While the licensed trade welcomes many elements within the Sale of Alcohol Bill publicans are concerned by the proposal to abolish ‘extinguishment’ – the licensing system that allows a new pub open only when another pub permanently closes.
The Minister for Justice Helen McEntee received Cabinet approval for her draft Bill to reform Ireland’s antiquated licensing system last Autumn.
Believing that the licensing laws were in significant need of reform, she published the General Scheme of the Sale of Alcohol Bill to outline her intentions.
The present system is based on a patchwork of 100 laws – some of which are over 200 years old and two-thirds of which pre-date the foundation of the State 100 years ago.
After a transition period of three years following the enactment of the Bill, the Minister proposed a removal of the extinguishment requirement whereby anyone seeking to open a new premises or an off-licence must first purchase a licence from an existing licence-holder in order to do so.
The General Scheme proposes an amendment to the so-called ‘extinguishment’ provision which sometimes proves an impediment to opening a new pub in towns and villages where some premises have shut, particularly in rural areas.
Often, these licences are sold in closed transactions to a large supermarket chain to be used for the purposes of an in-store off-licence in an urban area. And the cost of a licence can be prohibitive for someone seeking to open a new pub in a rural town which may need it, claimed the Minister.
The ‘extinguishment’ requirement will remain in place for off-licences however and will only be applicable to licences already in existence on the enactment of this Bill. No new licences granted under this Bill could be sold for extinguishment purposes.
“I do not believe we need a dramatic increase in the number of new pubs,” said the Minister at the time, “But in circumstances where a town has lost its pub we should acknowledge that the community has lost one of its focal points. The current system makes it difficult for anyone who wants to open a new pub in towns and villages where a pub has closed its doors.”
However the Chief Executive of the Vintners Federation of Ireland Paul Clancy has pointed out that, “This move will create a deregulated on-trade where the number of licences in operation will potentially be unlimited. This will massively impact villages that right now are struggling to support one small pub”.
The vast majority of pub closures occur in rural areas of the country.
According to the Revenue Commissioners’ statistics, in 2005 there were 8,617 seven-day licences compared to 6,788 in December 2021. This represents a 21% decline in pub numbers over the past 17 years. The proposed measure will exacerbate this trend.
“The Department of Justice says proposals for the deregulation of the licensed trade are being introduced in response to the decrease in rural pub numbers,” he continued, “It says the move will stimulate growth of new pubs in areas where they are in decline for over 20 years but, in our view, this proposal will completely undermine the trade.
“Pubs are in decline in rural areas not because of any barrier to entry but for a number of other reasons including demographics and changing consumer habits.
“Deregulation will precipitate the closure of many pubs as the owners decide to exit the business in the face of unsustainable competition. While the adage ‘the market will find its level’ is strictly true, it fails to take into account the cultural and community value of the existing pubs.”
Indeed the existing trade needs to be supported as it provides a vital service to local communities and in many areas, the local tourism infrastructure, argues the VFI.
According to the Federation, the principle of Extinguishment is accepted as a legitimate practice in the Sale of Alcohol Bill where it will remain for new off-licences. The VFI requests that the same principle be applied to the on-trade.
The Federation will appear before the Oireachtas Joint Committee on Justice later this month.