Regarding the Licensing and Registration of Clubs (Amendment) Bill
This open letter is to draw attention to uncertainties arising from the draft Licensing and Registration of Clubs (Amendment) Bill and to ask for clarification as to how our businesses will be impacted.
The creation of a new category of licence (the ‘Producer’s Licence’) which will enable us to provide tours and sell our produce directly to the public is very welcome and will provide an opportunity for us to grow our businesses and create skilled jobs in the face of global interest in Northern Irish produce and craft alcoholic beverages.
However, we have significant concerns as to how the Clause 11 amendment (Sales and consumption of intoxicating liquor in local producer’s premises, also known as the ‘Tap-room Clause’) will work in practice.
Our key concerns are:
· Hours of Operation
The hours allowed for tours per Article 42(2) as amended are weekdays (except Christmas Day) 8am – 11pm and Sundays (excluding Christmas Day and Easter Sunday) 10am – 10pm, however a tap-rooms would only be permitted from 4pm – 10pm. We acknowledge that amendments in respect of increasing taproom hours have been debated by the Assembly, however we would like to assert our view that the hours in the draft Bill unduly limit our ability to hire additional staff and maximise the economic benefits of tourism. We also believe that this will cause confusion for tourists who will expect opening hours to be correlated.
· Clause 11 : Planning Permission
In Clause 11(1) as drafted, Article 52E(1) requires “premises […] part of which is structurally adapted […] for the purpose of providing persons frequenting the premises […] for consumption on the premises.”
It is unclear how a producer could comply with this requirement as it contains an implication that a section of manufacturing premises must undergo permanent structural change to facilitate on-sales. Given that production facilities are typically fully utilised and that any on-sales area would, per the legislation, only be available for use as on-sales for 7% of the time, this requirement has the potential to decrease production capacity and increase costs by requiring the rental of additional storage space, rendering any financial benefits from on-sales redundant.
Furthermore, in Clause 10(3) as drafted, Article 52B does not include any requirements for designating areas for consumption where a tour is involved. We are therefore uncertain how this would work in practice if samples were being provided to a tour group whilst, at the same time, a tap-room is in operation.
As such, there is significant uncertainty as to whether planning permission (and the associated costs such as legal fees) are required for an Article 52E Order to be granted. We have noted that, if planning permission is required, costs for applying for a 52E Order could exceed £10,000 which would place this far outside the financial scope of most small producers in Northern Ireland, especially with the limitations around trading hours and days.
We have noted that similar concerns arose in the Republic of Ireland following the introduction of the Intoxicating Liquor (Breweries and Distilleries) Act 2018. Whilst the legislation was intended to enable independent producers to grow their businesses, once enacted it was evidence that the requirements for applying for a licence were onerous and that the costs were disproportionate to the revenue benefits for those businesses.
The Independent Craft Brewers of Ireland have stated that the costly and complicated process of applying for a licence under that legislation, plus the associated legal costs and planning fees, have led to an ‘extremely poor uptake’ in the Republic of Ireland, with as few as three breweries making use of the legislation, only one of which was in respect of on-sales. We are deeply concerned that a similar situation could arise in Northern Ireland which cannot easily be rectified given the primary legislation and responsibilties of separate government departments.
· Clause 11 : Rating
Similar to the point above, it is unclear how requirements of Clause 11 will impact the rating of manufacturing premises. As drafted, Article 52E(1) stipulates that an Order made under Article 52E shall “specify any part of the premises as being suitable for the sale of intoxicating liquor produced in the premises for consumption in the premises during the hours specified in Article 42(4)“.
At present, it is unclear whether this designation would affect part or all of a production premises such that industrial derating could be revoked. Given the size of most local producers, the loss of industrial derating would be a significant cost, and for most producers the ability to sell on-sales for up to 12 hours a week would not generate enough revenue to make up for this loss, in effect financially disadvantaging producers.
· Clause 11 : Application Process
In Clause 11 as drafted, Article 52F(1) requires an application to be made in compliance with Schedule 10, however this schedule explicitly states than, for the purposes of the schedule, “licence” means an extension licence. Any application made by the holder of a Producer’s Licence under Article 52E would not be an extension licence (in the way that ‘extension licence’ is normally used in the 1996 Order). Further it is unclear whether this would cause confusion or administrative issues for courts when carrying out the evaluation of whether to grant an Article 52E Order.
We respect that a number of these concerns are in relation to how the amended Order will interact with the functions of other Northern Ireland government departments (specifically the Department of Finance for non-domestic rating and the Department of Infrastructure for planning permission) and that it would be inappropriate for you to make comment on the intentions and work carried out by these departments. However, we ask that you recognise the draft Bill has a number of potential problems which are causing significant uncertainty for producers. The unintended consequences of the Bill may be that producers are financially disadvantaged compared to the status quo.
Given the significant work that both departmental officials and the Communities Committee have put into this legislation, we believe it would be an abdication of responsibility on our part if we did not draw your attention to these issues before the Bill passes into law.
We therefore ask that you consider whether clarifications or amendments are required to the legislation in advance of it receiving royal assent.
We have given due consideration to how the legislation could be amended to avoid the risk of the types of interactions described above. Our preferred solution would be to allow the holder of a Producer’s Licence to issue occasional licences to themselves only and only for the premises stipulated on that licence.
This amendment would simplify the legislation by removing the need for Clauses 11 and 12 and simply requiring a short amendment to Article 30.
We suggest this is a practical solution in three respects:
· where taprooms have been organised under an occasional licence in the past, the courts have been able to adequately scrutinise the organisation of and premises for the event. This provides precedent and evidence that the process has been appropriate for the type and size of events typically undertaken. There are also appropriate measures for dealing with complaints and the revocation of licences already within Article 30.
· this would enable the Department for Communities to retain more direct control over how taprooms are able to be licenced and regulated by remaining in the scope of the primary legislation.
· this would not create additional obligations on the courts service and is therefore better value for money.
The requirements of an Article 30 licence are clearly stipulated in the legislation and unambiguous. However, the term ‘ancillary’ (as used in Article 30(5)(a)(i) of the 1996 Order) is not defined in that legislation.
The question of whether a temporary space within a production facility could be designated as ‘ancillary’ can, we believe, be demonstrated by two criteria:
1) The maximum amount of time that on-sales could take place at a production facility under a Producer’s License is 7% of the year (being 6hrs x 104 days a year maximum), making retail wholly secondary to the purpose as a place of production; and
2) Any area at a manufacturing premises where production is not occurring (ie a delineated area for on-sales / off-sales) would lose its industrial derating in accordance with LPS guidance (for example, an office within the production premises does not qualify for derating)
This would also alleviate the problems with opening hours and provide clarity to both producers and the officials of the law tasked with regulating events organised by holders of a Producer’s License.
We thank you for your time and look forward to hearing from you ahead of the Further Consideration Stage of the Bill in the Assembly. We would be grateful for an opportunity to discuss these issues with you further before then to provide clarity to producers and to ensure that this legislation is workable with an easy and streamlined process for small businesses.
Thank you in advance for your assistance.