Tuesday, 1 May 2018

Minimum madness

Well, minimum alcohol pricing has finally arrived in Scotland today. There’s not a great deal I can add to the points I made here and here, although I have produced a summary of the issue for my Opening Times column.

Despite all the publicity, a lot of people are going to be taken by surprise when they go to the supermarket. The policy has been touted as something to address the scourge of “high-strength, low-cost alcohol”, but in reality it will affect well over half of all alcohol sold in the off-trade. Many consumers of mainstream products such as multipacks of lager and litre bottles of spirits will receive a shock. This news report lists some of the significant price increases that will occur.

This is a point made by Gordon Johncox of Aston Manor in a report in Drinks Retailing News, where he says:

The forecast model for MUP significantly underestimates how much moderate drinkers will be out of pocket based on real-world experience and actual market data. If the level and pattern of drinking were to remain unchanged after 1st May, then it would cost drinkers in Scotland in the order of £150 million a year.
He also reiterates the point I have made before that, far from giving the on-trade a boost, it will if anything harm it, as people’s disposable incomes are affected.
Counter to the view that is often repeated and promoted, MUP will reduce spending in pubs and bars. Representing as it does a regressive cost on even moderate drinkers, the increased cost on such a wide range of drinks will reduce the spending of consumers in pubs. This is clear in the forecast model, yet is not referenced or highlighted (even by the researchers that formulated the forecast model).
However, despite this, the appeasers of the Scottish Licensed Trade Association, and many useful idiots within CAMRA, still cling to the idea that it will in some way be good news for pubs. However, at heart I suspect they don’t really believe it will bring any benefit, and are embracing it purely out of a spiteful, dog-in-the-manner spirit of doing down another section of the drinks trade that they perceive as the enemy.

Obviously it will take some time before the effects of the policy can be properly assessed. No doubt there will be a short-term drop in apparent alcohol consumption, but the headline figure will inevitably be affected both by drinkers stocking up before May 1st, and buying alcohol in England afterwards.

The Scottish Goverment have gone on record as saying they don’t think there will be a significant amount of cross-border shopping. It’s certainly true that the distances between the major population centres in Scotland and the Border are such that you can’t just nip across for a few cans – Glasgow is 99 miles from Carlisle, and Edinburgh 56 miles from Berwick. But, every time any Scottish resident crosses the border for any reason in the normal course of their life, there will be a strong incentive to pick up some cans and bottles both for themselves and their friends and relatives. With potential savings of at least a fiver on a slab of Carling and a litre bottle of Bell’s, a nice little afternoon drive down the A1 to Berwick for four mates every month will pay for itself many times over.

And, inevitably, the calls will now intensify for the policy to be extended to England...

50 comments:

  1. I've written about minimum pricing a number of times myself, including in the CAMRA column in the local papers, and I tend to think the same way as you. We live in a society in which a lot of people cannot afford pub prices, and the only way they can enjoy a drink is with off-sales at home. Minimum pricing will not affect the better-off, so this a measure that impacts disproportionately people with little disposable income and I don't accept that we have the right to do that.

    Ultimately there are ideological questions here:
    1. Does imposing a minimum price interfere with the operation of the free market economy? I'm not a free marketeer, but the answer is clearly 'yes'.
    2. Should taxation exist solely to fund the state, or should it also be a method of social control? My answers are 'yes' and 'no'.

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    1. The other Mudgie !1 May 2018 at 15:48

      But this isn't taxation to fund the state, it's money from the less well off going straight to the supermarket shareholders.

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    2. Yes, it would be fairer and more intellectually consistent (although hardly a desirable policy) to seek to achieve the same result through increasing duty. But what we have is just singling out the less well off.

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    3. I suspect the SNP would have preferred a taxation solution, but they cannot do so as alcohol duty is not a devolved matter.

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    4. Other Mudgie: you're correct of course, and what you say is an additional reason as to why this measure is iniquitous. However, it has been imposed by Government decree rather than by price hikes by businesses, and for that reason I used the word 'taxation', admittedly rather loosely.

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    5. "Nothing fires up the Scots like someone threatening to increase their life expectancy" - today's Guardian. The piece is at least written by a recovering alcoholic, and does offer some useful insights.

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  2. Crikey. I agree with Nev.

    Off for a cold pint after that revelation.

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    1. Gosh, CL! I do apologise if I've given you a shock!

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  3. No doubt online sales to Scotland will boom

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    1. No sure about that, as alcoholic drinks, especially beer, are very heavy in relation to their value, and so much of the saving would be eaten up by delivery costs. Plus you would have to physically deliver them from outside Scotland.

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    2. What will happen is that spirit sales online will increase as the transport cost is proportionately lower than lower abv drinks. As in the USA during prohibition it will become more attractive to market spirits with possible consequences for public health that the promoters of this short sighted legislation did not intend or perhaps foresee

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    3. It will be illegal for online retailers to sell below the minimum price anything which is delivered to a Scottish address. This is not new, they already cannot offer things like BOGOF on online sales delivered to Scotland as such promotions are banned north of the border.

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    4. 'Mudge. That isn't entirely true. I used to buy spirits for the Club where I was Secretary from Italy and the prices where so much cheaper that there was a very real saving provided you bought a couple of cases.

      Of course that again is some thing that only the well off can benefit from. The whole business of attempting to regulate alcohol consumption by controlling price is predicated on the assumption that rich drunks are acceptable but poor ones aren't.

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    5. "It will be illegal for online retailers to sell below the minimum price anything which is delivered to a Scottish address."

      I don't know the definitve answer, but I've seen plenty of online comments suggesting otherwise.

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  4. I'm moving to Scotland shortly. Aldi/Lidl in Carlisle ahoy!

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    1. Not to mention the massive ASDA next to Junction 44 of the M6 on the north side of the city.

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  5. This is just a tax on the poor by interfering unelected public health bodies and their doctor chums. People who love telling other people how to live their lives. It must be vehemently opposed in England.

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  6. Hmm...Won't there be an increase in Scots buying beer by post from England too potentially?

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  7. Attacking alcohol of high strength and low cost. Hmm.

    Price of 4-pack of Morrison's Savers bitter (2% abv) on 30th April: £1.00

    Price of 4-pack of Morrison's Savers bitter (2% abv) on 1st May: £1.74

    Might as well go and buy a bottle of Buckie.

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    1. It is certainly the death knell for own brand spirits. Why pay £14 for a bottle of three year old Tesco GlenSkunkie when you can get a bottle of 'Grouse for the same price?

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    2. It will probably be the death knell for own brand beers as well. Plus it will severely undermine the alcohol sales model of Aldi and Lidl.

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  8. It's interesting to consider how honestly the outcomes of this will be assessed. Even when it has no effect on Scottish health it will be proclaimed a success & the case argued for extending it into England and increasing the price. The academics & doctors are activists that are invested in a particular outcome. So much for experts eh?

    The only thing which will roll this back is if there is an electoral impact on the SNP. With English politics being neck and neck in the polls, governments are a little more wary of an unpopular policy.

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    1. The Scottish Conservatives supported it, of course. If our current "Conservative" governmnent decided to introduce it, is Jezza really going to oppose it?

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    2. That, ultimately, is my real objection to these public health initiatives. Like road safety campaigners with their speed cameras, they don't understand the concept of evidence based science.

      To them it is self evident that reducing alcohol consumption (or speed limits) is beneficial so their is no need to apply a careful statistical analysis to the results

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    3. "Like road safety campaigners with their speed cameras, they don't understand the concept of evidence based science."

      Haha, if only Paul Smith was alive to read that! ;-)

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    4. I was thinking of Paul when I typed it -:(
      Pity SS forum is so moribund.

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    5. Long story, Dave, but a bit off-topic for this blog.

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  9. There is a sunset clause in the legislation that allows it to be repealed quickly if minimum pricing doesn't work (or more likely, starts costing the SNP serious numbers of votes). The clause may seem like a good thing but I think it's there only as a never-to-be-used sop to opponents of minimum pricing, and similar clauses could be used to grease the wheels of future unpopular nanny state health legislation.

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  10. It is prohibition slowly creeping in through the back door.
    When i was younger a dinnertime drink was no problem, we went every day and had three pints in just under half an hour 1979 - 1984, these days you would be sacked.
    When my wife was eight months pregnant we went on a walk round some local pubs, she was showing well but it was no problem asking for a pint and a half of bitter in 1989
    If a pregnant women went into a pub these days and asked for a drink of bitter or lager she would be reported for abusing her unborn child.

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    1. When I worked for the GEGB - of blessed memory - in the '70s we had a subsidised bar in the attached social club which was always busy at lunchtime.
      And a trip to an outstation to help the local man usually turned into a boozy party.
      But tell t'young folk today ..

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  11. The Dangerman3 May 2018 at 01:03

    I'm not sure you're correct to believe that home booze is price inelastic, and pub booze is income elastic. Id contend that consumption will remain roughly the same across the board but we'll be poorer as a result. I'm against the policy because its a regressive tax on the poor by an elite who moralise yet never practice what they preach, but the likely net effect on pubs is at worst, neutral.

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    1. Never claimed that home booze is price inelastic, but its price elasticity is certainly less than 1, especially for heavier drinkers, so some people will have to cut down on other expenditure.

      I'd accept that any impact on the pub trade is likely to be minor, but it's impossible to see a scenario under which it will actually be beneficial to pubs. And there are *some* people who spend a lot on both off-trade and on-trade booze, and so something will have to give.

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  12. Look. The rich pay proportionally more tax. The poor absorb that by publicly-funded needing health care. Cut the cost of the second, and you can reduce the first.

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    1. But it's well-established that, in terms of lifetime healthcare costs, people with "unhealthy" lifestyles actually cost the taxpayer less, as they die sooner. And, even if it was the case that MUP did reduce problem drinking, it's an exceptionally blunt instrument, on a par with trying to improve road safety by increasing the price of fuel.

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    2. Since when have many of those in power right now been interested in evidence or in logic for major decisions?

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    3. Ah: Peter's favourite metaphor. But still apposite.

      Using financial incentives and disincentives to alter behaviour, whist much loved by capitalists, must always be a blunt and ultimately unfair instrument. Direct legislation is more effective and more equitable.

      In the case of alcohol consumption: since 14 units per week is now universally accepted as the absolute upper limit that anyone should be drinking a system of non-transferable coupons would be the simplest way to implement that.

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    4. If I can get past reCaptcha, I was also going to say that the Establishment is interested in the effects of alcohol consumption on the whole economy, not just on taxation. The UK has a productivity problem, and the rôle played by drink in that is open to analysis.

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    5. I seem to remember Lloyd George saying something similar in 1916.

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    6. Crikey. How old are you, Mudge?

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  13. What a disgusting thing to say.
    The rich pay less taxes now than they did in the 60s and 70s, the poor work in factorys and do more manual work which takes its toll on the body, so the need for more health care.

    So you would like to cut funding for the NHS so you can reduce taxes for the rich.

    Come the revolution you would be the very first person i would put against the wall.

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    1. Alan, I was just illustrating the reasoning of someone that I'd put against the wall too. Sorry if I misled you. I'm in favour of taking sufficient tax to make the NHS work properly for everyone.

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    2. It's not very nice wanting to put anyone against the wall that you happen to disagree with. You're starting to remind me of someone...

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    3. You're right Mudge. It's metaphorical, shall we say?

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  14. I'm not one of those rich, Alan. Why did you think that I am?

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    1. "The poor absorb that..." phrasing made me think the same as Alan. Can you not see that someone could conclude that?

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  15. Well, Dave, in the sense that I, as an NHS user, might not talk about myself as "absorbing" our taxes possibly, but it's a bit of an assumption I'd say.

    Whatever, my point is that the idea could be attractive to doctrinaire, tax-cutting politicians in England for that reason, and not just to so-called do-gooders.

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  16. Cost of a bottle of Bishop's Finger (5.4% ABV, 2.7 units) in Asda - £1.50 (4 for £6). Cost at 50p a unit - £1.35. I wouldn't mind a 15p reduction in the price, but I doubt if it would happen.

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    1. Er, it's not a maximum price. Quite a few premium bottled ales *would* fall foul of MUP, including Shepherd Neame's own 1698 (6.5% ABV). And of course multibuy discounts have already been outlawed in Scotland.

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