The Blog

Minimum Pricing: Not Just a Scottish Play

When I heard about the beginning of the consultation on minimum pricing for alcohol, I didn't know whether to laugh or cry. Is it good or bad? All is not as straightforward as it seems.

It seems that every four months the ineptitude of our politicians compels me to put my fingers to the keyboard. When I heard about the beginning of the consultation on minimum pricing for alcohol, I didn't know whether to laugh or cry. Is it good or bad? All is not as straightforward as it seems.

"So foul and fair a day I have not seen."

Maybe, as in Macbeth, "foul is fair and fair is foul." It certainly has the feel of a Shakespearean tragedy waiting to happen; you know that although most of the characters are well-meaning, there will be a twist in the tale and it isn't going to end well for anybody. Now you might be expecting me to compare politicians to the meddling Lady Macbeth or the cackling witches. But this is not to be, I will be giving them the leading role in this analogy.

Like the Thane of Glamis, our brave and gallant government has much promise (or should that be "has promised much"?) and is trying to do the right thing. We commend them on this; all are in agreement that the issues of irresponsible drinking and reckless retailing need to be tackled. The cause of this proposed new idea is the result of a Home Office impact assessment which, in true Macbethian-style, prophesises that imposing a minimum price of 40p to 50p per unit on alcohol will cut consumption, lower crime and reduce the strain on the NHS (just for the record I am not claiming that the report was produced by a bunch of toothless, officious old hags). These bold-sounding claims are all very appealing, as those received by the Scottish Play's protagonist were.

"If chance will have me king."

Many responsible independent retailers will have shared my initial euphoria, because this proposal appears to be a powerful weapon to wield against the mighty supermarkets. Companies like Oddbins price their products honestly for the customer and the supplier and do not offer irresponsible pricing models. The proposed minimum price of 45p per unit is therefore unlikely to have a significant impact on our prices. Surely this is our chance to be crowned kings? So why do I have these nagging doubts?

"Good sir, why do you start; and seem to fear things that do sound so fair?"

In the short term, the prophecies of the Home Office impact assessment will be fulfilled and things are likely to look rosy. I accept we will probably see a reduction in the sales of alcohol initially. But after 18 months, or less, the new prices will become the norm and buying will increase again. The ineffectual tax hikes on alcohol in every budget and constantly increasing petrol prices are testament to this fact.

And this is where that niggling feeling that things aren't going to go the government's way starts to set in. What looks like an "innocent flower" has a "serpent" lurking beneath it: where do the government go when this doesn't cause the perceived long-term decrease in alcohol consumption predicted? As I've already hinted, you only have to look at history, or Macbeth, for the answer: they will take up the sword again, and again, and again. 45p will become 50p, 50p will become 75p, 75p will become £1, and the prices will steadily increase. Lest we forget that the duty escalator already guarantees a price increase each year. Independent wine merchants and all responsible consumers should be braced for the inevitable price rises that will come.

"Something wicked this way comes."

Just as Macbeth couldn't stop at wickedly murdering Duncan and had to try to kill Fleance as well, our politicians are not satisfied with the already heavy tax on alcohol and they continue to fiddle. This begs the question: why are the politicians proposing to implement price control on alcohol? I do agree that the government should step in to protect consumers and prevent them being exploited.

However, they don't really interfere with people's free will when it comes to other commodities or perceived evils that we apparently can't be trusted with, such as saturated fat or salt. In fact the proposed legislation doesn't seem very liberal at all when you consider that part of our coalition government was campaigning for the legalisation of cannabis only a couple of years ago. Politicians continue to peddle the argument that meddling with the drinks industry is because of what the Prime Minister calls the "unacceptable behaviour" and the Policing and Criminal Justice Minister, Damien Green, describes as the "terrible scenes" caused by alcohol.

However, there are two major flaws in this argument. Number 1: raising prices has never worked in the past, so there is no reason to believe that this time will be dramatically different. Number 2: the price rise is unlikely to affect the price of alcohol in pubs and bars, where much of the drinking is done, however much "pre-loading" Damian Green thinks people do. "Pre-loading" is the fashionable new word in politics for having a drink at home before you go out, to stop you spending so much. During a recession some might see this as quite wise.

The truth is, it is not a new concept, most of us have done this at some point in our lives, but giving it a new name is supposed to instil fear in us that this is a new evil. Should we also be calling a nightcap a "top-up"? Sorry, I digress; the actual answer to my original question, of why the government continues to intervene, lies in Macbeth's unravelling: once you start interfering, you cannot stop. My worry is that it starts with alcohol today, but what will they meddle with tomorrow?

"Tomorrow and tomorrow and tomorrow."

If this legislation is passed, what will tomorrow bring? I have the feeling that the increasing prices may only be the start of it, and just as it did for Macbeth, things may well spiral out of control. The prophecies sound great, but politicians need to be careful of the law of unintended consequences. Production of homemade alcohol, and its associated dangers, may increase. There may be a resurgence in the black market trade in alcohol. Young people may turn to illegal drugs if these offer a cheaper alternative. The UK's world-famous spirits and cider industries may be served a cruel and punishing blow. Politicians may become increasingly drunk on power and strengthen the nanny-state further. But these are not the most worrying consequences...

Politicians have made it clear that they are going after the kings of the retail sector: the supermarkets, who pile up cheap alcohol and slash prices that allegedly promote binge drinking. However, this is where our tale diverges from Macbeth's; the government will fail to slay the king. In fact their measures will play, and pay, straight into the greedy hands of the supermarkets. The buying power of the supermarkets allows them to sell a 70cl bottle of vodka for less than £10 while still making a profit.

Although minimum pricing may force this up to £13, it will not reduce the supermarkets' buying power; their costs will therefore stay the same. As I have already mentioned, sales are unlikely to change dramatically in the long-term, so in effect the government has put an extra £3 of our money into the supermarkets pocket for every bottle of vodka sold. So while responsible and knowledgeable wine merchants, who do not squeeze the living daylights out of their suppliers or mark up prices only to slash them the following week, struggle to sell a decent vodka for less than £14 a bottle, the supermarkets will be rubbing their hands with glee and praying that the politicians hurry up and get minimum pricing done already.

"What's done is done."

Before we jump the gun, minimum pricing isn't done yet; it is only at the consultation stage. There are a couple of hurdles to clear first, one of biggest being Europe. The government has made it clear that it doesn't like being told what to do by Europe and has been trying to drive a wedge between our neighbours and us all year. Politicians should prepare to be further annoyed, as minimum pricing is likely to be challenged under EU competition laws and may be deemed illegal by the European Court of Justice. If the minimum pricing does not sit well with the general public, wouldn't it be ironic if we were reliant on the ECJ to save us from the tyranny of our own government? I wonder how that would play out for the "Out of Europe" campaign - we tried to introduce legislation that would lead to you paying more for your alcohol, but that unelected lot in Europe said no. I think it may not help that particular campaign!

There is still time for the politicians to explore alternatives. Minimum pricing assumes that the only problem demographics are those on low incomes and young people. Although there are issues in these areas, it is a very simplistic view and will therefore only impact a very small proportion of heavy drinkers. What may be more effective is the advice I suggested in March, but that the government continues to ignore: education. There used to be a time when politicians were all about "education, education, education", but when it comes to alcohol it seems they would rather punish all than educate a few.

The government could take the first step of making it illegal to sell alcohol below cost price plus duty, as it had intended to in April 2012 prior to backtracking. This would prevent supermarkets running so called loss leaders, something that most responsible retailers refrain from doing. I acknowledge that although this may be more complicated to implement, it may be a more sensible first step than minimum pricing, which will probably prove ineffectual and have far-reaching consequences.

Macbeth said "I am in blood, stepp'd in so far, that should I wade no more, returning were as tedious as go o'er." Minimum pricing has not proceeded that far, there is still time for the government to turn back and cry "Hold! Enough!" So please take your seats to watch this tragedy unfold (or will it end up being a comedy of errors?). I'll see you again in four months most likely.

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