Wednesday, November 14, 2007

Binge drinking and tax

I want to comment on the latest moves to increase the tax on alcohol in the UK ostensibly to address the issues of "problem" drinking.

Unfortunately I don't even know where to start and I am rushed.

I've commented before that governments seem to be unable to think straight when it comes to alcohol. They need to be seen to do something because the media (in particular) loves to act all puritanical when it comes to bashing politicians (whilst simultaneously celebrating the outrageous lifestyles of certain 'celebrities').

This means that politicians can use very simplistic solutions that both please the media hacks and generate revenue for the Treasury whilst claiming to be acting in the public good. Unfortunately it is usually rubbish.

Raising duty on alcohol even further will not do anything to stop underage drinking, or weekend binge drinking, or even to reduce alcoholism. All it does is tax the vast majority who do drink sensibly. Not only that, but it perpetuates the drive towards low-cost, mass produced drinks brands that can afford to counter the price increases and build market share. These drinks do not have the kind of history or role in our society that encourages responsible enjoyment of the alcohol. Their goal is bigger volume so as to generate the necessary economies of scale to justify their investments.

The effect is to kill off any independent producers' & retailers' markets, and with them the chance of a mature drinking culture.

PLEASE lets have a sensible discussion about WHY we drink too excess in the UK, and other parts of the world (because we do) before we kill off the most sensible way out of this situation.


Andrew Brown said...

Hi Robert, I'll reply with my professional hat on.

First, I'd point out that the moment you can buy 50 units of alcohol - in the form of white cider - for about £5.

Second, the government have been very reluctant to use tax as means of trying to control the amount we drink.

In the new alcohol strategy all they would commit to was reviewing the evidence.

The public health lobby, on the other hand, are very firmly convinced that price and consumption go hand in hand. The best paper I've read on this comes from The Institute of Alcohol Studies. In particular look at the graph on page 6.

I'd also suggest that young people who are on low or fixed incomes (pocket money or part time wages) are particularly sensitive to price changes.

Whether the public health lobby will convince a skeptical Treasury we'll have to wait to see, but I'll not be putting all my eggs in that particular basket.

Robert McIntosh said...

Thanks Andrew, particularly for bringing a professional view to this.

I certainly do not claim that the answer is easy or will happen soon. I suppose I was a little too eager to jump from a lobby group's calls to blaming government. I will, however, write a post soon to discuss some of the frustrations I have with Duty and this government.

However, the whole price elasticity described in the report you link to is also rather odd. The graph seems to show the increasing consumption of alcohol per person and a falling price (in relative terms of course). It does not say how they get from there to saying that there is a price elasticity of -1? i.e. that the reverse is true.

That aside, I took much more notice of the comment:
"For one thing, there can be cross price effects ie if the price of one alcoholic beverage increases relative to the others, some consumers may switch to a cheaper alternative. "

There will always be something that is cheaper than everything else on some scale of "drunkenness per pound spent", whether it is a particular drink like white cider, or a known combination (e.g. snakebite).

As the IAS study says, the problem is a lot more complex than simply trying to put alcohol out of reach of young people or those with problems. We must address the reasons they drink too, and higher cost and more complicated retailing are not the solution. As a parent, for example, I know that simply moving things out of reach only makes them more attractive, I need to explain WHY they should not be played with.

My biggest frustration, actually, is with the media. We all know that any change is extremely complicated and will take a long time to have an effect. However, the baying wolves are already claiming that increased licensing hours are not working and we should return to our nanny state regulations from 1914.

OF COURSE it will take time to change people's behaviour. Those who liked to drink to excess are not going to stop just because the hours they can drink have changed and they no longer need to chug 5 pints before closing. But it will take time to filter through and I doubt that newspapers, eager to find another headline to raise the masses' ire, will give things the time they need to change.


Probably best not to post late at night, ... but what the hell.