Saturday, 26 May 2012

The Minimum Alcohol Pricing farce

The price of four tins of Tennent's lager looks set
to rocket to £3.50 under the new minimum pricing rules.
The SNP led Scottish government have just introduced minimum alcohol pricing (50p a unit) as a response to widespread alcohol problems in Scotland and the Tory led coalition is intent on introducing similar price fixing measures (40p a unit) in England and Wales.

The Minimum Alcohol Pricing bill passed through the Scottish Parliament with a landslide 86 - 1 majority vote in support of draconian price fixing measures, meaning that in Scotland the cost of a four pack of lager is set to rise to an eye watering £3.50. The Scottish Health Secretary Nicola Sturgeon justified the move with some absurd projected figures gleaned from a flawed study by Sheffield University, which conveniently told the Scottish government that commissioned and paid for the report exactly what they wanted to hear. The study was flawed because it failed to factor in several seemingly obvious negative socio-economic consequences of alcohol price fixing.

The Tory led Westminster Coalition also seem determined to push through alcohol price fixing measures with Theresa May acting as the Tory cheerleader for the scheme. The only voices of concern from the political establishment have been raised by the Labour party, who have estimated that Minimum Pricing in Scotland could create an estimated £125 million profit windfall for the alcohol industry, whilst providing no direct support to the police, health service and social services that spend £billions dealing with alcohol related problems such as late night disorder, liver disease and domestic violence.

It seems absurd that the beneficiaries of this policy which is supposedly aimed at reducing consumption will be the alcohol industry and the alcohol retailers that have created the majority of the alcohol related socio-economic problems, whilst the sectors that have actually spent decades dealing with the consequences will see none of the extra revenue.

Socio-Economic evidence

The whole idea of Minimum Alcohol Pricing is absolutely absurd, a vast amount of socio-economic evidence points to the fact that problematic drinking is a geo-cultural problem, not a problem of pricing.

If we look at countries with higher alcohol prices than the UK such as Norway, Denmark and Finland we find that they have lower average rates of alcohol consumption yet all of them have significantly higher rates of alcoholism and alcohol related deaths. In fact, within the European Union there seems to be more of a positive correlation between high alcohol prices and incidence of alcohol related deaths, than a correlation between alcohol consumption and alcohol related deaths!

If higher prices led to lower levels of excessive
drinking and alcohol related deaths, one would
 expect this graph to be the other way around.
The comparison with Denmark makes a very interesting case, they have significantly higher alcohol prices yet their levels of alcohol consumption are almost identical to the UK. The remarkable difference is in the rates of alcoholism and the incidence of alcohol related deaths, which are both vastly higher in Denmark than in the UK. If higher alcohol pricing was a real deterrent to problematic drinking, one would expect the UK to have a higher incidence alcohol related deaths than Denmark where alcohol is significantly more expensive.

Another interesting comparison can be made between the UK and Spain. Spain has significantly lower alcohol prices, yet their average levels of consumption, rates of problematic drinking and incidence of alcohol related deaths are all significantly lower. Visit Spain and you will not see Spanish people staggering, pissing, spewing and fighting all over the street (the people behaving like that are generally British tourists getting "shitfaced" on all the cheap booze). In Spain there are fewer heavy drinkers than in the UK (and those that do drink heavily tend to maintain better control of their behaviour), average alcohol consumption is lower and the alcohol related death rate is only 36% of the rate in the UK. Alcohol prices are significantly lower in Spain, yet the average consumption of alcohol is also significantly lower. If we are to accept the politicians' simplistic view that price is the principle determining factor in alcohol consumption rates, one would expect average alcohol consumption to be higher in Spain where it is cheaper, yet it is significantly lower.

Portugal also provides some interesting evidence, where the average alcohol price is similar to Spain, but their average consumption rate is the highest amongst the 13 western European nations under consideration. One would expect the country with the highest average consumption rate to also have one of the highest rates of alcohol related death, however the Portuguese death rate is almost identical to the UK death rate and a fraction of the death rate of other nations with much lower rates of average alcohol consumption such as France, Germany, Denmark, Austria and Norway.

Norway has by far the highest alcohol pricing at 234% of the European average and more than double the UK rate which has pushed consumption to the lowest level by far of the 13 countries, however their alcohol related death rate is much higher than the UK rate. When you take a closer look at the stats it is actually possible to determine a weak correlation between higher alcohol prices and higher rates of alcohol related death. I don't have the time or the budget to carry out a proper statistical analysis to see if there is a causal link, all I can do is suggest potential causes. The higher alcohol prices in these economies could have come about due to political attempts to reduce the alcohol problems through price manipulation or the prohibitive stance has caused increases in excessive consumption (as the criminalisation of certain addictive drugs has created an exponential growth in the number of addicts, Heroin in the UK for example) or the correlation could be a statistically irrelevant coincidence.

Comparisons of Western European economies shows that while there is weak correlation between alcohol price and alcohol consumption,  there is also a positive correlation between high alcohol prices and higher instances of alcohol related deaths and no correlation between average alcohol consumption and the instance of alcohol related deaths.

I believe that the incidence of alcohol problems actually has much more to do with the "culture of drinking" than it has to do with the price of the alcohol. The stats in the illustration above lend some support to my view, especially the significantly higher rates of alcohol related deaths in countries with similar or significantly higher alcohol prices than the UK (Denmark, Norway, Finland, Belgium & Sweden).

To resort to using a bit of "common sense" anecdotal evidence for a while I'm going to talk about Spain. It is customary in Mediterranean countries like Spain to serve alcohol with food (Tapas or other snacks), which "soaks up" the alcohol resulting in fewer people getting paralytically drunk. Spanish people also tend to drink more slowly than British people. I believe this is due to the strong influence of many decades of restrictive UK licencing laws on the British drinking mentality. These restrictive laws ended up incentivising pub goers to drink as much as they could before the pub closed, a haste that has remained part of the British drinking culture despite subsequent relaxations in the licencing laws. There is more of a relaxed attitude towards drinking in southern Europe, where drinking sessions are not treated like races with kudos to the fastest and heaviest drinkers. In Southern Europe there is also much more social stigma associated with getting leglessly drunk, vomiting, getting into drunken fights or spending the night in a jail cell, things that seem to be much more common amongst younger British drinkers, judging by the difference between the carnage in British high streets and hospitals late at night and the relative calm in the Mediterranean towns (the ones that don't suffer a seasonal influx of British tourists at least).

Adverse consequences

The cited positive consequences of this Scottish alcohol price fixing scheme are that there will supposedly be an estimated 300 fewer alcohol related deaths and 6,500 fewer alcohol related hospitalisations over the next decade, however the study hasn't properly considered what seem like obvious adverse consequences to the massive inflation of alcohol costs. Namely increases in alcohol smuggling, bootlegging, home brewing and poverty within families with one or more alcoholics. That the study has only managed to project relatively small socio-economic benefits is worrying, especially since the study failed to consider several potential (and extremely likely) adverse impacts.

I believe studies should be carried out to determine the adverse effects of introducing Alcohol price fixing legislation in Scotland before the scheme is rolled out elsewhere. If the adverse effects are not properly studied before legislation is rolled out elsewhere in the UK we can assume that the policy is ideologically driven not evidence based. The areas than need to be studied are:

Alcohol smuggling: Huge increases in legitimate "over the counter" alcohol prices will almost certainly lead to a corresponding increase in  alcohol smuggling from outside the price fixing zone. The scale of alcohol and tobacco smuggling from the continent was estimated at £5.5 billion in lost tax revenues back in 2008. Studies must be carried out to determine the volume of alcohol transferred from outside the price fixing zone and comparisons made with the cited reductions in legitimate alcohol sales. If measures are not undertaken to assess the increases in cross border transfers into the price fixing zone and the scale of lost tax revenues, and these figures are not offset against the claimed reductions in legitimate "over the counter" sales, any cited benefits to the price fixing legislation cannot be accepted as reliable.

Bootlegging: There is already a large problem with the illegal trade in counterfeit alcohol in the UK. Measures designed to massively increase the sale price of legitimate alcohol supplies will almost certainly incentivise more criminals to enter the counterfeiting racket in search of larger profit margins. It would be extremely difficult to determine the scale of the increase and the adverse consequences of  increased consumption of potentially dangerous bootleg alcohol, since the illicit trade in bootleg alcohol goes largely unmonitored.

Increased family poverty: It seems likely that a large proportion of "problem drinkers" will continue to consume excessive amounts of alcohol, simply expending more of their family budget on alcohol purchases and consequentially reducing the amount that is spent on meeting their children's needs. At a time when family budgets and disposable income are already being squeezed through austerity and economic stagflation a large increase in expenditure on alcohol is likely to have severe adverse effects on families that are unfortunate enough to have one or more alcoholics.

Home Brewing: As alcohol prices become increasingly unaffordable it seems likely that many people will turn to the cheaper option of brewing their own juice. I don't think this consequence would be anything like as harmful as the others mentioned, however the lack of consideration of a seemingly obvious consequence highlights yet another flaw in the University of Sheffield study. If there is a rise in home brewing, this rise must be offset against claimed reductions in consumption of "over the counter" alcohol and the lost tax revenue must also be taken into consideration.

Alternatives 

There are countless viable alternatives to a blanket  price hike for all alcohol consumers. The most obvious place to start would be better enforcement of existing laws and the introduction of new laws and regulations aimed at curbing problematic drinking behaviour. The problem with this approach is obvious. Any coherent integrated strategy to reduce problematic alcohol consumption would take a lot of man hours to enforce. With the Tory led coalition pushing through severe ideologically driven cutbacks in policing, the health service and social services it is extremely difficult to imagine where these man hours would come from. Here are a few alternative proposals to a draconian catch-all penalty for alcohol consumers.

Nuisance duty: Instead of introducing price fixing measures that would benefit the breweries more than anyone, the government could consider a "nuisance duty" on alcohol sales to provide funding for late night policing to discourage crime and disorderly behavior, public education and health service and social services interventions to help people suffering from alcohol addiction. Surely the beneficiaries of hikes in the price of alcohol should be the services that deal with the fallout, rather than the companies that have already profited enormously from creating this wave of problematic behavior.

Eduacation and rehabilitation: In all walks of life education and rehabilitation are better and cheaper deterrents than draconian punishment. People that cause trouble through problematic drinking should be compelled to at least learn the basics of responsible drinking and socially acceptable behavior before they are hit with financial sanctions and prison sentences.

Public order: Police should be given powers to compel problematic drinkers to undergo alcohol education and rehabilitation, repeat offenders would then face fines and detention for committing drunken public order offences.

Health sanctions: People that repeatedly turn up at hospitals in drunken states should be made to pay a "drunkenness levy". The foundation of the NHS is free health care at the point of need so imposing draconian levies for absolutely everyone that turns up drunk at at hospital would be unfair, since people do tend to have accidents when they are drunk, however repeat offenders should be compelled to undergo alcohol education and rehabilitation and if they still carry on offending they should have to pay a significant contribution towards their health care costs. If people abuse the system by regularly getting leglessly drunk and then taking up the time of paramedics and hospital staff, they are effectively stealing resources from the people that don't abuse the system so they should be made to pay.

The importance of food: Public drinking establishments should be given incentives to provide food. Drinking on an empty stomach is notoriously dangerous, pretty much everyone has made the mistake of feeding hunger with booze and suffered the consequences at least once. A culture shift towards providing alcohol and food together (as the Spanish do with Tapas) could be surprisingly effective in alleviating some of the worst public order problems.

Culture shift: Public figures and the media should run a campaign against problematic drinking. People should be made to feel ashamed and socially stigmatised if they repeatedly cause drunken chaos. For too long people have been normalised to wild and aggressive drunken behaviour in public places. There needs to be a culture shift towards social stigmatisation of excessive drunken behaviour, without a change in the current permissive attitude towards drunken chaos, problematic drinkers will continue to feel that there is nothing particularly wrong with their unruly and intimidating behaviour.

The proposals I have outlined are aimed at educating people that are in danger of becoming problematic drinkers, reforming their behaviour and then penalising those that continue with their problematic drinking. I think that this kind of approach would both be more effective and fairer than an across the board sanction against all drinkers. However I have little faith that such policies will be pursued since the introduction of a catch-all disincentive is obviously cheaper and easier to do than attempting an integrated effort to change the problematic drinking culture, so that is why we are set to be lumbered with it.

Motivation

It seems that the politicians that are pushing these price fixing schemes are motivated by their desire to "do something" about the manifest alcohol problems in the UK, however the act of just "doing something" doesn't help if the thing that is being done is some kind of ill conceived, poorly justified knee-jerk response to the problem. I believe that coordinated measures to combat the binge drinking culture and to focus upon problematic drinkers would be far more effective than a blanket price hike for all consumers.

The problem is, that an integrated holistic approach to the problem would be both much more difficult to achieve and a lot less visible than simply making a big fuss about voting through a basic price fixing scheme to penalise all drinkers without regard for the negative consequences.

The worst aspect of the alcohol price fixing legislation is that the main beneficiaries look set to be the breweries and the alcohol retailers that did so much to create the problems in the first place. With no stipulation that the extra cost to the consumer goes towards preventative services, it could be considered that the supporters of minimum alcohol pricing are engaging in gesture politics and actually care more about protecting the interests of the alcohol industry than they do about offering genuine solutions to the manifest alcohol related problems in the UK.

One of the craziest things about alcohol price fixing is that the Tories are pushing it. For the last two years they have been behaving like rabid neoliberals most of the time (privatise everything even the police, cut wages, cut pensions, attack labour rights, slash government spending, cut taxes for corporations and the rich, donate £40bn to the IMF.....) yet price fixing is absolutely against the neoliberal free-market ideology.

I wonder what is going on? Maybe Victorian style moral puritanism is the one thing that trumps neoliberal pseudo-economic dogma in the Tory mind.

Conclusion

The socio-economic evidence that drinking problems are a cultural problem, not a pricing problem is all around. The study that is being used to justify the scheme is flawed, in that it doesn't consider what seem to be obvious negative consequences such as increased family poverty, smuggling and bootlegging and lost tax revenues. An across the board price hike will end up financially penalising moderate drinkers as well as problematic drinkers and the big financial beneficiaries of the scheme look set to be the brewery industry, not the services that are put under immense strain by the British binge drinking culture. Overall, minimum alcohol pricing is nothing more than ill conceived, poorly justified, empty gesture politics. It is of utmost importance that the negative consequences of this Scottish alcohol price fixing experiment are carefully monitored before this kind of knee-jerk, ideologically driven moral puritanism is rolled out elsewhere.


See also






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