New code could cost trade £167m

The drinks industry faces being hit with total first-year costs of £167m to comply with a mandatory code of practice, according to the government's...

The drinks industry faces being hit with total first-year costs of £167m to comply with a mandatory code of practice, according to the government's own estimates.

A Home Office report outlines the full dramatic extent that a mandatory code could have on the trade.

The code is part of the government's policing and crime Bill, unveiled in the Queen's Speech, aiming to clampdown on "irresponsible" promotions and retailing. The Bill could law by as early as July, but it remains unclear whether the code will come in immediately.

And based on just a one per cent drop in consumption over 10 years, the on-trade and off-trade would incur £461m in lost profits - £53.5m per year.

The document notes that extra government-accredited training for staff, as part of the code, would cost the industry between £19m-£76m per year, with a potential first-year cost of £151.7m - based on a 50 per cent staff turnover.

On top of that it predicts that if pubs are forced to offer 125ml wine glasses it would cost a total of £3.1m in new glassware - or £34 per premises. However the document notes there could be an additional cost for extra storage space.

And based on figures quoted from The Publican, the report suggests the industry could incur £12m costs by having to offer 25ml spirit measures, under the code.

Martin Rawlings, director of pub & leisure at the British Beer & Pub Association, attacked a whole host of aspects of the analysis, noting that alcohol consumption had already fallen five per cent last year.

Referring to proposals on smaller measures, he added: "Not everybody is desperate to trade down when they can't."

Overall, he said, the report's conclusions were "disingenuous to a degree that's dishonest."

The Home Office also estimates the benefit of a one per cent drop in alcohol consumption over 10 years would save £2.514bn.

This is based on a £645m cut in policing alcohol-related crime; a £1.06bn drop in dealing with health-related alcohol problems and a £671m drop in "employment harms", such as absenteeism from alcohol.

Rawlings questioned why there were figures on health when the code was coming in as part of a policing and crime bill.

But long term the report argues licensees could see a benefit as people put off from visiting pubs, because of "irresponsible practices", would return.

Worringly for the trade, throughout the document the much-maligned KPMG report is referred to as a basis for the code. The government-commissioned report found a small minority of high street venues not following the industry's voluntary code of practice on responsible promotions.

One glimmer of hope is the document recognises the "adverse consequences" the proposals will have on small businesses. "Allowing local authorities the discretion to apply some of these conditions will ensure that, to a large extent, these costs will be targeted at those premises which pose a real threat to the four licensing objectives," it says.