The Social Responsibility Levy: Much Ado about Nothing?
The Alcohol etc. (Scotland) Act 2010 (the 2010 Act), received Royal Assent on 15 December 2010 and will come into force on 1 October of this year.
Whilst the Act proposes many wide ranging changes to liquor licensing in Scotland, one of the more controversial proposals is perhaps the Social Responsibility Levy.
The proposed framework of this levy may be found in draft Regulations. An initial consultation with the Scottish Government is currently underway with a view to the responses to that consultation being made publicly available. Further consultation will also be necessary before draft Regulations are placed before Parliament.
So, what is this charge and how is it proposed to work?
In essence, the levy is a payment due by licensed premises to local authorities to help towards the financial cost of dealing with the adverse social effects associated with drinking too much alcohol.
The general idea is that license holders will pick up the tab for the additional costs associated with, for example, extra policing needed to deal with alcohol fuelled disorder and the costs incurred by local authorities to deal with extra street cleaning.
The first interesting point to note is that a local authority will have the power to impose this charge but need not. This could mean that the levy could become law in some local authority areas in Scotland but not in others. And, as a local authority has the discretion to determine the amount, the cost may differ in different areas.
Many questions arise at this stage: Who will pay what? Will a nightclub that closes at 3am, pay the same charge as, for example, a small wine merchant that closes at 10pm? If so, is this fair? And how much will the charges be? Will the trade pass this on to the consumer?
Much discretion is also left to the local authority in respect of identifying the types of licensed premises that will pay (the potential pool is rather wideranging and includes both premises and occasional licence holders and holders of civic licences such as street traders, public entertainment and late hours catering).
The concept of a ‘double charge’ also arises in principle, whereby a premises or occasional licence holder may also be subject to another charge if they hold a civic licence. This may be affordable for certain types of premises. For example, large licensed supermarkets that hold a late hours catering licence. However, for those local grocery stores that have a small scale off licence and operate beyond 11pm, the concept of a double charge (which the local authority has the power to impose) may be more than small scale off licences can take.
The concept of ‘good practice’ (I have no idea how this will be determined other than it will be a matter for the local authority to determine) is also curious. The idea is that if a licence holder demonstrates good practice (yes, the onus is with you on this one to demonstrate it), then the local authority must give you a discount. The amount of this discount is to be decided following consultation. However, what if a licence holder calls the police frequently whenever there is trouble? Does this constitute good practice?
A reasonable concern is that the subjective nature of what constitutes good practice could lead to inequities in decision making from Board to Board and lead to patchwork decision making throughout the country. A statutory definition of Government guidance to assist in this regard would be helpful.
The questions, at this stage, are numerous. It is reasonable to ask where all this money will go. Can the industry be sure that the local authority will specifically use the money for the specified purpose? Remember, it is the local authority that will have the power to impose the charge and not the Licensing Board (which is itself a separate statutory creature). In this regard, the ring-fencing of funds raised will be crucial.
And if you don’t pay, what will the sanctions be? Will you have a right of appeal?
My view is that, should local authorities decide to exercise this power, it will impose a considerable administrative burden on them. I am not suggesting of course that they should not impose the levy – they have the legal power to do so. I am merely stating that, with the dust settling following the implementation of the Licensing (Scotland) Act 2005 and the amendments that will be brought to this piece of legislation via the Alcohol etc. Scotland Act 2010, (and not to forget the Criminal Justice and Licensing (Scotland) Act 2010) - it could all be regarded as too much too soon. Even for local authorities.
And let us not forget the trade. However laudable the intention may be, the concern must be that this levy will constitute an unbearable financial burden on it at a time when it can least afford it.
But maybe the concerns are much ado about nothing….? The statutory consultation may, after all, save the day…
All we can do is wait.
Watch this space.
For more information contact Caroline Treanor