Consultation Question 24: For the purpose of this consultation we are interested in expert views on the following.
a. Simple and effective ways to define the ‘cost’ of alcohol
b. Effective ways to enforce a ban on below cost selling and their costs
c. The feasibility of using the Mandatory Code of Practice to set a licence condition that no sale can be below cost, without defining cost.
Responses [have] indicated a wide range of views on the subject with no overall consensus. Many respondents raised issues of commercial confidentiality and the feasibility of enforcing a ban which did not contain a clear and simple definition of cost.
An ingenious solution was provided by “many in the off-licence trade” – in particular Walmart-Asda – who proposed that cost be defined as “duty plus VAT”. This was backed by
Gavin Partington, of the Wine and Spirit Trade Association, [who described it] it as a “pragmatic solution” that addressed concerns about cheap alcohol without affecting moderate drinkers. (…)
Opponents predictably included
(H)ealth campaigners and the beer and pub industries [who] warned that the minimum price was being set too low to have any impact. They claimed it would still mean beer and lager being available at “pocket money” prices in supermarkets… [And] Professor Ian Gilmore of the Royal College of Physicians, [who] said the government’s proposal was an extremely small step in the right direction, adding: “It will have no impact whatsoever on the vast majority of cheap drinks sold in supermarkets.”
Despite these reservations, “duty plus VAT” has now been accepted as the “cost price” of alcohol in the UK. The government has announced that, following its failure to introduce minimum pricing for alcohol, it will outlaw its sale below this “cost”. Members of the industry who – reasonably – resent the already high levels of tax on their products in the UK will be breathing a huge sigh of relief. For most of them, compliance will be very similar to falling in line with laws banning sex with animals: however cheaply wine, in particular, has been offered in UK supermarkets, it has very, very rarely been sold at prices that fall below duty and VAT. In the real world, growing, picking, fermenting, bottling and shipping grapes do actually cost money that has – at least partially – to be paid by someone.
Anyone who believes that the – let’s face it, wholly ludicrous – notion of duty-plus-VAT will put a lid on the simmering alcohol debate in the UK is very mistaken. Despite heavy opposition from the industry and the EU, the semi-independent Scottish government is still committed to introducing minimum pricing on its side of a border that does not physically exist. Many dismiss its ability to achieve this, but it’s worth recalling that the ban on smoking in pubs was originally introduced in Scotland before being adopted elsewhere.
The health lobbyists are very unlikely to admit defeat, especially as the cash-strapped UK government has accepted estimates of over £40bn of “costs” – using a different definition, obviously – to the English and Welsh economies being caused by alcohol misuse.
- National Health Service (NHS) costs, at about £3.5bn per year at 2009-10 costs
- Alcohol-related crime, at £11bn per year at 2010-11 costs
- Lost productivity due to alcohol, at about £7.3bn per year at 2009-10 costs (UK estimate).
There is also a strong link between alcohol and crime, particularly violent crime. In 2010/11, there were around 930,000 (44%) violent incidents in England and Wales where the victim believed the offender to be under the influence of alcohol, this rose to 58% in instances of stranger violence.
Friends in the wine industry like to dismiss most or all of these figures, but unfortunately the majority of them are as undeniably linked to the products we are involved with as road deaths are to cars. Even more unfortunately, “misuse” in the case of alcohol is harder to define. The stress-relieving qualities of a glass or two of wine at the end of a day may help to ward off cancer. Sadly, for a woman, that second glass almost certainly will increase the risks of breast cancer.
As someone who loves alcohol in its myriad forms and gets his livelihood directly and indirectly from the alcohol industry, I naturally have to support it is its fight against government interference. When I see it win battles such as the one over “cost price”, however, I cannot help feeling like an England cricket supporter watching a player failing to “walk” after being caught out. It means that the next innings is going to be a lot tougher. If we abandon logic to win our arguments, let’s not be surprised when the anti-alcohol lobby increasingly follows the same strategy to win theirs.