The Home Office have published a guidance document detailing the 'below cost ban' which will prevent the sale of alcohol below duty + VAT. The ban was announced last year when the Government announced its u-turn on alcohol minimum pricing to the dismay of health groups.
Subject to parliamentary approval, the ban will come into force in April 2014 as an additional condition of the mandatory code. The Home Office state that 'cost' will be defined as the level of duty plus value added tax (‘VAT’) payable on the duty element of the product price, meaning typically 'cost' prices will be:
- Can of 440ml beer at 4% ABV = 41 pence
- 750ml bottle of 12.5% ABV wine = £2.41
- 70cl bottle of 37.5% ABV spirits = £8.89
Health groups of course have continued to highlight that a below cost ban is no minimum unit pricing. The University of Sheffield recently published research that estimated a minimal impact of a below cost ban, "approximately 40 to 50 times smaller than the estimated impact of a 45p MUP" as explained here.
Eric Appleby of Alcohol Concern said "The idea that banning below-cost sales will help tackle our problem with alcohol is laughable, it's confusing and close to impossible to implement... The government is wasting time when international evidence shows that minimum unit pricing is what we need to save lives and cut crime."
However the Government Minister Norman Baker insisted that the below cost ban will "stop the worst examples of very cheap and harmful drink". The Home Office impact assessment suggests consumption is expected to fall by 0.04%, but with possible savings to the NHS £5.3 million a year, crime £3.6 million and £500,000 in reduced absenteeism.
The issue may well be enforcement, down to local authority licensing teams, Trading Standards and the police. The guidance states "where necessary, enforcement officers may request a copy of the premises pricing lists and take away for analysis to compare against the duty plus VAT permitted prices."
See reports from the Guardian, Telegraph and Independent.
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