Alcohol: let's stop binge pricing

Given the changing of the guard at Westminster, M&B's chief executive considers the last government's policy on alcohol legislation and what needs to change

Over the past 20 years the pub industry has been evolving to mirror wider social and cultural trends, while also being shaped by economic and legislative changes.

Despite these changes, pubs continue to be at the heart of social life and play a unique and positive role in British society. It is right and proper that pubs, due to their retailing of alcohol, are regulated.

However, government legislation has often been shaped by short-term thinking rather than a long-term holistic approach to the serious issues within the industry and society. This has resulted in policy that has been at best ineffectual and at worst actually driven increased ­levels of social disorder, rather than the reverse.

A couple of examples highlight this. Firstly, the legislation on alcohol disorder zones, or ADZs, enacted in June 2008. This was an initiative to tackle binge drinking but, to date, it has been completely ineffectual with no councils having applied to create one.

Secondly, and more importantly, the government's key lever to tackle antisocial behaviour caused by excess alcohol consumption has been to increase the duty on alcoholic drinks by well over inflation. The aim has been to increase prices in order to decrease consumption, as well as to increase the tax take to the Exchequer.

The result of this policy has been very different - the tax take on beer and spirits is at the same level as in 2003; furthermore, while beer prices in pubs have increased by 28% over the past seven years as duty has risen by more than 40%, supermarket prices have actually decreased, making alcohol cheaper to consumers.

Legislation is therefore not being targeted correctly and in many cases is actually exacerbating social issues. The statistics make disturbing reading. Currently in the UK:

n Eight out of 10 15-year-olds have tried alcohol and one in five 11 to 15-year-olds drink the equivalent of six pints a week;

n Almost half of 16 and 17-year-olds drink at least once a week and 30% of 15-year-olds say it is acceptable to get drunk at least once a week;

n Pre-loading is now a common phenomenon, where consumers, particularly young people, can purchase five pints of 8% abv cider for £3 or 15 pints of lager for less than £10.

Pricing is a key driver of some of these issues and the supermarkets are using "binge pricing" to drive footfall into their stores. Alcohol is one of the most discounted items in the supermarket, priced to entice customers into other parts of the store where there are higher profits.

While low prices are in themselves a good thing for consumers, the supermarkets' strategy has worrying social costs.

Pub prices have been unable to compete with supermarket prices, particularly in light of the need to employ trained staff to supervise consumption.

As a result, beer consumption in pubs has halved over the past 18 years from 36 million barrels to 17 million barrels, with a direct switching from the on-trade into the off-trade. If this trend was to continue, then there would be no traditional, drinks-led pubs in the UK by the year 2030.

This is the main reason the trade is concentrating on growing food sales, which has been a core part of our strategy at Mitchells & Butlers (M&B) for many years. Food sales are vital, not only because eating out is in long-term growth, but also because drinks-only sales are becoming economically unviable due to higher levels of duty and staff costs.

The concept of ensuring that alcohol is drunk in a properly supervised environment must be at the heart of any government strategy. Pubs and licensees across the country continue to play a key role in overseeing alcohol consumption in their businesses. For example, M&B refuses to serve around 120,000 people a month on the grounds that they are underage or already intoxicated.

The pub is the best place to regulate the sale and consumption of alcohol, and we invest much time and resource to ensure our pubs ­provide a well operated and safe place for our customers to eat and drink, under the supervision of well-trained staff.

In summary, current government policy is not helping to achieve the goals of a more responsible environment for the safe consumption of alcohol. In fact, it is driving purchase and consumption of alcohol outside pubs rather than supporting the responsible role pubs play in their local communities.

This must change and we would suggest some actions that would help to reach these goals:

Action on irresponsible retailers​

The police and local authorities already have extensive powers to act against persistent offenders and these powers should be rigorously and consistently enforced (both in the on and off-trade), rather than bringing in new and unnecessary regulation.

A level playing field on promotions ​

The recently enacted mandatory code rightly bans irresponsible promos in the on-trade. Pubs cannot offer "all you can drink for £10". However, most supermarket offers would drown a man for £10.

The government's focus on the on-trade is unbalanced as the majority of alcohol is now purchased in the off-trade, with nearly 70% being bought from supermarkets. We believe a level playing field between the off-trade and on-trade should be the minimum requirement.

This would stop alcohol misuse being exacerbated by supermarket "binge pricing" and reduce new antisocial behaviour such as pre-loading.

Why not bring in similar legislation to the Alcohol Bill in Scotland, where supermarkets would have to price a multipack item as a straight multiple of the price of a single product?

Incentivise those places that oversee both the sale and responsible consumption of alcohol ​

History points to the fact that pubs are the most appropriate place to regulate the consumption of alcohol. Government policy should, therefore, encourage their operation. This would create jobs and a better environment to supervise alcohol consumption.

Why not have a much lower rates bill for pubs and a higher one for supermarkets?

A more targeted and flexible duty regime is required

Duty has been the dominant tool used to manage consumption and this should be more targeted to encourage alcohol consumption in a supervised environment.

Why not lower duty rates for draught beer as opposed to a packaged product? Or what about a lower rate of VAT for alcohol sold with food, which is the policy they adopt in Italy? Should we not be incentivising a product that has a greater employment allocation and social purpose?

The need for a long-term view​

At a time when the pub is facing increasing pressures, we remain concerned at government policies on duty and regulatory costs, which are placing additional burdens on a social institution where the service and consumption of alcohol is under the controlled supervision of responsible licensees, directly accountable to local licensing authorities.

This contrasts with the continued tolerance of the widespread practice of binge pricing in supermarkets, with no supervision beyond the point of sale.

Westminster and Whitehall need to take a longer-term view on the right legislation for alcohol retailing, to combat the issues around alcohol misuse and to help the pub industry regain its strength. Any legislation should rightly regulate the sale and influence the consumption of alcohol in the UK.

In summary, we would support legislation that acted against the irresponsible retailing of alcohol, particularly where customers are encouraged to make bulk purchases. Only by taking necessary measures to combat such irresponsibility will policymakers create more parity between the on and off-trade and, therefore, provide an appropriate duty of care to society.

Adam Fowle is chief executive of Mitchells & Butlers​