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Report debunks £20bn 'cost of alcohol' figure

By Mike Berry , 03-Sep-2015
Last updated on 03-Sep-2015 at 10:18 GMT2015-09-03T10:18:23Z

Revenues from alcohol taxation in England amount to £10.4bn, leaving an annual net benefit of £6.5bn
Revenues from alcohol taxation in England amount to £10.4bn, leaving an annual net benefit of £6.5bn

Drinkers are subsidising non-drinkers to the tune of £6.5bn a year, a new report suggests.

The report Alcohol and the Public Purse: Do Drinkers Pay Their Way? estimates the direct costs of alcohol use to the Government in England, including the NHS, police, criminal justice system and welfare system.

Taken together, they amount to a gross cost of £3.9bn per year (in 2015 prices).

The IEA says the figure quoted by public health campaigners of a £20bn cost to the UK of alcohol use is “extremely misleading, conflating social and economic costs (most of which are paid by individuals and businesses) with the costs to government departments (the cost to the taxpayer)”.

Revenues from alcohol taxation in England amount to £10.4bn, leaving an annual net benefit to the Government of £6.5bn.

The report by the Institute of Economic Affairs (IEA) found that even if the Government halved all forms of alcohol duty, it would still receive more money in tax than it spends dealing with alcohol-related problems.

Subsidised

Report author Christopher Snowdon said: “It is time to stop pretending that drinkers are a burden on taxpayers. Drinkers are taxpayers and they pay billions of pounds more than they cost the NHS, police service and welfare system combined. The economic evidence is very clear on this. Forty per cent of the EU’s entire alcohol tax bill is paid by drinkers in Britain and, as this new research shows, teetotallers in England are being subsidised by drinkers to the tune of at least six and a half billion pounds a year.”

The IEA report shows that alcohol-related crime costs the Exchequer nearly £1bn per year. Other alcohol-related crimes, including drink-driving, add a further £627m, making a total cost to the police and criminal justice system of £1.6bn. Alcohol-related health problems cost £1.9bn per annum. Half of this results from alcohol-related hospital admissions (£984m) with a further £530m spent on Accident and Emergency attendances. Welfare payments given to those unable to work because of mental or physical ill health attributable to alcohol consumption incur a cost of £289m.

'Misrepresentative'

It adds: “Arbitrarily monetising intangible costs such as lost productivity – likely to be borne by the drinker and not by wider society or the taxpayer – have led to highly misrepresentative figures being commonly used by policymakers. Moreover, mainstream figures give the gross cost – failing to attempt to estimate the net cost of drinking, and ignoring tax revenue generated from the sale of alcohol.”

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