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
Show Hide image

Something is missing from the Brexit debate

Inside Westminster, few seem to have noticed or care about the biggest question mark in the Brexit talks. 

What do we know about the government’s Brexit strategy that we didn’t before? Not much, to be honest.

Theresa May has now said explicitly what her red lines on European law and free movement of labour said implicitly: that Britain is leaving the single market. She hasn’t ruled out continuing payments from Britain to Brussels, but she has said that they won’t be “vast”. (Much of the detail of Britain’s final arrangement is going to depend on what exactly “vast” means.)  We know that security co-operation will, as expected, continue after Brexit.

What is new? It’s Theresa May’s threat to the EU27 that Britain will walk away from a bad deal and exit without one that dominates the British newspapers.

“It's May Way or the Highway” quips City AM“No deal is better than a bad deal” is the Telegraph’s splash, “Give us a deal… or we walk” is the Mirror’s. The Guardian opts for “May’s Brexit threat to Europe”,  and “May to EU: give us fair deal or you’ll be crushed” is the Times’ splash.

The Mail decides to turn the jingoism up to 11 with “Steel of the new Iron Lady” and a cartoon of Theresa May on the white cliffs of Dover stamping on an EU flag. No, really.  The FT goes for the more sedate approach: “May eases Brexit fears but warns UK will walk away from 'bad deal’” is their splash.

There’s a lot to unpack here. The government is coming under fire for David Davis’ remark that even if Parliament rejects the Brexit deal, we will leave anyway. But as far as the Article 50 process is concerned, that is how it works. You either take the deal that emerges from the Article 50 process or have a disorderly exit. There is no process within exiting the European Union for a do-over.  

The government’s threat to Brussels makes sense from a negotiating perspective. It helps the United Kingdom get a better deal if the EU is convinced that the government is willing to suffer damage if the deal isn’t to its liking. But the risk is that the damage is seen as so asymmetric – and while the direct risk for the EU27 is bad, the knock-on effects for the UK are worse – that the threat looks like a bad bluff. Although European leaders have welcomed the greater clarity, Michel Barnier, the lead negotiator, has reiterated that their order of priority is to settle the terms of divorce first, agree a transition and move to a wider deal after that, rather than the trade deal with a phased transition that May favours.

That the frontpage of the Irish edition of the Daily Mail says “May is wrong, any deal is better than no deal” should give you an idea of how far the “do what I want or I shoot myself” approach is going to take the UK with the EU27. Even a centre-right newspaper in Britain's closest ally isn't buying that Britain will really walk away from a bad deal. 

Speaking of the Irish papers, there’s a big element to yesterday’s speech that has eluded the British ones: May’s de facto abandonment of the customs union and what that means for the border between the North and the South. “May’s speech indicates Border customs controls likely to return” is the Irish Times’ splash, “Brexit open border plan “an illusion”” is the Irish Independent’s, while “Fears for jobs as ‘hard Brexit’ looms” is the Irish Examiner’s.

There is widespread agreement in Westminster, on both sides of the Irish border and in the European Union that no-one wants a return to the borders of the past. The appetite to find a solution is high on all sides. But as one diplomat reflected to me recently, just because everyone wants to find a solution, doesn’t mean there is one to be found. 

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