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Thursday, 12 August 2010

Minimum pricing a step closer?

Minimum pricing is a slightly tricky issue for politicians: on the one hand, they want to be seen to be doing something about Britain's binge drinking problem, but on the other they don't want to alienate the many voters who benefit from cheap alcohol.  With unemployment likely to go up to (if not beyond) 1980s levels, the only way many people will be able to have a drink is by buying cheap booze. David Cameron's announcement that his government may look sympathetically (whatever that means) at local minimum pricing schemes is, frankly, wrong for a number of reasons:

Tories are supposed to believe in the market. Prescribing a minimum price is a severe interference in the whole principle of free market economics.  But then, I struggle to find any principle behind David Cameron's utterances; he is driven by a desperate, second-rate populism tempered by a nanny state desire to control the unruly drinking classes.

I don't know how minimum pricing can be squared with competition legislation, both from the UK and from the EU.

Not everyone who buys cheap alcohol is a binge drinker - many simply don’t have much money.

Minimum pricing will simply increase the profits of retailers such as Tesco's. No wonder Sir Terry Leahy (Tesco's boss) has supported a minimum price, as opposed to a tax increase when the money would go to the Exchequer.

It will lead to a postcode lottery for alcohol prices, with people driving further to buy drink from shops in areas that don't have a minimum pricing scheme.

I have written previously about minimum pricing.

5 comments:

  1. I agree it is a daft idea which is against a fair trading market. All that will happen is you get people traveling to get the cheaper prices, for example I knew a couple of folks who lived in Manchester but would go to Wigan to buy their shopping and in most cases petrol as the prices were far far cheaper.

    One of the problems is the government seem to be listening to big businesses such as Tescos without thinking about WHY they are behind something.

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  2. Arguably the biggest problem this would cause is not disadvantaging the less well-off, but that it would lead to an increase in home brewing and wine making for resale, illicit distilling, black market cross-border imports etc. And black marketeers have no compunctions about selling to minors. Rather than making the drinks market more responsible and orderly, it would drive a lot of it underground where it is not regulated at all.

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  3. "I struggle to find any principle behind David Cameron's utterances; he is driven by a desperate, second-rate populism tempered by a nanny state desire to control the unruly drinking classes"

    He is truly the Heir of Blair.

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  4. He seems to have a tendency to shoot from the hip with ill-considered populist proposals. Take, for example, his suggestion of moving the clocks forward. It will all come back to bite him.

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