Westminster City Council has been ordered to repay £1m in fees collected from Soho sex shops, in a legal ruling which could have ‘massive implications’ for licensing authorities around the country.
A written judgement issued today by the Court of Appeal finds Westminster’s policy of charging licensees on a self-funding 'polluter pays' basis breached European Union law.
Prior to the 2009 Provision of Services Regulations, councils were allowed to recover reasonable enforcement costs under the 1982 Local Government Act.
‘Charges for schemes requiring a person to obtain the authorisation of a competent body to have access to or to exercise a service activity must not exceed the cost of authorisation procedures and formalities,’ read the judgment from Lord Dyson, who is Master of the Rolls, Lady Justice Black and Lord Justice Beaston.
Lawyers representing Westminster had argued the decision ran contrary to long-held principles of UK licensing law and misrepresented EU directives in stating the council couldn’t recover enforcement costs from fees levied on premises.
As a result of the ruling, Westminster must now pay back more than £1m in fees previously collected from sex shops and faces an estimated annual shortfall of £350,000 – since charges on sex shop owners will now cost just £1,100 compared with the previous £29,102 annual licence fee.
Cllr Nickie Aiken, Westminster’s cabinet member for public protection and premises said the decision would mean ‘a free for all for the sex industry’ and would have ‘massive implications for local authorities nationwide.
‘This is not just about sex shops, this affects almost everything for which councils charge to carry out enforcement,’ Cllr Aiken added.
‘It will hit everything – including our policing of the grotty hotdog stands that we had forced out of the borough.’
According to Cllr Aiken, Westminster had closed down 68 illegal sex shops since 1999 in Soho – an area renowned as a home for the sex industry on account of its reputation and central location.
Westminster is considering leave to appeal against the judgement.
