Updated Sheffield report reaffirms the effects of minimum pricing for alcohol in Scotland

An updated report from the University of Sheffield, commissioned by the Scottish Government, provides further evidence that minimum pricing, combined with an off-licence discount ban, could reduce alcohol consumption and have a significant effect on reducing alcohol-related harm.

The findings, which were published today (31 January, 2012) by the Sheffield Alcohol Research Group (SARG), are an up-to-date analysis of what it is believed could happen if the Scottish Government introduced a minimum price for each unit of alcohol.

The findings are the results of an independent academic study. As part of the study, Sheffield researchers examined the potential effects of different minimum pricing levels on patterns of alcohol consumption and the resulting impact on Scotland's alcohol-related health, crime, and workplace problems.

To compile the report the Sheffield team analysed more than 21 separate policy scenarios, including setting a range of minimum prices per unit of alcohol, a total discount ban in off-licences and supermarkets and combinations of the two strategies. The research examined how policies affect alcohol purchasing and consumption by different population groups, including moderate, hazardous and harmful drinkers both in the on-licence (such as pubs, clubs and restaurants) and the off-licence (such as supermarkets) sectors.

The terms moderate, hazardous and harmful drinkers relate to how much people drink, and are the standard definitions used by the Office for National Statistics and others. Moderate drinkers are those who drink within current UK guidelines (they do not regularly drink more than 3-4 units per day for men or 2-3 units per day for women). Hazardous drinkers are those who drink above these guidelines, but do not consume more than 50 units per week (men) or 35 units per week (women). These levels are associated with increased long-term risks for health and social harms, and many of these drinkers also put themselves and others at risk through severe intoxication. Harmful drinkers are those who drink more than 50 units per week (men) or more than 35 units per week (women) – a level of drinking which has been associated with a high risk of both of harm.

Dr Yang Meng from the University of Sheffield's School of Health and Related Research (ScHARR) said: "We were asked to update our analysis of what would happen if the Scottish Government introduced a minimum price for each unit of alcohol. This was to ensure policy makers were able to draw on the most up to date information on prices, drinking and alcohol-related problems. The results continue to suggest minimum pricing can bring considerable health and social benefits and lead to significant financial savings in the NHS and criminal justice system."

The major findings of the University of Sheffield research are summarised below-

1. What is the rationale for the introduction of minimum pricing and off-licence discount bans?

• Minimum pricing is a policy that sets a minimum price at which a unit of alcohol can be sold. Price increases are targeted at alcohol that is sold cheaply.
• Cheaper alcohol tends to be bought more by harmful drinkers than moderate drinkers. So a minimum price policy might be seen as beneficial as it targets the drinkers causing the most harm to both themselves and society, whilst having little effect on the spending of adult moderate drinkers.
• Just over 50 per cent of all alcohol purchased from supermarkets is sold on promotion, although many of the discounts are quite small.

2. What are the estimated effects of a policy - for example a minimum price of 45p per unit of alcohol combined with a total ban on off-licence discounts?

A 45p minimum price together with a total off-trade discount ban gives an estimated:
• Reduction in consumption of alcohol of 6.0 per cent.
• Reduction of around 6,600 hospital admissions per year.
• Reductions in direct health (NHS) costs at £22m per year.
• Financial value of avoided mortality and morbidity (valued using the quality-adjusted life years (QALY) measure) of £109m per year.
• Reduction in numbers of crimes by 3,600 per annum of which 540 are violent offences.
• Direct cost savings associated with crime of around £3m per annum.
• Gains in quality of life associated with decreased crime is valued at £2.3m per annum.
• Reduction of 36,500 days absence per annum in the workplace.
• 1,200 avoided unemployment cases per annum in the harmful drinker group (assuming jobs are available for those able to work).
• Financial value for these estimated unemployment reductions of £30m per annum.

3. How do the effects vary when you examine different possible minimum price thresholds?

• The general pattern here is that the more intensive the policy, the greater the harm reduction. Higher minimum prices lead to greater harm reductions, and this goes up steeply. There is relatively little effect for a 25p minimum price, but 40p, 50p and 60p have increasing effects.
• Increasing levels of minimum pricing together with a ban on all off-trade discounting improves the effectiveness of minimum pricing. Overall reductions in consumption for 25p, 30p, 35p, 40p, 45p, 50p, 55p, 60p, 65p, 70p together with a total discount ban are: 3.2 per cent, 3.4 per cent, 3.7 per cent, 4.6 per cent, 6.0 per cent, 7.8 per cent, 10.0 per cent, 12.5 per cent, 15.1 per cent and 17.9 per cent.

4. What are the separate estimated effects of minimum pricing and a total discount ban?

• A total ban on off-trade discounting alone is estimated to reduce consumption by 3 per cent, although this may only prove effective if retailers were also prevented from responding by simply lowering their non-promotional prices.
• At lower minimum price thresholds, the combined effect of minimum pricing and an off-trade discount ban is close to the individual effects of the two policies added together. At higher minimum price thresholds, the two policies cover more of the same products and the combined effect is somewhat lower than the sum of the separate policies.


5. Would the suggested strategies penalise moderate drinkers?

Most policy options affect moderate drinkers in a minor way, simply because they consume only a small amount of alcohol and also because they do not tend to buy as much of the cheap alcohol that is targeted by minimum pricing and off-trade discount bans. Harmful drinkers buy more alcohol and also tend to choose cheap alcohol; therefore these would be most affected.

If a 45p minimum price together with a total off-trade discount ban were introduced:

• Moderate drinkers would be estimated to spend on average about 17p extra per week
• Hazardous drinkers would be estimated to spend on average about 105p extra per week
• Harmful drinkers would be estimated to spend on average about 253p extra per week

6. Who would benefit from the strategies, e.g. moderate, hazardous or harmful drinkers?

The policies we have analysed do affect the different drinker groups in different ways, in terms of both effects on consumption and also benefits in terms of reductions to health, crime and workplace harms.
• Significant health benefits are estimated for harmful drinkers (particularly deaths avoided), and important health gains also occur in hazardous drinkers.
• Moderate drinkers are affected in only very small ways by the policy options examined both in terms of their consumption of alcohol and their spending. However, even though moderate drinkers are, individually, at lower risk of health-related harms, they comprise a sizeable element of the population and so the small changes in their consumption feed through to small changes in risk but a considerable cumulative change in population health.
• When estimating policy impacts, crime avoided (in all age groups) is due more to consumption reductions in the harmful and hazardous drinking groups than the moderate group.

7. Would supermarkets and pubs lose out on revenue with minimum prices or discount bans? Would the Exchequer gain more from duty and VAT?

No, both off-trade and on-trade retail sectors are estimated to see increased revenue from minimum pricing or a total ban of off-trade discount. In general, retailers would sell less volume, but at higher prices, leading to an overall increase in sales value. This effect is seen in supermarkets and off-licences, and also in pubs, clubs and restaurants. For example, a 45p minimum price plus a total discount ban policy is estimated to result in increased revenues for the off-trade of £77m per annum and for the on-trade £26m per annum.

Assuming no change to the current duty and VAT rates, most price polices have only small effects on revenue for the Exchequer, as duty receipts fall (these are related to volume sold) but VAT receipts rise (related to sales value). For example, a 45p minimum price plus a total discount ban policy is estimated to result in a decrease in revenues to government of just £10.4m.

FAQS prepared by ScHARR Research Team

1.Following your study, what minimum pricing level would you recommend to the Scottish Government? Is there a clear winner?

We do not see it as our role to recommend a policy to the Scottish Government. Instead, we have looked at a range of policies, and modelled the likely effects each policy option would have on consumer spending, reducing consumption, and reducing health, crime and workplace harms. It is now up to government to decide which policy option, if any, they feel strikes the right balance between consumer interests and reduced harm to society.

2. Where has all your data come from?

Most of the modelling is based on a fresh analysis of existing Scottish data sources on consumption and harms. For example – via the Scottish Health Survey 2010– the model includes the patterns of consumption for over 9,000 people in Scotland; and – via the Living Costs and Food Survey (previously known as the Expenditure and Food Survey) – individual alcohol purchases in Scotland between 2001/02 and 2009. Scottish data on crime, alcohol attributable disease and hospitalisations, and workplace harms were used. Whilst we have checked that our findings are consistent with what is known about alcohol policy internationally, a lot of effort has gone into ensuring that wherever possible the data underpinning the model is both recent and Scotland-based.

3. Has the model considered cross border purchases?

We have not been asked to perform a quantitative analysis on the impact of cross border purchases on the policies.

4. Is it legal to introduce minimum pricing policy?

We are not able to answer this question because it is out of scope of our study. The question is best to be answered by the Scottish Government.

5. What is the potential impact of minimum pricing policy on the whisky industry?

Scottish whisky tends to be high quality products with high price per unit of alcohol. Minimum pricing policies are unlikely to have significant impact on the price of Scottish whisky.

Notes for Editors: Full Title:

MODEL-BASED APPRAISAL OF ALCOHOL MINIMUM PRICING AND OFF-LICENCED TRADE DISCOUNT BANS IN SCOTLAND USING THE SHEFFIELD ALCOHOL POLICY MODEL (V2)

Second update based on newly available data

Authors:
Modelling Team: Dr Yang Meng, Mr Daniel Hill-McManus and Professor Alan Brennan

Principal Investigator: Professor Petra Meier

To read the full report visit School of Health and Related Research publications

For further information please contact: Amy Pullan, Media Relations Officer, on 0114 2229859 or email a.l.pullan@sheffield.ac.uk