Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

I beg to move amendment No. 211, in schedule 11, page 183, line 8, at end insert—

‘( ) Licensing rules may provide for fees to cover the whole cost to the licensing authority of dealing with the application, whether the application is granted or not.’.

The amendment was suggested by the Law Society. It is required to make it clear that licensing rules can put the whole cost of dealing with an application on the individual applicant, rather than leaving part to be borne by the licensing authority itself and thereby by other firms regulated by that authority.

It is an important general principle of the bill that the costs of regulation should, as far as possible, be borne by those whose activities give rise to the cost, rather than by the regulated sector as a whole. That is particularly important in respect of ABSs, where some applications could give rise to complex issues. It would be quite unsatisfactory for there to be a single flat fee applied to all applications, whether from a comparatively small applicant filling a gap in legal services or from a megastore supermarket seeking to set up the sort of service that might give rise to particular concerns about the possible impact on access to justice. We have just debated that.

If a single fee were set to meet all the costs of dealing with ABS applications, the result could be grossly unfair to the small applicant. However, a single fee at the level appropriate for the small applicant would involve an unacceptable cross-subsidy from the rest of the regulated sector—in this case, non-ABS firms—towards the cost of ABS regulation. The solution is to enable different fees to be fixed for different categories of applicants. That is dealt with to some extent in the provisions concerning not-for-profit bodies in clause 106, but it is also important to be able to vary fees, even among commercial applicants for ABS licences. There is no reason why an applicant whose application gives rise to no significant concerns about access to justice should pay the same fee as one that does.

If licensing authorities were unable to match the fee to the cost of dealing with the application, they might be inhibited from investigating applications as thoroughly as they should, particularly where access to justice considerations arise. The amendment is designed to stop that problem and ensure that the costs of dealing with applications can be placed on the applicants concerned.

Simon Hughes (Party President, Cross-Portfolio and Non-Portfolio Responsibilities; North Southwark & Bermondsey, Liberal Democrat)

We have subscribed to the amendment, which is entirely reasonable, and if agreed to it would not mean a mandatory requirement. It does not say, “licensing rules must provide”, it says “may”. It does not oblige the outcome advanced by the hon. Member for Huntingdon but gives the clear indication that people should pay for the application that they are making, which must be the right process. If people are making a much bigger application, the processing and consideration will take longer, more time will be needed and the fees will be bigger. The amendment does all the things that one would expect. I hope that the consumerists on the other side of the room will join those on this side, thinking that this is a reasonable way forward.

Bridget Prentice (Parliamentary Under-Secretary, Ministry of Justice; Lewisham East, Labour)

It is a very tempting thought that consumerists across the divide should get together. I do not know whether this is meant to be just a probing amendment, but I am rather surprised by it, because this matter was fully dealt with in the other place. I thought that the position was understood and that it had been accepted that the Bill—particularly schedule 11—gives the flexibility that the amendment is designed to achieve.

It is reasonable to expect a licensing authority to charge for the full cost of processing applications, whether or not the application is successful. As the hon. Member for North Southwark and Bermondsey said, some applications will generate a great deal more work than  others, and that will depend on the nature of the body making the application. The megastore mentioned by the hon. Member for Huntingdon that wants to operate in various locations will clearly need more consideration than a single firm operating in one place.

The amendment also mentions the fee being payable whether or not the application succeeds. It is important that the fee is payable regardless of the success of the application, otherwise there may be a temptation on the authority to grant an application where it really ought not do so. Non-refundable application fees are pretty common in many walks of life and I see no reason why it should be any different here.

If the full costs were not charged in each case, one firm could end up subsidising another. That could create some problems. For example, it might make the authority unattractive to firms if their fees were disproportionately high, and in that event they might seek licences from another authority. There is nothing particularly wrong with that in principle—the reforms are in part about regulatory choice—but it might well have a knock-on effect on the authority itself if there were fewer applicants, each of whom would effectively be paying a discounted rate. The licensing authority could lose money as a result, and I am not sure that that is what we want.

The Bill already addresses the issues that the hon. Gentlemen have raised. It gives flexibility to the licensing authorities in how fees are set. The fee levels and their effects on legal services mark-up will obviously be monitored by the board. Fee levels form part of the licensing rules, which for example could set individual fees based on the amount of work that individual applications were estimated to need. All those would have to be acceptable to the board before it would put forward a regulator for designation as a licensing authority. If the board is concerned about the effects on smaller firms or on competition, it can require changes or decline to recommend designation.

Given that what he is seeking is already achieved by schedule 11 paragraph (1) and by a number of other safeguards and flexible provisions in the Bill, I ask the hon. Member for Huntingdon to withdraw the amendment.

Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

The Minister seems to have created a new battle cry for international socialism: “Consumerists of the world, unite!” However, I appreciate her thoughtful response and I shall go away and think about it. On that basis, I beg to ask leave to withdraw the amendment.

Nicholas Winterton (Macclesfield, Conservative)

I ask Committee members to bear with me at this stage, because I have quite a lot of work to do in putting a number of matters to the Committee. With the Committee’s leave, I propose putting the questions on Government amendments Nos. 134 to 137 together.

Jonathan Djanogly (Shadow Solicitor General (Also Shadow Minister for Trade and Industry), Law Officers (Assist the Home Affairs Team); Huntingdon, Conservative)

So we are not including amendment No. 138.

Nicholas Winterton (Macclesfield, Conservative)

I was hoping that hon. Members on both sides would be listening carefully to what I said. I  propose, with the Committee’s leave, to put the questions on Government amendments Nos. 134 to 137 together.