Legal advice: It'll cost you

Now that the Licensing Act 2003 has had time to bed in, it is perhaps time to take stock of the realities of operating pubs under the new regime. Does the Act represent the deregultation for the pub industry the government promised? The £1.97bn over the first 10 years we were told would be saved is looking more and more elusive. Has the trade been press-ganged into accepting changes that do not have the promised benefits? And if so, what are the consequences?

Lack of guidance causes too many problems

Any new legislation takes time to settle down and new tricks of the trade need to be learnt. Those practising in the 1960s (not me, I hasten to add) no doubt had concerns about changes made to the law in 1964. The difficulties were exacerbated this time, however, during the process of conversion of licences in such a short time and the lack of proper guidance from central government, as the Office of the Deputy Prime Minister Committee has recently declared. So where are we now?

Until the law is simplified (and this applies to small matters such as having to display notices on blue paper to graver issues like having to advertise in local papers) there will always be applications that are rejected for not complying with the regulations.

This can be very expensive in terms of having to re-apply and re-advertise and also in legal costs as the application forms are still over-complicated and a lot of people require expert assistance.

In addition, the burden is increased because of the lack of any "slip rule", allowing minor errors in applications which do not prejudice anyone to be disregarded when licensing officers process an application. This surely increases costs for the average operator, who may be inclined to spend additional money on expert assistance for applications in order to avoid making mistakes.

Are variations worthwhile?

When does a formal application need to be made? Is a variation of layout too minor to require a variation under Section 34 of the Licensing Act 2003 or not? There are likely to be situations where changes to the premises are envisaged in order to boost profitability (theme pub, anyone?) which may necessitate a formal variation application. It may be that such changes will no longer be considered worthwhile, given the costs of applying and the possibility of having to go to a hearing before the licensing committee.

Unfortunately, as the Act does not exclude much from the list of what can be classed as a so-called "major" variation (except changes of name or address or variation of the designated premises supervisor), the local licensing authority may ask for formal variations in a lot of cases where previously they have not been required by the courts. Also, why, under the new system, is the administrative burden of applying to vary a licence which already exists the same as for someone applying for a licence from scratch?

Add to all of this the costs of having 1:100 scale plans drawn up, the fees on applying and all of the ancillary costs mentioned above and it becomes clear that there is in many cases an unnecessary burden on parties applying to vary licences.

The spectre of representations and reviews

One of the central tenets of the Act was to increase the effect of local knowledge on licensing matters by giving local authorities power over applications and allowing residents and local businesses to have their say. Good in theory, but the Act appears to have got the balance between business interests and residents' rights somewhat askew. Licensing officers are meant to be a screen between these (often competing) interests, rejecting representations from interested parties if they are vexatious or are not made by someone in the vicinity of the premises.

Guidance instructs officers who are unsure to err on the side of the interested party. This has been used to justify representations being accepted that really are tenuous at best. As such, a hearing is required and costs mount up. This is a factor that will become increasingly important in taking commercial decisions.

Also, representations do not have to relate to the application per se. For instance, an application for a variation to allow for provision of late-night refreshment does not stop a representation being received regarding noise nuisance. This requires the applicant to consider carefully the wording of notices and adverts, possibly requiring specialist advice, in order to attempt to persuade parties considering making representations not to do so. In any event, this may not stop a determined resident or business association from making representations, which will need a response.

Furthermore, even if responsible authorities can be reasoned with, it is often difficult to make contact with interested parties such as local residents to ensure they withdraw their representations in good time. As a result those representations may not be withdrawn until the day of the hearing, when quite often the applicant turns up and the residents do not! By this stage, though, the costs will have been incurred.

Forced into unnecessary measuresThe power of review takes the powers of residents and responsible authorities a stage further and is an effective weapon against premises that are genuinely causing concerns. But the process can also be used to coerce well-managed premises into having to introduce unnecessary measures. Costs can very quickly escalate if pubs are required to provide plastic glasses or additional doorstaff because the police have persuaded premises down the road to do so as a result of a genuine concern. Do you spend the money first to avoid the possibility of a review, or do you hold your ground?

So where are the cost savings coming from? For larger entertainment premises there is the possibility that in the long run there will be savings, but it's hard to see how a £30 fee every three years for smaller pubs under the old system can be bettered when the fees for renewal every year are significantly higher. Where can the savings be made? If reviews become a regular feature of the system and applications for variation are required for almost any small works, then commercial interests will undoubtedly suffer.