Police Reform and Social Responsibility Bill

I beg to move, That the clause be read a Second time. The new clause addresses the point about the local setting of licensing fees that was debated in the Public Bill Committee. I welcome the hon. Member for Kingston upon Hull North (Diana Johnson) to the Opposition Front Bench. She will recall the discussions that we had on this point in Committee. I welcome other Members who sat on the Committee, and other hon. Members who are present. In my response to the consultation on the Bill, I said that we intended"““to enable licensing authorities to set licensing fees based on full cost recovery””." Since then, as I confirmed in Committee, I have been working with colleagues across Government to ensure that we achieve that aim in a way that is fair to all sides. I know that fee payers will be concerned about a change that is likely to see fee income rise overall. However, the fact is that licensing fees have not been increased, even for inflation, since the Licensing Act 2003 came into force in 2005. The new clause does not represent a change of principle. The current fees are supposed to cover the legitimate costs of licensing authorities in discharging their functions under the 2003 Act. However, there has been widespread agreement for some time that they do not achieve that. The previous Government recognised the problem, and promised an independent review of their proposed fees as early as 2004. The independent panel published its report, known as the Elton report, in December 2006. The recommendations included an increase in fees, but no action was taken. Therefore, the question for this Government is not whether the situation needs to be addressed, but how best to address it. We could set the fees centrally again, which would have the advantage of providing consistency for fee payers. However, I have chosen to move to set fees locally because I consider that it may be difficult to achieve a close approximation to full cost recovery with nationally set fees. Different areas do not have the same costs, and it is unavoidable that a blanket fee level would leave some councils with a deficit or provide an excessive income to others. No system is ideal, but as a matter of principle, council tax payers in areas with higher costs should not subsidise the administration of the licensing regime, and fee payers in lower-cost areas should not fund wider council activities. Fee payers should be reassured that locally set fees will not mean that licensing authorities can set whatever fees they like. First, they will only set the level of the fee. They will not be permitted to design new fees or their own fee structure; nor will they be able to use licensing fees as an income stream. The only basis on which they will be able to set fees is to recover their costs in discharging their functions under the 2003 Act. I will issue guidance to local authorities on the setting of fees, including statutory guidance under section 182 of the 2003 Act. To ensure that costs are kept to appropriate levels, that will include guidance on the principles of good regulation, including risk-based and targeted inspection. To provide further reassurance to fee payers, there will be a nationally set cap on fee levels. Under the new clause, that is provided for by the ability of the Secretary of State to apply constraints to the licensing authority's ability to set fees. I intend that the level of the cap will be set in regulations after consultation. The consultation will contain a detailed impact assessment of the proposal. In short, this measure is an important step towards ensuring that the Licensing Act 2003 works as it was intended to work, with fees fully funding licensing authorities' administration of the Act.