A minimum price of 50 pence per unit of alcohol was introduced in Scotland in May this year, and the early results are very bad news for the supporters of this policy. Firstly, let me remind readers what MUP in Scotland was predicted to achieve in its first year: a 3.5% reduction in alcohol consumption per head and a 7% reduction in consumption among harmful drinkers. These reductions in consumption are supposed to lead to 60 fewer alcohol-related deaths, 1300 fewer hospital admissions, and 3500 fewer crimes. These predictions come from the Sheffield Alcohol Pricing Model (SAPM) which is the Scottish Government’s bible on how to tackle alcohol-related harms.
SAPM proposes a simple, linear relationship between price, consumption and harm. As price goes up, consumption will fall and alcohol-harms associated with consumption will also fall. The whole model falls apart if the price rises brought about by MUP fail to deliver the fall in consumption. And, so far, they have.
In the longer term, the three big claims for MUP were:
1. Lives will be saved, and there will be fewer hospital admissions. However, the numbers will not be statistically significant enough to prove or disprove any claim made in the context of overall mortality, e.g., after 20 years it is claimed that MUP will mean 120 fewer deaths a year, yet in 2017 there were 57,883 recorded deaths in Scotland and in 20 years that annual figure will be much higher, so the claimed 120 ‘lives saved’ will be in the range of 0.1-0.2% and hence not statistically significant.
2. MUP will have a limited impact on moderate consumers – it was promised it would be between £4 and £8 a year more expensive for moderate drinkers. There are very many examples I can give on how this is simply wrong. If you take a four-pack of Tesco cider then it has doubled (£2.20 to £4.40) so less than 9 units a week incurs an additional cost of £114.40 a year.
3. MUP is targeted and not regressive – it’s anything but! The evidence is that drinkers are switching to higher strength drinks on the one hand and own label products, typically lower strength ‘value’ products, are dramatically losing sales, so lower-income households are not buying own label beer, lager, cider etc.
Recent analyses of sales data over the summer in Scotland have shown that the price of alcohol has risen 11%, but this has not led to a reduction in consumption, on the contrary, consumption has risen. There are two ways in which we can measure alcohol consumption – by value, and by volume. The value of alcohol sales – the amount of money consumers are spending on it – rose by 15%. So, when value-inflation exceeds price-inflation we can assume that volume consumed is also increasing. In the off-trade the volume of pure ethyl alcohol consumed rose by 4%. So, consumers are spending 11% more on beverage alcohol products in return for just 4% more alcohol.
So, what’s going on? Well, there are winners and losers. Sales of strong white cider have fallen off a cliff because it has nearly trebled in price; conversely, sales of white wine, fortified wines and spirits have all increased. But the most spectacular example of an increase in sales is ‘Buckfast’. Known as ‘Bucky’, this is a fortified wine made by monks in Cornwall, and is a favourite tipple of street drinkers because it contains 15% ABV. Sales of Buckfast have risen by 15%. And in addition an extra two million bottles of white wine were also sold over the summer. This contributed to an increase of 17 million units of alcohol consumed in Scotland over the first six months of MUP as compared to the same period in 2017, of which the increased sales of Buckfast alone contributed seven million units.
This wasn’t meant to happen – this wasn’t in the model! It appears that drinkers in Scotland, rather than reducing consumption, have decided that if the amount they want to drink is now going to cost them more, then they might as well trade up to better products. Economists call this “product substitution” and it is a well-attested response that consumers sometimes make to price rises, but the Sheffield researchers never modelled it.
The other substitution effect economists have identified is “market substitution”. This is what happens when consumers wake up one morning and find that a category of products they regularly buy has rocketed in price and they can no longer afford them. Instead of just giving in and buying less, consumers buy from the black market where prices are cheaper. This happened in Russia in 2010 when the government imposed a minimum price of 220 roubles on a half-litre bottle of vodka. Legal sales fell and consumers went into the black market and bought moonshine – cheap industrial alcohol fortified with embalming fluid – and people started dropping like flies. In 2012 the Russian government relented and reduced the minimum price to 185 roubles – approximately what it was before they intervened. So, market substitution completely undermined the policy.
In the UK, illicit sales of alcohol are already denying HMRC nearly £2 billion a year in lost alcohol duty, which is why the government introduced the Alcohol Wholesalers’ Registration Scheme, and MUP can only increase the size of this black market. Already in Scotland we see attempts to evade the effects of MUP. The Scottish press is full of stories about people using cash and carry cards to buy alcohol at wholesale prices before rocking-up on council estates in Glasgow and selling it out of the back of a van. And, reportedly, the car park of Tesco’s in Carlisle is regularly full of cars with Scottish number plates!
It has been put to me that the increase in alcohol consumption in Scotland is down to the hot summer, the World Cup and Harry marrying Megan! Have you ever heard such a lame excuse for a policy failure? If MUP only works when it’s raining, there’s no football on TV and there isn’t a new episode in the Royal soap opera, then that sounds like a policy in trouble to me.