Minimum pricing: the thin end of the wedge?

In the government's attempts to tackle the problems around alcohol, one solution has provoked more reaction than most. Minimum pricing.

A significant number of people, inside and outside of Westminster, now believe introducing a minimum price on a unit of alcohol will help curb some of the problems associated with booze.

In the past couple of weeks, two events in particular have ensured the return of this controversial subject to the political map.

Firstly, Gordon Brown invited backbencher Sally Keeble to host a 10 Downing Street reception to promote her campaign to tackle alcohol-related problems, which includes calls for minimum pricing.

And just a few days previously, Liberal Democrat leader Nick Clegg came out in favour of minimum pricing, saying: "If supermarkets are not prepared to act responsibly, it is time they were forced to."

For many licensees the equation over minimum pricing seems simple. By introducing a minimum price on a unit of alcohol - say 50p - supermarkets and off-licences will be forced to curb their 'irresponsible' loss-leading tactics.

Despite an increasing focus on supermarket tactics, many are continuing to sell lagers and wines at knock-down prices. Just last week Asda was found to be selling a four-pack of Skol for 90p - cheaper than a four-bottle pack of Evian.

So is it time for action? Tony Payne, chief executive of the Federation of Licensed Victuallers' Associations, thinks so.

"A lot of the problems we have around health at the moment we know are from people drinking too much alcohol bought in the off-trade. It needs sorting out," he said.

John Anderson, licensee of the Deansgate in Manchester, believes it is crazy that when the price of food is going up in supermarkets the price of alcohol remains so cheap. "It's a drug and there has to be some kind of control," he said. But, he added, the on-trade was not completely blameless. "We all have our part to play," he said.Cheap supermarket beer

Consumer group the Campaign for Real Ale (CAMRA) is also strongly in favour of government intervention.

Roger Protz, editor of CAMRA's Good Beer Guide, said: "Cheap beer in supermarkets - often sold at less than the price of bottled water - is killing the British pub.

"Around 150 pubs a month are closing and the main reason is simple: people are abandoning their locals because they can buy cheap supermarket beer."

The issue is still being knocked around government departments in Westminster. But in Scotland the Scottish National Party (SNP) is a few steps ahead in making minimum pricing a reality.

Plans for a minimum price - initially suggested as 35p a unit - are included in a [Scottish] government consultation to tackle alcohol abuse. And although serious doubts have been raised about the legality of bringing in a minimum price - this week justice minister Kenny MacAskill told a conference the SNP was determined to press ahead with the measures.

But the issue is far from simple. In the middle of this debate sits the British Beer & Pub Association (BBPA). Although its members include all of the UK's major pub companies - whose licensees will surely have complained about supermarket prices - the BBPA also represents major brewers such as InBev, Coors and Carlsberg.

Clearly these brewers have an interest in maintaining good relations with the supermarkets, where their key brands are stocked. As such, the BBPA has come out against the idea of minimum pricing and would advocate it only as a "last resort".

BBPA communications director Mark Hastings said introducing a minimum price would be the "thin end of the wedge". The concern is that once the government begins to develop evidence that pricing of alcohol can be used as a tool to stem problems, there is no end to where it will lead.

The bottom line is that pubs could get hammered a few years down the line, as well as supermarkets.

A last resort?

Hastings said: "Government intervention on price should only be used as an absolute last resort and only on the basis that it will actually reduce alcohol misuse," he said. "There is absolutely no link between price and alcohol misuse.

"There are many ways for people to get their hands on cheap booze. Young people and those who abuse alcohol would continue to just buy the cheapest available."

Adding fuel to this argument was a report revealed last week claiming that increasing the price of alcohol would not cut binge-drinking.

A happy conclusion for the company that commissioned the report - supermarket giant Asda.

However, the study, conducted independently by think-tank the Centre for Economics and Business Research, did offer some strong evidence against minimum pricing.

Among its conclusions it found that the heaviest drinkers are those who cost society the most and their demand would not be affected by price. It also concluded that minimum pricing would be even more regressive than taxation.

It says that lower income groups would suffer greater "welfare losses" than high-income groups if the price of alcohol was raised.

However, the deciding factor in this debate is shaping up to be the second part of a government-commissioned review by Sheffield University into the relationship between the pricing and promotion of alcohol.

The Publican ​understands that the document is now in circulation, and is due to be published this month. The results should feed into the government's alcohol strategy which has been out for consultation since July and wraps up on October 14. The Department of Health has promised to publish the results within three months.

In the meantime, all eyes will remain on Scotland. If MacAskill gets his way and is given the green light to legislate on minimum pricing, the cat will well and truly be among the pigeons.

Political pressure

The Tories, as well as the LibDems, appear determined to get tough on supermarkets selling cheap alcohol. Earlier this year, in an exclusive interview with The Publican, leader of the Conservatives David Cameron said:

"One of the things we've said is we want to stop the practice of heavily discounted alcohol in supermarkets, we need to change the law."

The Conservatives are also in favour of raising tax on "problem" drinks associated with binge-drinking, such as RTDs, super-strength beers and super-strength ciders.

Would it be legal?

It is highly unlikely that supermarkets could be asked to agree a minimum price among themselves as it would breach competition laws.

A spokesman for the Office of Fair Trading said: "Under the current laws we would have concerns that any agreement between supermarkets to fix the price of alcohol would fall foul of the competition rules. Supermarkets have to decide for themselves how to price products."

However, even if the government legislated, some believe this could still bring legal challenges. A leading competition lawyer, who wished to remain anonymous, said: "If the government introduced legislation then it would be a question of whether there would be a challenge by the European Commission.

Possibly someone would challenge it in the courts under EC Treaty Rules such as the free movement of goods principle."