There are different pieces of legislation (laws) that require or allow the Council to license different activities:

• Animal businesses
• Caravan and camping sites
• Gambling
• Alcohol, entertainment and late-night refreshment
• Pavement furniture
• Scrap metal dealers
• Sex establishments
• Skin piercing
• Street trading
• Taxi and private hire
• Charitable collections

In some cases, the law is specific about the fee that a person applying for a licence needs to pay. In some cases, the law allows a Council to charge a fee if it wishes. For some types of licence, the Council cannot charge a fee at all.

Where a Council can decide to charge a fee and the amount that is charged, there are certain principles that apply. This includes Councils not being allowed to deliberately make a profit. Councils can look to recover all of the costs they incur when dealing with these particular types of licence, providing they are ‘reasonable’. These can be costs for:

• Processing an application.
• Carrying out an inspection.
• Monitoring a licence holder’s compliance with rules and responding to suspected breaches.
• Enforcement against unlicensed people/activities.
• Administrative costs.

The aim, when calculating fees, is to try and ensure each fee covers all costs; not just the time spent by staff doing tasks, but as much of the other costs the Licensing service incurs, as is reasonably possible.

If it were decided that fees should be set below full cost recovery level, the Council’s General Fund would need to meet the shortfall. The General Fund is ‘pot’ that Council tax payer’s money goes into, which pays for lots of important frontline services.

 

Each fee comprises of seven, separately costed elements:

1. Components

The cost, where applicable, of any items or which are issued to the licence holder alongside the basic licence document. For example, a vehicle licence plate and stickers or driver licence ID badge.

The total cost of this element is the sum of all necessary components. Where components are not necessary, the total cost of this element will be zero.

2. Services

The cost to the Council of any services that are necessary as part of a particular licensing regime within a 12-month period. For example:

• Staff and/or councillor training courses.
• Publication of notices in newspapers.
• Professional body membership.

Some services that are received will benefit multiple licensing regimes. For example, training for staff on criminal evidence gathering. In such cases, the cost of that service is split amongst the various regimes that benefit. The percentage each regime contributes is calculated by comparing the number of licence applications (including notices) and service requests (complaints and reports) the Council received in the last financial year.

Regime	No. of applications and service requests in 2021/22	% Split
Animals	190	3.5%
Caravan and camping sites	75	1.4%
Gambling Act 2005	249	4.6%
Licensing Act 2003	3144	58.6%
Pavement licensing	105	2.0%
Scrap metal dealers	10	0.2%
Sex establishments	1	0.0%
Skin piercing	153	2.9%
Street trading	159	3.0%
Taxi and PH	1027	19.1%
Charitable collections	253	4.7%
Total	5366	100.0%

 

Since animal licensing is judged to broadly represent 3.5% of the work the Licensing service does, 3.5% of the cost of things like criminal evidence gathering training is included within the ‘Services’ element of the animal licensing application fees. For taxi and private hire licensing, it would be 19.1% and so on.

Once the total cost of all the services, whether split or in full, is calculated, it is then divided by the number of licence holders to give a ‘cost per licence holder’. This is so that each licence holder contributes an equal amount, for every licence they hold, towards the cost of the services benefitting that licensing regime in a 12-month period.

1. General admin

The estimated cost to the Council of the time spent on any administrative activities which are not related to specific cases or applications within a 12-month period. For example:

• Responding to formal complaints.
• Budget monitoring.
• Fee setting.
• Making changes to policy.
• Statistical returns to central government.
• Meetings of the Licensing Committee.

The total amount of hours and minutes spent on each activity, by each type of staff member, is estimated.

As with ‘Services’, some activities will benefit multiple Licensing regimes and therefore only a percentage of the total cost is used to calculate the overall total cost of all ‘General Admin’.

As above, the total cost is divided to give a ‘cost per licence holder’.

Where a fee relates to a licence with a duration of more than one year, the cost per licence holder is multiplied by the number of years it will last. For example, as the standard duration of a private hire operator licence is five years, that cost is multiplied by five. This ensures that the applicant/licence holder contributes towards the future costs to the Council, up to the point of time the licence expires and a renewal may be made.

2. Compliance

The estimated cost to the Council of the time spent on recording and responding to service requests that relate to licensed persons or vehicles.

The cost of the time taken to record, investigate and follow up a service request, on average is calculated, then multiplied by the number of compliance service requests predicted for the forthcoming 12-month period. The latter number is taken from the average number of compliance service requests received across three 12-month periods.

As above, the total cost is divided to give a ‘cost per licence holder’ and is multiplied for fees relating to licences of multiple years in length.

3. Enforcement

The estimated cost to the Council of the time spent on recording and responding to service requests that relate to unauthorised activity i.e. unlicensed persons or vehicles.

The average cost of a service request is, this time, multiplied by the number of enforcement service requests predicted in the forthcoming 12-month period (based on the average across the three same 12-month periods).

As above, the total cost is divided to give a ‘cost per licence holder’ and is multiplied for fees relating to licences of multiple years in length.

4. Rolling reserve

The setting of fees is not an exact science, as it relies on calculations used to predict about the number of licence holders the Council is likely to have, and number of licence applications that will be received (with fees paid), in the upcoming 12-month period.

A rolling reserve is maintained for the Licensing accounts so that any over or under recovery of income is carried forward and factored into the setting of future fees. This is done by dividing the total reserve by the number of applications predicted in the forthcoming 12-year period, to give a ‘cost per application’.

Were there to be a positive reserve carried forward from one financial year to the next, because of over recovery, a negative figure would be applied ‘per application’.

5. Processing

This is the total cost of the time it takes for the various staff to carry out all the individual tasks connected with each specific application. For example, the creating of a record on the Licensing database, checking of the application to see if it is complete, issuing of a licence etc.

 Some of the elements, especially ‘Processing’, include the cost of the time a particular person spends on each specific task. To calculate that cost, the time taken, on average, to perform that task is multiplied against an hourly rate appropriate relevant to the type of staff that do the task. That hourly rate is constructed of the salary costs of the role, and non-salary on costs (also known as ‘overheads’).

Some of the calculations rely on the number of applications or service requests that are predicted to come in (during the 12 month-period the fees are being set for). The numbers of renewal applications predicted is taken as 95% of the total number of licences, by type, which are set to expire during that 12-month period. For other application types and for service requests, the prediction is based on the average number received across the last three, full 12-month periods.

In the example below, the total number of predicted compliance and enforcement service requests for the 2023/24 period was calculated by adding together all of the data from records across all of the existing four district Councils. Compliance service requests was predicted to be 13 (12.67 rounded up) as that was the average per year, across 2019/20 to 2021/22. The number of enforcement service requests for that period was predicted to be 19 (rounded down from 19.33).

Service requests	2019/20	2020/21	2021/22
	Total	Total	Total	Average
Compliance (licensed activity)	7	16	15	12.67
Enforcement (Unlicensed activity)	10	19	29	19.33

 

Differences from previously set fees

You may notice that some fees go up, whilst others go down. This isn’t uncommon but will be more noticeable this year with the formation of the new Council.

The Mendip, Sedgemoor, Somerset West and Taunton and South Somerset Councils all had methods for calculating fees which were broadly similar, but not identical. The fees for Somerset Council were calculated using one method, using data from all the four District Council’s databases.