Minimum alcohol pricing fails the coalition's "cost of living test"

Policy irony of the day: the Tories reject minimum alcohol pricing because it "hits the poorest hardest".

The most notable thing about the government's apparent U-turn on minimum alcohol pricing is the basis on which the policy has been rejected. Theresa May, Michael Gove and Andrew Lansley have led a cabinet revolt against the proposal on the grounds that it would hit the poorest hardest and punish responsible drinkers as well as irresponsible ones. 

On a point of fact, they are correct. Minimum pricing would have a disproportionate effect on the poorest since they spend a greater proportion of their disposable income on alcohol. An IFS report found that a price of 45p per unit (the level proposed by ministers) would cost the poorest households 2 per cent of their total food budget, compared to 1.3 per cent for the richest. Lansley, a long-standing opponent of minimum pricing, told the Spectator last year: "it's regressive, so there are perfectly normal families who just don't happen to have much money who like to buy cheap beer or cheap wine. Should they be prevented? No, I don't think so". 

The policy, it appears, has failed the coalition's new "cost of living test". After the great pasty tax revolt, ministers are wary of anything that increases the price of people's pleasures, particularly at a time when the government is about to hand 8,000 millionaires an average tax cut of £107,500 by scrapping the 50p rate. 

But if the new measure of a proposal is to be whether it hits the poorest hardest (as Lansley's stance suggests) it's worth noting how many of the government's existing policies fail this test. The decision to raise VAT, for instance, a regressive tax that takes no account of income, inevitably had a disproportionate effect on low earners. A study published in 2011 by the Office for National Statistics showed that the poorest fifth spend nearly 10 per cent of their disposable income in VAT compared with 5 per cent for the richest households.

Alongside this, the government has capped benefit increases at 1 per cent (a policy that will force even more to choose between heating and eating), reduced the fund for council tax benefit by 10 per cent (a measure that will force thousands to pay the tax for the first time) and elected to charge social housing tenants for their "spare" rooms (the notorious "bedroom tax"), all at the same as cutting income tax for the highest earners. Confronted by a government that has so often chosen to hit the poor, while sparing the rich, it's hard to take their new emphasis on the "cost of living" entirely seriously. 

A 'Cheap Booze' sign displayed outside a Hoxton off licence on November 28, 2012 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Theresa May is paying the price for mismanaging Boris Johnson

The Foreign Secretary's bruised ego may end up destroying Theresa May. 

And to think that Theresa May scheduled her big speech for this Friday to make sure that Conservative party conference wouldn’t be dominated by the matter of Brexit. Now, thanks to Boris Johnson, it won’t just be her conference, but Labour’s, which is overshadowed by Brexit in general and Tory in-fighting in particular. (One imagines that the Labour leadership will find a way to cope somehow.)

May is paying the price for mismanaging Johnson during her period of political hegemony after she became leader. After he was betrayed by Michael Gove and lacking any particular faction in the parliamentary party, she brought him back from the brink of political death by making him Foreign Secretary, but also used her strength and his weakness to shrink his empire.

The Foreign Office had its responsibility for negotiating Brexit hived off to the newly-created Department for Exiting the European Union (Dexeu) and for navigating post-Brexit trade deals to the Department of International Trade. Johnson was given control of one of the great offices of state, but with no responsibility at all for the greatest foreign policy challenge since the Second World War.

Adding to his discomfort, the new Foreign Secretary was regularly the subject of jokes from the Prime Minister and cabinet colleagues. May likened him to a dog that had to be put down. Philip Hammond quipped about him during his joke-fuelled 2017 Budget. All of which gave Johnson’s allies the impression that Johnson-hunting was a licensed sport as far as Downing Street was concerned. He was then shut out of the election campaign and has continued to be a marginalised figure even as the disappointing election result forced May to involve the wider cabinet in policymaking.

His sense of exclusion from the discussions around May’s Florence speech only added to his sense of isolation. May forgot that if you aren’t going to kill, don’t wound: now, thanks to her lost majority, she can’t afford to put any of the Brexiteers out in the cold, and Johnson is once again where he wants to be: centre-stage. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.