David Cameron’s “big bang” approach to raising alcohol taxes and discouraging drinking

By Dr. Ananya Mandal, MDDec 29 2011

The British Prime Minister David Cameron has ordered officials to develop a scheme in England to stop the sale of alcohol at below 40p to 50p a unit in shops and supermarkets. There could also be a more sophisticated system of taxes based on the number of alcohol units contained in the drink. Both options would cost drinkers an estimated extra £700 million a year, with any extra tax revenue potentially going to the NHS.

This is a part of the Government’s forthcoming alcohol strategy. It was due for release next month, but has now been delayed until February. A recent official study found that setting a minimum price of 30p per unit would prevent 300 deaths a year, 40p about 1,000 deaths, and 50p more than 2,000 premature deaths.

Theresa May, the Home Secretary, is said to favor taxing drink on the basis of alcoholic units. The Business Department has warned that forcing firms to charge a minimum price could be illegal under European law. Andrew Lansley, the Health Secretary, favors a voluntary approach, but he has been overruled by Mr. Cameron, although the compulsory scheme might fall foul of government lawyers.

The minimum price would be accompanied by an “aggressive” public health campaign and a more draconian approach to curtailing the sale of alcohol in shops, pubs and clubs. A Whitehall source said, “The Prime Minister has decided that when it comes to alcohol, something pretty radical now has to be done and he is keen on the minimum price. It is complicated how this can be delivered, particularly under European law, but it is clear that the voluntary approach has not worked.”

At present beer and lager is taxed at about 18p a unit, compared with 19p a unit for wine and about 25p a unit for standard spirits. VAT at 20 per cent is also charged on alcoholic drinks. A more sophisticated scheme would target cheap drink sold in supermarkets and shops, while not hitting those sold in pubs or more expensive alcoholic drinks. Mr. Cameron is thought to have opted for a “big bang” approach to the alcohol problem after noting the success of the ban on smoking in public places.

A bottle of own-brand gin with around 37.5 per cent alcohol content would go up from £6.95 to £11.85. A two-liter bottle of own-brand cider would more than triple in price from £1.20 to £3.75. The cost of a £12 bottle of whisky would rise to £12.60, while a bottle of cheap wine would go up from around £3.75 to £4.20. A four-pack of beer with more than five per cent alcohol content would cost a minimum of about £3.95.

In a letter to The Daily Telegraph few weeks ago, doctors from the British Medical Association and Royal College of Physicians claimed that minimum pricing for alcohol would be the most “simple and effective mechanism” for tackling the problem. Following the warning, the Prime Minister said he would “look very carefully” at how to tackle the problem of cheap alcohol.

Gavin Partington, of the Wine and Spirit Trade Association, said there was “no evidence [a minimum price per unit] will tackle alcohol misuse”. The association would rather see “enforcement, education and a series of policies to address the root causes of alcohol misuse”, he added.