Shelving minimum pricing saved on-trade from £62m revenue drop, says new report
The shocking statistics come in a report by the Sheffield Alcohol Research Group which estimates the income group-specific impacts of minimum pricing in England 2014/15.
The report estimated that revenue to retailers in the off-trade would increase by £201.1m. It added that the overall alcohol-related revenue to the Treasury (from duty and VAT receipts) “is estimated to change only very slightly” by -£48.5m or 0.6%.
Change in methodology
In a previous report, the authors suggested that both trades would see an increase of revenue. However, the methodology has now been changed to show further detailed analysis of the impact of minimum pricing.
The group has looked at beer and cider as separate drinks categories. The report said: “Due to the large differences in alcohol duty levied on these products, cider can be sold at substantially lower prices and higher strengths than beer.”
It also takes into account incomes. “Income-specific impacts of policy interventions such as MUP (minimum unit price) can be estimated for alcohol consumption and alcohol-related harms,” the report explained. “The model now only focuses on the population aged 16 and over.”
'Under consideration'
Last week, the Government announced that it will not press ahead with introducing minimum pricing, but it will “remain a policy under consideration”. However, there will be a ban on alcohol sales below the level of alcohol duty plus VAT; and there are plans to take “tougher action” on irresponsible pubs and clubs.
The news saw licensees on the Publican’s Morning Advertiser’s website stress disappointment at the decision. Many supported the policy because they believed it to begin to close the price gap between pubs and supermarkets.
The Sheffield report added that if a 45p minimum unit price was introduced, it would cut 123 deaths in the first year, with 624 fewer deaths in 10 years’ time. A previous report in 2008 said that 344 alcohol-related deaths would be prevented in year one, with 2,000 by year 10.
The study also found that harmful drinkers would save £1.70 if the minimum pricing policy was taken forward. It said: “Annual spending increases are larger for hazardous drinkers (£9.70) than moderate drinkers (£0.90) and it is estimated that spending slightly decreases for harmful drinkers (-£1.70).”
'Evidence-based'
British Beer and Pub Association chief executive Brigid Simmonds said: “The updated Sheffield study echoes concerns we raised in our response regarding the original evidence-base and the potential impact for pubs. The new model shows a decline in revenue to on-trade retailers, rather than a considerable increase under the previous model. The new numbers are more in line with the Treasury’s own econometric model which show that on-trade beer volumes fall when off-trade prices increase.”
Kate Nicholls, strategic affairs director at the Association of Licensed Multiple Retailers, said: "This latest report highlights a point we have been making to a number of ministers – the absolutely critical importance of evidence-based policy making.
“Too often politicians are making decisions with real and severe commercial impacts without a true understanding of the costs in terms of jobs and growth and over exaggeration of the potential benefits. That is as true of alcohol related crime, EMROs (early-morning restriction orders), [late-night] levies and health-related harms.
“What we urgently need is a pan stakeholder task force to agree baseline data and cause and effects.”
Divided opinions
The Federation of Licensed Victuallers Associations and the Guild of Master Victuallers (GMV) questioned the figures.
Bill Sharp of the GMV said that the group has divided opinions over minimum pricing. However he added: “In general because of the high prices the pubco’s charge compared with the low prices the supermarkets charge, the answer would be to bring the higher charges in line with the lower prices.”
