Fact checking the Alcohol Health Alliance

As reported in The Guardian and elsewhere, the Alcohol Health Alliance has issued a press release in response to the ongoing campaign to bring an end to the alcohol duty escalator which, according to the Wine and Spirit Trade Association, led to tax on wine rising by 50 per cent since 2008, along with tax on spirits rising by 44 per cent. Although the public health lobby demanding higher taxes is something of a ‘dog bites man’ story, it is worth assessing their arguments.
Katherine Brown, director of the Institute of Alcohol Studies, said it would be madness for the government to give in to pressure. “Scrapping the duty escalator would be going against yet another government commitment to tackle the cheap alcohol that is causing mayhem on our streets and bringing our health service to its knees.”

These are both subjective statements which reflect Britain’s perennial moral panic about alcohol consumption, particularly amongst young people, despite a 16 per cent drop in consumption since 2004. Whilst ‘mayhem’ is hard to define, the most widely used estimate of alcohol’s cost to the NHS in England is £2.7 billion a year. In the context of an NHS England budget of £95.6 billion, it is difficult to argue that alcohol is ‘bringing our health service to its knees’, particularly since alcohol duty rakes in £12 billion per year for the government.
“Furthermore, making alcohol more affordable poses a real risk to vulnerable groups such as young women. With almost a third of female drinkers aged 16-24 drinking the equivalent of nine shots of vodka in a session each week, we need to be doing everything in our powers to curb excessive alcohol consumption, not encouraging it by lowering the price.”

Firstly, nobody is talking about ‘lowering the price’, only putting an end to above-inflation rises in duty. Secondly, the latest figures from the Office for National Statistics show that 28 per cent of women drinkers aged 16-24 consume more than 9 units of alcohol on their heaviest drinking day. This is closer to a quarter than a third. Note that this is the proportion of female drinkers, not females overall. The Institute of Alcohol Studies ignores the fact that most women in this age group (52 per cent) report drinking no alcohol at all in the previous week. Overall, only 14 per cent of women aged 16-24 drink more than 9 units – ie. get drunk – on their heaviest drinking day of the week.

Presumably the Institute of Alcohol Studies put their estimate in the context of ‘shots of vodka’ because the consumption of spirits by women has retained some its taboo, but the ONS figures show that spirits and liqueur consumption makes up less than half of the alcohol consumed by this group. Of women who drink 9 units or more, the most popular drink – preferred by 64 per cent – is wine.

Overall, women drinkers aged 16-24 consume an average of just 11 units per week (of which 4 units are consumed as spirits). This is well below the recommended guideline of 14 units per week.
The alliance says alcohol harm in the UK costs more than £21bn each year, which is more than double the total revenue collected from alcohol duties (£10bn).

The figure of £21 billion comes from a Cabinet Office report which looked at the emotional, financial and intangible costs of alcohol consumption to individuals, businesses and the state. Not only is it at the highest end of the Cabinet Office’s estimates, but the largest elements that make up this figure are not costs to the government. The largest single element is not even a monetary cost, but is a subjective “emotional impact cost”. Most of the costs are not to the government but to the drinker. It is quite wrong to compare this figure with the amount taken by the government in duty.

If alcohol duty is a Pigovian tax, it must meet the costs to the government, notably healthcare costs and policing costs related to drunken behaviour. The Cabinet Office figures indicate that these costs make up no more than £6 billion of the £21 billion total. The Institute of Alcohol Studies ignores the VAT on the alcohol duty which raises government revenue from £10 billion to £12 billion. Even disregarding the economic benefits created by the alcohol industry and the various sums paid out in corporation tax and income tax, it is clear that drinkers pay twice as much as they cost public services.
Alcohol bought in supermarkets and off-licences is 61% more affordable than it was in 1980, it says.

This is true, but misleading. It reflects nothing more than the fact that average incomes have doubled since 1980. Almost everything has become ‘more affordable’ since 1980 for this reason alone. In real terms, however, alcohol has risen in price as a result of above-inflation tax rises. The Office for National Statistics notes: “Between 1980 and 2012 the price of alcohol increased by 24% more than the retail prices generally. However, real households’ disposable income per adult (adjusted) increased by 99% over the same period. Using the most recently available data, alcohol in 2012 was 61% more affordable than it was in 1980”.

The casual reader could easily mistake ‘more affordable’ for ‘cheaper in real terms’. This confusion is actively fostered by the Alcohol Health Alliance, whose chairman explicitly says that “We’re already seeing alcohol, in real terms, 60% cheaper than it was in 1980. This is simply untrue. It is 24% more expensive in real terms. Temperance organisations such as the Institute of Alcohol Studies are hardwired to view expensive alcohol as a good thing, but there is no reason to view people’s ability to afford alcohol, or anything else, in 1980 as optimal.

Britain’s ‘public health’ lobby has been remarkably successful at obfuscating the simple fact that the UK has some of the highest alcohol taxes in the world. Whether one looks at wine, beer or spirits, Britain is in a tiny club, along with Sweden, Finland and Ireland, that taxes alcohol at a much higher rate than the rest of the EU. The graphs below show the tax rates on wine and ethyl alcohol. If high taxes were the ‘solution’ to alcohol abuse, Britain would be one of the most sober nations in the world. In reality, however, alcohol duty is an ineffective and deeply regressive stealth tax.

Head of Lifestyle Economics, IEA

Christopher Snowdon is the Head of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove; Iron Fist. His work focuses on pleasure, prohibition and dodgy statistics. He has authored a number of papers, including "Sock Puppets", "Euro Puppets", "The Proof of the Pudding", "The Crack Cocaine of Gambling" and "Free Market Solutions in Health".

3 thoughts on “Fact checking the Alcohol Health Alliance”

  1. Posted 18/02/2014 at 16:08 | Permalink

    “The figure of £21 billion comes from a Cabinet Office report which looked at the emotional, financial and intangible costs of alcohol consumption to individuals, businesses and the state”

    Has there been a study done looking at the emotional, financial and intangible benefits of alcohol consumption to individuals, businesses and the state?

    It is hard to conceive that so many people could voluntarily and regularly consume alcohol if they did not personally think that the benefits of doing so outweighed the costs.

  2. Posted 18/02/2014 at 17:22 | Permalink

    There hasn’t, but since Britons spend over £30 billion on alcohol every year, it is reasonable to assume that they receive more than £30 billion’s worth of benefit from drinking.

  3. Posted 20/02/2014 at 10:54 | Permalink

    Its probably extremely difficult to estimate the consumer surplus, but I would imagine its of the order of a hundred billion pounds.

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