Health and Sport Committee

Meeting date: Tuesday, April 17, 2018

Official Report 514KB pdf

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Subordinate Legislation

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Alcohol (Minimum Price per Unit) (Scotland) Order 2018 [Draft]

Item 2 is consideration of an affirmative instrument. As is usual with such instruments, we will have an evidence session with the cabinet secretary and her officials. Once we have asked our questions about the instrument, we will move to the formal debate and the motion.

The instrument in question is the draft Alcohol (Minimum Price per Unit) (Scotland) Order 2018. I welcome the Cabinet Secretary for Health and Sport, Shona Robison, accompanied by Daniel Kleinberg, the head of health improvement, Louise Feenie, alcohol policy team leader, Marjorie Marshall, economic adviser, and Lindsay Anderson, solicitor, also from the Scottish Government. I invite the cabinet secretary to make a brief opening statement.

Thank you, convener. I am delighted to join the committee this morning to consider Scotland’s first minimum unit price for alcohol.

Last November the UK Supreme Court concluded that minimum unit pricing was targeted, proportionate and lawful. That unanimous judgment fully endorsed Scotland’s alcohol pricing policy. My statement to Parliament then set out our plans for consultation and engagement. As you know, I proposed a minimum unit price of 50p per unit of alcohol from 1 May 2018 and we ran a public consultation on 50p throughout December and January. We received 130 consultation responses. Of those who commented on the 50p proposal, 74 per cent supported it.

The consultation process did not bring to light any new relevant evidence. Taking account of a number of factors, we concluded that a minimum price of 50p per unit strikes a balance between public health and social benefits and intervention in the market. We have engaged extensively with the alcohol industry since November and our approach has been welcomed by trade bodies and businesses alike. We have produced comprehensive Government guidance for industry and funded two bespoke products, the Scottish Grocers Federation booklet for smaller retailers, and the Scottish Wholesale Association guidance for wholesalers. We have been working with licensing standards officers and have provided a range of communications materials for retailers and alcohol and drug partnerships.

Scottish ministers’ decision to propose a minimum unit price of 50p per unit is supported by an updated business and regulatory impact assessment, the BRIA, which I have laid before Parliament. Members will see from the BRIA that 51 per cent of all off-trade sales in 2016 were below a minimum price of 50p. This indicates that a sizeable portion of the alcohol market will be impacted at the level of 50p. The BRIA also details outputs from the University of Sheffield modelling. In 2016, Sheffield estimated that 50p per unit would lead to 58 fewer alcohol-related deaths in the first year, with a cumulative total of 392 fewer alcohol-related deaths within five years. The reduction in alcohol-related hospital admissions would be similarly substantial.

While I remain open-minded about future consideration of the rate, our collective priority must be to implement the policy without further delay. I need not detail the extensive cost of alcohol to our health, our economy and our society. However, I remind the committee that, as a nation, we drink 40 per cent more than the low-risk drinking guidelines of 14 units per week for men and women.

Minimum pricing has been a long time coming but it is not a panacea. It sits within a framework of more than 40 measures and a policy that we are refreshing to ensure that it keeps pace with Scotland’s relationship with alcohol. Alcohol policy is backed by significant public funding. Since 2008 we have invested more than £746 million to tackle problem alcohol and drug use. We have also committed an additional £20 million per year to frontline alcohol and drug services.

Members will know that Parliament legislated for a sunset clause on minimum pricing. Scottish ministers will therefore bring to Parliament a report on the impact of the policy five years on. Parliament will then vote on the policy’s continuation before the sixth year of operation. NHS Health Scotland is conducting an independent evaluation and the industry is involved in studies to look at the policy’s economic impact. I am sure that the committee will take a keen interest in the evaluation and keep track of emerging findings in the coming months and years.

With Parliament’s support, I look forward to implementing the 50p rate on 1 May and I hope that it will be endorsed across Parliament.

We now move to questions from members.

It is six years since the Alcohol (Minimum Pricing) (Scotland) Act 2012 was passed and its implementation was stalled, for reasons we are all very well aware of. The minimum unit price of 50p was agreed six years ago and it has been somewhat overtaken by the rise in inflation and other factors and pressures, to the point at which it is fair to say that its impact will be diminished, and I think that will be echoed by third sector organisations and campaigning groups. I understand that you want to implement the policy without any further delay but what consideration has the Government given since the Supreme Court judgment to that price of 50p and would you consider lifting it to 60p, which is what a number of groups, and certainly my party, now advocate?

First, you will be aware that all the University of Sheffield modelling was based on the 50p per unit price—that is important.

Changing the price is not as simple as just replacing one price with another. A load of issues would flow from that that could cause a considerable delay in the implementation of minimum unit pricing.

The court case and the evidence that was led in court were based on the modelling done by University of Sheffield on 50p. It is the affordability of alcohol that matters, not just the price, and that will depend on other factors such as income growth and how the market reacts to minimum unit pricing as well as inflation. We have to look at the evidence and monitor and evaluate Scotland’s alcohol strategy because that will give us a fuller picture.

We want to keep the price issue under review as we proceed, but given the journey that we are on, which Alex Cole-Hamilton outlined in his question, I am keen that there is no further delay.

I will give one example of what such a change would cause. In 2012, we had to notify the European Commission of the proposed 50p minimum unit price. If that was to change, we would have to go back to the EC with the new price. That is a lengthy process and it could leave us open to further legal challenge, based on whether there was a challenge about a different price being proportionate.

We won the case because 50p is a proportionate price and it balances public health with business interests. It is not as simple as taking one number off and putting another on. A lot of complex issues and further delay would certainly flow from that. We have had enough delay; we want to get on with the implementation.

I understand that and I share the willingness to press on and see this implemented. However, you said in your opening remarks that the price will be kept under review, so although changing it is complex, it is not impossible. What are the staging posts for the review and when will we come back to the issue?

We have five years before the sunset clause kicks in and it will depend on the evidence that emerges. That is not going to happen in six months. Evidence about the full impact on the market, for example, will take some time to emerge. I do not therefore want to set a moment in time, because it might not be the right moment in time, depending on the evaluation. We should keep these matters under review.

There is obviously the formal pause in five years when we can look at whether the policy will continue, given the sunset clause, but I would be reluctant to set a point in time at this moment. I am sure though that the committee will want to look at the evidence as we go forward and I would be happy to engage with the committee on the evidence as it emerges and not just wait for the five-year point.

I fully support the minimum unit price. We need minimum unit pricing, particularly because of the substantial number of hospital admissions that you mentioned. I have visited the royal infirmary and was quite appalled at the amount of people who were lying on trolleys having had accidents because of alcohol.

That brings me on to the social responsibility levy. I know that there were plans for that but nothing in the draft order would introduce the social responsibility levy, which would be of substantial help to the health service and local authorities, as it was planned in the 2012 act. Are there any plans to introduce the social responsibility levy when you are looking at the five-year plan? Will the social responsibility levy be introduced?

Whether it is a public health supplement or social responsibility levy, the Government will keep it under review. Remember that the social responsibility levy was geared towards recouping local costs, such as additional policing costs, that could be associated with alcohol. It was more about covering local costs than being applied in relation to minimum unit pricing.

The additional revenue highlighted is a high estimate so we need to see what the evidence shows. If behaviours change and people consume less, we need to see that evidence. These are estimates and they are based on what we think might happen but we will not know until we see the market operation.

The estimates are also of revenue and not profit and, again, we will need to see the evidence of where that revenue goes. We do not know whether it would be to the retailers, the wholesalers, the producers or a combination of them, so whom should we put the levy on? We need to understand all that, but we should keep it under review. When we have the evidence, we would be in a better position to look at all that in more detail.

We also have to take current economic circumstances into account when introducing a levy or a supplement. Although we have no plans to introduce the levy now, we will keep it under review. We will look at the evaluation and the evidence as it emerges and that will help us to better understand whether there are additional revenues from this policy and where they fall, and then we will be able to make a more informed decision.

11:45  

That was one of the points I wanted to raise. If there was additional revenue, would it be the licensee who would benefit from it? That was supposed to be part of the social responsibility levy.

If you look at the effect that the policy has had in five or six years and you decide to change the minimum unit price, would it be for this committee or Parliament or the minister to do that? If you produce the evidence, could the committee ask or could it be asked in Parliament if you are going to introduce a social responsibility levy as we go along through that five to six years?

We will reflect on all those matters in the light of the evidence that will emerge over the next five years. We will reflect on the impact of the policy per se and we will look at whether additional revenues have been raised—that is yet to be tested—and where they fall. The Government will have the opportunity to consider all the issues in the round and come to an informed conclusion about that.

What is important at the moment is getting this up and running and getting on with it at the beginning of May. That will allow us to look at the evidence as it emerges rather than making estimates based on what we think might happen. We need to see what personal behavioural changes there are and what happens in the market. Again, we are happy and keen to work with the committee as that evidence emerges over time.

I go back to Alex Cole-Hamilton’s point to look at how MUP will be uprated. You have talked about the review and I understand that, but during the passage of the bill, cabinet secretary, you said that there could be an inflation-linked mechanism such as the retail price index. Nothing I can see in the order adjusts for inflation. For example, if we have 3 per cent inflation for the next five years, that will badly erode the current figure. Are you considering an inflation index, and if you are, will you consider one that is obviously in the current thinking, such as the consumer price index or CPIX? As you know, the Bank of England does not recommend RPI any more.

As I said earlier, it is the affordability of alcohol that matters, not just the price. That will depend on factors such as income growth, how the market reacts in reality, as well as inflation. It is not just about inflation; there are also all these other factors to consider. I do not think it would be prudent to commit to reviewing the minimum unit price in line with a single economic measure. As I have said, we will keep the rate under review, along with the emerging evidence from the extensive evaluation programme. That will help us to decide what the next step will be, rather than just fixing on one economic measure.

Is there any mechanism within the instrument to allow any change to the figure before a five-year review?

You would have to lodge a further instrument setting a different price. There is no mechanism for change in the instrument, but that change would be available as the evidence develops, if it were to take you to a different place.

That is useful, because the other way of doing it—I know it is not just about inflation, cabinet secretary, but just for argument’s sake—you could have had an inflation indicator within the instrument that would allow an annual uprating.

I take your point. As evidence emerges and the policy develops, we will be able to see whether we need to revisit that issue. At the moment, we really need to see how the policy works in the market, what it tells us about any future price and how we would come to an informed decision on that.

If any change was required while we are still subject to EU regulations, would we require EC permission for that?

Louise Feenie might want to say a little bit more about that, but the answer is yes, because we notified the commission about the price way back in 2012, believe it or not—it was quite a while ago. If there was a change in the price, the commission would require to be notified again and that is quite a lengthy process.

That is one aspect, which is why it is important that the evidence of the impact of the policy rules out a further challenge based on what interests might perceive as being a disproportionate response. We won the case based on our response being proportionate. If there was a price change in future, we would have to be mindful about making sure that that test was still met, otherwise I think we could open ourselves up to a different line of challenge.

A point was recently raised with me at an addiction treatment centre about those for whom behavioural change is more of a challenge and the impact that minimum unit pricing could have on them and their families. With that in mind, what consideration has the Scottish Government given to supporting those who have that additional challenge, and to supporting addiction treatment centres? Is that part of the strategy?

Yes, and maybe Daniel Kleinberg will say a little bit about this.

The aim is to make sure that people are given the opportunity. Given all the publicity around the issue, we also have opportunity to have that discussion with people who are using alcohol at harmful levels or indeed have an addiction. This is a good opportunity for them to seek and receive services and support. The policy has always been to target hazardous and harmful drinkers. We know that those who drink most heavily and live in deprived areas experience the greatest levels of harm and we have always argued that they will benefit most from the policy. We know that rates of alcohol-related deaths in deprived areas are six times those in least deprived areas. We have this opportunity to have a big impact on health inequality, and the policy has always focused on those with an addiction. We have been talking to alcohol and drug partnerships about the support that can be given.

That is exactly the point I was going to make. We have spoken to ADPs to prepare them and make them aware that minimum unit pricing is an innovative measure, so things may land differently as it comes in.

We are really talking about dependent drinkers.

Yes, and we are talking about investment in services to support people who, by the time they are drinking the cheapest alcohol, are probably already drinking at levels that require attention.

We are providing materials to ADPs to distribute locally and signposting to local services that can help people whose drinking is problematic. A bit of thought has been put into this, and we have an opportunity to signpost people to services.

Are we also looking at supporting those third sector organisations that are involved in the treatment of addiction? I imagine that some of the burden will fall on them.

Yes. A lot of the support to third sector organisations that provide support on the frontline is done through the ADP structures so that support will come through the usual mechanisms and resources that are around those systems at the moment. There is also an additional £20 million, and I am sure that a lot of third sector organisations will benefit from that.

Cabinet secretary, in your statement you mentioned work with the Federation of Small Businesses Scotland and the Scottish Wholesale Association. The timescale for implementing the policy is now quite tight, so what consultation and work is the Government undertaking with those organisations?

Extensive work has been done to make sure that, for example, we support them with materials that explain clearly to them and their members about minimum unit pricing and how it works, how they can communicate with the public about how it works, and that it is a Government policy and they can signpost anyone who wants to make further inquiries to the Government. A lot of work has been done on the development of those materials so that when the policy is implemented, it hits the ground running because that awareness has been raised.

We have engaged extensively with individual businesses and their trade bodies since the Supreme Court judgment in November. As the cabinet secretary says, we have made available a lot of physical materials as well as guidance and support on a one-to-one basis. Our sense is that has been welcomed and that the vast majority of businesses are ready for implementation on 1 May. More importantly, they have resources within their toolkit that they can use to deal with customers who have questions or concerns about how the policy will impact on them.

I have also been in discussion with the Scottish Wholesale Association about the policy, and there is a small technical wrinkle. I understand that some members, such as wholesaler organisations or companies, also have or are operating with a premises licence. It creates a bit of a loophole or a problem for them, in that they might need to use dual pricing or have separate aspects to their building. Is the Government offering a workaround for that?

We are certainly working on that. Daniel Kleinberg, do you want to comment?

It is a very technical issue to do with, I think, the operation of a 2005 act. We are aware that there are different interpretations. We are clear there is nothing about MUP in itself that needs to apply to trade-only sales, but the way in which companies hold their licence could have a read-across. We are talking to them at the moment. We are happy to consider further where that leaves them, whether or not they need to adjust their business, and what steps we can take to help resolve any uncertainty.

There being no further questions from members, we now move to item 3, which is the formal debate on the affirmative instrument on which we have just taken evidence. Members will recall that there are no longer opportunities either to ask questions of the minister or to ask questions of officials, but we do start with the cabinet secretary, and I invite her to move motion S5M-11141.

Motion moved,

That the Health and Sport Committee recommends that the Alcohol (Minimum Price per Unit) (Scotland) Order 2018 [draft] be approved.—[Shona Robison]

Motion agreed to.

Thank you very much, and thank you to the cabinet secretary and her officials. We now move into private session.

11:57 Meeting continued in private until 12:32.