Mandatory code based on KPMG report
The Government's proposed mandatory code — set to cost the industry over a whopping £160m — is largely based on the KPMG report widely discredited by industry observers.
The mandatory code, which represents one of the biggest changes in alcohol retailing history, based on a report slammed as "farcical" and "little more than tittle-tattle" by trade groups.
The mandatory code proposes bans on deals such as all-inclusives and free drinks for women while other measures in the code include compulsory staff training, unit labelling at the bar, and forcing pubs to offer drinks in smaller glasses.
KPMG researchers visited fewer than 1% of on-trade premises (418) and concentrated visits on just eight towns over a short period of time. Much of the evidence in its report is anecdotal rather than based on scientific data gathering. For example, researchers relied on their own judgements as to if anyone was under-18 rather than asking premises to provide data on how many refusals had taken place.
Based on the KPMG report, the Government has estimated that "there are approximately 390 premises offering unlimited drinks for a fixed price, 815 premises offering free drinks in large quantities and 1,629 offering free drinks to specific groups" and that a mandatory code is required.
"This is outrageous," said Noctis executive director Paul Smith. "Even the Government has admitted the KPMG report is just a small sample. To extrapolate this report into policy is pretty shocking."
He added that the estimated numbers running deals were "very unlikely".
Costs
The Government estimates that forcing all bar staff to undergo mandatory training could cost the industry up to £151m in the first year. In subsequent years, with a 50% turnover in staff, the cost is estimated at between £19m and £76m a year.
The cost of forcing pubs to offer 125ml glasses of wine is estimated at £3.1m while the cost of forcing pubs to serve 25ml spirit measures could be £12m.
But the Government says these costs can be justified if it leads to a 1% reduction in alcohol consumption. A 1% fall would cost the industry £461m over 10 years in lost profit but would save £2.51bn in crime reduction and health benefits.
Smith added: "I don't believe the costs have been properly estimated. We want the small minority of problem premises dealt with but what is wrong with enforcing the Licensing Act? It is only three years old and if used effectively is a good tool.
"We must lobby hard against this. We want good businesses to stay alive."
