Licence please

The path unfolds

The Scottish Executive has clarified the timetable for the reform process. It has also gone some way to meet concerns that many licensees might be put out of business by the changes. Under the new law overprovision will remain a ground of refusal of a licence. Licensing boards are required to set out clear policies on what constitutes overprovision. Fears had been expressed that some existing licensees might be refused a licence under the new regime, simply because their board wanted to cut down on numbers.

The licensed trade has campaigned hard to ensure that any existing licensing rights, including extended hours, would be automatically transferred into the new system as “grandfather rights”. Another concern it had was that existing premises would be subject to a complete review under current planning and building legislation, a test which many older premises might fail.

The Executive relents

The campaign has been partly successful. The Executive had previously announced that there would be no grandfather rights, but it has now relented. Existing licensees will be exempt from the overprovision test if there is to be no significant change to their operation. They will also be exempt from the need to provide planning, building and food hygiene certificates if the new licence is on a like-for-like basis. That, however, is as far as it goes. A licensee will not have an automatic right to the same hours he enjoys at present, nor will his premises be exempt from appraisal by the board. If board members consider that they might have been minded to refuse a licence because of the “location, character or condition” of premises, but that suitable modifications can be made to address this, the licensee will be given 12 months to carry out these modifications. If he does not, his licence can be revoked. In her article which appears opposite, Janet Hood of the BII highlights some of the potential pitfalls which may await, depending on local boards’ interpretation of the new rules.

Start preparing now

Although the reforms are still some way off, it would be wise to start to think now about the implications. Licensees who are reviewing their business operations in advance of the smoking ban should have one eye on the reform timetable. If anyone is considering any significant change to their business of a type which would require board consent, it might be sensible to implement it under the existing system. Thereafter, a smooth transition into the new system should be guaranteed if the change is on a like-for-like basis. Licensees should be taking a hard look at their premises. Would they comply with current legislation if a brand new licence was being sought? If not, consider modifications now. I consider it likely that many boards will use the new system as a lever to force the upgrading of premises which are considered below standard. They may get tougher on issues such as disabled access. For your clients to be told in 2008 that they have only a year to save their business is the stuff of nightmares.

Structured approach

The timetable for the reform process is also clearer. New boards will be appointed in May 2007, after the next local government elections. They will have six months to prepare their policies and conduct overprovision assessments. On a single appointed day all licences will come into force under the new system. Perhaps ominously, this is referred to as the “big bang”. The transition period will begin in February 2008. The Executive says that an acceptable transition period will be approximately 18 months. A transition team comprising five clerks has been established.

On the positive side, the Executive is to be commended for its structured approach to this most important of reforms. Far too much recent legislation has been rushed into place, with problems only coming to light when it is too late to sort them. That is not to say that the trade will have no problems come the big bang. Licensing boards have shown themselves profoundly ignorant of the problems which the trade faces: equally some members of the trade have failed to heed licensing boards’ calls to improve standards. It is vital that there is dialogue over the next two years to ensure that the reform proceeds with both sides in partnership, not in conflict.

Tom Johnston is a partner in Young & Partners, Business Lawyers, Dunfermline and Glenrothes, and an accredited specialist in liquor licensing law

“Grandfather wrongs”

The Scottish Executive, so the business section of its website declares, “aims to ensure long-term sustainable economic growth”. The site continues: “There are a range of policies in place aimed at helping to increase productivity levels”, which “should create a business environment which actively encourages innovation, entrepreneurialism and high skill levels, helping to encourage the creation, growth and transformation of businesses”. We also read: “As part of its aim to foster long term sustainable economic growth in Scotland the Executive has a range of initiatives to encourage business start-ups and grow existing businesses. These include financial support and advice, both directly, and via other delivery agents.”

The website then adjures: “If you have encountered regulations that you have found placed unnecessary burdens or costs on your business then the Executive would like you to tell it. Even if the regulation falls outwith the areas of responsibility of the Executive and/or you have already asked about it elsewhere, then we would like to hear from you.”

This is very encouraging and commendable and reflects the desires of the majority of entrepreneurs who aim to carry on businesses in Scotland. It fosters a belief that the Scottish Executive is willing to listen to business leaders to the benefit of the people of Scotland. The website goes on to say: “As part of its commitment to fostering long-term, sustainable economic growth in Scotland, the Executive works with the Enterprise Networks to help deliver the enterprise strategy aimed at creating a smart, successful Scotland.”

Success story

The licensed trade in Scotland is the country’s largest employer and creator of wealth. It is a highly successful industry spanning every conceivable form of business from nightclubs to village stores, hotels to museums, whose outlets are to be found in every corner of the country. In recent years industry leaders have invested heavily to ensure the continuous delivery of a successful market product. At the Holyrood conference in March 2005 when the Licensing (Scotland) Bill was launched, Tavish Scott declared that the majority of licensed premises in Scotland were run so as to cause no harm to the communities in which they were to be found.

The bill heralds the fact that a much sought-after new licensing system is to replace the old. All those with an interest have hoped that the bill would enable the delivery of a responsive licensing system which would encourage responsible retailing, assist in the improvement of the health of the nation and enable the speedy removal of those persons who failed to meet the laudable five objectives set out in the bill.

Cutting out the grandparents

It was believed that there would be extensive consultation with among others the industry itself.

On Friday 18 August a severe blow was delivered to the industry with the release of a ministerial decision that there will be virtually no “grandfather rights”. Although heralded by the Scottish Licensed Trade Association and the Scottish Retail Consortium as a victory for their lobbying powers, I believe that in its present form it could sound the death knell for the trade.

The ministerial decision – which in a letter to the trade bodies hopes to offer “some degree of reassurance” – purports to have considered “more fully the impact on existing licensees”. It will enable the following effects, which I enumerate in the order given in the press release:

“There will be no full embedded ‘grandfather rights’ for existing licensees in Scotland. There will be no ‘grandfather right’ for currently licensed hours or extensions to those hours”. As far as it goes, this is understandable, as it would neither be right nor proper for premises which were subject to complaint or objection to catapult into the new system without scrutiny and the possibility of refusal. Why, however, should there be no grandfather rights for those premises which are being run according to the law and which operate without complaint? Why should there not be grandfather rights for the admission of children to premises where children’s certificates already apply? Why should there not be a simple procedure to permit access by children into at least non-bar areas of those premises such as shops and hotels where it would be unreasonable to refuse them entry and where the request is made via the operating plan submission? What administrative difficulty could this create?

There will be partial grandfather rights available to existing licensees as follows:

“Exemption from the consequences of the overprovision assessment and from the overprovision ground for refusal of a licence where there is no change to the size, capacity or type of operation taking place on the premises”. Again this is all to the good until one considers that at present the size and capacity of many older, more established premises is unknown, as indeed is the type of operation. The operation of premises will only be reflected accurately when the operating plan is finalised, and therefore with the exception of the running of an off sales or old fashioned public house, no premises are likely to meet this criterion.

“Exemption from the need to provide building standards, planning and food hygiene certificates when the transfer is on a like for like basis”. On the face of it this is indeed welcome. However thought should also be given as to whether all premises should require to submit plans afresh. The cost to the trade will be enormous – it has averaged over £1,000 per premises in England and Wales, and that extra cost on top of the likelihood of vastly increased fees could make it impossible for smaller businesses to afford, thereby harming again the diverse Scottish independent trade which ensures Scotland stands out in the international setting. However when we read this offer with the next, doubts creep in.

“Where transfer is on a like for like basis but the Board considers that they would nevertheless be minded to refuse the licence on the grounds of ‘location, character or condition of the premises’, but that suitable modifications can be made to address this, the licence must be granted and the licensee given a period of 12 months to make the necessary modifications. If the modifications are not made within this period the licence would be revoked”. This is an interesting combination of the terms of the Licensing (Scotland) Act 1976, sections 17(1)(b) and 32. It removes most of the comfort to be had in the preceding paragraph. How does one modify a location and to what purpose? I can only imagine for the purpose of back door overprovision. What is meant by the “character” of premises in the “existing premises” concept? Is it an alternative term for “condition”? One can modify the condition and I would submit that if the premises are in such a condition as to merit these measures, licensing boards should be taking action now, in terms of section 32. If licensees had not completed the works by transition, there would be no possibility of grandfather rights – as in my suggestion – prevailing as they would currently be under an administrative cloud. In my opinion 12 months is not a sufficient period to enable a licensee to carry out modifications, as he may require to obtain local authority and other consents which regularly can take over 12 months.

The safety net is then completely removed by the final paragraph. “All other aspects of the new legislation would be applied including: Applications subject to decision by the Board and open to full process for objections and representations” – meaning that any person can object to the application, which will then remove any “grandfather rights” which were on offer.

Too difficult?

What harm would the granting of grandfather rights for well run existing licensed premises cause to communities in which premises are located? What harm could be caused to those communities by their loss? What difficulties would it cause licensing boards to administer grandfather rights in the manner I have suggested?

The Scottish Executive claims it wishes to support business development and aims to create a smart, successful Scotland. Its current proposals will not foster that aim.

Janet Hood is Head of BII Scotland and Chair of the In-House Lawyers Group