No, that is not correct. If all performances are under 100 capacity are exempt from regulation under the Licensing Act then the Licensing Act cannot be used to control noise, and its power pre-emptively to prevent noise is precisely what is needed. The only relaxation needed (and it is needed) is for all unamplified performances to be exempt from the Licensing Act. They and they alone are sufficiently dealt with by other applicable laws. Exempting unamplified 2-in-a-bar does not really go far enough. It would also be sensible to exempt the provision of entertainment facilities that do not include amplification. There could be a de minimis derogation to permit electric instruments to be used only if they are no louder than acoustic instruments. There urgently needs to be a tightening of the Licensing Act to de-exempt jukeboxes and big screen TVs. You obviously have no idea what sort of SPL you can create before melting a pair of Peavey Black Widows. They are used by many metal bass guitarists, and are the woofer in the big HiSys Peavey tops and the big Peavey subs. The Walls of Jericho would not have stood a chance.
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