Of all sectors of the UK economy, one of those likely to be hardest hit by COVID-19 is the hospitality industry, and especially operators of licensed premises. In this fast moving and unpredictable environment, it is important that licensees keep up to date with current information and review how this may impact on their businesses in order to work towards protecting their business moving forwards along with exploring potential available options. At Burges Salmon we are well versed in helping clients navigate challenging times.
The government’s restrictions on the operations of food and drink businesses and the strict legal controls on movements of people will have an immediate, drastic impact on all licensed premises. These restrictions will clearly be at the forefront of most licensees’ concerns, as will the question of those options and potential opportunities that might still be open to licensed businesses (including providing a takeaway or home delivery service). The COVID-19 lockdown has also raised questions over the ability of the licensing system to continue to function – specifically in respect of the conduct of licensing applications and hearings. Finally, given the nature of the crisis, there is an increased risk of lapse of premises’ licences and it is important to bear in mind the appropriate procedure in that event.
Restrictions on business
On 21 March 2020, the UK government brought into force regulations imposing restrictions on businesses selling food or drink for onsite consumption. These restrictions were subsequently incorporated into broader regulations applying to a much wider range of businesses, which came into force on 26 March.
We have also considered the broader ramifications of these regulations for the retail and leisure sectors.
From the perspective of operators of licenced premises, restaurants, cafes, bars and pubs are required to stop selling food and drink for consumption on the premises and to close any premises, or part of the premises in which food or drink are sold for consumption on those premises. Failure to comply (without a reasonable excuse) is an offence.
The regulations also make it an offence for individuals to leave their homes without reasonable excuse, and an offence for people to gather in groups of more than two (with certain, limited exceptions).
The Secretary of State is required to review these restrictions every 21 days (the first such review by 16 April) and to terminate any restriction as soon as they consider that it is no longer necessary in the context of the public health response to COVID-19. The regulations include a 'sunset clause' which means that, in any event, these regulations will automatically expire after six months (on 26 September 2020). Nevertheless, it appears likely that these restrictions will be in force for some time.
Options remaining to licensed premises
From 26 March, the usual operating model for the majority of licensed premises is, effectively, illegal. However, businesses may still be able to offer a takeaway or home delivery service. This remains subject to restrictions under other legislation – in particular planning and licensing regimes.
With regard to planning, the government has, temporarily, expanded permission to provide takeaway food. The official guidance is clear that the intent is for premises that do not currently offer this service to be able to do so, and that related premises can remain open in order to provide this service. However, businesses are encouraged to take orders either online or by telephone and, as is provided for in the Regulations, businesses are not permitted to provide seating for customers to consume food or drink on or adjacent to the premises. Read our planning article for further details.
Relaxation of the planning regime does not extend to permission for off-sales of alcohol unless already provided for in the relevant premises licence. Businesses looking to sell alcohol for consumption off the premises and/or to offer a home delivery service should first review the conditions on their licence to confirm that they are licensed to do this. If looking to provide a delivery service, businesses should also take legal advice to ensure that their service offering is compliant with relevant licensing law.
Licensing applications and hearings
The situation created by COVID-19 and the government’s response is unprecedented in modern times, and was not envisaged by the procedures laid down in the Licensing Act 2003.
Restrictions on movement and gatherings have a direct impact on official hearings, including those related to premises licences and licence applications. The question of whether and how such hearings could proceed where officials and other participants were not able to attend in person has been the subject of some debate – for example, does the current law allow for such hearings to take place remotely (e.g. by way of videoconferencing software)?
Furthermore, licensing applications (whether for new licences or certain variations) require that advance notice be given in order that local residents and others have opportunity to consider and make representations, by way of physical notices near the premises and published notices in local newspapers.
On 2 April, the Institute of Licensing published a protocol for licensing applications and hearings during the COVID-19 crisis. This protocol is being maintained and updated by the Institute.
A key message in the protocol is that the licensing system should not come to a grinding halt due to the current crisis. The protocol, while not binding on licensing authorities, makes a number of suggested forms of practice, compliant with existing licensing law, that are intended to ensure continuation of the licensing regime despite the restrictions imposed by the government response to COVID-19:
- Use of online applications as a default position (replacing postal applications)
- Use of remote technology to continue provision of pre-application advice
- Active efforts by all parties to explore possibilities for compromise to enable determination of applications without the need for a hearing.
In respect of advertising, the protocol indicates that applicants should continue to perform statutory obligations (see above) where possible, to be supplemented by online publication of notices; in online newspapers or even, potentially, bespoke web pages created and maintained by Licensing Authorities.
The protocol further suggests online publication by Licensing Authorities of full details of all licensing applications, in recognition that local residents may not be able to visit their local council buildings to inspect application documents. The protocol also suggests that Licensing Authorities raise local awareness of licensing applications through circulation by email to local ward Councillors, Parish Councils, local residential and civic amenity groups, and organisations representing local operators and businesses.
With regard to hearings, the existing licensing regime provides for adjournment of hearings, however the protocol notes that indefinite adjournment until further notice' is contrary to these provisions - i.e. licensing authorities cannot simply postpone all hearings indefinitely. Furthermore, the protocol discourages lengthy adjournments as a general practice with a view to keeping the licensing regime operating without accumulation of significant backlog.
Instead, remote hearings are to be encouraged. There is considerable commentary to suggest that virtual licensing hearings are not prohibited under current law, and the protocol recommends that Licensing Authorities seek to convene remote hearings wherever possible.
This has now been formalised in regulations. The Coronavirus Act 2020 (which received royal assent on 25 March) allows the Secretary of State (or equivalent authority in Wales or Northern Ireland) to make regulations relating to such hearings, apparently with these concerns in mind. Relevant regulations were made on 2 April and came into force on 4 April in respect of England (the authors of the protocol express the view, in relation to Wales, that remote hearings can still be carried out under existing licensing law). These regulations make clear that such hearings can be held in 'electronic, digital or virtual locations such as internet locations, web addresses or conference call telephone numbers'. The regulations also confirm that a hearing is 'open to the public' if it can be accessed through remote means.
Further to these regulations, on 8 April Kit Malthouse, Minister of State for Crime and Policing, published a letter to the chairs of the various licensing committees, giving further guidance on operation of the licensing system during the present crisis. This makes clear the government’s view that licensing hearings should proceed where possible (including by remote hearings), and also its preference for a flexible approach to advertising requirements (in respect of which the Minister’s position is very similar to that set out in the protocol). It is also worth noting that the Minister urges a pragmatic approach more broadly, including with regard to breaches of licensing conditions and procedural defect, and late payment of premises licence fees or late-night levy charges. The key message of flexibility and pragmatism is echoed in an advice note on licensing published by the Local Government Association on 9 April.
As mentioned above, the protocol is not binding. However, it is to be hoped that in light of the protocol, the regulations and the content and tone of the ministerial letter that licensing authorities will act pragmatically to ensure that the licensing system continues to function, especially bearing in mind the new regulations confirming the validity of remote hearings. If licensees (or prospective) licensees face difficulties in this regard they should seek legal advice.
Lapses of licences
It is sadly likely that some corporate licence holders will go into insolvency as a result of the COVID-19 crisis. The nature of this crisis also means that, tragically, there will be loss of life.
In event of either insolvency or death of the licence-holder, the licence will immediately lapse. However it is possible for certain interested parties (such as the relevant insolvency practitioner or the licence-holder’s personal representatives) to give an interim authority notice to the licensing authority: this has the effect of reinstating the licence as if the person giving the notice is the licence holder, allowing licensable activities to take place pending formal application for a transfer. The maximum period for which such notice can have effect is three months and the application must be made within 28 days of the lapse of the licence. We are able to assist with these applications.
Burges Salmon’s Licensing team is able to assist operators of licensed premises with all types of licensing issues and help navigate any particular issues faced at this time. For further information on, or assistance with, any of the issues raised please contact Joanne Attwood, Head of Licensing or Stephen Lavington, Senior Associate.