In Defence of Liberty

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Minimum Unit Pricing Sobers the Cabinet

The plans to introduce minimum alcohol unit prices in England and Wales may be dropped, as the Cabinet is split on the issue. The Prime Minister David Cameron wished to create a price floor for alcohol, and the Home Office is now considering responses to its 10-week consultation on a price of 45p per unit. According to BBC political correspondent Louise Stewart, several Cabinet ministers oppose the plans, including Home Secretary Theresa May, Secretary of State for Education Michael Gove and Leader of the House of Commons Andrew Lansley. Mr Lansley opposed this measure during his time as Health Secretary, but new Health Secretary Jeremy Hunt seeks legislation for alcohol minimum pricing.

Prime Minister David Cameron is thought to have repudiated alcohol minimum pricing. (Photo: PA)

Prime Minister David Cameron is thought to have repudiated alcohol minimum pricing. (Photo: PA)

James Kirkup, Deputy Political Editor for The Telegraph, reports that the Treasury are also against alcohol minimum pricing, believing the resulting drop in consumption will seriously harm tax revenues from alcohol duties. The extra taxation on alcohol garners £2.8bn from sales of spirits, £3.4bn from wine and £3.8bn from beer and cider. In total, alcohol duties deliver £10bn a year to the Treasury.

Mournful Bombast

Labour have capitalised on this speculated change in policy. Shadow Home Office Minister Diana Johnson said the confusion demonstrated “weak leadership”, and it would be a “humiliating climb-down” for the government if minimum unit pricing, a “flagship policy”, was not introduced. At Prime Minister’s Questions, Leader of the Opposition Ed Miliband skewered and ridiculed David Cameron, asking:

Could the Prime Minister tell us, is there anything he could organise in a brewery?

The revelations have also revealed deep fractures in the Conservative backbenches. Sarah Wollaston, Totnes MP and a General Practitioner, enveloped her fury in mournful bombast, telling BBC Radio Four’s Today programme:

I feel devastated. We know that whenever alcohol’s too cheap, people die. If the chancellor wants a message from me, it’s that we are already paying a huge amount to clean up the costs of this… This policy is about getting rid of alcohol that’s being retailed around 22p a unit, that’s the alcohol that’s killing people and causing carnage.

(Video thanks to you7uber2)

“Blunderbuss of a Policy”

David Davis MP, former Shadow Home Secretary and Conservative Party leader candidate, called minimum pricing a “blunderbuss of a policy”. Mr Davis also states that this policy will “transfer £1bn from the public to the people who sell alcohol, and it’s not going to work”. He takes a low view of the British Medical Association and others dedicating themselves to government policy:

If I wanted medical advice, I’d go to a medic. This is a social policy issue: it’s much more complex than saying put up the price and we’ll stop it… The medics are not evidence. The medics are making an argument; they’re not actually presenting evidence to show that this works. I’ve not seen anywhere that this works.

When a transaction occurs, a product is exchanged for money at a mutually-agreed price between the seller and the buyer. A minimum price would result in fewer transactions, as the intersection of mutually-agreed terms between the buyer, the seller and the government is always smaller than those transactions agreed between just the buyer and the seller.

A minimum price is in the interests of the seller, but not those of the buyer. Occasionally, it is political favourable to back a minimum price, such as the minimum wage. Despite attacks against the alcohol industry and supermarkets by the Alcohol Health Alliance UK and others, who accused the industry of “using the tactics of Big Tobacco”, these groups and MPs are supporting a policy which necessarily helps the supermarkets and the alcohol industry.

Price and Cultural Phenomenon

This policy will leave supermarket shelves well-stocked with alcoholic drinks, as a surplus follows from setting a minimum price. As Thomas Sowell explains in his book Basic Economics:

A surplus, like a shortage, is a price phenomenon. A surplus does not mean there is some excess relative to the people… The people simply did not have enough money to buy everything that was produced at the artificially high prices set by the government.

Lastly, as Christopher Snowdon identified in his Institute for Economic Affairs paper Drinking in the Shadow Economy, there is no international correlation between alcohol’s affordability and consumption. As David Davis MP suggests, this fact points to a cultural, rather than an economic, explanation exists for alcohol consumption in the United Kingdom.

There is no international association between alcohol's affordability and consumption. (Graph by Christopher Snowdon)

There is no international association between alcohol’s affordability and consumption. (Graph by Christopher Snowdon)

The most remarkable aspect of minimum alcohol pricing is that such a policy was considered by a Conservative-led government. Following this government’s sensible reconsideration, the puritan shrills have been excruciating. Sarah Wollaston MP’s assertions are absurd: your body does not ‘know’ how much you paid for an alcoholic drink. It’s impossible to say that it’s the “22p per unit” alcohol that’s “killing people”, rather than the glugs of Sauvignon Blanc and fine champagne. The consequences of a minimum price are predictable, assisting the very sellers that are being blamed for “loss-leading”. The lack of an international association between alcohol affordability and consumption identifies culture, and cultures are wrought by glacial change. Alcohol minimum pricing will make responsible and occasional drinkers pay more, whilst helping supermarkets. Any Conservative that is furious about the government dropping this policy should return their membership cards and establish a new Corporatist party.

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