By Daniel Hunter

Taxpayers are forking out almost £1.5 million a month to subsidise the drinks industry because of government delays to reforming licensing rules, council bosses are warning.

Nationally-set and outdated licensing fees are stopping councils from recovering their full costs from applications from pubs, nightclubs and off-licences, meaning the cash has to come from their already stretched budgets.

The Local Government Association, which represents more than 370 councils in England and Wales, is calling for government to honour its promise to allow councils to set flexible, cost neutral charges which fairly represent their costs.

A more tailored approach would also allow authorities to set in place licensing arrangements which encourage responsible enterprises, reflect the type and size of venue and can more effectively penalise businesses which flout regulations or encourage anti-social behaviour.

Despite making a commitment to introduce locally set fees in 2011's Police Reform and Social Responsibility Bill, Whitehall has still not issued a consultation on how to implement them. Meanwhile, councils, which are already struggling to provide vital services in the face of 33 per cent budget cuts, are left picking up an estimated £17 million tab every year.

All venues in England and Wales currently pay fixed national licensing charges, depending on the type of application. However, the true cost of licensing — which includes site visits, public consultation, liaising with police, committee hearings, investigating and taking action on breaches - can be several times higher. Councils are not permitted to make a profit on licensing fees, but by reforming the system they would be able to recover the actual costs of an application from those who will benefit from it.

"It's clearly wrong that taxpayers are subsidising the drinks industry. Councils want to support good local pubs but cannot be expected to continue picking up the tab for licensing fees which are outdated and not fit for purpose," Cllr Mehboob Khan, Chair of the LGA's Safer and Stronger Communities Board, said.

"As well as meaning more taxpayers' money could be spent on frontline services, a more flexible licensing system would help councils support responsible venues which enrich local communities and put pressure on those which encourage excess drinking, noise and high street mess.

"The Government needs to stop dragging its feet and deliver on its promise to allow locally-set fees. It's costing councils almost £1.5 million for every month which passes without government delivering on its promise. This is money which could be spent on filling potholes, libraries, caring for the elderly and protecting children."

The LGA is today (Tuesday) holding a licensing summit where leading councillors, licensing officers, police and crime commissioners, trading standards staff and directors of public health, will discuss fees and other issues such as metal theft, minimum alcohol pricing and using licensing to reduce alcohol consumption.

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