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Minimum alcohol pricing

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GuyBarry
1261656.  Wed Nov 15, 2017 8:35 am Reply with quote

The Scottish government has been given the go-ahead to introduce minimum alcohol pricing:

http://www.bbc.co.uk/news/uk-scotland-41981909

The aim is to discourage the consumption of strong, cheap alcohol. For example, a 2-litre bottle of 5.5% ABV cider in my local shop (11 units) currently costs £2.99; assuming a minimum unit price of 50p, the legislation (if introduced in England) would put the price up to £5.50.

There's no precedent for this anywhere in the world and I can't quite see how it's going to work. It's not an increase in tax or duty, so who will get the extra money? Will retailers get to keep it, or will manufacturers simply whack up their prices in response?

Also, what's to stop retailers from getting round the legislation by offering discounts on other products for people buying alcohol? If I were given £2.50 off the cost of the rest of my shopping every time I bought a bottle of cider, could the retailer be prosecuted?

 
dr.bob
1261660.  Wed Nov 15, 2017 9:06 am Reply with quote

The Scottish government has already banned multi-buy offers for alcohol, so it's now illegal for a supermarket in Scotland to offer "BOGOF" deals, or "buy three bottles for £10" type offers.

If there was evidence that some supermarkets were trying to avoid the minimum pricing by offering some kind of combined deal, I'm sure they'd be able to legislate against that too.

As for who gets the extra money, that's already been discussed up here and it's pretty clear that it will go straight to the manufacturers. Which does make it slightly ironic that they're the ones who are campaigning most heavily against the policy.

 
Baryonyx
1261662.  Wed Nov 15, 2017 9:17 am Reply with quote

I guess if it's successful, their sales will drop as the price works as a disincentive to purchase, even if they gain more profit from each drink.

 
dr.bob
1261666.  Wed Nov 15, 2017 9:23 am Reply with quote

That's clearly their fear, though it's too early to tell whether the drop in sales will outweigh the increase in profits.

 
dr.bob
1261669.  Wed Nov 15, 2017 9:25 am Reply with quote

dr.bob wrote:
As for who gets the extra money, that's already been discussed up here and it's pretty clear that it will go straight to the manufacturers.


Ah, my mistake. The BBC reporting of it makes it very clear that:

Quote:
It is a price hike for the cheapest drink, with any extra cash going to the retailer.

(my emphasis)

That makes much more sense why the manufacturers have been so set against it.

 
GuyBarry
1261677.  Wed Nov 15, 2017 10:10 am Reply with quote

But if the manufacturers decide to put their prices up as a result of the legislation, there's no way that anyone will be able to stop them. I suspect that's what's going to happen.

The only analogous thing I can think of is the compulsory 5p plastic bag charge. Retailers are expected to give the additional revenue to "good causes", and I think they're required to give details of what they do with the extra money; but there's no law preventing them from keeping it, as far as I know.

Personally I think it would have been better if the Scottish government had campaigned for alcohol duty to become a devolved issue, so that they could have imposed their own rates of duty. I really don't see why private companies should benefit from a policy that's intended to improve public health.

 
Leith
1261686.  Wed Nov 15, 2017 10:46 am Reply with quote

I think this is the relevent legislation:
http://www.legislation.gov.uk/asp/2012/4/contents

When the BBC article says the extra cash 'goes to the retailer', I think that actually means that the law only specifies the minimum price at point of sale, and doesn't say that the money should go anywhere in particular.

The money would therefore go initially to retailer, and retailer, distributor and manufacturer etc. will negotiate their respective cuts with each other, as usual.

The price points of cheaper brands are presumably set to maximise profits. If the industry thought it could raise prices without losing money it would have done so already.

 
GuyBarry
1261695.  Wed Nov 15, 2017 11:15 am Reply with quote

Thanks for that link.

Alcohol (Minimum Pricing) (Scotland) Act 2012 wrote:
(1)Alcohol must not be sold on the premises at a price below its minimum price.

(2)Where alcohol is supplied together with other products or services for a single price, sub-paragraph (1) applies as if the alcohol were supplied on its own for that price.


So I (living in Scotland) go up to my local corner shop and buy a bottle of cider priced £5.50. They then say "we'll throw in a free pizza worth £2.50". I've got the cider for £3, and as far as I can see they haven't broken the law.

 
Alexander Howard
1261696.  Wed Nov 15, 2017 11:15 am Reply with quote

Yup: the Beeb is showing its usual amount of expertise in commercial reality.

In Norway the solution to alcoholism adopted in the 1920s was a state alcohol monopoly; Vinmonopolet ("the wine monopoly"), which has been followed in Sweden (Systembolaget) and Iceland (Áfengis- og tóbaksverslun ríkisins: don't even try to pronounce it). I believe there are similar systems in Canada. Vinmonopolet came under pressure when the European Economic Area was being negotiated as booze is a major export from many EU countries, and from Britain. It remained, but lightened up a bit.

There was also a state monopoly in Britain from the First World War to quite recently - but only in an area near Carlisle where there had been a massive government arms factory whose workers had to be kept sober. That system outlasted the war by decades, which shows how difficult it is to get governments to drop redundant regulatory powers.

Though Nicola the Sturgeon likes to gather powers in her hands, there is no sign that all pubs and offies in Glasgow are about to be closed down and replaced, like Norway, with a few stores resembling a pharmacy where would-be topers must queue in shame.

 
Leith
1261704.  Wed Nov 15, 2017 11:49 am Reply with quote

GuyBarry wrote:
Thanks for that link.

Alcohol (Minimum Pricing) (Scotland) Act 2012 wrote:
(1)Alcohol must not be sold on the premises at a price below its minimum price.

(2)Where alcohol is supplied together with other products or services for a single price, sub-paragraph (1) applies as if the alcohol were supplied on its own for that price.


So I (living in Scotland) go up to my local corner shop and buy a bottle of cider priced £5.50. They then say "we'll throw in a free pizza worth £2.50". I've got the cider for £3, and as far as I can see they haven't broken the law.


Looks that way, but maybe that's ok, and a person buying a bottle of White Lightning as part of their weekly shop isn't the sort of problem drinker that the new legislation hopes to discourage. You've still had to spend the £5.50, and now have some food instead of most of the price of the next bottle of cider.

 
suze
1261706.  Wed Nov 15, 2017 11:55 am Reply with quote

GuyBarry wrote:
Personally I think it would have been better if the Scottish government had campaigned for alcohol duty to become a devolved issue, so that they could have imposed their own rates of duty.


The Scottish government did at one point express a desire to do that, but two things stopped it. One, it was advised in words of one syllable that Westminster would say "no" to any such request.

Two, the Scotch Whisky Association took an opinion in chambers and was advised that "differentiated rates of duty within the territory" are in any case prevented by EC Directive 92/83.

That appears to take the idea completely off the agenda until that fabled 11 pm sixteen months hence.

 
Leith
1261743.  Wed Nov 15, 2017 3:16 pm Reply with quote

GuyBarry wrote:
The only analogous thing I can think of is the compulsory 5p plastic bag charge. Retailers are expected to give the additional revenue to "good causes", and I think they're required to give details of what they do with the extra money; but there's no law preventing them from keeping it, as far as I know.

One thing worth noting with respect to the plastic bag tax: It's working.

Single-use carrier bag use is down 83% since introduction of the tax, by latest figures:
https://www.gov.uk/government/publications/carrier-bag-charge-summary-of-data-in-england/single-use-plastic-carrier-bags-charge-data-in-england-for-2016-to-2017

Environmental groups report significant reductions in plastic bag litter:
http://www.independent.co.uk/news/uk/home-news/uk-plastic-bags-beaches-5p-tax-a7432056.html
When I'm in the UK I take part in an annual river clean-up organised between the local canoe clubs, and we've noticed a dramatic drop in the amount of carrier bags we are removing from the river and banks.

As for donation of the proceeds, I get the impression there's a degree of wooliness in the rules for when, and how much is donated. Even so, while some retailers are retaining more for 'admin costs' than others, they seem on the whole to be being fairly responsible.
https://www.edie.net/news/5/Plastic-bag-charge-UK-sustainability-statistics-from-Defra-2017/

(Whether that has any bearing on the likely success or otherwise of the minimal alcohol pricing policy, I wouldn't like to speculate)

 
GuyBarry
1261746.  Wed Nov 15, 2017 3:44 pm Reply with quote

Leith wrote:

One thing worth noting with respect to the plastic bag tax: It's working.


It's not a tax. That's the point. The government isn't taxing plastic bags, it's imposing a minimum charge for them. In that case, the intention is that the money should be given to charitable causes (even if it can't always be enforced).

I'm not aware of any similar guidelines regarding the extra revenue generated by the minimum alcohol pricing policy. The intention appears to be to hand a lot of money over to private businesses, ostensibly as a public health measure.

I doubt whether people in Scotland are going to drink less because of this measure. When you have an addiction, you find the money to fund that addiction, even if it means spending less on food, getting behind with the rent or even neglecting your children. This policy will only hit poor people, not the ones who can already afford to spend £6 on a bottle of wine.

 
Dix
1261748.  Wed Nov 15, 2017 3:52 pm Reply with quote

Indeed. The bag charge is a good thing.
You no longer get plastic bags forced down your throat -- in some places it was quite a struggle to refuse them -- and only now, a very long time after the 5p charge came in, are we running out of old bags to use for bin liners. I've not yet had to actually buy bin liner bags.
Never mind the 5p, I'm happy the bags are gone.

 
L on earth
1261749.  Wed Nov 15, 2017 3:59 pm Reply with quote

GuyBarry wrote:
I doubt whether people in Scotland are going to drink less because of this measure. When you have an addiction, you find the money to fund that addiction, even if it means spending less on food, getting behind with the rent or even neglecting your children. This policy will only hit poor people, not the ones who can already afford to spend £6 on a bottle of wine.


Regarding whether or not it'll work, there is a reasonable amount of evidence that MUP is effective, although population level measures are notoriously difficult to produce good evidence on.

The potential for it to cause extra hardship for poorer families with a heavy drinker is a fair point, and it was my main reservation regarding the introduction of MUP. However, considering the impact of problem drinking on these families regardless of pricing, and its impact on society as a whole, I think the benefits here outweigh the risks.

 

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