The Alcohol Health Alliance UK and its members are campaigning for a rise in alcohol duty in the next Budget. What difference does this make, and can higher prices really reduce alcohol harm? In this blog Colin Shevills, Director of Balance the North East Alcohol Office, explains why a rise in alcohol duty not only improves public health but also helps pubs and public finances.
It’s a matter of weeks to the Budget and the tug-of-war over alcohol duty rates has begun.
On the one side we have the folk from public health – of which I am one – trying to persuade the Chancellor to increase alcohol duty by 2% above inflation to save lives. “You might miss out on your brief cheer in the House of Commons but it will raise money, help you to ‘level up’ – and it is the right thing to do for the long term health and wealth of the nation.”
On the other side, we have Big Alcohol and their well-resourced trade associations and front groups making claims about what a bad deal they get from the tax system. “Cut duty rates and allow our businesses to compete on the global stage, drinkers deserve a penny off a pint, pubs are closing at record rates.”
The debate happens every year. The arguments are similar. And for the last few years the outcome has been the same – taxes have been cut with the industry claiming a victory for pubs and the public. The truth, however, is rarely that simple and it is always worth looking behind the statements made by Big Alcohol corporations with commercial interests to consider.
For example, we hear little about the fact that duty cuts since 2012 have cost The Treasury – us in other words – around £1.3 billion a year, enough to fund the salaries of 41,000 nurses. Or that alcohol duty brings in less than half of the £27 billion a year that alcohol harm costs society. And – worst of all – how these cuts have led to almost 2,000 additional deaths; over 61,000 avoidable hospital admissions; and more than 111,000 unnecessary alcohol related crimes.
Before we look at what the 2021 Budget might bring, let’s reflect on whether successive alcohol duty cuts have achieved what the industry claimed they were looking for.
First, let’s address the claim that duty cuts will help support the whisky industry. Remember when the then Chancellor George Osborne stated in his 2015 Budget that: “To back one of the UK’s biggest exports the duty on Scotch whisky and other spirits will be cut by 2%”. This argument doesn’t make sense. Over 90% of whisky is exported and therefore not subject to UK excise taxes. In fact, the biggest beneficiary of any cuts to spirits duty is vodka, which accounts for around a third of UK spirit sales. And incidentally cheap vodka is often the drink of choice for people consuming at high-risk levels.
What about that penny off the pint? If we could visit a pub at the moment I’m fairly sure many regulars would dispute whether they actually see the benefit. I know that people running pubs aren’t really seeing the benefit, because they have said so. In a survey of publicans in the North East of England carried out by Balance in 2018, only 7% said they saw any benefit from duty cuts passed on to them. They are much more worried about having to compete with cheap supermarket prices where the affordability of beer has more than tripled since 1987.
“But surely it has prevented pub closures?”, I hear you say. Think again. Between 2008 and 2013 duty was increased by 2% above inflation each year and the net decline in the number of pubs was 1.5% a year. In the following five years of freezes and cuts, the closure rate increased to 1.9% a year, despite a stronger economy, relief on business rates and the pubs code, all of which should have improved trading conditions.
In recent months, we have been bombarded with headlines about how alcohol sales in supermarkets have gone through the roof. Cutting alcohol duty will make the product even cheaper and, if the past is anything to go by, will increase the price differential between the off and on trade, thus making things worse for pubs. Just perhaps – as organisations like the Institute of Alcohol Studies and the Alcohol Health Alliance have been saying for years – cutting alcohol duty is not the answer to saving pubs.
So why is the industry calling for cuts? Well it’s obvious. The cheaper a product is the more we buy and recent Budgets have seen duty fall 19% on beer; 12% on cider and spirits; and 3% on wine. The problem from a public health perspective is the more we drink, the greater the levels of harm, especially for those drinking at risky levels. Yet the industry gets a significant amount of its revenue from those drinkers. A 2018 report from the Institute of Alcohol Studies estimated that while people drinking above the low risk guidelines make up 25% of the population, they provide 68% of industry revenue.
We can’t emphasise enough that a disproportionate amount of harm driven by the widespread availability of cheap alcohol is felt in our most deprived communities, many of them in the North East of England where we have the highest rates of death and hospital admissions from drinking. It also falls on our hard-pressed emergency services. Even during the last three months of 2020, when COVID-19 cases were on the increase and restrictions were in place in the night-time economy, North East ambulance crews were being called out to an average of 50 alcohol-related incidents every day.
What’s more, while there are mixed messages about just how much people are drinking during the pandemic, it is becoming increasingly clear that more of us are drinking at high-risk levels. In fact, a report from the Royal College of Psychiatrists in September last year estimated that the number of higher-risk drinkers in England had almost doubled during the pandemic, increasing from 4.8m to 8.4m.
This is very bad news for places like the North East which already suffers from the highest levels of alcohol harm in England. With Balance’s own surveys suggesting that one in four drinkers are consuming more – and risky drinkers four times more likely to be increasing their intake than those sticking within the guidelines – there can be little doubt that harms from alcohol in the North East will increase from what are already very high levels.
In fact, we may already be seeing the damaged caused by increased consumption and an inevitable disruption to treatment services. Provisional data from the Office for National Statistics indicates that deaths caused by alcohol increased by around 15% in the North East during the first nine months of 2020.
Cutting the cost of booze in the Budget will only make that problem worse.
As ever, I am hopeful this year’s Budget will start to reverse recent cuts in alcohol duty. One thing is certain: a system which incentivises the production of strong alcohol and fails to generate enough revenue to cover the costs of the harm it causes is in urgent need of reform. Our next task is to ensure that the government’s decision to review how it works leads to a system which taxes drinks according to strength; covers the cost of the harm alcohol causes society; and does away with the annual duty bun fight. People’s lives depend on it.
Written by Colin Shevills
On 3 March, the government has the opportunity to save lives and reduce alcohol harm. Help support our campaign by emailing your MP and asking them to support an increase in alcohol duty.
This blog was published with the permission of the author. The views expressed are solely the author’s own and do not necessarily represent the views of the Alcohol Health Alliance or its members.
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