Westminster Council says it may lose �3m over several years

Pubs and bars will be allowed to stay open longer but the cost of their licence will be based on the venue's rateable value, rather than capacity.

Westminster Council says the licence fee may drop by as much as 90%, meaning councils could have to charge residents more to meet the shortfall.

Bars can apply for a change in their opening hours from Monday.

'99% drop'

Westminster Council leader Simon Milton told BBC London changes in the way licences were calculated would have a big effect on councils' funds.

Hotel bars like Metropolitan should see their licence costs fall sharply

He said some venues currently pay as much as �3,500 for their licence each year.

This could drop to as little as �180.

"Under the new proposals from the government, that will be cut to a few hundred pounds, maybe as much as 90%," he said.

A bar in a hotel on Park Lane, meanwhile, could see its licence fee drop from as much as �37,500 to as little as �350 - a drop of nearly 99%, the council said.

Westminster believe it could cost them �3m over several years, while Camden Council estimate a cost of �2m.

Under the new law Westminster Council say they will be responsible for licensing around 3,600 premises - taking on responsibility for pubs and restaurants - rather than the current 570.

Mr Milton said: "We have said to the government that it is not right that council tax payers should pick up the bill."