As I See It

Minimum pricing: will it be a pyrrhic victory?

Terry smiling headThere is no shortage of statistical analysis these days and, it must be said, some of it makes for pretty dry reading.

One set of stats that will be well scrutinised will not be available in any meaningful sense for a couple of years or more, but the anticipation is already palpable.

The verdict on minimum unit pricing of alcohol gives us certainty over how much it’s going to cost to buy a drink some time next year. But the big question is whether it will achieve its ambition to cut alcohol-related deaths.

Whichever camp turns out to be vindicated will be doing a lot of finger-pointing at the other side and yelling: “I told you so!”

Health campaigners, backed by the Scottish government claim it will reduce the number of deaths from diseases of the liver, and so on. The Scotch Whisky Association, which has led opposition to the legislation for five years, doubts that price will make much difference and that education is a better weapon to tackle alcohol abuse.

It is a sensitive issue and while no one doubts the need for responsible drinking there is clearly a divergence over the best way to achieve it.

Firstly, we should note that the the seven Supreme Court judges was unanimous, but that they were giving such a verdict on a matter of law, not whether they supported the policy. The Supreme Court held that it was for the Scottish Government to decide as a matter of general policy to target alcohol-related harm and that the courts should not interfere lightly with that right.

Evidence that the policy will have the desired impact is yet to be proven and to that end the government has produced research from Sheffield Alcohol Research Group stating that 120 lives a year can be saved.

This represents 10% of all alcohol-related deaths in Scotland last year, according to figures from Alcohol Focus Scotland. It says the 1,265 last year compares to 600 in the 1980s. Today, an average of 22 Scots die because of alcohol every week.

Yet other evidence contradicts these findings. Luca Bertoletti, European Affairs Manager of the Washington-based Consumer Choice Center states: “There are no empirical evidences that set minimum prices on alcohol will lead to a reduction of consumption.”

He goes on to argue that lower income households will merely spend more of their income on alcohol, making them even worse off, and that they may be tempted to turn to the black market in search of their regular fix.

“This could have fatal health consequences and at the end achieve the opposite of what policy makers had in mind,” says Bertoletti.

He says that if the Scottish government really wants to tackle the problem of alcoholism it should work more on educational programmes and “allow consumers to make their own choices.”

This is closer to the arguments from the Scotch Whisky Association which believes education and taxation would be better ways to deal with problem drinkers.

In a somewhat barbed comment, new SWA CEO Karen Betts reacted to the Supreme Court ruling by saying that the government’s success in bringing about minimum pricing would be bad news for the Scotch whisky industry.

She said the SWA would be looking to both the Scottish and UK Governments to support the industry “against the negative effects of trade barriers being raised in overseas markets that discriminate against Scotch Whisky as a consequence of minimum pricing.”

This was a clear warning that the SWA’s efforts to persuade other countries to reduce tariffs could be undermined by the pricing policy. A case of ‘why should we cut tariffs if you’re imposing your own?’

This has been a running theme for the SWA in its battles with successive chancellors over UK excise duties. The SWA is hoping that in next week’s Budget the Chancellor will reverse his duty hike in March and has produced evidence that higher tax denies the Treasury £200m in revenue as consumers stop buying.

This slightly undermines the SWA’s case for not increasing the price of booze through MUP. If such price elasticity applies with regard to excise duty then it must also apply to minimum pricing.

However, the point about MUP is whether the higher price deters the target group. The risk is that it merely leads to an overall fall in consumption, including occasional drinkers – with knock-on effects on employment and business taxes, while the hardcore continue to drink themselves into oblivion.

I have argued over the years that the legislation is too sweeping and ought to have been more focused on the real culprits – the supermarkets – who are selling cheap drink that people consume at home. The Scottish Licensed Trade Association is also of this view and I have heard it from drinks company executives.

Drinking should take place in controlled environments – pubs and other bars – where it can be sold by the measure. The binge drinking culture is fuelled by those who drink uncontrollably at home even before they go out.

As Paul Waterson of the SLTA says, cheap alcohol has turned us into stay-at-home drinkers, noting that 72% of total alcohol sales in Scotland are off-sales, of which 80% is sold by supermarkets.

Encouraging more people to drink in bars would also help save pubs which are closing largely as a result of the competition from supermarkets. Fix this, and we might start to make progress.

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