Henry Featherstone

Minimum unit pricing: NICE, but wrong

Minimum unit pricing: NICE, but wrong
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So, NICE, the body charged with ensuring cost-effectiveness in the NHS, says that alcohol minimum unit pricing is the most effective way to tackle excessive drinking and its impact on the NHS and society.  Interesting, and certainly a challenge to the new Health Secretary and his alcohol taxation review, but ultimately misguided.    

Where NICE have got it right, is that there is a clear and consistent relationship between the price of alcohol and its level of consumption.  Indeed, the effects of price changes on alcohol consumption are more effective than other alcohol policy interventions, such as restricting the number of outlets, or bans on advertising or price promotion.  But where NICE have got it wrong, lies in their inability to look at the bigger picture.

The benefit of using duty as an instrument for reducing alcohol consumption is that any additional revenue raised goes to the Treasury; whereas with a minimum unit pricing regime any additional income goes direct to the drinks industry, since manufacturers, suppliers and supermarkets would simply increase prices to meet the proposed minimum unit price.

   

If, say, a restructuring of the duty regime as we suggested in our report, Hitting the bottle, were to be combined with banning below cost sales, then there is a de-facto minimum unit price, but all the extra money goes to the Treasury.  The problem faced by politicians – and not currently by NICE – is that they have to make their decisions within an overall resource ceiling. 

Henry Featherstone is Head of Policy Exchange’s Health and Social Care Unit.