Calling time on minimum pricing for alcohol

David Cameron surprised many this week when he endorsed plans for councils in Greater Manchester to set a minimum price for alcohol. The proposed scheme, which is set to be fully discussed in October, would force both retailers and pubs to charge a minimum of 50p per unit, and follows a similar recommendation from the National Institute for Clinical Excellence.

Supporters of minimum pricing claim that it would discourage supermarkets from selling cheap alcohol, which would reduce the number of deaths from related diseases. Indeed, some studies have indicated that even a slightly lower minimum price of 40p, which has been proposed in Scotland, could prevent 1,000 premature deaths a year. There have even been claims that stopping supermarkets from selling cheap alcohol could prevent community pubs from closing down.

On closer examination, however, the case for greater regulation and higher alcohol prices is less compelling. Though excessive alcohol consumption has been linked with a range of diseases, research has also shown that moderate drinking, which would be hit by minimum pricing, may be a more healthy option than avoiding alcohol altogether, with one meta-analysis finding that as many as four drinks a day reduces the risk of death by nearly 20 per cent. And a Spanish study even suggested that heavy consumption of beer and spirits could lower heart disease. Given that heart disease alone costs the British economy £29bn a year, it is likely that alcohol consumption saves more than the estimated £2.7bn cost of alcohol abuse to the NHS.

Similarly, links between crime and alcohol regulation are not straightforward. For example, with an extremely tough licensing regime, which mandates that all strong beers, wines and spirit be sold through a state monopoly, Sweden should have the lowest rates of alcohol-related crime in Europe. Inconveniently, for those longing for Britain to go down a similar path, this is not the case. In fact 86 per cent of violent crimes in Sweden are alcohol-related, while the figure is only 42 per cent for Britain and 40 per cent for Belgium, a country with a licensing regime and drinking culture similar to ours. In any case, using minimum pricing to discourage people from drinking at home is likely to increase crime rates in city centres.

However, while the health and social benefits of minimum pricing are unlikely to live up to the predictions of its supporters, it may benefit the drinks industry. Unlike an increase in duties, which would at least raise money for the treasury, a mandatory price floor would limit competition between all parts of the drinks industry, boosting margins and driving up profits at the expense of consumers. Government mandated price-fixing would also undermine the work of the Competition Commission, setting a dangerous precedent. It should therefore come as no surprise that Tesco has backed minimum pricing, while a range of companies and trade associations have supported more moderate restrictions, such as a ban on below cost sales of liquor.

There is nothing wrong with trying to encourage a more moderate level of alcohol consumption. Even so, the claims made by the anti-alcohol lobby about the health impacts of drinking need to be more closely examined than they are currently. If, after a proper analysis that looks at the pros as well as the cons, the government still wants to reduce alcohol consumption then it should do so through increasing taxes—the clearest and most transparent way. In contrast, David Cameron’s enthusiasm for minimum pricing creates the impression that he is more concerned about headlines and drink company profits, than he is about public health.