My Lords, the order makes provision for the introduction of a mandatory licensing condition banning the sale of alcohol below the cost of duty plus VAT.
The Policing and Crime Act 2009 amended the Licensing Act 2003 to confer a power on the Secretary of State to specify further mandatory licensing conditions relating to the sale and supply of alcohol. Sections 19A and 73B of the Licensing Act allow for such conditions where she considers it appropriate for the promotion of the licensing objectives. The order would apply to all licensed premises in England and Wales; Scotland and Northern Ireland are subject to different legislation.
The Government are committed to reducing alcohol-related harms. We have taken a decision to ban the sale of alcohol below the permitted price—that is, the cost of duty and VAT. That fulfils a commitment in the coalition agreement. It will ensure that the worst cases of cheap alcohol are banned from sale. The ban will prevent anyone from selling alcohol at heavily discounted prices. A can of average-strength lager will now cost no less than 40p, and a standard bottle of vodka no less than £8.89. The ban aims to reduce excessive alcohol consumption and its associated impact on alcohol-related crime and health harms.
It is estimated that overall alcohol consumption will fall by 10.5 million units in the first year alone, resulting in 900 fewer crimes and 100 fewer hospital admissions. After 10 years, there will be 500 fewer hospital admissions and 14 lives will be saved each year. It is vital that we reduce alcohol-related harm, which it is estimated costs society £21 billion per year, £11 billion of that being alcohol-related crime. In nearly half of all violent incidents the victim believed the perpetrator to be under the influence of alcohol. The most common type of anti-social behaviour experienced or witnessed—by one in 10 people—was drink-related. This measure will ensure that we take a step towards a much needed reduction in the £21 billion bill that this country faces as a result of alcohol.
I thank the noble Lord, Lord Goodlad—who is not in his place this evening—and the members of the Secondary Legislation Scrutiny Committee for drawing the order to the attention of the House. The committee has reviewed the order and has made some important observations about the evidence on which we rely to demonstrate the benefits that the order will bring.
I will comment on the committee’s concerns that the evidence is highly speculative. The benefits have been assessed using the University of Sheffield’s School of Health and Related Research model, which is accepted as the best available model for estimating benefits of this policy. The modelling was carried out by researchers based at the university, who are independent of government and have qualifications and significant experience in the fields of health economics, health modelling, systems modelling and decision modelling. The modelling from the University of Sheffield estimates that this policy is worth £3.6 million per year in crime reduction benefits in England alone. That figure was laid before Parliament in the impact assessment and the Explanatory Memorandum.
The health benefits have also been considered, and again, those have been laid before Parliament. The Explanatory Memorandum notes an estimated benefit to the public sector in England alone of £1.15 million per year on average over the first 10 years. The impact assessment estimates the wider health benefits to society, as well as to the public sector, to be £5.3 million per year. While the reduction in average consumption is modest, this policy will impact the most on hazardous and harmful drinkers. We know that there is a direct link between the price of alcohol and the quantity consumed by the heaviest drinkers, and that they tend to favour the cheapest alcohol. We also know that hazardous and harmful drinkers generate the biggest costs for alcohol-related harm. This policy seeks to achieve 900 fewer crimes in the first year alone. The reduction in hospital admissions will go from 100 in year 1 to 500 in year 10.
Two consultations have been held on the Licensing Act and on alcohol strategy, in 2010 and 2012-13 respectively. Following the results of the consultations, banning the sale of alcohol below the cost of duty plus VAT was considered the most pragmatic way to tackle the worst examples of cheap alcohol. I hope that the House will agree with the Government that the introduction of the ban is an appropriate use of the powers conferred on the Home Secretary by the Licensing Act 2003. Accordingly, I commend the order to the House.
Amendment to the Motion
Moved by Baroness Smith of Basildon
As an amendment to the above motion, at end to insert “but regrets that Her Majesty’s Government have failed to demonstrate a coherent link between the permitted price policy and the evidence quoted in the Impact Assessment and Explanatory Memorandum, meaning their claims are completely speculative; and further notes that the Secondary Legislation Scrutiny Committee in its 35th Report (HL Paper 149) again criticises Her Majesty’s Government for failing to make the policy link as asked by the Committee in its 32nd Report (HL Paper 137).”
My Lords, I am grateful to the Minister for his explanation, and for his comments on the report of the Secondary Legislation
Scrutiny Committee. I beg to move my Motion of Regret, which reads as an amendment to the Motion moved by the noble Lord.
I seek clarity from the Minister on the evidence he has produced and the information presented to your Lordships’ House in the Explanatory Memorandum and in the impact assessment. It seems to be a regular theme when looking at Home Office legislation—I feel that I come back to these three points again and again—that we need to probe further to understand: the evidence base for the measures brought before us; how those measures will work in practice and the impact they will have. That is, whether the measure can achieve the objective the Government state and any unintended consequences, such as whether groups or individuals other than those whom the policy targets are affected and whether that is reasonable. I have tabled this amendment to the Motion today because of the lack of clarity on these points in the order before us.
Most noble Lords would agree that alcohol can be both a pleasure and a pain. The vast majority of those who enjoy a beer or a glass of wine—or something stronger—do so responsibly, without causing any significant harm to themselves or others, and do not cause any disruption or drain on public services. However, we are also aware of those who, because of the amount of alcohol they consume, cause significant harm to themselves, and harm and disruption to others. That can be a considerable drain on public services, to the detriment of others. The challenge is to effect such change that will impact on the behaviour of those who have and cause significant problems, without unfairly impacting on responsible drinkers. The question for your Lordships’ House is whether the order before us today achieves those objectives.
I found the Secondary Legislation Scrutiny Committee’s 32nd report, and the 35th report with the publication of the correspondence from the Minister, Norman Baker, very helpful, and I was glad that the noble Lord referred to them briefly in this comments. The committee has proved—I have tried to follow this in reading the papers myself—the discrepancies and the contradictory information supplied by the Government in evidence for the policy. I am particularly grateful to the committee for its scrutiny, and I always find its reports particularly helpful and invaluable to your Lordships’ House.
After the committee’s initial scrutiny, the Government withdrew their original Explanatory Memorandum that claimed that the benefit to the public sector was £17 million a year from this policy and replaced it with the significantly more modest claim of less than £1 million —and I have to say that the evidence base for that £1 million remains a bit woolly. The 35th report published correspondence with the Minister, Norman Baker, with the initial questions and concerns of the committee. Having read the order, the Explanatory Memorandum, the impact assessment and the committee’s reports, I had anticipated a fuller response from Norman Baker. I share the concerns that the committee expressed in its 35th report, when it said:
“We found the letter to be no more convincing on the merits of this policy than the Explanatory Memorandum. The House may wish to press the Minister to explain the policy of the instrument more clearly in debate”.
That is the challenge for the Minister this evening: to explain that and to assist your Lordships’ House in understanding the rationale and impact of this, as well as bringing clarity to the evidence on the impact.
I am going to refer to parts of the Explanatory Memorandum and impact assessment as I make my comments. Page 2 of the impact assessment provides the Government’s assessment of the economic benefits of this policy. It identifies a best-estimate annual cost of £5.3 million and £9.5 million of benefits, giving a net annual benefit of £4.2 million. I am still a little puzzled by the figures. If the Minister has the impact assessment in front of him, he will see that the calculations of the costs in the figures include only two of the four costs listed; it does not include the cost to retailers. It says:
“There will be transition costs as retailers familiarise themselves with the policy … This is estimated to be a one-off total cost of £4.1m”.
Neither does it include,
“transition costs to the licensing authorities to familiarise themselves with the policy and inform alcohol retailers, estimated at £0.2m”.
Those costs do not seem to be included in the £5.3 million that the Government give as their best estimate of annual costs. But those are costs that the Government say will arise.
When we look to non-monetised costs and benefits, we see that there is more certainty around the costs than there is around the benefits, where it says:
“There may be a benefit to business if consumers”,
do such and such, such as “switch their expenditure”. So there is much more clarity about the costs than there is about the benefit, with the costs being referred to as “will” and the benefits as “may”.
Paragraph 10 of the Explanatory Memorandum is completely different, because the cost to business there is identified at around £0.4 million a year, with an estimated one-off cost as well. But it talks also about the impact on the public sector, saying:
“There is an estimated cost of £5.3 million per annum, plus £0.2 million implementation costs. There is an estimated benefit in reduction of healthcare costs of £1.15 million per annum. The benefit to society, for example to victims, the police and the criminal justice system through a reduction in alcohol related crime is estimated as £3.6m per annum”.
There is a net annual cost of £0.5 million—so that is different. But I do not where the evidence is for the impact that is outlined in the impact assessment. The evidence base would be crucial on this, and if the Minister could enlighten us on the evidence base for those figures and why they are different in the impact assessment from the ones in the Explanatory Memorandum, I would find that helpful.
I have quoted from Norman Baker’s explanation in the committee’s 35th report. He explains the modelling used and offers,
“reassurance that work is in hand to improve the quality of checking Home Office Statutory Instruments and supporting documents”.
I still do not understand the reasons for the differences, but maybe I am missing something that is very obvious to others—I just do not know what it is, and other noble Lords may also find a lack of clarity there. If the
Minister can give an explanation on points that I have raised regarding costs and benefits, that would be very helpful.
The second point is on the impact of the policy. What difference would this policy make? The rationale for the policy is outlined on page 7 of the impact assessment, which cites the NHS costs of £3.5 billion, alcohol-related crime at £11 billion and lost productivity due to alcohol at around £7.3 billion a year. That is £21.8 billion annually. It would be helpful to have the evidence base for that, because, again, those are significant costs. If they are likely to be reduced significantly, we would like to know the evidence base for that.
Page 3 of the impact assessment identifies the policies that were considered by the Government before bringing this policy forward. Originally, there was the minimum unit price, which qualifies what they used to call competition. The Home Secretary said previously:
“We will ... introduce a minimum unit price for alcohol”.—[Hansard, Commons, 23/3/12; col. 1071.]
There were no ifs, buts or maybes—she said, “We will introduce this”. The consultation document on the alcohol strategy stated:
“In the Strategy, the Government committed to introducing a minimum unit price. However, in other areas, this consultation seeks views on the introduction of policies”.
That seems to me very clear. The Government had intended, and were clear about that intention, to introduce minimum alcohol pricing, to the extent that they were consulting on other matters in the strategy and not that one. But tucked away on the impact assessment to the order, on page 3 we learn:
“The Government has decided that the introduction of minimum unit pricing (MUP) will remain a policy under consideration but will not be taken forward at the present time”.
That is not quite the same fanfare as when it was announced that it would be brought in. So that was rejected.
The other policy rejected was the ban on multi-buy offers, such as “buy two, get one free” in supermarkets. I am not clear how that works in conjunction with this order. Presumably, although multi-buys are not being offered, they would have to be sold in line with the formula in this order at a permitted price. I would like an explanation on how that works. I go to Marks & Spencer and buy my husband six bottles of Sussex Golden Ale for the price of five—that is a multi-buy. He is not going to get drunk on those; he is not a big drinker. He might have a couple of bottles of beer at the weekend, of an evening. But presumably that affects the price for those seeking to purchase such items on a budget. Although the Government do not seek to do anything around multi-buy offers, the permitted price would have an impact on such offers.
What about those pubs or restaurants that offer in many areas fish and chips and a pint for £4.99 or £5.99? Will that fall foul of this order, if somebody decides that the beer rather than the chips has been discounted on price? How would that be assessed? I would like to know the detail of how that will work, because we are told that this policy is the alternative to banning multi-buys and minimum unit pricing. What difference is it going to make?
The Minister quoted from the University of Sheffield School of Health and Related Research, which produced the data for the Government on the impact of the policy and the different income groups. There is recognition that those with an addiction are not likely to be affected by pricing; the greatest impact appears to be on those hazardous and harmful drinkers on lower incomes, as those on higher incomes could just spend less for the same effect.
Page 13 of the impact assessment explains further that there will be no change in expenditure for the higher-income moderate drinkers but there will be an increase for hazardous drinkers of 30 pence a year. It says that,
“whereas low-income harmful drinkers are expected to increase their expenditure by £1.40 per year, higher-income harmful drinkers are expected to decrease their expenditure by £0.10 per year”.
Is that really going to make any difference? The Minister gave some sort of figures on the differences that this policy is going to make, but I have not seen the evidence behind the information that he has given.
The response to the committee from the Home Office when it asked about the impact on crime—and the Minister gave significant figures on this—was:
“The reduction in crime costs was estimated by predicting how crime will change in response to changes in alcohol consumption. These estimates do not predict how the level of crime will respond to any changes in disposable income resulting from the ban on below cost sales. However, the prediction is that, on average, alcohol spending among low income groups will increase by 0.03%, equivalent to a £0.15 increase in annual spending. It is not likely that this would lead to any considerable increase in crime”.
We need more information about a significant impact in this regard. If we want to reduce harm, including harm from crime caused by drinking, will this pricing policy do it? How much less would someone drink as a result of this policy?
The Secondary Legislation Scrutiny Committee’s report states that the Sheffield model—the ScHARR model—
“assumes that on average each person will reduce their alcohol intake by 0.04%. The Committee asked what that meant in practical terms. The Home Office responded: ‘The reduction in consumption equates to an average three units per year per person that is equivalent to a large (250ml) glass of 12% ABV wine’”,
or two regular glasses, if, like me, you do not like the large glasses that some pubs use. Given that such minimal outcomes are listed in the report, the impact assessment and the Explanatory Memorandum, one has to question whether the measure will make the significant difference that the noble Lord claims that it will. It seems to me that there is not much evidence for that.
The impact assessment says that minimum unit pricing is still under consideration, but I understand that it may be affected by the Scottish legal challenge. Is this genuinely still under consultation—I think that the committee made a similar point in that regard—or is that just a phrase now being used as a graceful way of ditching the policy when it is difficult to say what the real position is, given the comments made by the Home Secretary and the Prime Minister?
These are worthy objectives. None of us wants to see harm caused to individuals or society through alcohol. I emphasise that most drinkers drink responsibly and drink gives them pleasure rather than causes them pain. The Government need to bring forward evidence to support their policy on these issues. I hope that the noble Lord will address these issues; otherwise, it seems to me that considerable effort and money have been expended to bring forward legislation that appears to have such a small effect.
Alcohol abuse is a serious issue and we all want to see policies brought forward to address it. However, I worry that the Government do not have a grip on this issue. We have had the hokey-cokey over the minimum unit pricing and the late night levy, which was supposed to bring in £16 million a year in the first year and £17 million in subsequent years. I think that that figure is now about £520,000. Not a single early morning restriction order has been put in place. The Police Reform and Social Responsibility Act included powers for the Home Secretary to introduce full cost recovery for alcohol licences. The Government say that they will implement those powers but have not done so although the Act dates from 2011. We now have the Government’s sobriety scheme to help those with alcohol problems. The pilots were launched in April 2012 and lasted for six months. I have no information on them but I understand that six people have benefited from the scheme.
If we are going to tackle this issue, we have to do so seriously and seek to have a joined-up approach on the different issues that can make an impact. However, I am not clear that the measure before us today will have any impact. If it will have an impact, where is the evidence base for that?
My Lords, my noble friend will no doubt be relieved to hear that I will not ask as many questions as did the noble Baroness, Lady Smith. I think that we have perfect symmetry here because I wish to ask my noble friend why he is not going further today and why minimum unit pricing appears to be only half on the table.
The Government’s response to the consultation acknowledged that there might be unintended consequences of minimum unit pricing. This nostrum seems to be becoming increasingly prevalent. What process is now involved? We have this form of pricing, which clearly is half a loaf, but what is the Home Office doing in terms of further research? We have robust Canadian research, which many of us have seen over the past few months. I have the relevant brief in front of me. It states:
“All 10 Canadian provinces have some form of minimum alcohol pricing applied to liquor store and/or bar and restaurant sales … The Centre for Addictions Research of BC at the University of Victoria has collaborated with five other research agencies in Canada, USA and the UK to evaluate minimum pricing impacts on health and safety. Six studies have been conducted which demonstrate impacts of increased minimum prices on level of consumption and alcohol-related harms including deaths, hospital admissions and crimes. The results support the predictions of the Sheffield Alcohol Policy Model and suggest that estimated benefits are larger than the model predictions”.
It is interesting that all the Canadian evidence seems to imply that the Sheffield model is rather conservative in its estimate of the health and social benefits arising from minimum unit pricing.
It is interesting that the Government seem to have parked this matter. I very much hope that the Minister will describe what next steps will be taken to introduce something rather more robust than what we have before us today. How on earth will officials in the Home Office assess what the unintended consequences will be? It seems to me a very circular argument. There may be unintended consequences but surely, if the evidence appears robust, the way to deal with that is to go forward on a trial or sunset-clause basis, see what the impact is and then make adjustments accordingly rather than just talking about unspecified unintended consequences. I take the point about the Scottish legal challenge but that is a timing issue in terms of seeing whether or not that will bear fruit for the complainants.
I very much hope that the Minister will give us a little bit more of a window on the future as opposed to this rather cautious approach that we have at present.
My Lords, I welcome this debate. It is good to explain to the House how this measure fits in with the Government’s alcohol strategy, and the Motion tabled by the noble Baroness, Lady Smith of Basildon, has given us a chance to debate it more fully than we might otherwise have done.
I think all noble Lords agree that, when used responsibly, alcohol can be a welcome part of social situations and community events. However, we all also accept that alcohol-related harm can affect many people in England and Wales, with victims in almost half of violent crimes believing the perpetrator to be under the influence of alcohol. This is completely unacceptable. That is why the Government are committed to tackling this issue and why it is crucial that they use all the tools at their disposal to tackle the causes of this harm.
Through the alcohol strategy, the Government are promoting proportionate and targeted action to reduce the costs and problems caused to society by irresponsible and excessive drinking without disproportionately affecting responsible drinkers. This includes giving local areas more powers to address the alcohol-related problems that they face on a daily basis through the local alcohol action area scheme, which was launched last week. It offers support to local areas in cutting alcohol-related crime and disorder and reducing the damage caused to people’s health. As well as taking local action, we are acting nationally by challenging the alcohol industry to raise its game by supporting targeted local action, tackling the high strength or high volume products that can cause the most harm, promoting and displaying alcohol responsibly in shops, and improving education around drinking.
I think all noble Lords will agree that alcohol that is too cheap is a threat to achieving the aims of our strategy. We must do something about it without penalising those who choose to enjoy alcohol in a responsible manner and without threatening economic growth by creating red tape for business. The noble Baroness, Lady Smith, and my noble friend Lord Clement-Jones asked about minimum unit pricing. I would like to be clear that this is not a debate about the benefits of minimum unit pricing. However, I accept that it is a matter of great interest and will therefore speak briefly on it. A wide range of evidence was provided throughout the consultation on minimum unit pricing. These have been considered alongside updated modelling by the University of Sheffield—I note the comments of my noble friend on this point—which suggests that a minimum unit price of 45p would have an impact on the consumption of hazardous and harmful drinkers, thereby resulting in a significant reduction in health harms and some reduction in crime-related harms.
A number of other issues were raised, including the potential impact of minimum unit pricing on the cost of living, the economic impact of the policy and increases in illicit alcohol sales. The Government acknowledge the need to give careful consideration to any possible unintended consequence of minimum unit pricing. Further, while we remain confident of the legal basis of the minimum unit pricing policy and will continue to support the Scottish Government in this area, the Government are also mindful of the need to watch the outcome of the legal challenge to the Scottish Government’s minimum pricing legislation. For these reasons, the Government have decided that the introduction of a minimum unit price for alcohol will remain a policy under consideration. I emphasise to the noble Baroness that it is remains a policy under consideration. It has not been shelved but will not be taken forward at present. We will continue to monitor carefully the legal developments and the implementation of this policy in Scotland.
Perhaps I may answer my noble friend Lord Clement-Jones’s comments about minimum unit pricing in Canada. Two provinces are actively engaged in this: British Columbia and Saskatchewan. They have been doing so for some time but their policies are different in practice from the proposals that have been made on MUP in England and Wales. Social reference pricing in Canada involves minimum prices for types of drinks but not per-unit pricing. The context of sale is also different. Alcohol sales are more tightly controlled in those provinces than is the case currently in England and Wales.
My noble friend also asked about the process for considering MUP. The policy remains under consideration, which includes looking at the experience of the policy in other jurisdictions and the potential unintended consequences. Officials remain focused on keeping this under review and will continue to do so, but it would not be appropriate to set a timescale for when this will be completed.
Perhaps I may address some of the questions asked by the noble Baroness, Lady Smith. It is easier to do so in the general rather than the specific, and I hope she will allow me to write to her on some of the specific challenges she made on the impact assessment and the Explanatory Memorandum. However, I should say that the impact assessment was approved by the Regulatory Policy Committee in 2013 and given a green rating. The benefits of the model have been based on the University of Sheffield’s ScHARR model and experts in a number of different fields have fed into the policy. While the reduction is modest compared with the size of the problem, this policy will impact the most on hazardous and harmful drinkers. That is why it is designed in this way. We know that those particular drinkers generate the biggest costs for alcohol-related harm. What this policy seeks to achieve is 900 fewer crimes in the first year alone. The reduction in hospital admissions will go from 100 in year one to 500 in year 10.
I am grateful that the noble Lord is making the effort to address the questions. I did not ask for the evidence on alcohol-related crime or hospital admissions; I asked for evidence of the change that this policy would bring about. That was what I was trying to understand—the evidence for the changes that the Government say this policy would bring about, not evidence of the problem.
Perhaps in the context of the figures that I am intending to provide to the noble Baroness when I reply in detail, I will seek to do so. However, I think that I have just said in my most recent contribution to the debate that this policy is focused principally on those people who hazard themselves and others through excessive drinking. The policy is targeted at those drinkers with very high consumption of alcohol and is considered to be a very effective policy in this area.
The noble Baroness asked why the Explanatory Memorandum contained one set of figures and the impact assessment a different set. The Explanatory Memorandum identifies the health benefits for the public sector, as is the practice. The impact assessment presents a wider picture and includes the gains in quality-adjusted life years, which also benefits patients. The costs in the impact assessment outlined in the table on page 2 relate only to the costs in the public sector, because that is normal practice for impact assessments.
In response to the question on multi-buys, full details on how this policy will work with regard to the type of offers that have been mentioned can be found in the guidance that has been published by the Home Office. In effect, it means that, aggregated together, the multi-buy still has to meet the requirements of this policy so that there is no suggestion that the multi-buy can break through the price that this measure implements. Businesses can continue to promote multi-buys if the total price is not beneath the permitted price.
I picked up one point that the noble Baroness made about page 2 of the impact assessment. She pointed out that a whole series of costs were not included in those figures. If she looks, those total figures excluded transitional costs—and I think she admitted that the costs listed immediately above the paragraph entitled,
“Description and scale of key monetised costs by ‘main affected groups’”,
were transitional costs.
I am grateful to the noble Lord. I did see that but I just wonder why the figures exclude transition costs. They are still a cost of implementation.
It was considered that this was a reasonable way to evaluate the costs and benefits over time. Obviously, this is a continuing process, and amortising transition costs over time is not normal practice when one is doing an impact assessment. These costs are identified separately, which enables noble Lords to assess them properly.
I pay tribute to the noble Baroness’s diligence in drawing the House’s attention to some of the matters relating to the analysis of the Explanatory Memorandum and the impact assessment. I will make sure that all noble Lords who have spoken receive a copy of the letter which I shall write to the noble Baroness setting out answers to the detailed questions that she has asked me, and I hope that I will be able to answer them to her satisfaction.
I believe that at heart this is at least a brick in the wall towards building an effective alcohol strategy. We must build on this to maintain the momentum of our commitment to reduce the harm caused by alcohol to consumers, to families, to the thousands of victims of alcohol-related crime, and to local communities and businesses, which are also vital to our economy. With that in mind, I commend the order to the House and I hope that it will prove acceptable to noble Lords.
My Lords, I am grateful to the Minister and I look forward to receiving his letter. I do not doubt the Government’s objectives in this regard at all; what I doubt is the effectiveness of the policies outlined. I will go through his letter in some detail but, when I look at the tables in the impact assessment, the impact does not seem to be at all significant. I was not necessarily making the case for a minimum unit price; I was just trying to understand the Government’s direction of travel on this, having gone from absolute certainty to a position where the policy is now under consideration and under review. There is a lot more work to be done on this. For now, I beg leave to withdraw my amendment but I look forward to receiving the Minister’s letter and perhaps to having further conversations with him on this issue.
Amendment to the Motion withdrawn.