Thursday 29 November 2012

Minimum Alcohol Pricing Will Cost Teetotallers More Too

One of the key planks of the push for minimum alcohol pricing is the claim - only believed by the gullible - that alcohol costs the country a massive amount of money.

As is the case with all public health agitprop, this cleverly-constructed lie ignores the many benefits of alcohol to society. The £2.7bn cost to the NHS is exploited, without admitting that circa £10bn alcohol duties covers that externality like a motherfucker. And when professional prohibitionists gather up every conceivable and fantasy 'cost' (many of which are not public costs at all) it still isn't anywhere near the value we can put on the public's enjoyment of their chosen tipple.
The value to the person purchasing the alcohol of purchasing the alcohol must be higher than the amount they spend on purchasing the alcohol. If it weren’t, then they wouldn’t purchase the alcohol now, would they?

Now yes, this might be diminished by the costs they also bear in cirrhosis, drunken fights and waking up to one of the Two Fat Slags on vomit stained pillows. And it would be right to take those costs into account as well. But as our first order estimate of the consumer benefit of alcohol our lower bound simply cannot be any lower than the amount that people are willing to spend on purchasing alcohol.

The BBC tells me that this number is £38 billion a year.
The UK alcohol market also enjoyed the biggest rise in value, with sales estimated at £38bn – up 15% since 1999.
That’s a fairly large number to put against that £2.7 billion a year cost to the NHS (however strangely calculated that was).
Indeed, especially since the value of alcohol to society has since risen to £42.1 billion.

Besides, what does the average credulous nodding-dog member of the public in favour of minimum alcohol pricing - or any other policy promoted by the public health cabal, come to that - think will happen to these mythical 'savings'? Do they seriously believe any of it will actually be re-distributed to them?

Hmm, whaddya think?

However, buried in the Home Office's consultation dossier for minimum alcohol pricing is something quite interesting. You see, the government's plans will increase day-to-day costs for everyone according to the impact assessment (page 13).
Implementation of a minimum unit price at any level will increase prices and therefore inflation. As shown in Table 4 the impact of a 45p MUP is estimated to be a +0.2ppts, based on the weight of off-trade alcohol sold in the Consumer Prices Index.
It goes on to explain that this is only an estimate, and could be higher if price differentials are kept for more pricey products (which is a definite). To aid comparison, it is also highlighted that the across the board increase of VAT in January 2011 added 1% to inflation.

So if you screamed about the VAT increase (I'm looking at you, Labour) then there should surely be at least a fifth of the same effort employed in opposition to minimum pricing. Yes?

Now, whether one drinks or not, inflation is used as a measure for increases in producer salary costs, for benefits and pensions, as well as being a prime factor in the deterioration of savings income. If the CPI increases by 0.2%, so will that eventually end up costing the public more. Yes, even smug teetotallers!

Curiously, the Regulatory Policy Committee who presented this document haven't even attempted to quantify the increase in welfare benefits which would result from the rise in inflation. The two are inescapably linked, yet no mention is made of it as far as I can see. It's very odd, almost as if it could be as much again or greater than the costs foreseen to the exchequor.

Oh sorry, did I not mention that yet? See, if prohibitionist dreams come true, reductions in consumption will cost the treasury £200m in just the first year according to the same document (page 17), and could be more if drinkers start sourcing elsewhere (again, a definite).
It is important to note that additional costs to the Exchequer may arise depending on the effect of MUP on non UK duty paid consumption and the size of alcohol tax gap as well as any potential impact on Corporation Tax receipts.
We'll just add that to the deficit, then. That's another £200m, plus increased welfare costs to the same tune or greater, required from more taxation or further 'cuts' at some point. Nice work Cameron.

Still, if it makes the finger-waggers happy, who cares, eh?

UPDATE: Tim Worstall suggests an estimate of the total cost after benefits have been adjusted.
Benefits are uprated for inflation. Benefits bill is £160 billion a year. 
So that’s £300 million right there. 
So, half a billion a year out of the public purse.
Good work, Cameron.


sillyusername said...

I really don't understand this, I must be every bit as silly as my user name. Are these people stupid? All you have to do to understand the effects of increasing the cost of alcohol is take a glance at Norway (where I live), Sweden, Finland and Iceland. These countries have very tight controls over alcohol marketing, no or minimal alcohol advertising, high prices and limited availability. They also have high levels of alcoholism and alcohol related disease (real not imaginary), a thriving market in gut rot moonshine, insane levels of smuggling and Saturday night binge drinking that puts the term bacchanalia to shame. It is not as if we are a million miles away, how hard is it to look at real examples of the effects of minimum pricing?

Dick_Puddlecote said...

They seem to have ignored Finland where results weren't good, and instead peered through binoculars to a couple of jurisdictions in Canada. I believe it's called cherry-picking for an agenda. ;)

Steve Wintersgill said...

According to this (I know, it's the beeb so I should probably have double checked the figures) in 2010 "...Beer contributes £5.5bn in duty and VAT and alcohol contributing £14.6bn in total to UK tax revenues..."and assuming a 5% drop in consumption (I know, it's based on figures from ScHARR, so I should probably simply ignore it) that would equate to a reduction of £748 million in duty and VAT combined. Nice hand Cameron you muppet.

Jeff Wood said...

Ah, but...

When the EU tells them minimum pricing is not on, they will regretfully increase the duty on all drinks, including the expensive ones. Problem solved, for the Treasury anyway.

They know this, and the present posturing is an enormous con.

Dick_Puddlecote said...

The Overton window scenario had crossed my mind, but it's politically such a rotten fish of an idea for Cameron that I really think he means it.

Curmudgeon said...

I loved this comment on Heresy Corner:

"Cameron has a regrettable tendency - it's the most irritating thing about him - to go off on moral crusades. He likes to ride a high horse, even though it usually turns out to have been lent to him by the husband of Rebekah Brooks."

Michael McFadden said...

Dick, if increased alcohol prices have a bad effect on the CPI, the government will simply remove them from the CPI calculation. That's what they did over here with tobacco when they started boosting cigarette taxes in the 80s.

While my taxes essay is on cigarettes rather than alcohol, anyone who hasn't read it might want to take a look at it: same games being played: