Very long faces in the West Country this week. Despite much pressure from the health lobby, Alistair Darling has chosen to ignore calls for minimum pricing of alcohol, and instead has imposed a hefty tax hike on cider. In Wednesday’s Budget statement, the Chancellor announced a duty increase of 10% above inflation for cider compared with 2% above inflation for other alcoholic drinks across the board.
In recent years cider has enjoyed something of a tax holiday, making it a firm favourite among young people with little money and big thirsts. Cider has been a cheap way to binge-drink, and the budget hike is intended to bring it back into line on duty and price.
But are above-inflation tax hikes the best fiscal strategy for tackling alcohol misuse – especially binge-drinking by young people? Why the aversion to minimum pricing as an additional measure?
The problem with hikes in duty is that they can be easily absorbed by the supermarkets, which continue to offer cheap drink as loss-leaders to draw people into their stores. Many deeply discounted drinks are currently being offered at less than the cost of VAT, and these tend to be the very lines, such as strong ciders, lagers and alcopops, that are especially popular with young people.
Minimum pricing, on the other hand, has to be passed on to the customer. By fixing a minimum price per unit of alcohol sold – in other words, banning ultra-cheap offers on booze – the government can ensure that no drink can be bought at less than, say, 50p per unit, the figure recommended by England’s Chief Medical Officer as an ‘immediate priority’ over a year ago. This would mean no less than £5.50 for a 2-litre bottle of normal-strength cider (compared with many current offers under £2), £6 for the average six-pack of lager and £4.50 for a typical bottle of wine – more for higher strength versions.
The impact on health could be considerable. Consumption is closely linked to price, and a team at Sheffield University have calculated that, with a minimum of 50p per unit, every year the UK could see: 3,393 fewer deaths, 97,900 fewer hospital admissions, 45,800 fewer crimes, 296,900 fewer sick days, and a total benefit of over £1 billion. The deterrent effect and health benefits would be greatest for the heavier drinkers, especially those with the least disposable income.
With an election in the offing, the tax versus minimum pricing issue has split the parties. The Lib Dems are likely to be for it, Labour against (after Gordon Brown’s flat refusal to accept the CMO’s recommendation last year) and the Tories somewhere in between (on selected types of drink favoured by young people). In Scotland the parties line up differently – perhaps distorted by the distilleries – and the SNP-led efforts to drive through legislation are having a rough ride.
But, after the election, there’ll be all to play for. My guess is that common sense will break out and minimum pricing will soon be on the statute book as a useful adjunct to increases in duty. It won’t be either/or, but both/and. There’s still a chance that, just as it did with smoke-free legislation, Scotland could lead the way.
Or perhaps a fresh lot of Westminster MPs will see the light, and a ban on deep discounting of booze could be one of the early benefits of a hung parliament.
Good news for the nation’s health – but maybe less so for the apple-growers and cider-makers of the West Country.