Several local councils have expressed concerns about the impact of licensing. For instance, Highland Council has estimated a need for 6-17 staff just to implement licensing (this does not even include preparations for planning control zones). These staff will need permanent contracts but given the last 10 years of cuts and voluntary / redundancies, how such councils be able to afford this HR cost? Overall, the ASSC contends that the Scottish Government have not properly addressed the concerns from local authorities, or indeed the Law Society of Scotland.
Local Authorities are under extreme financial and capacity pressures as a result of austerity compounded by the Covid-19 pandemic. It seems, therefore, that not only is the Scottish Government determined to dismiss the views and data provided by the sector that this will have the most impact on, but pleas from the delivery agents of Licensing are also to be ignored with similar disdain.
Legal experts have long since predicted a surge in licensing applications for short-term lets for when the scheme goes live, potentially overwhelming local authority departments.
The unprecedented scale and resource implications for local authorities were well summarised in January 2020 by licensing expert Stephen McGowan of TLT LLP. Mr McGowan, who is chairman of the Institute of Licensing Scottish region, and accredited by the Law Society of Scotland as a specialist in licensing law, and member of the Short-Term Let Working Group, explained that the regulation will … have a significant impact on local authorities and other local services. He said:
“Provision will need to be made to deal with the impact of such a magnitude of applications on local authority resources. A massive rush of applications of this order could bring licensing administration to a halt, and have a knock-on effect on reporting obligations with Police Scotland and other authorities such as Fire and Building Standards, who will likely have to comment on each application. This could impact on processing times for other types of civic licence.”
Mr McGowan also noted the following on the implications of licensing and provided a comparison with changes made to the liquor licensing regime:
“It has been put to me that councils can “gear up” and bring in temporary staff to help process these applications, but that would only take us so far. There are approximately 32,000 properties in Scotland registered on the successful Airbnb platform alone. By contrast, when the liquor licensing regime changed in 2009 there were around 16,500 applications to process and it was a mammoth task for everyone concerned. The licensing system is supposed to wash its own face and it will be for local authorities to determine a fee for these applications to cover projected costs, but even that is not the full picture. Licensing is a specialist area and the impact of the new regime is not just about the cost of employing temporary office staff to process bits of paper. It’s also about the inspections that will have to occur in order to produce reports that the properties meet the required safety standards. There is also the impact on police resource. Every application will need to be reported on and every person checked for criminal convictions and so on. The police may also be asked to report on evidence of antisocial behaviour. The police will see no percentage of the licence fee, and all of this will be happening on top of the other licensing business that both the council and the police are dealing with. It is not too wild a projection to see how the licensing system itself could creak and create delay and logjam, without the right precautions being taken”.
The Law Society of Scotland also warned on the cost of the regulations and that local authorities may not be ready from a resourcing perspective: “There are unlikely to be resources in place at present in local authority licensing or planning departments to cover such additional and in certain areas, extensive work.”
The policy intention is that the fee levels should cover adequately the staff and administrative costs. However, that ignores the considerable cost of establishing the scheme:
“There are often significant infrastructure costs in introducing new schemes, for example new IT systems, which cannot always be fully recovered…We question whether it is proportionate for applicants to be fully liable for costs of establishing a system, including preparing staff to run the scheme. We suggest that it is appropriate to consider this question in the context of balancing the extent of the mischief which the scheme aims to regulate with the potential gain to the wider public of regulation.”
“In addition, there are likely to be practical challenges with this approach. How may each local authority calculate expected numbers of applications be quantified to be able to work out what the costs should be per application? What is the approach to be by local authorities to differing circumstances, for example, those undertaking home sharing versus those undertaking secondary letting? The omission of a BRIA, or partial BRIA, from this consultation make these questions particularly pertinent.”
The Licensing Law Committee of the Law Society of Scotland has emphasised the importance of piloting the new licensing scheme ahead of implementing the new powers – but the Scottish Government have no plans to do this.
It is clear that increased regulation will place additional burdens on local authority planning and licensing teams to manage the requirements of a new scheme at a time when they can least afford it. A proper impact assessment of the costs is required urgently as part of the Business Regulatory Impact Assessment process.
The Scottish Government continue to maintain that the fees charged will make the system cost neutral but the local councils clearly state that does not address:
“It will be necessary to understand the administrative burden that this may place on local authorities and how this will be resourced.”
Aberdeen City Council
“We believe that the 12-month lead-in time to establish our Short-term Let regime will be resource intensive and there will be no ability to recruit additional staff when resources aren’t available until licence applications are submitted and fees paid. This poses staffing issues for the council. Consequently, we believe that the Scottish Government should fund the start-up costs.”
“…it is considered essential that Scottish Government provide specific funding for additional resources required by LA’s to cover the initial set up costs, including the transitional and compliance elements of the new legislation.”
Comhairle nan Eilean Siar
“We have no indication of what the full impact of any COVID-19 fallout will be as the situation is ongoing. Economic recovery may be protracted and we may be dependent on our Tourism Sector to inject life into our economy. Providing us with as much flexibility as possible with regard to regulations would help us in the long term.”
“The evidence gathering, consultation and mechanism to set up a control area will require resourcing, finance and additional staff time to deal with retrospective planning applications where these are required during the transitional period. This legislation will have significant implications for both Development Plans & Development Management, ever diminishing teams against a background of annual budget cuts.
The issue of enforcing regulations and the extra work this will entail is likely to fall on Planning and Licencing staff. In the current climate, the Comhairle is undergoing consultations on cuts that will need to be made to balance support given during lockdown. There is no budget available currently for the recruiting and training of staff and although it is anticipated that potential fees will pay for any staff, there is an initial outlay required, which has not been planned for in budgets. We propose an initial start-up grant or loan from Scottish Government.
Each application would require due consideration and income from planning fees for Change of Use, at current levels, would be unlikely to cover additional staff time for this work.”
“Paragraph 6.4 all local authorities must have a live licensing scheme open to receive licensing applications by 1 April 2022.
• There are 18 months until this needs to be in place, and probably about 12 months once we know the outcome of this consultation and see guidance in the spring. There are policies to be written, consultations to be carried out with public and stakeholders, committees to seek approval from, staff to be employed and trained etc. We are still working from home and under restriction, and with the best will in the world, 18 (or 12) months to get everything underway, when we don’t know what is happening with our workplace, or indeed the way we are working, seems ambitious.”
Glasgow City Council
“It is anticipated that there will be significant resourcing issues for the Local Authority in setting up a licensing scheme. Significant staff resourcing for set of scheme/verification process/carrying out inspections/enforcement etc. would be required.”
“The new regulatory responsibility of both licensing and control areas are anticipated to have significant, budgetary and regulatory impacts on the Highland Council; invoking responsibilities in relation to the status and safety of a very large number of properties across a dispersed geographical area…”
Highland Council also estimate that they could receive as much as “10,000 potential applications” on licensing and that while the “scheme permits a phased approach over a 3-year period but this will still present considerable administrative and operational undertaking for dealing with the initial applications. Ongoing resource will then be needed for renewals and new premises.
The workload will necessitate additional staff for the following teams:
North Ayrshire Council
“Councils are to set up a new system, complete with new conditions and an inspection system involving Housing, Protective Services and Planning by 1 April 2022 at the latest. This would be a substantial task at any time, but it is particularly onerous when Council staff, working remotely, are facing increased demands to provide services to the public due to the coronavirus pandemic and Councils are facing unprecedented challenges, particularly with regard to licensing due to the coronavirus pandemic.
(a) if premises are to be inspected, Council staff must be available for this;
(b) Council staff are already having to work under pressure as the Coronavirus restrictions are regularly changed. In the case of STLs, where there are objections or representations to Licence Applications, delegated powers are not available to Council officers and the Application must be considered by the Licensing Committee. If there are to be around 327 Applications in North Ayrshire, then a portion of them will need a ‘virtual hearing’ compliant with ECHR 6. This would place a burden on Licensing Authorities at a time when they are least able to bear it.
2.2. Although Councils will be able to choose when the licencing scheme will start locally, it must be within 12 months after 1 April 2021.
2.3. The new STL system commences at most 18 months away, and Councils have not seen the secondary legislation on which the new system will be based. It will be laid in Parliament in December 2020 and has not been issued in draft. It has not been stated whether Application forms and other documentation will be prescribed, or whether they are to be drafted by individual Councils.”
South Ayrshire Council
“…there is an element of concern regarding the proposed lead in time for implementation of a robust licencing regime, the resources this will require and the added pressure to workloads required of staff and services.”
“The implementation, management and enforcement of the [licensing] process is considered particularly resource intensive for local authorities, with little guidance given around who would be expected to lead the process.”
West Dunbartonshire Council
“For smaller authorities with fewer short term let premises it may be difficult to fully resource an effective and efficient service without the fees being very high and thereby creating a wide and varying fee structure across the country. There is a concern about the level of Fees that a smaller Local Authority may charge where they are not dealing with a large volume of applications and have limited resources to deal with such applications. The fee structure may not be of a sufficient level to meet resource concerns and the adverse comparisons by the public as to differing fee structures around the country as can happen in Civic Government Licensing.”
On 22nd January 2021, the following answer was provided to Finlay Carson MSP:
Finlay Carson (Galloway and West Dumfries) (Scottish Conservative and Unionist Party): To ask the Scottish Government, in light of the responses from local authority stakeholders to the consultation on short-term lets, whether it will provide grants or loans to councils to assist with the costs of setting up a licensing scheme, and how many have (a) requested and (b) indicated that they might require additional funding. (S5W-34589)
Kevin Stewart: Local authorities will be able to charge fees to cover the cost of establishing and running their short-term lets licensing scheme. The Scottish Government has no plans to provide grants or loans to local authorities to do so. A total of 23 local authorities responded to the Short Term Lets: Consultation on a licensing scheme and planning control areas in Scotland (14 September 2020); see www.gov.scot/publications/short-term-lets/ for the consultation paper and report. Three of those responses expressed the opinion that the Scottish Government should provide grant or loan funding to support the establishment of the licensing scheme. Outside of the consultation, no formal requests for additional funding have been received.
The Impact of COVID19 on the Financial Sustainability of Local Government in Scotland Consultation responses further illustrate that Local Authorities have neither the funds, or time to spend on implementing a License scheme.
Joint Submission from COSLA, Solace and CIPFA Directors Of Finance
Local Government needs absolute flexibility to manage funding locally and to respond to need, rather than be pressed into areas of specific spend or to be limited to using funding by an artificial deadline or within financial year. The outcomes that were jointly agreed in the National Performance Framework (NPF) should govern how well Local Government’s performance is measured and a much greater focus on how Local Government is achieving over 60% of priorities in the NPF, rather than the current landscape of siloed pots of national funding, with micro-management of each. A more strategic approach is also required to enable Local Government to address the inequalities with our communities in a holistic manner. Ministerial engagement must demonstrate respect for Local Government and for Ministers to trust Councils to get on and do the work they were democratically elected to do.
Submission from Argyll & Bute Council
West Lothian Council:
On 9th October 2021, West Lothian Council released a press release stating that STL licensing will “add needless workload to council staff who have seen a 3000% increase in their caseload since the start of the pandemic”.
“They have urged licensing lawyers to ask questions of the Scottish Government why legislation designed to tackle a problem in cities – where lets have caused very obvious problems – is needed in areas such as West Lothian.
“It outlined the size of the workload generated by changes needed to licensing laws because of Covid regulations.
“There is now a-six month backlog in applications going before the Licensing Board when historically there was none.
“In her draft response Audrey Watson, the council’s Licensing Solicitor questioned why the proposed licensing should be mandatory rather than optional for local authorities.
“She said: “The licensing schemes which are mandatory involve public safety issues such as knife dealer and skin piercing and tattooing licences but public safety is not likely to be a factor in most applications for short term let licences.
“Fellow Conservative Alison Adamson branded the proposed legislation as a piece of “centralised control freakery.””
Highland Council’s Medium-Term Financial Plan- Update “provides an update on the approach to medium term financial planning for the Council, a key element of good financial management as required by the CIPFA Financial Management Code”. This outlines a £50million budget deficit in 2022/23, rising to £124million in 2026/27. This does not include the financial burden of short-term let licensing or planning control zones. To expect Highland Council to front load the development and administration of licensing (to be in place by October 2022), when applications are not to commence until April 2023 puts the local authority at a funding disadvantage. It may result in impact on core funding activities across the region.
Highland Council passed the following motion on Thursday 28th October 2021:
(4) Council strongly urges the Scottish Government to drop its proposed licensing scheme for short-term holiday lets and instead adopt the registration scheme proposed by the Association of Scottish Self Caterers. This would be far less costly for operators and less onerous for the Highland Council to administer, whilst providing proven health and safety protection. The proposed scheme is not appropriate for the Highlands.
The short-term letting and wider tourism industry has repeatedly called for the Scottish Government to listen to expert industry concerns and to opt for a more flexible, proportionate, and business-friendly registration scheme.
Scottish self-catering is a vital part of the country’s world-famous tourism offering and Scotland is well-renowned as having some of the most stunning and welcoming places to stay.
If licensing is brought in, especially in the context of the COVID-19 pandemic which has decimated the industry, there is the real possibility that many small businesses may see their livelihoods threatened.
 Stephen McGowan is the author of Local Government Licensing Law in Scotland (2012), the only legal textbook on the Civic Government (Scotland) Act 1982 – under which the new licensing schemes will be adopted.
 Medium Term Financial Plan- Update 28th October 2021: https://www.highland.gov.uk/download/meetings/id/78893/9_medium_term_financial_plan_-_update