Last month, we published the most recent in our series of debate questions: “Is it right to introduce a minimum alcohol price to tackle alcohol-related problems?” An overwhelming number of readers came down on the side of Philip Davies MP, who had concluded that the policy was flawed, illiberal and illogical.
But today we learn that the Prime Minister and Home Secretary are pushing ahead with minimum alcohol pricing – starting at 40p a unit but with the possibility of further increases. They have chosen to ignore the advice of their own Health Secretary Andrew Lansley. Like Dr Sarah Wollaston, they claim that many problems in society are caused by alcohol-induced problem drinkers. Violent crime in town centres, and the crowding of casualty departments on Friday night are the result of alcohol abuse. And given that the price of alcohol has an effect on its consumption, their argument logically flows that increasing the price of alcohol at the cheap end of the market will lower demand, lower consumption from problem drinkers and therefore ameliorate some of the negative effects of alcohol.
At first sight, this seems a beguiling argument. But give a bit of thought to it, and you soon realise it is illogical, authoritarian nonsense.
It’s probably first worth remembering that problems in society are not caused by alcohol. They are caused by people. In a free society bound by the rule of law an individual should be able to decide to drink as he/she wishes, subject to the laws surrounding anti-social behaviour, violence and licensing. It shouldn’t need saying, but a good starting point for any strategy of eliminating alcohol-related problems would be to enforce the existing laws of the land. Being 'drunk and disorderly,' for example, is still an offence.
But let’s suppose that the laws of the land are enforced fully and we still have significant alcohol-associated problems. Whether minimum alcohol pricing will reduce these alcohol-related problems then hinges on whether it will reduce the amount of alcohol consumed by problem drinkers.
The Government’s position is that there is plenty of evidence that raising the minimum price of alcohol will lower consumption. This, in almost all cases of goods and services, is an economic fact, so is hard to contend. But it’s also worth noting that Governments have long argued that a minimum price for a unit of labour (i.e. a minimum wage) does not lead to less employment…
Nevertheless, let’s assume that alcohol follows basic economic law. Higher price = lower consumption.
The extent to which consumption falls depends on a term economists call ‘the price elasticity of demand’. A minimum price would be most effective if demand was ‘elastic’ – i.e. a small increase in price lead to a big fall in consumption; and ineffective if demand for alcohol was price ‘inelastic’.
The evidence that Dr Wollaston presents from Canada suggests that at the lower end of the market, demand is relatively elastic overall. This might be because the poorer individuals who buy cheap alcohol face a higher opportunity cost when the price increase occurs, or because a small price change means the alcohol becomes unaffordable. The same may well be true in the UK.
But the problem drinkers, and alcoholics, who cause most of the societal problems associated with alcohol abuse, are likely to have the most *inelastic* demand for alcohol and thus be undeterred by the price. If unaffordable, this is the group most likely to turn to crime in order to obtain it. If still affordable, this is the group most likely to continue to buy at the higher price. As Philip Davies said, it's surely obvious that those who like to drink to excess are the least likely to be deterred from drinking by price rises.
Therefore the link between aggregate consumption and the negative societal results of alcohol abuse are not clear cut. Aggregate consumption can fall, but if the problem drinkers’ consumption is still high, then the negative societal impacts remain. Indeed, we can see this from the evidence. Since 2004, alcohol consumption at an aggregate level has actually fallen by 11% - but reported levels of alcohol harm continue to rise.
The implication is that the minimum alcohol price would deter responsible drinkers from buying cheap booze but would be far less likely to deter problem drinkers, making the policy distinctly illiberal. It amounts to punishing the vast majority of responsible drinkers of cheap alcohol for the actions of problem drinkers. Those most affected will be those on tight budgets, suffering from the impact of the recession.
Surely we should be guided by principle here? As Alex Deane outlined in his ConHome column on this subject last year “People should be free to choose to eat or drink whatever they want, without interference from a nannying government.” The duties on alcoholic drinks are already high, and more than internalise the direct health costs that campaigners identify.
As such, the policy is paternalistic and unfair. Alcohol-related problems occur in families throughout the income scale – and there is little evidence that artificial price hikes through tax have changed behaviour. But what is particularly pernicious about this policy is that it deliberately targets the lower end of the market. It is really trying to lower consumption of alcohol by the lower classes, and very much falls into a 'we don't like the oiks drinking a lot but I like a few bottles of wine on a Friday night’ line of justification.
Statistics from the IFS back this up. They produced a report on minimum pricing that found that poorer households, compared with richer households, on average pay less for a unit of off-sale alcohol. Their analysis has shown the poorest households pay an average of 39.8p per unit, whilst those at the higher end of the income scale pay 49.3p. A minimum price at 40p, which would inevitably rise, will therefore clearly be hugely regressive.
Despite these arguments, it still seems likely this illogical, illiberal, and unfair price mechanism will be passed. But before I’m accused of being in the pockets of big retailers, let me be clear that none of my arguments suggest that alcohol-induced issues aren’t a big problem. The question is how to deal with them. If considering the plight of the alcoholic or the negative effects of alcohol-related crime, much better ways of eliminating the negative effects of problem drinkers would be to support rehabilitation centres, to support education on underage drinking (as Philip suggested) and to properly enforce existing laws such that perpetrators of alcohol-fuelled crime face more directly the cost of their actions. We must make the case for individual responsility.
Instead, what the minimum price amounts to is a crass piece of legislation, untargeted at problem drinkers, that will impose yet another increase in the cost of living on the responsible working poor, in order to appease an increasingly virulent, paternalistic middle-class miserablist health lobby hell-bent on destroying the type of drinking undertaken by the poorest in society of which they disapprove.