Below-cost alcohol ban would have 'limited impact'

By John Harrington, M&C Report

- Last updated on GMT

Related tags: Alcohol, Price, Alcoholism, Beer, Government

The plan to ban sales of alcohol below the combined cost of duty and VAT would have “limited impact” on prices in shops and supermarkets, according to a new study.

A survey by Newcastle University looked at 2,000 alcohol promotions at 29 shops in the city, and found that just 2% were below that level.

The Government came in for criticism for saying it would ban sales of alcohol below the combined level of VAT and duty last year.

Critics said the “below cost” ban, which is set to be introduced this April, fails to factor in production costs and would only affect a tiny proportion of deals. That conclusion is supported by the Newcastle study.

Dr Jean Adams, who led the study, called for the Government to introduce a minimum unit price instead.

“The effect of price on alcohol consumption has been documented clearly: when the price of alcohol increases, consumption decreases; whereas when price decreases, consumption increases,” she said.

“Setting the minimum alcohol price at below cost price will not deter binge drinkers, as very little alcohol on sale will actually have to increase in price.

“Our results indicate that the current government proposal to ban sales of alcohol at below ‘cost’ price is likely to affect very few products and so would be unlikely to have a substantial effect on purchasing and consumption.

“In contrast, a minimum price of 50p per unit would impact on more than one quarter of the price discounts we identified.”

The issue of pricing is set to be addressed in the Government’s forthcoming Alcohol Strategy, due in the next few weeks. David Cameron has previously indicated that he favours minimum pricing, although many in his party, including Health Secretary Andrew Lansley, are known to oppose the move.

Related topics: Licensing law

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