be open to doubt.

Criticism of the new regime and the Government’s response

Throughout 2005, the new scheme attracted criticism. The Criminal Sub-Committee of HM Council of Circuit Judges observed:

“those who routinely see the consequences of drink fuelled violence in offences of rape, grievous bodily harm and worse on a daily basis, are in no doubt that an escalation of offences of this nature will inevitably be caused by a relaxation of liquor licensing which Government has now authorised.” (“24 Hour Drinking Lunacy, say judges”, Daily Telegraph, 10 Aug 2005)

At least some senior police officers questioned whether the existing system of standard closing times actually was the cause of alcohol-related disorder as the Government suggested (Alcohol Alert 2005). The police also indicated that relaxation of opening hours might hinder them in combating such problems because

“the longer the hours then the greater [the need] ... to police in the course of the night…[thus requiring] ... a pulling of resources out of day-time policing into night-time policing to cover those risks”.(Home Affairs Committee 2005)

The Royal College of Physicians maintained that:

“[i]nternational evidence indicates extending licensing laws increases the amount of alcohol drunk and in turn the amount of alcohol related harm including violence and Accident and Emergency attendances.” (E-Politix.com 2005)

Alcohol Concern complained that the provisions of the Act and Guidance severely hamper local authorities’

“ability to manage the night-time economy [since]… it is very difficult for local authorities to make objections to a licence application and few authorities can match the legal might of drinks companies in the courts when it comes to defending licensing decisions.” (Press Release, 13 Jan 2005).

These and other criticisms stimulated extensive press comment and, unusually, there were numerous separate attempts in Parliament to delay the scheme’s implementation (see HCDeb, vol 430, cols 164-220, 25 Jan 2005; HCDeb, vol 436, cols 759-806, 12 Jul 2005; HCDeb, vol 438, cols 89-133, 24 Oct 2005; HC Third Standing Committee on Delegated Legislation, cols no 3-28, 26 Oct 2005; HLDeb, vol 675, cols 900-915, 14 Nov 2005; and HCDeb, vol 439, cols 898-900, 15 Nov 2005).

The Government’s response was to reject the predictions of dire social consequences, whilst simultaneously arguing that the new scheme gave power to local communities to guard against any such problems by allowing residents and responsible authorities to object to applications, and enabled licensing authorities to reject applications or impose appropriate conditions where difficulties arise (DCMS Press Notice 122/05, 23 Sep 2005). However, this response tended to be undermined because of the tone and substance of certain sections of the Guidance, the most controversial of which, perhaps, is the following passage:

“The Government strongly recommends that statements of policy should recognise that longer licensing hours with regard to the sale of alcohol are important to ensure that the concentrations of customers leaving premises simultaneously are avoided. This is necessary to reduce the friction at late night fast food outlets, taxi ranks and other sources of transport which lead to disorder and disturbance. The Government also wants to ensure that licensing hours should not inhibit the development of thriving and safe evening and night-time local economies which are important for investment and employment locally and attractive to domestic and international tourists without compromising the ability to resource local services associated with the night-time economy. Providing consumers with greater choice and flexibility is an important consideration.”

These attempts to “direct” licensing authorities attracted particular criticism, with the Chairman of the Local Government Association (LGA) complaining that the Guidance was “too liberalising, too strong in encouraging extended hours and too little discretion was given to local authorities” (BBC News, 17 Sep 2005 http://news.bbc.co.uk/1/hi/uk/4255888.stm). Indeed, a view seemed to emerge that the Guidance created a presumption in favour of longer hours, constraining authorities’ ability to reject applications or modify them in favour of objectors by adding conditions concerning opening times. The Government sought to rebut this impression in a letter sent by the Secretary of State to all licensing authorities in September 2005, shortly before Parliament debated the commencement order bringing the new scheme into force. The letter claimed to “clarify a couple of points in relation to the statutory guidance” and emphasized that:

“There is no presumption in the Act for longer hours over the objections from local people and organisations. Where there are objections and the licensing committee believes that changing the hours would underline the statutory licensing objectives i.e. on crime and disorder, public nuisance, public safety and the protection of children from harm, they can reject the application or grant it with appropriate conditions and/or different hours from those requested. Indeed at the outset the Guidance makes it very clear that it is the duty of the licensing authorities to promote these objectives when carrying out their functions under the Act and that these four objectives are paramount objectives.” [our italics]

Of course it is correct to say that there is no presumption in the Act in favour of longer hours and that, where there are objections, authorities have to decide the matter by reference to the licensing objectives contained in the Act. However, the Guidance, to which authorities have to have regard, “strongly recommends” that SLPs recognise that longer licensing hours for sale of alcohol are important to avoid problems of disturbance and disorder. So the Guidance itself identifies longer hours as a method of avoiding problems which bear upon promotion of the licensing objectives.

In considering the legal effect of this aspect of the Guidance it is useful to distinguish between objects or purposes which licensing authorities must pursue on the one hand, and considerations which are legally relevant to deciding how to promote such objects or purposes, on the other. The licensing objectives are best characterised as the objects or purposes which must be pursued or promoted, and this would be the case regardless of what the Guidance had said because s 4(1) of the Act so requires. However, the Guidance arguably elevates the Government’s desire to see longer licensing hours to the status of a mandatory relevant consideration to achieve those objects or purposes. Therefore, the possible connection between longer hours and the possible beneficial effect this may have in helping to avoid disturbances etc is a factor to which regard must be had in framing the SLP and in determining individual cases. But this does not mean that in determining any one case there is a presumption in favour of longer licensing hours than residents or responsible authorities might desire. If that were so it would surely constitute unlawfully treating this consideration as a fetter on licensing authorities’ ability to determine in each individual case how best to promote the statutory licensing objectives. Furthermore, it is a firmly established and uncontroversial principle of Administrative Law that

“... it is entirely for the decision maker to attribute to the relevant considerations such weight as he thinks fit, and the courts will not interfere unless he has acted unreasonably in the Wednesbury sense.”(per Lord Keith in Tesco Stores Ltd v Secretary for State for the Environment [1995] 1WLR 759 at 765)

So, as a matter of law, regard must be had to the relevant consideration, “but the extent, if any, to which it should affect the decision is a matter entirely within the discretion of the decision maker”, subject to Wednesbury unreasonableness (see Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223).

It follows then that, strictly speaking, the Government’s interpretation of the effect of the Guidance as set out in its letter to licensing authorities is not incorrect. However, significantly, it fails to mention that the Guidance seeks to promote the view that longer licensing hours may be likely to promote certain licensing objectives, and licensing authorities are required to take this into account as explained above. Of course, whatever the “clarification” letter had said, it cannot alter the legal effect of the Guidance itself on the decision-making process (see J&J Colman Ltd v Commissioner of Customs and Excise [1968] 1 WLR 1286 at 1291). The letter was a document designed to counter a gathering political storm which threatened to delay implementation of the new scheme and was issued as part of an agreement between the Government, the LGA, and LACORS (Local Authority Co-ordinators of Regulatory Services) to monitor and evaluate the scheme’s operation, including review of the Guidance accompanying the Act (DCMS Press Notice 122/05, 23 Sep 2005). It may well be that this will provide an opportunity to revise and perhaps modify the section of the Guidance dealing with longer hours. At the time of writing, there have been some interim revisions to the Guidance, which were of a relatively minor nature and which took effect on 22 June 2006, although these did not include any revised sections on hours. Further, more substantial, revisions are expected in 2007 and it is possible that these could include changes to the sections on hours.

It might be commented that these events reflect some of the contradictions inherent in the new scheme. On the one hand, the Government’s position is that a central feature of the scheme is for local communities, rather than Whitehall, to control the impact of licensing in their own area. On the other hand, in framing the Guidance, the Government sought to ensure that licensing authorities were given a very strong steer in the direction of supporting the deregulatory philosophy which was one of the Government’s key policy goals in establishing the regime in the first place. In many respects this is understandable. The realpolitik of the new scheme’s introduction is that some local authorities are reluctant converts to the new philosophy, some seriously question the underlying assumptions, and others find it difficult to adjust to the new “hands off” approach given their long standing institutional role in defining what the public interest requires. There is a strong sense here of the Government seeing itself as being “ahead” of licensing authorities and other interest groups who have criticised the scheme. As a consequence, the very process of deregulation has been highly centrally directed and this seems likely to continue. Not only has the Government intervened to “clarify” the effect of the scheme but it has also initiated a review of the scheme and of the Guidance. The notion of Government stepping back and allowing local communities alone to determine where to draw the boundaries between “individual freedom, community interest and state intervention” may well not turn out to be as pronounced a feature of the new regime as might perhaps originally have been thought.

The attitude of licensing authorities and the impact of licensing policy on “market-based” decisions

If early indications are that the Government itself has exhibited some reluctance fully to adhere to a “hands-off” approach to licensing, there are also clear indications that licensing authorities have not readily accepted their role as “referees” rather than “players” under the new scheme. Accordingly, far from there being a clear division of responsibilities, an ambiguous state of conflict has prevailed. Indeed, it has been evident that the expectations of authorities, set out in their SLPs, have in some cases been over-prescriptive and lacking in recognition of the “light touch”, purely administrative approach which should be adopted where there are no relevant representations. The British Beer and Pub Association, the Association of Licensed Multiple Retailers and the British Institute of Innkeeping identified over 30 SLPs (out of 376 in total) which, in their view, were over-prescriptive as to an application’s content and which failed to acknowledge absence of discretion by authorities where no relevant representations were made. Canterbury City Council’s SLP was judicially reviewed on these grounds and the Administrative Court in R (on the application of British Beer and Pub Association) v Canterbury City Council [2005] EWHC 1318 (Admin) accepted that the SLP was unlawful in these respects. Richards J stated (para 85):

“The scheme of the legislation is to leave it to Applicants to determine what to include in their applications, subject to … inclusion of a statement of specified matters in the operating schedule. An Applicant who makes the right judgment, so that the application gives rise to no relevant representations, is entitled to the grant of a licence without the imposition of conditions beyond those consistent with the content of the operating schedule and any mandatory conditions. The licensing authority has no power at all to lay down the contents of an application and has no power to assess an application, or to exercise substantive discretionary powers in relation to it, unless there are relevant representations and the decision-making function under s 18(3) is engaged. If a policy creates a different impression, and in particular if it misleads an Applicant into believing that he must meet certain requirements in relation to his application and that he lacks the freedom accorded to him by the Act and Regulations, the policy is contrary to the legislative scheme and is unlawful …”

This analysis emphasises the deregulatory, free-market approach underlying the new regime but does not lead to a complete vindication of this methodology and indeed it is arguable that it brings to light elements of the scheme which fundamentally detract from these values. The successful challenge to the SLP was that, as expressed, it gave the impression the authority could exercise discretion regardless of whether there were relevant representations. Furthermore, it was accepted that, insofar as the SLP purported erroneously to prescribe matters applicants were obliged to address in their application, this may have resulted in them incorporating matters they might not otherwise have included. This in turn may have given rise to relevant representations that might not otherwise have arisen, although his Lordship considered that the claimants’ concerns in this respect were “substantially overstated”. However Richards J also accepted (para 86) that

“… a policy that is lawfully expressed is likely in practice to have a very similar effect to one that is unlawfully over-prescriptive in its expression. That is because an applicant with freedom to determine for himself the contents of his application will realise that an application that fails to take account of the expectations lawfully expressed in the policy is likely to give rise in practice to relevant representations and thereby to engage the decision-making function of the licensing authority …and the authority, whilst assessing the application on its individual merits, will be guided by the matters set out in the policy in reaching its decision. An applicant who does not tailor his application to the policy therefore faces an uphill struggle.” [our italics]

Therefore the vision of the system which emerges is that applicants’ proposals for operation of their premises are not solely to be determined by their assessment of what “the market” can support and what will render their operation economically viable. Rather they have to engage in a difficult process of choosing whether to ignore “advice” (lawfully) expressed in the SLP, thereby running the risk that once an objection is raised the licensing authority may reject their application, or alternatively ensuring that their application addresses each and every element of advice set out in the SLP to enhance prospects of success. In reality, then, authorities can be “players” from the start of the process and “advice” set out in the SLP can act as a series of “rules” which prudent applicants would be unwise to ignore.

Decision-making in contested applications

Unlike the situations just discussed, the new scheme formally contemplates licensing authorities having direct influence when an application is contested, since here the authority is required to decide whether to grant the licence, and what conditions to attach. However the new scheme does seek to structure and perhaps limit the scope of their discretion, although it is far from certain that it is practically or legally effective in so doing.

This uncertainty stems from the fact that in resolving contested applications authorities may be confined neither to considering solely matters raised in relevant representations nor to considering only the four licensing objectives themselves as the sole permissible objectives of decision-making. Whereas the Act (s 18(3)(b)) requires the authority to have regard to relevant representations when determining the steps it considers necessary for promotion of the licensing objectives it does not state in terms that it can only have regard to these. This might allow for consideration of information relevant to the licensing objectives generally, although falling outside that contained in relevant representations. Certainly there may well be matters other than those specified in a relevant representation that relate to the same licensing objective with which that representation is concerned, which come to light after the representation is made but before the hearing. For example, the police may make a relevant representation in respect of disorder occurring outside premises and subsequently discover on a visit there that drugs are being sold. Both disorder and drugs are directly connected with the likely effect of the grant of the licence on the licensing objective of prevention of crime and disorder, which falls within the police’s recognised area of expertise.

How the statutory scheme should be interpreted on this issue is therefore a matter open to debate (see Quietlynn Ltd v Plymouth City Council [1988] QB 114 and R v Birmingham City Council, ex p Quietlynn Ltd (1985) 83 LGR 461 for differing views on reception of matters not contained in objections to sex establishment licences within the statutory time period). Although touched on in Canterbury, the court declined to express a view on the matter, because it was unnecessary to dispose of the case. Richards J (para 90) thought it

“better to leave open the question of whether the licensing authority’s discretion extends beyond the issues raised in the representations and whether it can take account of information received otherwise than through relevant representations received”

though he went on to observe that the council’s claim for “full discretion” may well “overstate the extent of the Council’s discretion.” If the focus is placed on the deregulatory nature of the Act, its tendency towards “light touch” regulation and the licensing authority’s role as referee, this points towards a restricted discretion. However, the overriding importance of the promotion of the licensing objectives may support the view that authorities have an obligation to consider any matters relevant to promotion of those ends.

As regards the licensing objectives themselves, whereas it is correct to say that the Act establishes them as the touchstone of regulation, it seems that they are not exhaustive of the objects or purposes which licensing authorities are entitled to promote when exercising their decision-making functions. Indeed, this is expressly recognised in the Guidance which, whilst emphasizing that the Act provides “a clear focus” on the promotion of licensing objectives”, also proceeds to draw attention to a number of other key aims and purposes. These are stated to include “further development within communities of our rich culture of live music, dancing and theatre” and “greater choice for consumers, including tourists”. The Guidance goes on to point out that “a natural concern to prevent disturbance in neighbourhoods should always be carefully balanced with these wider cultural benefits, particularly the cultural benefits for children.”

If these other considerations are relevant, they present the possibility for disagreement as to how they relate to the licensing objectives. The range of options open to authorities when making decisions is premised on what is necessary to promote the licensing objectives and the Guidance makes it clear that “there are no other licensing objectives, so that these four objectives are paramount considerations at all times”. So it seems that those other objectives are clearly subservient to the licensing objectives. However, in the normal scheme of things there will be a range of factors to be borne in mind. How they are factored into the decision-making process is, as a matter of law, likely to be left to the licensing authority’s judgment, provided that their pursuit in any individual case does not frustrate or clearly run counter to promotion of the licensing objectives (Padfield v Minister of Agriculture [1968] AC 997). Whilst not quite “old style” regulation with a broad, unfettered discretion, this is certainly moving in that direction and goes a considerable way towards undermining the specified “licensing objectives” as the sole assessment criterion for determining provision of licensable activities.

In the light of this analysis, it emerges that the legal framework governing the process of decision-making in contested cases provides considerable scope in law and practice for licensing authorities charged by Parliament with arriving at judgments in individual cases significantly to influence outcomes. Contested applications throw up a range of competing interests on the part of all groups involved and it is often difficult to achieve any consensus about what steps are necessary to promote the licensing objectives. Since striking a balance between these competing interests is difficult, licensing authorities need to be in a position where they can significantly influence outcomes through making “all-things-considered” judgments leading to defensible decisions, notwithstanding that all stakeholders may not be happy with the outcome. However, whether licensing authorities are able to do this in a coherent fashion is open to question, given the ambiguity and conflict that seems to be prevalent in the new scheme. Nor is it clear whether the scheme will deliver the Government’s deregulatory agenda, since there may be an inclination to resolve competing interests by granting a licence subject to conditions, perhaps a wide range of conditions. If this is the case, decision-making driven by local communities has the potential to be significantly less deregulatory in practice than the Government’s description of the new framework has generally been willing to allow.

Conclusions

It would be wrong to conclude that the Licensing Act simply reproduces, in different form, a style of regulation similar to that under the previous law. In general, the new scheme is deregulatory for it provides greater freedom to licensees to determine the conditions under which they might operate by reference to market-based considerations. Furthermore, licensing authorities are no longer the sole determinants of the ground rules which apply to their decision-making processes since the Act goes a good deal of the way to providing a basis for structuring the exercise of discretion through the medium of law. However, they retain a significant influence in these matters and a discretion considerably greater in extent and breadth than is apparent on preliminary examination of the legal provisions of the new scheme.

At best, the change effected by the Act may be viewed as a matter of degree, rather than as a truly radical realignment of the capacity of the State or public actors to direct and shape outcomes and processes associated with the regulation of licensable activities. At worst, as we have seen, the new scheme simply creates a site of conflict – not only about differences of outcome in the ordinary way in which democratic decision-making always produces differences - but rather in terms of the contradictions and potential for ambiguity with regard to the respective roles of central government, licensing authorities, the “entertainment industry”, local residents, and all others with a stake in decisions. Whereas the scheme may well appear to devolve power and influence to the network of stakeholders in conjunction with licensing authorities, the continuing influence of central Government in the process should not be under-estimated. Arguably one of the most significant changes the Act makes is to give central government greater influence over licensing matters than it had previously. This is not only because the Government was the architect of the scheme, but also because of its capacity continually to influence through detailed statutory guidance.

The notion that the State should “steer rather than row” may well be an aphorism which serves generally to indicate a predisposition for allowing stakeholders to determine matters. However the extent to which any scheme predicated upon such a notion actually delivers less, rather than more State intervention or control, depends on what attitude the State adopts to its steering role as well as the extent to which the operation of the scheme gives rise to political controversy and disquiet amongst interest groups and the public at large. One of the ironies of central Government’s approach to its role in respect of licensing is that because the Act has been represented as an example of New Labour’s “coherent moral and intellectual position” on drawing the boundaries between “individual freedom, community interest and state intervention”, the Government has had to take a very active role in seeking to ensure that licensing authorities respect the market-based philosophy which provided the impetus for reform. Nevertheless there is at present clear evidence that this philosophy is not unquestionably accepted by all licensing authorities or stakeholders affected by licensing decisions, and a detailed examination of the institutional design of the scheme indicates there are opportunities for departing from it and perhaps significantly diluting it over time. Insofar as such developments might not necessarily be inconsistent with the relevant legal provisions, this raises the question of the Government’s willingness to accept such a state of affairs as the natural consequence of ascribing decision-making to local communities. The true test of the Government’s commitment to the ‘third way’ methodology which it has claimed underpins this Act and other similar schemes reproduced in legislation such as the Gambling Act 2005 (DCMS, 2005) will be whether it is willing to accept such developments as one natural consequence of the scheme it has established, or whether it will seek to make changes to ensure that outcomes more universally consistent with its ideological position are produced.

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