Alcohol Price

In September 2007, SHAAP convened an expert workshop to consider action that government can take on alcohol pricing policy to reduce alcohol-related harm in the population. The workshop reviewed an extensive body of research evidence which establishes a link between alcohol consumption and harm and identifies controls on price and availability as among the most effective policy options available to government to reduce the burden of harm from alcohol use.

This evidence is summarised in Alcohol: Price, Policy and Public Health. [pdf]

The report makes a series of RECOMMENDATIONS to the Scottish and Westminster governments on mechanisms for increasing alcohol price:

Recommendation 1 – End irresponsible alcohol promotions

New Scottish licensing legislation due to come into force in 2009 will outlaw irresponsible drinks promotions in pubs and clubs. Irresponsible alcoholic drinks promotions are defined as promotions which offer alcohol free of charge or at a reduced price on the purchase of one or more alcoholic drink, or any other product. The provisions of the new licensing legislation should be extended to cover shops, supermarkets and off-licences (See Appendix 2 for more details on Scottish licensing legislation and the promotions mechanism).

Recommendation 2 – Establish minimum alcohol prices

Fixing minimum drinks prices can achieve health goals that raising alcohol taxes alone cannot by preventing below-cost selling and the deep discounting of alcohol that some retailers engage in. Fixing minimum drinks prices is possible under both UK and EU competition law, provided that minimum prices are imposed on licensees by law or at the sole instigation of a public authority. Minimum prices can be expressed either as a particular price or a minimum profitmargin. The provisions of the new licensing legislation in Scotland appear to be sufficiently broad to allow the addition of a description of a drinks promotion which is irresponsible if it involves the supply of an alcoholic drink below a certain price. (See Appendix 2 for more details on the mechanisms and legal framework for setting minimum drinks prices in Scotland).

Recommendation 3 – Increase alcohol duty and link alcohol taxes to inflation

Increasing the rates of duty on all categories of alcoholic drinks is a simple, straightforward means available to the Westminster government to raise alcohol price. It is possible for alcohol producers and retailers to absorb the costs of a tax increase without increasing the retail price of alcohol, and this is particularly likely in the case of big supermarkets that can subsidise losses on alcohol with profits from other products. However, the evidence suggests that most producers and retailers generally pass on the costs of tax increases to consumers.19 In addition to raising the duty on alcohol, the Westminster government should also index-link tax increases to counter the erosion of the real value of specific alcohol duties in nominal terms due to inflation.

Recommendation 4 – Link levels of taxation to alcohol strength

Increasing levels of taxation on stronger alcoholic beverages and reducing the level of taxation on lower strength beverages would give a financial incentive to consumers to buy and consume lower-strength drinks (provided the reduction or increase in tax was reflected in the retail price) and to producers to produce lower-strength products. Although the way excise duty is levied in the UK is subject to rules laid down by the EU, EU law allows taxes other than excise duty to be placed on alcohol products by individual member states. This gives the UK government scope to place further taxes, in addition to excise duty, on alcoholic beverages with higher alcohol content with the aim of reducing alcohol consumption and improving public health. In particular, the duty on cider should be increased in relation to its alcoholic strength and taxed at the same rate as beer, a comparable alcoholic beverage. Under the current excise arrangements, cider is taxed at a much lower rate than beer of an equivalent alcoholic strength. (See Appendix 3 for more details on linking taxation to alcohol strength).

Recommendation 5 – Create an independent regulatory body to protect the health of the nation in relation to alcohol

There are a number of issues relating to the regulation of the alcohol market, including pricing practices, labelling, the effectiveness of voluntary agreements and harmful promotional practices, that could be the responsibility of an independent, regulatory body. The purpose of such a body would be to protect the health of the nation in relation to alcohol.

Recommendation 6 – Reconvene the National Licensing Forum

The National Licensing Forum should be reconvened to oversee the implementation of the new licensing legislation and to ensure that local licensing boards fully understand their responsibilities in relation to the public health principle embedded in the legislation. There should be appropriate medical and health public representation on the Forum.

Recommendation 7 – Initiate a parliamentary inquiry into the health and social harm caused by alcohol in Scotland

A parliamentary inquiry initiated jointly the Health and Justice Committees could examine a) the current functioning of the alcohol market including promotional practices and b) effective policy action which would reduce the significant burden of health and social harm caused by alcohol.