Late-night levy: how can local authorities support sector?

The levy is an optional power allowing local authorities in England and Wales to charge premises that sell alcohol between midnight and 6am a fee in a bid to raise contributions towards the cost of policing the late-night economy.

LNL costs vary from council to council. As an example, Islington Council charges late-night businesses between £299 and £4,400 per year for the levy, depending on their rateable value and is the premises if primarily or exclusively used to sell alcohol for consumption.

However, operators and industry experts alike have repeatedly called for the levy to be scrapped in recent years, citing its lack of flexibility and clarity as well as its “unfairness”.

Poppleston Allen​ associate solicitor Suraj Desor said: “Clearly against the backdrop of high inflation, soaring business costs and a challenging economic environment, the leisure and hospitality sector would prefer the levy be scrapped altogether – it is another financial burden placed upon the sector during what continues to be a tough time for operators.

“Some of the other key criticisms of the levy included the power being considered to blunt an instrument which lacked flexibility, applying to either the whole of a local authority’s jurisdiction including operators outside main city centres or otherwise not at all.

Targeted and transparent approach 

“[It was also considered] unfair in terms of which businesses paid the levy while the use of proceeds lacked transparency.”

To address criticisms the Government made changes to the levy​ in July this year through the Policing and Crime Act 2017 (and related Schedule 18) which include:

· Giving local authorities the ability to charge the levy to late-night refreshment premises that serve hot food during the levy period alongside those permitted to sell alcohol, to assist with the cost of policing the night-time economy. Note, local authorities will not be permitted to impose a levy solely on premises providing late night refreshment during the relevant late-night levy period.
What this means is a levy in your area will always catch those premises who are permitted to sell alcohol during the hours specified in the levy and it may also, if the local authority decides, catch those premises providing late night refreshment, if they are not already caught by the fact that they also sell alcohol during those times.

· Introduce flexibility to allow local authorities to ‘localise’ the levy to certain areas rather than applying it to the whole local authority area, so it is more geographically focused on the Perceived source of late-night problems, and to allow different late-night levy requirements to apply in different parts of its area.

· To give the local policing body (Police & Crime Commissioners (PCCs)) the right to request that a licensing authority formally propose a levy.

· Requiring local authorities to publish information about how the revenue raised from the levy is spent.

Though a snap poll conducted by the Night-Time Industries Association (NTIA) earlier this year saw 77% of respondents call for the levy to be abolished​ altogether, with the changes expected to be felt “most servery” by independent business.

“It is just another stealth tax on top of others which is systematically penalising businesses that operate at night, with no clear benefit"

“Putting aside the sector’s disappointment the levy has not been scrapped, if we take a wider view, the Government has sought to sharpen this blunt instrument and address some of the criticisms via recent amendments to the levy which came into force this Summer.

“Hopefully, at the very least these changes will lead to a more targeted and transparent approach to the use of a levy and funds generated where a local authority chooses to adopt the power”, Desor continued.

Poppleston Allen partner James Anderson also described changes to the levy ​as having a more “targeted approach” following the changes this summer, however, the Campaign for Real Ale (CAMRA) chair Nik Antona said the revisions were a “step in the right direction” but remained “unfair, controversial and detrimental”.

Regarding the changes in July, NTIA CEO Michael Kill said: “With taxation and inflation already drowning the sector, the Government must reconsider its position on late-night levy’s.

“It is just another stealth tax on top of others which is systematically penalising businesses that operate at night, with no clear benefit.”

In addition, UKHospitality (UKH) said the changes were “frustrating” and based on “out of date evidence”.

Stumbling block 

Some authorities have looked to remove the levy in recent years, for example Nottingham, where the LNL with a Business Improvement Districts (BID), a business led levy developed between local firms and the authority, in 2022.

Desor added: “Looking at the bigger picture, only time will tell whether these amendments are enough to result in a renewed interest from local authorities previously put off by the inflexible nature of the levy.

“I would anticipate a major stumbling block may be the use of BIDS, which some within the sector feel offer a more effective, targeted approach.

“Notably with a BID all businesses within the BID area pay towards the BID as opposed to simply those premises licensed for sale of alcohol and/or late-night refreshment late at night, which can generate more money as a result compared to a Levy.

“This view of a BID over the levy is most evident in the cases of Cheltenham, Southampton and Nottingham, where the use of the local BID was key in the decision to remove the levy which was previously in place.”