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The politics of price

1 May 2013
David Young
This article was published 11 years ago. Content may no longer be relevant.

Good policy is often at the mercy of politics, with evidence put aside for raw expediency. Alcohol-related harm in the UK was at the forefront of Prime Minister Cameron’s sights when he came into office, but now the situation is a bit more murky. David Young and Shannon Hanrahan investigate the politics of minimum price in the UK.

The Conservative Liberal Democrat Government’s abandonment of minimum unit alcohol pricing in March added one more policy U-turn to a long list. Since coming to power in 2010, the government has repeatedly changed course to avoid running into the brick wall of negative public opinion. Outrage from charities resulted in the dumping of a planned cap on charitable tax relief. Derision from tabloids saw the cancellation of a proposed tax on sausage rolls (and an unseemly rush by politicians to be photographed eating meat pies to show they were in touch with voters).

How did an alcohol harm-reduction policy proclaimed in March 2012 to be ‘turning the tide’ against irresponsible drinking end up just 12 months later on the list of aborted, unpopular policies?

David Cameron’s vision of a ‘Big Society’ provides an insight into the thinking that drives his party’s policy. The idea behind the ‘Big Society’ is that citizens, including business interests, identify and respond to needs within their own communities. In practice, this means ‘nudging’ people to adopt particular types of desired behaviour. Legislation is only considered as a last resort.

The key alcohol harm-reduction policy the Conservatives have introduced (and “not backtracked on) has been the Public Health Responsibility Deal – a voluntary agreement with the alcohol industry on issues such as promotions and labelling, aimed at tackling alcohol abuse. Many health advocacy groups, such as the Royal College of Physicians, have criticised this for not being tough enough.

Against this backdrop, the government was lauded for ‘revolutionary’ action on alcohol when it declared it would set a minimum price per unit of alcohol. This was at the heart of a promised Alcohol Strategy that also included a ban on the sale of multi-buy discount deals, a late-night levy to get pubs and clubs to help pay for policing, improved powers to stop serving alcohol to drunks, and a ‘zero tolerance’ approach to drunken behaviour in A&E departments.

“Of course, I know this won’t be universally popular”, Prime Minister David Cameron said in a press statement in March 2012, “but the responsibility of being in government isn’t always about doing the popular thing. It’s about doing the right thing. Binge drinking is a serious problem.”

That is revealed in National Health Service (NHS) figures that show 1.1 million hospital admissions in England relating to alcohol in 2009–10, or 879 more each day than five years previously. In the five years to 2009–10, there was a 25 percent rise in the number of people admitted due to drinking. In 2010, there were 8,790 alcohol-related deaths in the United Kingdom.

Cameron said that minimum unit pricing would make a real difference to these statistics. “We’re consulting on the actual [minimum] price, but if it is 40p (about NZ$0.70), that could mean 50,000 fewer crimes each year and 9,000 fewer alcohol-related deaths over the next decade.”

Those figures came from the Sheffield Alcohol Price Model, which has provided highly influential estimates of the effects of different minimum unit prices.

Scotland – one of the few countries in recent years to have introduced minimum pricing legislation – used Sheffield model estimates when it settled on a minimum price of 50 pence per unit of alcohol (around NZ$0.90) in 2012. The Scottish legislation would see the strongest ciders more than double in price, while bottles of whisky would cost at least £14 (about NZ$25) and wine a minimum of £4.50 (about NZ$8.00).

The Sheffield model has been a source of debate. Statistician John C Duffy assessed the model for the free market think-tank the Adam Smith Institute, with Adam Smith fellow Christopher Snowdon. Snowdon says the model suffers from the problem of ‘garbage in, garbage out’.

“If you tell a computer that minimum pricing will reduce harmful drinking and alcohol-related mortality, it will not try to disagree with you. If you don’t ask it to estimate how many people will buy alcohol from the black market or cut down on their food or heating budgets to pay for more expensive booze, it will not tell you about the unintended consequences.”

Professor Tim Stockwell, director of the University of Victoria’s Centre for Addictions Research of British Columbia, defends policy makers’ use of the Sheffield model. “The Sheffield model uses best practice guidelines, best available evidence and provides conservative estimates of benefits”, he says. “Where assumptions had to be made, the Sheffield group erred on the side of caution.”

Stockwell’s own research is often cited by proponents of minimum unit pricing. Stockwell’s centre carried out a landmark study between 2002 and 2009 in British Columbia, a Canadian province where alcohol could only be sold directly to the public in government-owned stores.

It found rises in drink prices resulted in “large reductions” in rates of alcohol-related deaths, reductions in alcohol-related hospital admissions associated with injuries and poisonings, and delayed effects on alcohol-related hospital admissions associated with serious diseases two to three years after the price increase.

“I believe our work provides strong evidence that minimum pricing has public health benefits,” says Stockwell.

“While pricing is not the only determining factor on population rates of alcohol consumption, it is by far the most scientifically well established causal factor.”

The UK Home Office agrees. It found “consistently strong evidence” to suggest that increasing alcohol price is “associated with reduced consumption”, particularly among youth.

Opponents of minimum pricing argue that the link is not so clear cut. William Boyack, media and public affairs manager for the Wine and Spirit Association (WSTA), notes that Italy has comparatively low alcohol prices along with low levels of consumption, while Ireland has high prices and high levels of consumption.

“If higher prices were the answer, then the UK already has some of the highest alcohol taxes in Europe.”

However, the battle over the UK Government’s minimum pricing plans was not largely fought over research or evidence. Rather, the policy’s opponents mounted a highly successful public relations campaign designed to highlighta threat to ordinary drinkers’ wallets.

Boyack calls minimum pricing an “extremely regressive measure”. He points to a study by the Centre for Economics and Business Research, an independent economics consultancy that found the poorest 10 percent of UK income earners would be the worst hit by a 45p minimum unit price.

The WSTA launched a website – Why Should Responsible Drinkers Pay More? Boyack says the campaign “was designed to increase consumer awareness about the potential impact of minimum unit pricing and to encourage decision makers to rethink the need for such a blunt policy when targeted alternatives are already working.”

He notes that, since 2004, per capita alcohol consumption in the UK has fallen by 16 percent.

At the website, users could sign a petition, calculate how much they would be hit in the pocket by price rises, and fire off a form email to their local politician. The email stated, “Responsible drinkers like me will end up paying higher prices, whilst those who binge drink will ignore the price hikes and continue to cause problems.”

The WSTA has not revealed how many people signed the petition. While polls show the majority of the British public oppose minimum pricing, the campaign’s Twitter message appears to have hardly been re-tweeted (although brewer SAB Miller was among those that broadcasted it). But the campaign seems to have been highly successful with one particular audience: opinion writers for right-of- centre newspapers.

More than 30 articles agreed with the WSTA’s perspective in newspapers that could be described as ranging from the right-of-centre to the further-right of the British newspaper landscape.

In the Daily Mail, Simon Hefner thundered, “It may seem that the government is doing us a favour by trying to prevent us harming ourselves. But it is not. Thanks to extensive state propaganda, we all know the facts. It is up to each of us to judge how, and whether, we act upon them.”

In the Mirror, Carole Malone warned that “working people are under the cosh from all sides, which is why [Prime Minister David] Cameron needs to stop treating us all like kids who can’t be trusted in a room with a few glasses of pinot grigio.”

And in the Sun, Conservative MP David Davis asked, “Why should sensible drinkers have to hand over even more cash because some people don’t know when to call it a night? We should be clear that the minimum price is deeply unfair. It will not affect the richest, who may not even notice.”

The alcohol industry led a very well organised operation, according to Conservative MP and former GP Sarah Woollaston, an outspoken advocate of minimum pricing.

“A campaign to alarm people that alcohol would be unaffordable for low-income, moderate drinkers has spooked politicians stung by the accusation that we are ‘spoiling life for the sensible pensioner whose only enjoyment is a glass of wine on a Sunday’.”

Woollaston takes issue with the idea that minimum pricing would unfairly hurt average drinkers.

“The majority could be said to be punished under the existing system where we all pay the cost of clearing up the mess left by irresponsible drinkers. The healthcare costs are around £3bn per year to our NHS, and anyone visiting a casualty department on a Friday or Saturday night will see just the tip of the iceberg.”

On top of the health costs, Woollaston points to the “staggering” social costs. “Most of the rough sleepers in my area have alcohol as a major contributor to their situation as do 40 percent of child protection cases and domestic violence [cases]. Our violent prisoners in jail, drunk drivers, impulsive suicides: the list is a long one, and the total cost to the UK is estimated to be in excess of £20bn.”

She further argues that, if supermarkets generated windfall profits as a result of minimum unit pricing, the government could levy a windfall tax “to be used for the benefit of those who are already addicted and need extra help”. (This idea is not likely to appeal to the Adam Smith Institute.)

Stockwell calculates that light and moderate British drinkers would only pay around £10 (NZ$18) more for alcohol over the course of a year if a minimum unit price of 45p was introduced.

“In short, light and moderate drinkers are hardly affected, and minimum pricing in particular is very targeted to heavier drinkers.”

The Scottish Government encountered a similar (although arguably not as well organised or well resourced) campaign when it attempted to introduce minimum pricing. Its first attempt to introduce the policy in 2009 failed.

Although the legislation was passed in 2012, the effect is yet to be felt. Implementation is on hold pending litigation from the Scottish Whisky Association, the European Spirits Association and the Comité Européen de Entreprises Vins (representing Europe’s wine producers). They argue that minimum pricing is an illegal barrier to trade, will discriminate between companies, will fail to address harmful drinking, is illegal under European and global competition laws and will ruin the Scottish whisky industry’s efforts to counter price controls and tariffs overseas. A ruling is expected in coming months.

In New Zealand, Prime Minister John Key poured cold water on minimum alcohol pricing in 2012, while admitting he wasn’t sure how the policy worked.

“Does it mean that a supermarket couldn’t loss-lead ... or does it mean that there’s actually a minimum price for a unit of alcohol?” he asked in The New Zealand Herald. He worried that people who abuse alcohol would simply drink a worse kind of pinot grigio.

“Raising the price can just push people down the quality track.”

As for the United Kingdom, while media leaks have confirmed minimum unit pricing has been dumped, the government is yet to officially confirm this or to reveal which other parts of the Alcohol Strategy might be revived.

Opponents are not giving up, even though they appear to have won. Boyack says.

“The ‘Why Should Responsible Drinkers Pay More?’ campaign will continue to make the case for the [minimum unit] policy to be dropped and for sensible solutions that target the root causes of problem drinking rather than policies that will punish the vast majority of responsible drinkers.”

Most British political commentators have concluded that the U-turn on alcohol pricing was driven by the simple political calculation that voters would not tolerate paying higher prices. In the same month that the government killed off the policy, the Chancellor announced a small cut in alcohol duty. This, he declared to a cheering Parliament, would make beer cheaper.

NOTE: New Zealand and the United Kingdom use different measurements for calculating a unit of alcohol. In the UK, one unit corresponds to eight grams of alcohol, therefore a pint of four percent lager would be 2.3 units. In NZ, a unit is based on 10 grams of alcohol or 12.7 millilitres, therefore a pint of four percent lager would be two units.

David Young is a London-based writer.

Shannon Hanrahan is the Managing Director of UK-based public health consultancy The Outcomes Group.




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