Government reveals 'below-tax' alcohol ban proposals

The Home Office has issued guidance​ on its proposal to ban sales of alcohol below the combined sum of duty plus VAT in England and Wales.

A 440ml can of 4% ABV beer would have to cost at least 41p, a 750ml bottle of 11.5% ABV wine would cost at least £2.41, while at least £13.55 must be charged for a litre of 40% ABV spirits.

As expected, very few pubs would be affected as they would still be able to sell pints of 4% ABV beer for 53p and pints of 4.5% ABV still cider for 28p.

Enforcement​

Spirit-based ready-to-drink products in 330ml bottles, with an ABV of 6%, could not be sold for less than 68p (all prices are based on 2013 duty rates).

Failure to comply with the new regulations, which would take the form of mandatory licence conditions, may result in a licence review or closure notice.

The regulation document recommends that enforcement officers only check the price of heavily discounted alcohol.

In March 2012 the Government said it planned to ban the sale of alcohol below duty plus VAT after abandoning earlier proposals to set a minimum unit price.

'Dangerous precedent'​

Paul Chase, a leading alcohol policy commentator and head of UK compliance at CPL Training, said he was opposed in principle to the State putting a floor under alcohol prices.

"I am therefore wholly opposed to minimum unit pricing because making the government the price-setter for the sector sets a dangerous precedent and has a number of unintended consequences. But I have some sympathy with the proposition that preventing below-cost selling stops an abuse of market power and prevents dumping," he said.

"But the relationship that needs to be rebalanced here is the one between brand-owners and retailers. Retail prices need to be set at a level that reflects the brand-owners investment in brand image and the need to maintain brand values. Resale price maintenance (RPM) was abolished in 1964, and it may be that a targeted reintroduction of it in respect of alcohol sales would dampen-down extreme price competition in the retail sector by making floor-prices a matter of commercial contract rather than government dictat.

"There remains of course the attitude of the EU to such a proposal, but I note the European Commission’s ongoing attempts to soften the treatment of strict RPM as a hard-core restriction under EU competition law."