Green light for price reform

11 November, 2011

Minimum pricing is firmly back on the agenda after the Scottish government published a bill to bring in the measure north of the border and the UK announced below-cost alcohol sales will be banned in England and Wales from April 6, 2012.

The UK has opted for a minimum price of duty plus VAT, which would mean a bottle of wine at the current average price of £4.60 would have a minimum price of £2.58, and a litre of cider could not be sold for less than 40p.

The UK government’s public health minister Anne Milton has said minimum unit pricing is “probably illegal” because it is likely to breach European law. But Scotland, which tabled the Alcohol (Minimum Pricing) (Scotland) Bill last week, countered that minimum unit pricing is “probably not illegal”.

The Scottish government’s public health head Donald Henderson said: “The UK government has taken the Carlsberg defence – they say it is ‘probably illegal’. We think it is probably not illegal.” He added that the European Court of Justice has not yet taken a clear stance on the issue.

Last year the SNP group failed in its attempts to introduce a 45p-per-unit minimum price. But the bill was tabled again after the party won an overall majority in the election in May. The Alcohol Bill does not suggest a minimum price, but lays the groundwork for one to be set in the future.

If the bill becomes law it is expected to be challenged by the drinks industry in court. 

James McLean of the Law Society of Scotland said: “Ultimately, the legality of the government’s proposals on minimum pricing of alcohol could finally be determined only by the ECJ.

“Compatibility with EU duty directives requires to be considered as well as issues concerning free movement of goods in terms of the EU treaties. The court has rejected minimum pricing in the past but has not previously had the opportunity to review proposals related to commissioned academic research.”

The Scotch Whisky Association has said the bill is unlikely to reduce alcohol misuse and violates EU and international trade rules. It warned that it could damage the Scotch whisky trade, which exports goods worth more than £3.4 billion a year.

Chief executive Gavin Hewitt said: “Minimum pricing is the wrong policy option. It will not achieve the objective of a more healthy, positive and responsible attitude to alcohol.”

The Wine & Spirit Trade Association said minimum unit pricing would punish consumers already struggling in today’s tough economic climate, but welcomed the duty-plus-VAT price floor in the UK.

WSTA communications director Gavin Partington said: “Critics say it doesn’t affect that many products, but it was very difficult to come up with a pricing mechanism that was both legal and addressed selling below cost. 

“This mechanism rightly means that two consumer taxes – excise and VAT – will have to be paid for by the consumer, and will ensure that the worst examples of below-cost selling no longer exist.”

He added that the move may bring some clarity to the fight against duty fraud. “It provides a very clear message about the legal level at which products can be priced and provides clear guidance to enforcement agencies,” he said.

A ban on below-cost sales was part of the UK government’s coalition agreement. Home Office Minister James Brokenshire has described the move as “an important first step” in preventing alcohol-related crimes.

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