Plan for minimum drink prices faces major challenge

Published on Tuesday 2 June 2009 22:01

PLANS by the Scottish Government to introduce minimum pricing for alcohol products have come under fire in a major research report today.

It finds that the likely impact on heavy and hazardous drinkers has been over-estimated and that the benefits of increased alcohol prices, such as reductions in health, crime and workplace accidents and damage are over-estimated.

The report, from the Centre for Economics and Business Research, is a direct challenge to the arguments presented by the Scottish Government for higher prices in its drive against alcohol abuse, particularly among young people.

The report estimates that if minimum pricing at 40p per unit was introduced in Scotland:

&#149 Harmful drinkers (that is, men who consume more than 50 units a week and women who consume more than 35 units) to whom the pricing legislation is targeted would reduce consumption by just 2.3 per cent or between one and two units a week on average.

&#149 The value to individuals of improved health and job prospects would be less than 30 million a year.

&#149 The savings to wider society including the National Health Service and policing costs and costs to victims of crime would be around 6 million a year, or 0.06 per cent of the total NHS Scotland annual budget.

The report says the economic case for minimum pricing is weak and goes on: "Moderate drinkers would have to pay towards a policy that will have a marginal impact."

Ben Read, one of the report's authors and managing economist at CEBR, said: "The figures do not present a compelling case once you take into account the substantial additional costs to consumers and the fact that heavier drinkers are least responsive to price increases.

"Our findings raise serious questions about the robustness of the Scottish Government's evidence base for minimum pricing. We would suggest further research is done before a policy of this kind is considered."

The Scottish government has put forward a series of measures to crack down on alcohol abuse, estimated to cost the country some 2.25 billion a year.

Justice Secretary Kenny MacAskill has argued that minimum pricing for alcohol would most affect harmful and hazardous drinkers. He said: "We need to change the culture of looking up to the heavy-drinking hard man."

In April the British Medical Association highlighted statistics on alcohol abuse in Scotland, including a 400 per cent increase since 1996 in the numbers of those with liver disease. It also called for the minimum pricing of products, based on alcohol content.

The CEBR argues that overall, consumption of alcohol products appears to be price inelastic – this means that a 10 per cent change in price will typically lead to a less than 10 per cent reduction in consumption.

The University of Sheffield study estimated that hazardous and harmful drinkers have a price inelasticity of minus 0.21 across all alcohol products – this implies a 10 per cent increase in the price would only lead to a 2.1 per cent reduction in consumption amongst heavier drinkers.

"This means that pricing legislation is unlikely to have a significant impact on overall consumption levels of those drinkers that it is intended to target, unless price increases are set at very high levels, which would place an unfair burden on moderate drinkers," the CEBR said

Minimum pricing, the report notes, would also substantially increase firms' profits at the expense of consumers.