The U.K. government has announced a compromise measure that will mean venues such as pubs and bars will no longer need licenses for live music, as stipulated by the 2003 Licensing Act.

Sports minister Gerry Sutcliffe confirmed that the government is now making a recommendation that venues up to 100-capacity be exempted from licenses.

"We are minded therefore to consider an exemption from the Licensing Act for live music in venues with a capacity of less than 100," he said, noting that it would need cross-party support to go through quickly.

The concession emerged during a Parliamentary debate at Westminster Hall on the Culture, Media and Sport select committee's report on the impact of the 2003 Act. It represents a partial victory for umbrella trade group U.K. Music, the Musicians' Union and actors union Equity.

Members of Equity and the Musicians' Union staged a demonstration outside Parliament earlier, attended by MPs including committee chairman John Whittingdale.

However, the committee as well as U.K. Music and the unions had called for an exemption for venues up to 200-capacity. The so-called two-in-a-bar rule, which allowed for two musicians to perform in a pub without the need for a license, was ended by the 2003 law.

"One of the most controversial aspects of the legislation was the abolition of the two-in-a-bar rule," said Whittingdale. He noted that morris dancing was still exempt, suggesting to some hilarity that if Metallica performed with a morris dancer there would be no need for a license.

Whittingdale insisted the requirement for licenses for small venues is having a "damaging effect."

Although Whittingdale conceded there were no official figures on how many pubs had stopped staging music because of the law change, he stressed that MPs were well aware of pubs in their constituencies that "have not wanted to go through the burden of acquiring an entertainment license."

Lembit Opik, MP for Montgomeryshire, intervened to state that pubs in his constituency "simply won't bother with the bureaucracy" of applying for licenses.

"It is a place where many bands start," Whittingdale said of pubs. "They don't start at Wembley Stadium." He recalled seeing a band in his teens playing a song called "Roxanne" to 150 people. To laughter, shadow arts minister and fellow Conservative Ed Vaizey congratulated the chairman for discovering the Police.

"This is a man who discovered Sting, pogoed to the Undertones and got down with Lemmy from Motorhead," said Vaizey.

Whittingdale welcomed the government compromise to allow 100-capacity venues to have live music without a license, though described the concession as "late and fairly small."

But he expressed concern that the chances of the consultation process and enactment concluding before an election is due next spring were "pretty slim."

"I'm not entirely sure why there needs to be a consultation at all," said Whittingdale.

Vaizey agreed that it was "very unlikely the review will be got through in time for the next election." Although he mocked what he described as the government's ninth review of the 2003 Licensing Act, Vaizey said the Conservatives have "pledged to have a proper, thorough, strategic review" of the licensing law if they win the election.

Vaizey also suggested that ministers at the Department for Culture, Media and Sport had broken the law when they had a young band, the Frontiers, perform at its (unlicensed) HQ in July, although Sutcliffe insisted it was a "private event and didn't need a license."

Asked for assurances that the government would accept an exemption from the Licensing Act for venues up to a capacity of 200 if that emerged as the favored solution, Sutcliffe said he would consider this "if the consultation overwhelmingly shows the figure of 200 is the one everyone is happy with." He also defended the current Act, saying there had been an 11% increase in the number of live music licenses since 2007, and pledged to further simplify the application process.

Whittingdale also raised serious concerns about the London Metropolitan Police's Form 696, which requires full details of performers as part of the licensing process within 14 days of an event.

Although some amendments have been made to the form, Whittingdale said there is a widely held belief that Form 696 is being used to target black music and that was "causing resentment." He quoted evidence supplied by the O2 in London that it had postponed or canceled three events because of Form 696.

"If it is affecting them to that extent it is going to be affecting other venues," he said.