Cumulative Impact Zones: failure to prepare is preparing to fail

Cumulative Impact Zones: failure to prepare is preparing to fail by Jeremy Philips

For over 500 years magistrates granted alcohol licenses at their complete discretion. Then in 2005 a new regime came into force, where the presumption was that applications would be approved, save where objectors could demonstrate potential problems based on either a threat to the general public’s or children’s safety, crime and disorder, or public nuisance.
This has changed. In many parts of the UK the burden of responsibility now lies with operators to prove that their premises will not have an adverse effect on the local community. This is because guidance issued by the Secretary of State under Section 182 of the 2003 Licensing Act explained that councils could use their powers to adopt policies to reduce alcohol-related disorder in established leisure zones in their towns. The response, while slow to catch-on, has been the steady spread of ‘Cumulative Impact Zones’ (CIZ); areas that councils have identified as problematic due to the number of licensed premises they contain. In these areas there is a rebuttable presumption that any new application for a premises licence, or variation of one that could increase alcohol sales, will be refused.
This is a radical change to our licensing laws, and although not set out in the legislation itself this ‘guidance’, published originally by the Culture Secretary and more recently the Home Secretary, is having a marked impact on many businesses and property owners across the country. There is also very little one can do to prevent the designation of an area as a CIZ, unless one challenges the very evidence supporting the initial proposal, which will be beyond most licensees. Apart from judicial review (and I should say that the establishment of a CIZ has yet to be challenged in the High Court), businesses are left with a generally informal local process to object to a proposed CIZ. In reality, such consultations invariably result in the designation being adopted by the council, which will often have the support of residents and local police, the latter suitably armed with crime statistics.
What this means for new businesses
For freeholders and their tenants looking to obtain a new or later license for their premises within a CIZ the challenge isn’t insurmountable, but it is certainly extremely difficult. Their task will be to persuade the council to grant a licence in spite of its own policy. This means providing evidence to prove that despite the new licence, later hours or larger premises, the venue will not add to the areas’ proven problems. Now of course this is difficult as the correlation between more and/or larger bars and increased intoxication is an obvious one. However there are worthwhile strategies to follow that can help your case. These include, for example, placing an emphasis away from vertical drinking towards food and entertainment, if that is consistent with the style of business. Similarly, if you can show that your premises will present an entirely new kind of operation to the area, with for example ‘upmarket frontage’, door staff to improve safety and security, and lighting around the premises the odds can improve greatly, depending upon the reasons that the CIZ was adopted. Just as important is to be able to produce good references and a portfolio of other premises where there have been little to no complaints from residents or the police.
A good example of this was a new bar in Leeds that was granted a licence recently, despite its being in a CIZ, due to its portrayal as a specialist bar designed for beer connoisseurs. Another worthwhile approach in appropriate cases is the ‘broken window’ argument, where it can be suggested that a new venue would actually benefit an area more than a traditionally crime-attracting vacant space. I recently advised a client in a south coast resort to adopt just this argument. This, coupled with plans to decorate the venue to the highest standards and a pledge to set an example when it came to control of the door, led to the ultimate success of the heavily contested application.
What happens if you are an existing tenant within a CIZ?
Once you have been granted your licence then happily there is no longer any need to ‘renew’ your licence. Instead one simply pays the annual fee. Nevertheless, if you operate within an area given a CIZ designation then the risk of any licence within that area facing review proceedings will inevitably be higher. As public disorder issues have already been identified, if your premises come to be seen as part of that problem, it can be a case of ‘step out of line and it will be very tough to get your business back’! In my experience, this is a particular worry for the freeholders of leisure properties within CIZ’s who could, through no fault on their part, face a dramatic drop in the value of their properties in the event that their tenant loses the licence.
My advice to freeholders is to make sure from the outset that you are fully aware of the situation and the risks that come with owning a licensed property within a CIZ. Practical steps to consider include tweaking the lease covenants to put in place additional duties to notify the landlord of any problems – for example if the tenant receives any letter of complaint from the local authority or other regulatory body, and taking out a loss of licence insurance policy. Another step is to pay the modest fee of (presently) £21 per annum to register an interest with the council, entitling you to receive notice in most cases if the property is threatened with enforcement action. It has also now been recognised by the High Court that in certain circumstances it can be legitimate for two licences to be held for the same property. In a high profile case in July of this year the High Court ruled in favour of a nightclub premises in Guildford that had taken out a shadow licence as a form of protection against loss.
Finally, for tenants facing a threat to their licence, it is crucial to respond quickly at the first sign of trouble and to identify an expert to offer guidance and help steer your case. All too often we see cases where licensing barristers have been brought in far too late on applications, or reviews that were rushed through by the business owners and which have led to the wrong outcome, perhaps unnecessarily, as a result. By thinking strategically and getting advice at the outset this can be avoided as in my experience these stress areas aren’t necessarily a lost cause; you can get – or keep – licences so long as you’ve focused on the real issues from the outset.
Jeremy Philips is a myBarrister licensing specialist. 
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