Minimum pricing: the key questions

Some aspects of the debate are more settled than others.

Minimum pricing for alcohol is back in the news today, as ministers are expected to announce that the price per unit will be 45p.

Since the new information is rather technical (importantly, the average price-per-unit in a recent IFS study was 44.8p, so this price will have a material effect), what we're actually getting is less a discussion of whether 45p is too high, too low or just right, and more rehashing of old arguments. So here they are again.

Minimum pricing lowers alcohol consumption

The Lancet concludes:

Natural experiments in Europe consequent to economic treaties have shown that as alcohol taxes and prices were lowered, so sales, alcohol consumption, and alcohol-related harm have usually increased.

Samira Shackle wrote in February that:

A 2008 model by the University of Sheffield suggested that a high enough minimum price could significantly reduce the impact and cost of alcohol to society. It found that problem drinkers seek out the cheapest ways to get drunk as they tend to be either young or those who drink a lot, and therefore would change their behaviour in response to price increases more than moderate drinkers would.

It's hardly surprising. All that is being concluded is that, on a societal basis, alcohol sales obey the laws of supply and demand (as an aside, it's fascinating that those normally most wedded to this rule of thumb are quickest to argue with it in this situation).

There is some countervailing evidence. An IEA paper suggests that there is no cross-national correlation between affordability of alcohol and total consumption:

Chart

Nonetheless, the balance of evidence is strongly on the side of minimum pricing having some effect on consumption.

Minimum pricing hits some types of problem drinkers harder than others

Alcoholics – people with a pathological addiction to alcohol – are unlikely to reduce their consumption that much in the face of minimum pricing. It is nearly the definition of addiction that you prioritise feeding that addiction, and that is no different with alcoholism. Minimum pricing hurts alcoholics with basically no upside (although for a few it may be the final straw to seek help).

The policy is instead aimed at a different sort of problem drinkers: binge drinkers, who suffer their own health problems but are thought to be far more price-sensitive.

In this aspect it can be seen as a trade-off: hurting alcoholics to help binge drinkers.

Minimum pricing hits the poor hardest

George Eaton writes:

As a recent ONS study noted, 'people in poorer households spend a greater proportion of their disposable income on alcohol duty than higher wage earners.'

Additionally, price-based controls always hit the poor hardest by their very nature. That doesn't necessarily mean they're aimed at the poor, just that the mechanism by which they work has less effect on people with enough disposable income not to care (cf. fuel duty, carbon taxes, prescription charges and passport fees).

Minimum pricing is a boon for supermarkets

Matt Cavanagh writes:

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’.

This transfer is largely unavoidable if the major benefit of minimum pricing – the fact that it prevents retailers absorbing the cost – is to be maintained. As I wrote in March:

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.

It might be illegal under EU law

The European Union is quite prescriptive about how sin taxes work. The European Commission has warned that Scotland's implementation "causes problems with the compatibility with the EU Treaty", and previous attempts have been shot down by the courts. Not that that's not a reason not to try.

Of course, none of these questions address what is really the heart of the matter: how far does the government's right or responsibility to alter people's behaviour to protect them extend? That's a valid debate to have; but it is a separate one from whether minimum pricing would work at achieving its stated goals. To that, the answer is a cautious yes, but it remains worth noting that its goals are reducible to "stopping poorer binge drinkers from drinking so much". That may still be a valid aim, but its a weaker one that many defenders have made it out to be.

Booze. Photograph: Getty Images

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

Photo: Getty
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Tim Shipman's Diary

The Sunday Times political editor on poker, pasta – and being called fat by Andrew Marr.

A couple of Saturdays ago, I was having dinner with my wife at Padella (which serves the best pasta in London) when the phone rang. It was an irate David Davis. “You’re reporting that a friend of mine has said Philip May wants Theresa to quit. It’s not true. I don’t even know Philip May.” I calmly explained that I wasn’t accusing him and I had his friend on tape. “Who was it?” he asked me. I wasn’t saying. “Well, it’s not bloody helpful,” the Brexit Secretary said before hanging up.

The following day, I woke up to watch Philip Hammond explain to the BBC’s Andrew Marr why his cabinet colleagues had leaked me details of how the Chancellor had branded public-sector workers as “overpaid”. “I don’t know who [Tim Shipman’s] sources are,” he said, after inaccurately suggesting that I was being fed information as part of some Brexiteer conspiracy to discredit the cabinet’s leading Remainer.

On Monday, I did an interview with Eddie Mair in the back of a beer garden in Ireland, where I’m playing cricket. In reality, the leaks had much more to do with colleagues irritated at Hammond’s sometimes grating behaviour. Word reaches me that he regards it all as very unhelpful. It seems odd after 16 years in political journalism to have to say this, but we’re not here to be helpful. It might make sense if our politicians gave us less to write about. Over the past three years, they have delighted us enough.

Back for seconds

Voter fatigue is a recognised problem. No one talks about journalist fatigue. We all hope that Theresa May rejuvenates on her Swiss walk (perhaps regenerating into Jodie Whittaker). Thanks to the decision she took when she last went walking, I’m facing the obliteration of another summer holiday writing a second political tome covering the period since my Brexit book, All Out War, up to the general election. What looked at one stage like the boring second album is now a rip-roaring tale of hubris and nemesis. When I asked for title suggestions on Twitter, there were plenty of votes for “Mayhem” and “Mayday”. The most imaginative was: “The Snarling Duds of May”. Sadly, it’s too long for my publisher.

Catching the big fish

The new-found attention from writing books is a double-edged sword. To my delight, then embarrassment, Andrew Marr referred to me twice as “the doyen” of the print lobby. “We keep trying to stop him,” Marr’s editor, the redoubtable Rob Burley, confided at a rival magazine’s summer party. The following week, Marr said: “The biggest fish in the pool, if only physically, is Tim Shipman…” I got a text from a special adviser friend asking: “Are you paying him?” I pointed out that Britain’s best-known political interviewer had just called me a fat bastard live on national television.

New blood

I make my debut on BBC2’s Newsnight alongside Ash Sarkar of Novara Media, one of the new websites that cheerlead for Jeremy Corbyn. She is nerveless and fluent in her mid-twenties, when I was a tongue-tied naif. People who get the Corbyn phenomenon are rightly getting more airtime. Off the air, she tells me that she’s a “libertarian anarchist” and then asks me where I live. “Are you going to smash it up?” I ask nervously. She smiles. Ash’s main concern is to paint the town red in the Saturday-night sense. A Labour MP draws attention to her Twitter biog, which concludes: “Walks like a supermodel. Fucks like a champion. Luxury communism now!” Bravo. I think…

Brexit gamble

I was greatly cheered by the induction in the Poker Hall of Fame of the late Dave “Devil­fish” Ulliott, the player who did the most to create the TV and online poker boom in Britain. Westminster has a few useful card sharps – Paul Stephenson, formerly of Vote Leave, among them – but I don’t know any politicians who play. By contrast, the US presidents Harry Truman, Dwight Eisenhower, Lyndon Johnson and Richard Nixon were all accomplished poker players.

When I worked in the US, I interviewed a member of Barack Obama’s poker circle when he was a state senator in Chicago. The cautious, composed and occasionally bold player he described was the mirror image of the politician we came to know. His Republican rival in 2008, John McCain, preferred the chaotic gambling of the craps table and his erratic campaign reflected that. Too many of the current cabinet seem to be dice men. What we wouldn’t give for Devilfish running the Brexit negotiations.

Blundering through

Anyone who has ever dealt with McCain would have been saddened by the news that he is suffering from brain cancer, but his resilience almost makes you feel sorry for the tumour. McCain is undoubtedly the most media-friendly politician I have ever met. When I travelled on his plane in 2008, he took every question from the foreign press pack and made us feel welcome. Through him, I also met Steve Duprey, the former boss of the New Hampshire Republicans. He was fond of explaining Duprey’s first law: “In politics, before considering malevolence, always assume incompetence.” I have had much cause to remind myself of that over the past three years.

Paranoid android

If you are looking for a summer read, I recommend Jonathan Allen’s and Amie Parnes’s Shattered, a great insider account of Hillary Clinton’s disastrous 2016 presidential election effort. It shows how a flawed candidate with little ability to connect with the public presided over a paranoid regime of advisers engaged in Shakespearean bloodletting that led to them coming a cropper when fighting a charismatic populist. On second thoughts, you could always wait to read my second book this autumn. 

Tim Shipman is the political editor of the Sunday Times. “All Out War” is now available in paperback (William Collins)

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue