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Government warned against proposed minimum alcohol price





The Office of Fair Trading has warned the government against pressing ahead with their plans for a minimum price for alcohol, claiming the new legislation could encourage retailers to sell more, rather than less booze.

The UK’s competition watchdog has provided written evidence to the Health Select Committee that suggests their efforts to curtail alcohol consumption in Britain could backfire.

The government plans to reduce heavy alcohol consumption and all the subsequent health and public order problems by imposing a ban on the sale of low-cost alcohol. Plans are already in place by the Scottish government to impose a 50p minimum price per unit, but as is the case south of the border, the new legislation has been met with fierce opposition. The Scottish Whisky Association has already made a legal challenge of the ruling and others are expected to follow.

Under the new proposals, the additional money paid by consumers will be purloined by retailers and OFT (Office of Fair Trading) suggest this will merely incentivise them to sell more and recommends a change in taxation rather than a minimum price.

Additionally, they intimate such measures would set a dangerous precedent in that interfering in the free market could lead to lower productivity and lower value which would be detrimental to the consumer. Likewise, the watchdog has warned the government of possible significant long-term losses particularly as they would find it hard to resist calls for minimum prices in other areas should they press ahead with their plans for a price ceiling in alcohol.

“At worst, such an incentive could dull the effectiveness of the minimum price in reducing alcohol sales,” the watchdog said in its evidence to the health committee.

“Taken in isolation, a minimum price for alcohol may not have a significant negative effect on productivity. However, the OFT is concerned that, by legitimising intervention to control prices in a competitive market, it will be harder for the government to resist calls for similar measures in other parts of the retail sector in future.”

Like Scotland, OFT suggested the government could face opposition from the European Commission although conceded their proposed measures would not be preventable under UK competition law.

Last month the health select committee supported the plans for minimum price per unit on the condition the ruling has an immediate impact on the reduction of harmful drinking. Their report was critical of the government’s strategy inferring that the proposed legislation was too focused on preventing antisocial behaviour suggesting the rulings should centre around the health problems associated with binge drinking.  
 
Image by Tobyotter 
 
 

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