Cheltenham Borough Council has become the first local authority to scrap its late night levy, with its focus turning instead to its Business Improvement District (BID).
The local authority adopted a late night levy in 2014. However, last August it adopted its first BID, which is funded through a BID levy calculated as a percentage of business rates. In Cheltenham the BID levy has been set at 1.25%.
This is set to generate around £440,000 annually or £2.15m over the five-year term of the BID.
According to a report prepared for a council meeting last week, the significant majority of licensed premises are also subject to the BID levy “which means they are disproportionately affected”.
It noted how the BID provided a lot more flexibility, but also that projects and work currently funded by the late night levy outside the BID area would not benefit from the BID funding.
The report recommended scrapping the levy for three primary reasons:
- The need to ensure that businesses were not unduly burdened by two levies;
- The understanding that levy activities would be incorporated in BID activities; and
- The fact that BID income would be substantially more than the income raised through the levy.
Following the decision last week (24 February), the late night levy will cease to have effect from 1 April 2017.
Cllr Andrew McKinlay, cabinet member for development and safety at Cheltenham, said: “The late night levy was adopted by Cheltenham in 2014 and has raised in excess of £250,000 since its adoption. The council, in partnership with the PCC [Police and Crime Commissioner], has funded a wide range of projects since 2014 that has made a tangible difference to the management of Cheltenham’s night-time economy to enhance an already save night out for all.
“Since 2014, Cheltenham adopted a business improvement district. The council has taken a view that the new business improvement district is a more suitable vehicle for doing what the levy has been paying for because the BID is more flexible and will raise substantially more than the levy.”
Cheltenham’s decision was backed by the British Beer & Pub Association (BBPA), which highlighted how the council had not received the level of revenue that had been predicted after implementing the late night levy three years ago.
The BBPA said it would continue to oppose late night levies. It argues that BIDs and other partnership schemes such as Pubwatch and Best Bar None are more effective.
The association recently opposed Gloucester City Council’s plans for a levy, and wrote to Liverpool City Council urging them to look again at its decision to implement one.
Liverpool decided to impose a levy despite its licensing committee originally rejecting a proposed scheme earlier in 2016.
Last month Tower Hamlets Council approved the implementation of a late night levy. This levy will come into force on 1 June 2017.
Brigid Simmonds, BBPA Chief Executive, said: “Cheltenham Council have taken a wise decision in abolishing their late night levy. A levy was implemented in 2014, but it has failed to reach expected revenue targets, raising less than 39% of the £199,000 figure that had been predicted in the first year.
“Small businesses like pubs contribute to the levy, but the funds collected are not reinvested to tackle the particular problems that these small businesses face. Local pubs are already struggling with high business rates, other taxes and red tape, and the decision to remove this extra tax is very welcome.”
Simmonds added: “We will continue to oppose late night levies, campaigning against them wherever they are proposed. Other councils, such as Leeds and Bristol, have taken the decision to abandon their late night levy plans, and it’s very encouraging to see a levy removed, for the first time.”