Bill Quango examines the thought processes behind the latest outbreak of bansturbation in Scotland and Dick Puddlecote tears into the feeble response from CAMRA and Tesco.
As Dick points out, "The implication appeared to be that it is almost certainly going to be mirrored in England and Wales. In fact, scratch that. It wasn't implied, it was cast as almost a definite."
Well, that didn't take long. From those socialist running dogs, The Daily Mirror:
England could copy Scotland by banning cheap drink, Health Secretary Alan Johnson signalled yesterday. He is looking at ending irresponsible shop discounts and introducing a minimum price per unit of alcohol.
There's an interesting point on the price-inelasticity of the demand for booze in that article; "The British Medical Association said the rest of the UK should follow Scotland after research showed a minimum 40p per unit caused consumption to fall 2.6 per cent."
One unit is half a pint of weakish 3.5% beer, lager or cider. So sticking 80p on a pint or 70p on a half-litre can would reduce consumption by one-fortieth?
What have we wrought in the UK?
24 minutes ago
26 comments:
Wake up at the back there! You know that maths (even simple maths) and Labour just do not go together!
No, you've got the wrong end of the stick there – 40p per unit would be the minimum price at which alcohol was sold, not the increase in the price.
But the basic point is correct – is it worth clobbering the responsible consumers of alcohol for the sake of a trivial reduction in overall consumption? In any case, the problem drinkers are probably the least price-sensitive, and so the 2.6% fall would come from responsible drinkers cutting back. How that advances the cause of public health is beyond me.
Curmudgeon is right (about the legislation: I'm sceptical that any non-'problem' consumers are going to drink notably less because it suddenly costs 70p for a tin of Carlsberg instead of 65p. Rather, the impact will be Absolutely None At All).
My personal conspiracy theory: this is really a move to bail out small shopkeepers during the recession, trying to slow high-street closures, make things look less ghost-town-ish, and to try and avoid losing those (Asian hence historically Labour, but small businessmen so economically natural Tories) votes to the Tories...
...because any cornershop charges a quid a tin anyway, and it's only the big supermarkets that discount further.
C, perhaps you're right. But I think it's only strong cider that works out at less than 40p per unit.
JB, read Dick's post - the supermarkets are welcoming this with open arms, because it enables them all to make higher profits. If you're looking for conspiracy theories, Labour always favour big business over small business, major donors and all that.
Mark,
£8.99 bottle of cheap Scotch = 32p a unit
Four 440ml cans of 5% lager for £2.99 = 34p a unit
£3.49 bottle of 13% wine = 36p a unit
A 40p/unit minimum price would put up the price of many mainstream products in the off-trade, not just the ultra-cheap ones.
John B, The point about price elasticity is that, while you or I might not think an extra 5p on a can of Carlsberg is makes any difference to our purchasing decision (not that I would drink the stuff anyway) there will be someone for whom it does. And that will probably be the light to moderate drinker who isn't really that bothered about it, not the determined regular drinker.
The question hasn't been answered as to who would pocket the difference between the normal selling price and the government-dictated minimum. But you do have a point that it could act as a cosy form of resale price maintenance for small shops.
C, thanks, I stand corrected.
"the supermarkets are welcoming this with open arms, because it enables them all to make higher profits."
Or, they're *saying* that they welcome it, because they'd rather use their lobbying power for things that make them serious money than things that are pretty trivial.
As someone who knows a reasonably amount about game theory, the retail industry, and the alcohol industry, I don't think that low headline alcohol prices reflect cut-throat competition between supermarket chains that they'd all be keen to end. It's more about running loss-leaders on visible items (as with bread and beans a few years ago), plus a bit of transferring alcohol purchases from impulse (=cornershop) to bulk-buy-in-advance (=weekly supermarket).
"The question hasn't been answered as to who would pocket the difference between the normal selling price and the government-dictated minimum."
The retailers, without a shadow of doubt.
JB, haven't you now sort of contradicted your statement above that the corner shop charges £1 a tin anyway? I'm not even sure that alcohol is a 'loss leader' - it might well be a 'very low margin leader' but they don't make actual marginal losses on it.
I don't think so.
Tesco charges 60p a tin, partly because beer is a high-profile item and therefore big visible promotions help win people from Sainsbury's for their higher-value weekly shops, and partly because they want people to stock up with a big crate of 60p beer when they're doing a big shop rather than buying a four-pack for £4 from their local offy when they're thirsty.
The local offy continues to charge £4 for a four-pack throughout.
If the rules are changed, then the supermarkets will gain slightly by increasing the margin they make on a crate of beer - but they'll be less able to persuade people to buy a crate from them instead of a four-pack from the offy. And they'll have to compete with each other using different loss/low-margin leaders, which is a mild but trivial pain.
I suspect you may be right about 'loss leader' vs 'very low margin leader', although it also depends on whether you include the opportunity cost of shelf space in the supermarket (the big chains do quantify this, and it's quite high...)
Boots should start stocking their home-brew beer kits again!
PS I assume the Palace of Westminster will continue to offer subsidised beer though...
PPS You could always cut the benefits to these low-lifes who can afford to buy this cheap booze in the first place!
Why are they tinkering with a minimum price per unit on booze? It's such an ifficient method to control people.
Why not pass a law limiting a person's intake to x units per day? Anbody who drinks less than that isn't going to be affected, only the heavy dinkers targeted will be affected and those are the ones that the gummint worry about. Easy.
CAMRA are chock-full of socialists seeking special treatment. I quit around the time they started trying to block pubs being converted to private housing.
Like most lobbying organisations, they've gone beyond what they were originally about - promoting ale to people to something uglier.
Surely part of the effect will be that those drinkers who need to react to the price hike will downgrade to even cheaper (and probably more dangerous) sources of alcohol.
I recently found out (via JuliaM) that mad drinkers are even stealing the alcohol based hand cleaners from the walls of hospitals. Look for that to increase.
"Why not pass a law limiting a person's intake to x units per day? Anbody who drinks less than that isn't going to be affected, only the heavy dinkers targeted will be affected and those are the ones that the gummint worry about. Easy."
Because economically speaking, a quota and a tax have exactly the same positive effects, but quotas have far worse deadweight losses.
(also, the people whose excessive drinking matters are poor, because they're either kids or pikies. We don't actually care if DK and Guido drink a yard of gin each...)
JB, this isn't a tax we are talking about, it's a minimum price, which has much the same effect as a quota.
Although both have much the same effect as an additional sales tax (from the point of view of the consumer), see here, or have I missed something?
Durr, sorry.
Tax: consumer and producer surplus transferred to the government. Some deadweight loss.
Minimum price: consumer surplus transferred to the producer. Some deadweight loss.
Quota: deadweight losses all round.
I may have got it wrong, but surely under EU rules RPM is forbidden so they can't artificially raise the price by any means other than tax/duty. Or they can, but the EU might have something to say about it.
I'm not expecting the EU to stop them, just to adapt a law or just introduce another one allowing RPM by member states on health grounds.
Either way it's collective punishment on the many, to crack the very small nut of problem underage binge-drinkers (if that was the target in the first place of course).
I'm sure the government would wish to introduce it as a duty requirement so they can get their mitts on the cash, though.
I can't see the government being happy to let all the extra money just go to various levels of the supply chain. You would expect the alcohol producers as well as the retailers to try to get their hands on some of it by increasing their margins and withdrawing bottom-end brands. What is the point in buying The Claymore when it retails for the same price as Bell's?
It really does raise all kinds of questions about how it will actually work. I'm no lover of the EU, but with a bit of luck they might be able to stamp this out.
Once we have our ID cards they could be loaded with units each week and the pub, offy or supermarket till can deduct each time you buy a unit up to your limit. Easy.
You know, once we have these ID cards they are going to think up all kinds of useful things to do with them and we will wonder how we ever managed without them.
Cheers,
Mark Baker
DP, C, under Art 81 of the EU Treaty (as existed in 1999-2000, it may well have been renumbered since), retail/resale price maintenance agreed between businesses is strictly forbidden under EU law if it "may affect trade between Member States", so that's a red herring - if Scottish pubs and off licences sell booze from other EU countries at the same minimum price as they sell booze from the UK, they are not caught.
Plus the EU are bansturbators non plus ultra, I'm sure the SNP will find some "public health" exemption.
MA, nice try. Mrs W hardly drinks, so I can use up her allowance and that's me sorted.
I don't mind them increasing this cost so as to improve our health. Because that means healthcare costs should come down by a greater amount, so my taxes should reduce by more than the amount of increase in the cost of my alcohol. Unless of courese this is just another revenue raising exercise?
Tax raises of this type should be at the very least tax neutral.
"Like most lobbying organisations, they've gone beyond what they were originally about - promoting ale to people to something uglier."
Promoting ale to their wives?
Anyway, the only thing stopping the government imposing a quota on people is that it is impossible to police. They'd love to do it though - imagine the frisson they'd get from exercising all that power!
the only thing stopping the government imposing a quota on people is that it is impossible to police.
ID cards would be a big help in that respect.
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