The minimum price dilemma

Yes, minimum prices put money in the pockets of the supermarkets - but that's the necessary evil of the project.

The IFS yesterday released its analysis of the effect of a minimum price for alcohol, and it made some interesting points.

Far from what one would believe from Theresa May's statement on the matter, and the press focus on "supermarket multi-buys" and "cut-price alcohol", it is by no means just the cheapest booze which would be hit by a proposed floor of 40p a unit. With the average price-per-unit just 44.8p in their sample, a total of 47.8 per cent of drinks would have their prices hit by the changes. For some types, it's even worse. Over 80 per cent of ciders will see price increases.

The correlations between price and wealth, and price and quantity consumed, are as you would expect (or even slightly weaker):

The average price for those with incomes below £10,000 per year is around 42p per unit, compared to 51p for those above £60,000. Households consuming fewer than 7 units of alcohol per adult per week pay almost 49p per unit, compared to 41p for those consuming more than 35 units.

One area where the report isn't quite so compelling, however, is in its call for minimum pricing to be enacted through the tax system rather than a simple floor.

In this, the authors echo an argument made by Matt Cavanagh in the Spectator last month (Cavanagh clearly being psychic, he managed to address the issues a month before the Home Secretary even raised them), when he wrote:

Last year’s IFS study [pdf] estimated that, assuming ‘no behavioural response from consumers and no wider price effects’, the 45p MUP proposed by the SNP in 2010, if introduced across the UK, ‘would transfer £1.4 billion from alcohol consumers to producers and retailers’. By contrast, an MUP implemented indirectly, via changes in duty, would transfer this money to the Exchequer, which could reduce the need for spending cuts or tax increases elsewhere.

The problem for both the IFS and Cavanagh is that the single biggest argument the government has in favour of minimum pricing is wrecked if it is implemented through duty.

The rough plan (which would still be an enormous shake-up to the current way "sin taxes" are administered, and is likely illegal under EU law) would involve changing duty so that it is charged at a flat rate per unit, rather than the current variable rates depending on the type, as well as the strength, of alcohol. At present, only spirits, fortified wine and beer are taxed purely in relation to strength, with all other drinks merely striated into broad categories.

In order to prevent this increase being absorbed by supermarkets as a loss-leader (even with duty at the much lower current rates, it is possible to buy some drinks which are sold for less than the combined duty and VAT charged on them), this would have to be combined with legislation preventing shops from selling for less than the duty charged on the drink.

Enacting this plan would indeed result in a sharp rise in alcohol prices, with most or all of the increase going to the treasury rather than the supermarkets or drinks companies. But the increase would come from all drinks, rather than just the cheaper ones that the proposed minimum price is targeting.

With a minimum price, a drink which is already over the floor would see no price increase at all. If a three-unit bottle of beer costs at least £1.20 before the change, it will cost the same after. This allows the government to truthfully say that the price will hit heavy drinkers hardest and have the happy side-effect of aiding our flagging pubs (while slightly less truthfully claiming moderate drinkers aren't affected; the IFS confirms they are still "substantially affected").

The same is not true if the increase is put in through the tax system. That £1.20 bottle of beer may have around £0.60 of duty on it before the change, with production making up the other £0.60. After an increase, it suddenly has £1.20 of duty on it, with production still taking up £0.60. While, of course, supermarkets and drinks companies have profits which they may choose to cut into to prevent a price increase, it is unlikely they would be able to suck up all the extra cost.

In a 2011 paper, the IFS offer some concessions to this problem. They point out that as a percentage increase, a higher duty would still hit cheaper drinks more, and it is certainly the case that the public will be a lot more comfortable with any price rises going into general taxation than into the pockets of businesses.

Nonetheless, the strongest argument the government has in favour of minimum pricing is that it only affects the cheapest drinks and the heaviest drinkers. The IFS study already puts that on shaky ground, but trying to do the same thing through general taxation would blow a hole in the argument altogether. If the aim is simply to discourage drinking by raising prices across the board, then that can be achieved through taxation. But the aim of minimum pricing is more nuanced than that, and there's no point in pretending that it can be done any other way.

Not hit by a minimum price: a cocktail in the Ritz-Carlton hotel. Credit: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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I can’t follow Marie Kondo's advice – even an empty Wotsits packet “sparks joy” in me

I thought I’d give her loopy, OCD theories a go, but when I held up an empty Wotsits bag I was suffused with so many happy memories of the time we’d spent together that I couldn’t bear to throw it away.

I have been brooding lately on the Japanese tidying freak Marie Kondo. (I forgot her name so I typed “Japanese tidying freak” into Google, and it was a great help.) The “Japanese” bit is excusable in this context, and explains a bit, as I gather Japan is more on the case with the whole “being tidy” thing than Britain, but still.

Apart from telling us that we need to take an enormous amount of care, to the point where we perform origami when we fold our underpants, which is pretty much where she lost me, she advises us to throw away anything that does not, when you hold it, “spark joy”. Perhaps I have too much joy in my life. I thought I’d give her loopy, OCD theories a go, but when I held up an empty Wotsits bag I was suffused with so many happy memories of the time we’d spent together that I couldn’t bear to throw it away.

After a while I gave up on this because I was getting a bit too happy with all the memories, so then I thought to myself, about her: “This is someone who isn’t getting laid enough,” and then I decided that was a crude and ungallant thought, and besides, who am I to wag the finger? At least if she invites someone to her bedroom no one is going to run screaming from it, as they would if I invited anyone to my boudoir. (Etym: from the French “bouder”, to sulk. How very apt in my case.) Marie Kondo – should bizarre circumstance ever conspire to bring her to the threshold – would run screaming from the Hovel before she’d even alighted the stairs from the front door.

I contemplate my bedroom. As I write, the cleaning lady is in it. To say that I have to spend half an hour cleaning out empty Wotsits packets, and indeed wotnot, before I let her in there should give you some idea of how shameful it has got. And even then I have to pay her to do so.

A girlfriend who used to be referred to often in these pages, though I think the term should be a rather less flippant one than “girlfriend”, managed to get round my natural messiness problem by inventing a game called “keep or chuck”.

She even made up a theme song for it, to the tune from the old Spiderman TV show. She would show me some object, which was not really rubbish, but usually a book (it may not surprise you to learn that it is the piles of books that cause most of the clutter here), and say, “Keep or chuck?” in the manner of a high-speed game show host. At one point I vacillated and so she then pointed at herself and said, “Keep or chuck?” I got the message.

These days the chances of a woman getting into the bedroom are remote. For one thing, you can’t just walk down the street and whistle for one much as one would hail a cab, although my daughter is often baffled by my ability to attract females, and suspects I have some kind of “mind ray”. Well, if I ever did it’s on the blink now, and not only that – right now, I’m not even particularly bothered that it’s on the blink. Because, for another thing, I would frankly not care to inflict myself upon anyone else at the moment.

It was all a bit of a giggle eight years ago, when I was wheeled out of the family home and left to my own devices. Of course, when I say “a bit of a giggle”, I mean “terrifying and miserable”, but I had rather fewer miles on the clock than I do now, and a man can, I think, get away with a little bit more scampish behaviour, and entertain a few more illusions about the future and his own plausibility as a character, when he is squarely in his mid-forties than when he is approaching, at speed, his middle fifties.

Death has rather a lot to do with it, I suppose. I had not actually seen, or touched, a dead body until I saw, and touched, my own father’s a few weeks ago. That’s what turns an abstract into a concrete reality. You finally put that to one side and gird up your loins – and then bloody David Bowie snuffs it, and you find yourself watching the videos for “Blackstar” and “Lazarus” over and over again, and reach the inescapable conclusion that death is not only incredibly unpleasant, it is also remorseless and very much nearer than you think.

And would you, dear reader, want to be involved with anyone who kept thinking along those lines? I mean, even if he learned how to fold his undercrackers into an upright cylinder, like a napkin at a fancy restaurant, before putting them in his drawer? When he doesn’t even have a drawer?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war