Drinkers are not a drain on taxpayers, IEA expert responds to new study
18 May 2024
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Responding to a report from the Institute of Alcohol Studies which claims that alcohol harm costs England £27.4 billion a year, Christopher Snowdon, Head of Lifestyle Economics at the free market think tank, the Institute of Economic Affairs, said:
“It is important to understand that very little of the £27 billion ‘cost’ falls on taxpayers. Lost productivity is an opportunity cost to drinkers, not to wider society, and various ’emotional costs’ are not financial costs at all.
“It is also important to note that this is a cost analysis, not a cost-benefit analysis. A full cost-benefit analysis would include the economic contribution of the alcohol industry which the IAS estimates is worth £46 billion a year. It would also include emotional benefits as well as emotional costs.
“In any case, this report shows a real-terms decline in the societal cost of alcohol in England since the early 2000s. In 2003, the Cabinet Office estimated that the cost was £21 billion, based on 2001 figures. That is £38 billion in 2024 prices.
“Our own analysis shows that alcohol misuse costs the public purse less than £5 billion a year and is amply exceeded by the more than £10 billion paid in alcohol duty. Thanks to the UK’s high alcohol taxes, there is little doubt that drinkers continue to subsidise non-drinkers to the tune of billions of pounds.”
ENDS
- The cost to public services, including the NHS, of alcohol misuse totalled £4.3 billion in 2022/23. This uses the same methodology as Alcohol and the Public Purse which estimated the cost at £3.9 billion in 2015. This figure is a fall in real terms, largely due to the decline in alcohol-related violence.
- Both the Cabinet Office report and the IAS report look at the gross societal cost of alcohol consumption. This should not be confused with the net cost to non-drinkers nor to the net cost to the government.
- IAS estimated that the production and sale of alcohol was worth £46 billion to the UK economy in 2014: Factsheet: The Alcohol Industry.
- Tax receipts from alcohol duties in the United Kingdom amounted to an estimated £12.6 billion in 2023/24.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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