Westminster council is fighting a court order forcing it to pay about £1 million in compensation to sex shop owners.
Nine businesses in Soho and Covent Garden won a High Court victory after claiming the council acted illegally by charging them up to £26,000 extra a year to help fund its crackdown on unlicensed premises.
Mr Justice Keith, handing down judgment last month, said a new European directive did not permit the council to add the premium to its annual sex establishment licence.
This means the 13 establishments owned by the nine firms, including Simply Pleasure, Janus and Darker Enterprises, are in line to be refunded about £50,000 or more each in excess charges.
But the Standard has learned the Tory authority is determined to appeal against the judgment as it fears having to draw funds from other budgets to enable it to continue regulating the industry. Last year it closed seven sex shops, court action is continuing against a further seven and it conducted 44 raids, seizing 13,000 items including unclassified DVDs and fake Viagra.
Tony Devenish, Westminster’s cabinet member for public health, said Soho’s improving reputation would be damaged if sex establishments were “sprouting up unregulated”.
He said: “Who else pays? Do you think it’s fair that the taxpayer pays for the illegal activity of others? It’s like saying if you don’t go out and commit crime yourself, why should you pay for the police force? We clearly can’t have unregulated sex establishments in the West End, they lead to criminality.
“You get various undesirable elements going in. We fear there could be an economic hit to a vibrant part of the British economy at a time of recession.”
But Tim Hemming of Simply Pleasure said: “I think I can speak for all the licensees in Westminster and we are very pleased with the judgment. At the end of the day, we were paying £30,000 a year for a licence that was not set correctly. You can’t put a punitive charge on something that is legal. We just felt they were charging us too much money and it’s been proven.”
