Minimum alcohol pricing coming - be ready for the change

Last week it emerged that the government is planning to institute a new system of minimum pricing for alcohol. The controversial plans follow similar moves in Scotland, where plans for a new pricing scheme for cheap alcohol have already been announced.

The Cameron plans are intended to target cheap alcohol; for example own-brand vodka sold in supermarkets. The government has said that it wants to avoid hurting “traditional pubs”, but there is concern that any change to the alcohol duty schedule would hit landlords and responsible drinkers. The coalition is reportedly therefore considering more flexible ways of targeting specific types of drink and establishment.

Broadly, the scheme is intended to stop businesses selling alcohol below around 40 or 50 pence per unit. The exact figure is yet to be determined – and is apparently causing some conflict in Whitehall.

Why is this happening?

The government is responding to calls from a number of medical professionals for action on cheap alcohol. In December, the British Medical Association was amongst a handful of groups urging the coalition to introduce a system similar to that recently announced by the Scottish government.

North of the border, it will soon be illegal to sell alcohol at less than 45 pence per unit. The coalition is said to favour a system that targets cheap drinks, while limiting the impact on more expensive alcohol.

According to medical professionals alcohol is a factor in the deaths of one in four 15 to 24 year olds. A recent report has suggested that some 2,000 premature deaths could be prevented through the institution of a minimum price of 50 pence per unit.

But minimum pricing plans have been heavily criticised as a crude and ultimately inefficient way of tackling so-called ‘problem’ drinking. There is particular concern about the unintended financial consequences of any such plan. It is estimated that a minimum pricing scheme could cost consumers around £700 million each year – but if the Scottish model were used, the Exchequer wouldn’t receive a penny. There is similar concern that supermarket retailers would simply bump the prices of their own-brand products and pocket the difference. Finally, there is significant disagreement over the efficacy of ‘pricing out’ solutions. Critics have pointed to the failure of drug prohibition, suggesting that increasing the price of alcohol will merely make life more expensive for drinkers, rather than succeeding in reducing alcohol-related problems.

What do I need to do?

As the situation currently stands, retailers don’t yet need to take any action. The government is yet to flesh out its plans, but it is thought that they will be presented in February.

In the medium term, though, you need to be mindful that changes to the regulations governing the sale of alcohol are likely to be forthcoming. While it is thought that the government will find it difficult to impose a minimum price in a way that is compatible with European law, it is now clear that the coalition intends to take some action. Retailers and landlords should be prepared.