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Operators fear high costs of licensing

05 August 2005
Operators fear high costs of licensing

Hospitality operators believe the new licensing regime in England and Wales is going to cost them more money.

Most businesses contacted by Caterer had already incurred significant costs and didn't expect a notable boost in sales after the new regime begins on 24 November.

Licensing minister James Purnell has claimed the new system will save operators in England and Wales £1.9b in administrative costs over 10 years, because once registered they don't need to apply again unless they want to change operating hours.

But with last-minute changes to licensing fees, an annual licence renewal charge, and the still-unresolved issue of additional charges for alcohol disorder zones, most companies are highly sceptical of any savings.

Mitchells & Butlers, which has more than 2,000 pubs and pub-restaurants, has predicted the cost of registering its estate at between £3m and £4m. Young's, which has 208 pubs, estimates costs could reach £500,000.

Young's chairman John Young said the licensed trade was being clobbered by the huge costs of licensing. "Our brewery used to be full of beer, now it's awash with paper," he said.

A spokesman for the British Beer & Pub Association said the average cost to pubs of gaining the required premises and personal licences was £2,000. Nick Scade, chairman of the Restaurant Association, believes restaurateurs face a bill of £1,000-£2,000.

"I've asked James Purnell just where my part of the £1.9b in savings is going to come from. The new regime has certainly not saved me any money, but it will cost me £350 extra each year," he said.

Mike Gore, business risk manager at Greene King Pub Company, said it had spent about £1.5m on ensuring the licensing reform process passed smoothly. "This cost has included bringing in extra staff to cope with the additional workload, drafting plans, application fees for both premises and personal licences, and advertising applications in the local press."

Challenges to vary licences was also pushing up costs, according to Richard Horrell, head of operations and planning at Wolverhampton & Dudley's Pathfinder Pubs division. He said as many as 15% to 20% of its applications to vary had attracted challenges, doubling or tripling costs.

Licensing lawyer Craig Baylis agreed that many more applications to vary a licence - mostly to open later on public holidays - had been contested than the Government had expected.

David Bishop, parliamentary officer at the Federation of Small Businesses, said the new regime was costing small businesses more than large operators.

"We have a major concern over the size of the bands used to calculate licence costs as there's a huge difference between a business with a turnover of around £4,300 and one with £33,000," he said. "The Government must revisit the banding system and consider offering a discount for businesses that don't make the majority of their money from alcohol."

Licence applications: Estimated costs

GroupSizeCost
De Vere Group54 hotels£55,000 -plus
Fuller's250 pubs£400,000
Young's 208 pubs£300,000-£500,000
Greene King Pub CompanyManaged 650-plus£1.5m
Greene King Pub Partners1,260£1.5m
Mitchells & Butlers2,000-plus£3m-£4m
Everads161 pubs£90,000
Eldridge Pope108 pubs£130,000
Barracuda160 pubs£200,000
Shepherd Neame379 pubs£400,000
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