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Alcohol pricing – a punishment on the poor?

50p a unit policy could be ‘counter-productive’

Published on January 24th 2011.


Alcohol pricing – a punishment on the poor?

According to Home Office research, two thirds of us think the nation’s drinking is ‘out of control.’

The government wants to ban beer being sold at below 38p a can and thinks the minimum price of a bottle of wine should be £2.03.

The pub industry and health charities think they are looking in the wrong direction, claiming price is not a trigger in controlling alcohol consumption.

So who’s right?

Benjamin Williamson, of consultancy firm cebr, which has been working with drinks firm SABMiller to study pricing measures, claims the new policy wrongly assumes that people with the least money are the heaviest drinkers.

“Research we’ve carried out suggests 90 per cent of people drink responsibly, and it’s wrong to assume the other 10 per cent are of a lower social demographic,” he said.“The poorest people will be the biggest losers though, even if they are responsible drinkers. It’s not a fair system.”

It’s a good point. Why should a high earner who abuses alcohol worry about the price of a bottle of wine going up by £1 here or there? It’s not much of a deterrent.

A report carried out by cebr for the Scottish Government found that minimum pricing could actually create ‘economic distortions’ and impinge on people’s ability to buy other things, thereby robbing other parts of the economy.

And is our drinking really ‘out of control?’ It's an easy image to muster; simply walk around a town centre on a Saturday night and wait for an over-excited reveller to be sick in a doorway. But that might be the only person you see: does it represent an accurate cross section of the country?

Some health charities think the real issue is the way supermarkets are allowed to sell booze as a loss leader, making it too accessible to young people and encouraging binge drinking.

In Greater Manchester, of course, the local councils are acting in a stronger manner; planning a minimum pricing strategy of 50p per unit.

But will this have an impact, or will it hit the poorer even harder and create new ‘booze run’ routes towards Cheshire and Lancashire, where people would still be able to buy booze almost at cost prices?

Williamson argues the measures aren’t even a revenue generator for the local councils that enforce minimum pricing. Administrative costs will mount up and drinks companies will simply factor the new mathematics into their profit margins. Those costs will also hit retailers and the pub industry.

“It could be counter-productive,” he says. “Councils and the government could actually lose money.”

In these times of austerity, is that a risk worth taking?

Health campaigning group Our Life have their own points to make, especially about central government ideas.

“The proposals talk about banning below cost sales but is anyone actually bothered about the fact that sales are 'below cost'?" says spokesman Dr Giles. "No they're not. What people are concerned about is tackling the very cheapest alcohol on the shelves to reduce harmful drinking, changing people's attitudes towards alcohol, and rebalancing the unequal marketplace between pubs and the off-trade. This move by government misses these points entirely."

Our Life claimed that at the levels proposed the ban on below cost sales will make no meaningful difference to the prices being charged by the supermarkets. “It’s very likely that this will still mean that you can buy two-litre bottles of cider for less than £1.50 and cans of lager cheaper than Coca Cola,” said Dr Giles.

“At these prices it is still too easy to get very drunk quickly and cheaply,” Dr Giles said. “Bargain prices in the supermarkets can mean huge bills for the taxpayer as the NHS and the police have to sort out the mess. The financial cost of alcohol-related harm to the NHS in the North West alone is in excess of £400 million per year,” Dr Giles claimed.

“The most effective method of enforcing a ban on below-cost selling is to introduce a minimum price of 50p per unit of alcohol. It’s widely accepted that such a step would save lives and save money,” Dr Giles said.

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5 comments so far, continue the conversation, write a comment.

excuse me butJanuary 22nd 2011.

...where can I get a can of beer for 38p or a bottle of wine for £2.03?

Spain

AnonymousJanuary 22nd 2011.

The main objective of these rules is to give incompetent public adminstrators something else to administrate.

excuse me butJanuary 23rd 2011.

...do Spain have a drink problem?

No!

PythagorasJanuary 23rd 2011.

Cheap booze unequals drink problem.

quod erat demonstandum

Annonny MooseJanuary 26th 2011.

Alcohol is price inelastic, so this won't make much difference.

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