Minimum alcohol pricing: a response to the British Medical Journal

The following letter has been written in response to ‘Under the influence’, an article by Jonathan Gornall which appeared in the British Medical Journal in January 2014. It is addressed to the editor of that publication.

 

Dear Dr Godlee,

We are writing regarding the article by Jonathan Gornall in the recent issue of the British Medical Journal. This article should never have been published in a respected academic journal, even as a feature piece, as it did not come close to the standards of scholarship that should be expected of such a journal.

Appreciation of the scientific method and the economic way of thinking

The article seems to begin with the assumption that statutory minimum unit pricing (MUP) for alcohol is self-evidently desirable and that, by implication, those who oppose it only do so out of sinister intentions guided by vested interests. This leads the author to look for financial relationships that frequently do not exist but are implied by association, rather than accept the more obvious explanation that many people sincerely disagree with the policy on grounds that are ‘evidence-based’. The feature makes no attempt whatsoever to engage in the scientific or economic debate but merely tries to undermine the process of pursuing knowledge in a scholarly fashion by disparaging the reputations of those on the other side of the debate. As such, it is worth restating the case that is made by the opponents of MUP, arguments that have simply not been addressed by the proponents.

Firstly, the idea that, ceteris paribus, higher prices tend to lead to lower consumption is not such a novel insight in economics as it appears to be in public health. It is not an observation that would lead to the publication of scholarly arguments in an economics journal. However, the precise impact of MUP will depend on behaviour and the impact found in any model will be determined by the way the model is constructed. If social scientists tell a computer that a minimum price will reduce licit alcohol consumption and that, more controversially, this reduction will lead to better health outcomes, it is self-evident that the computer will reflect this in its estimates of ‘lives saved’. Moreover, the number of ‘lives saved’ will rise as the price rises. For those who lobby for MUP, this is sufficient information to make the policy ‘evidence-based’.

But the evidence is partial because the models are partial. They disregard, for example, the costs of the policy and the likely unintended consequences. There may be costs in terms of health if, for example, people on low incomes maintain their alcohol consumption levels, but spend less on food and heating for their family. There are likely to be substitution effects, such as the purchase of illicit alcohol or illegal drugs, which have health hazards associated with them. There will clearly be financial costs resulting from prices being artificially raised. These costs will depend on consumption levels, but they will not be trivial and they will affect people on low incomes more than those on high and middle incomes.

These are essentially the arguments that we have laid out in the IEA’s work, backed up by economic analysis. The medical establishment’s support for MUP implies that doctors are either unaware of these costs or feel them to be a price worth paying for the predicted benefits. This is a perfectly valid opinion, but it can only be a subjective evaluation of the costs and benefits. An estimate of lives saved in a partial equilibrium model can never, on its own, justify the implementation of a given policy. If this were the only consideration then there would be no limits to government intervention in almost any area of private economic and social activity. Economic decisions involve trade-offs. If public health academics wish to make a serious contribution to an economic debate, they must recognise this.

Our own opinion is that the costs and risks would outweigh the likely benefits, as they did in Denmark when a ‘fat tax’ was briefly introduced. The government appears to have taken a similar view to our own on this occasion. We understand that this is disappointing for many readers of the BMJ, but it does not warrant the bizarre assortment of ad hominem attacks and smears that you published on 8 January.

Funding and vested interests

We trust that your readers are not surprised that an education and research charity whose mission is to promote a wider understanding of the role of markets chooses to publish work in this field. Your readers will also not be surprised that the alcohol industry lobbies against MUP. Mr Gornall lists examples of companies with interests in the sale of alcohol having meetings with government departments as evidence that politicians were ‘under the influence’ of the industry and that the pubic consultation ‘was a sham’. Neither conclusion follows from the evidence.

  1. Nowhere does he detail the activities of the large, well-funded effort to promote MUP over a period of several years, including those of taxpayer-funded organisations such as Alcohol Concern. If there has been an imbalance in access to politicians, Mr Gornall provides no evidence for it. He merely demonstrates that those involved in one side of the debate had some access to politicians.
  2. In a letter to the Telegraph that was timed to coincide with the publication of his article, various doctors complained about the industry’s ‘deplorable practices’, but these appear to consist of no more than holding meetings with MPs. Is the ‘public health’ lobby above engaging in such deplorable practices itself, or are meetings only deplorable when one’s opponents hold them? Do we not expect elected representatives to understand both sides of an argument before putting forward legislation which is such a significant step that it might, in fact, be illegal (see below)?
  3. Mr Gornall claims that the All Party Parliamentary Beer Group allows an unusual degree of access to MPs and quotes John Holmes of Sheffield University saying that drinks industry representatives use these groups as a way to ‘talk to lots of MPs in a way that just wouldn’t be available to any public health group.’ This is simply untrue. There is an All Party Parliamentary Health Group, an All Party Parliamentary Group on Primary Care and Public Health, an All Party Parliamentary Group on Environmental Health, an All Party Parliamentary Group on Global Health and an All Party Parliamentary Group on Smoking and Health (the latter co-ordinated by the private pressure group Action on Smoking and Health), to name only five.
  4. Similarly, John Holmes is quoted as saying: ‘We can’t really change the narrative in any way - we don’t have that power - but bodies such as the Adam Smith Institute have this public megaphone which is disproportionate to the scientific merits of what they’re saying.’ This is an extraordinary comment. Nobody has had more influence over the minimum pricing debate than Holmes and his colleagues at the Sheffield alcohol unit. The findings of their computer model have been quoted on countless occasions by broadcasters, campaigners and politicians, including the Prime Minister at the start of Mr Gornall’s article. The influence of privately-funded think tanks has been trivial by comparison. This is not surprising; the annual income of the IEA is far smaller than the turnover of a typical single GP practice.
  5. No evidence is provided – because none can be found – that drinks industry funding to the IEA is at all significant as a proportion of our income or that drinks industry funding is greater than, for example, funding by the retail industry which would benefit from MUP. Whilst the IEA has a policy of donor confidentiality, all public listed companies publish their donations and, as Mr Gornall implies, but does not have the courage to say, such donations to the IEA are small. Mr Gornall mentions a (presumably deplorable) meeting between Jeremy Hunt and the chief executive of Asda supermarket, saying that it ‘reveals the incestuous web of influence spun by think tanks and lobbying companies paid to lobby on the [alcohol] companies’ behalf.’ The BMJ should provide evidence that think tanks have been ‘paid to lobby’ or it should formally retract this slur.
  6. Given that Mr Gornall wishes to imply that the funding of think tanks influences their research agenda, readers might wish to reflect on the fact that it is more than likely that the income of the BMJ is mainly from government sources and that Mr Gornall was paid to write the article that he did. We address the arguments in BMJ articles and put forward by Mr Gornall on their merits. However, those that believe that funding sources influence arguments may wish to consider that a journal that frequently promotes government solutions to social problems is largely funded by the subscriptions of government-funded universities and members who receive their salaries from the government. Mr Gornall should be even handed when discussing how funding might create bias in policy debates.

The ‘right-wing’ slur

Whilst we acknowledge that discussions about policy can become heated, Mr Gornall goes beyond what is reasonable when he refers to the input of free-market institutes as a ‘barrage of pseudoacademic shots from the far right’. This exceeds the limits of civilised discourse. We trust that in the cold light of day, the BMJ recognises that smearing opponents of price-fixing as fascists is disgraceful. An apology and retraction would be welcome.

The intellectual heritage of the IEA is classical liberal. The first Editorial Director was a member of the Liberal Party, though other senior staff have had a variety of political affiliations or none at all. If the phrase ‘far right’ was used to describe an individual, a set of policies would be  conjured up in the imagination that would bear no relationship to those that IEA authors have promoted in practice. Indeed, the use of price controls and minimum prices to achieve social objectives are much closer to the policies of those that any reasonable person would regard as standing for the ‘far right’.

The IEA was formed because of a serious concern that overarching central planning of the economy, that was so in fashion intellectually after World War II, could lead ultimately to some kind of totalitarian fascism. It is up to the reader to make a judgement about whether the continuation of the policies of the post-1945 government would have led to this result (as it did, for example, in some South American countries) but it was a sincerely held view by economic liberals and it is within that economically liberal tradition that the IEA continues to work.

MUP is an extreme policy and attempting to slur those engaged in free political debate is an extreme response to the dropping of that policy

Mr Gornall writes as if the case for MUP is self-evident. Not only are there concerns, however, about its economic effect, it is also a policy that is unusual – perhaps even extreme. There are natural concerns about economic and social freedoms as well as disputes about the economic impact that do not even seem to have been considered by Mr Gornall. However, the policy is also of doubtful legality. No country has yet adopted the system at a national level and the European Commission has repeatedly warned that it is legally unsound and limits competition.

Moreover, the policy is patently regressive and will increase the cost of living for millions. There are, then, numerous reasons why the government would perform a ‘U-turn’ on this issue after consulting with a broad range of stakeholders. The thrust of Mr Gornall’s complaint is not that industry actors and free-market think tanks have had ‘undue influence’ over the government - whatever that may mean - but that they have had a voice at all. There is no evidence whatsoever of any wrongdoing. Think tanks voiced their opinion, businesses mobilised their customers and politicians made their minds up. It is disappointing from your perspective that the government felt that the costs outweighed the benefits on this occasion, but the grubby insinuations and factual errors in Mr Gornall’s article are beneath you.

Britain remains a putatively open society in which free speech and access to politicians and opinion-formers are available to all. As the medical establishment increasingly resorts to legislative coercion in its bid to regulate lifestyles, it can expect to encounter continued resistance from those who believe in free markets and personal liberty, including a very large proportion of the British population. On issues such as minimum pricing, we believe that you are profoundly wrong. We do, however, believe you to be sincere (point 6 above is only made to demonstrate how people who think like Mr Gornall might consider how your own vested interests would affect your views). If we are to have a mature debate about public policy, we ask that you at least recognise that we also mean what we say and address the arguments in IEA publications. Not one sentence of Mr Gornall’s article attempted to do this.

What exactly do you mean when you say that "MUP is an extreme policy"? Extreme by what measure? The IEA may be very keen to protect the sales of White Cider, but does it have any alternative mechanism to improve the health impact?
I would suggest it is "extreme" as in extremely unusual. It is not unusual to tax alcohol (though we may have different views on that) but to set a (possibly illegal) minimum price - thereby also potentially creating competition problems to the benefit of big business - is unusual. I am not sure what white cider is so I have never tried to protect its sales but I do believe that the tax playing field is not level and is weighted against beer and wine and in favour of cider and I am not in favour of that (though I would prefer it to be levelled downwards). It is also an extreme measure relative to education and information campaigns in this area as a control method and is extreme in its very disproportionate affect on the poor (unlike education campaigns that tend to be financed through taxes by richer people and do not affect the price paid by poorer people and still allow people to make choices). Indeed, if ignorance is the cause of the problem, then poorer people will benefit relatively more from the cut in consumption that could arise as a result of education campaigns because alcohol is a high proportion of their budget whereas they suffer disproportionately from tax and minimum price methods of control.
White Cider, and a few other cheap and nasty beverages , largely consumed by alcoholics and teenagers, are what will be affected by minimum unit pricing. The stuff respectable people drink will not be affected at all.
A minimum price of 45p or 50p per unit would increase the price of the majority of alcohol sold in the off-trade - it certainly isn't just something that would affect a small number of marginal products. And isn't it rather snobbish to talk of "cheap and nasty beverages, largely consumed by alcoholics and teenagers"?
What do you drink that costs less than 45p a unit?
ASDA are selling Badger Tanglefoot £5 for 4 bottles - 6.4 units. 78 pence a unit. or Newcastle Brown Ale, same price, slightly weaker. Or for those who just want to get drunk cheaply Strongbow Cider 440 ml 2.2 units 70p a bottle 31 pence a unit
@Martin Rathfelder - The point is that whatever the minimum price would be set at initially, if there was perceived to be no or little impact, then, once the principle and mechanism had been established, there would be pressure to increase it until there is. A tax is one thing, but direct government interference in pricing and pricing competition is quite another.
So, HJ, do you have an alternative proposal to reduce the damaging effects of alcohol? There is good evidence that raising the price or reducing access helps.
Given the elasticities, these price increases will generate windfall profits for retailers. They will inevitably be taxed - more bureaucracy.
Actually one of the effects might be to reduce the alcohol concentration, which has been rising over recent years. That would be very beneficial.
@Martin Rathfelder - I do not advocate this, but if raising the price is perceived to be 'necessary' by the proponents of higher pricing to control demand, I fail to see why they think that minimum pricing is a better solution than higher taxation. Minimum pricing will increase margins for producers and/or retailers and so they will be encouraged to do everything possible to sell more alcohol in preference to other goods because selling alcohol will have become more profitable per unit sold - price is not the only factor in determining how much they sell.
Martin - have you not read the comments? There are two possibilities - further tax or education. However, you could argue (indeed, I would argue) that in a pluralist society we have to put up with these costs - though I would not be against private health insurers rating on the basis of alcohol consumption (something that is impossible in a socialised system of course). All sorts of activities are not good for the people involved and often for wider society (under-exercising, over-eating, promiscuous sex, not spending enough time reading good books..the list is almost endless) and I am afraid that we generally have to put up with it or try to change the culture by persuading people to lead a better way of life (as the temperance movement and many religions did in the late 19th century). The main argument above is that MUP is the worst policy buy in this field. If we attempt to solve every problem that involves behaviour we do not like by coercive regulation we will encounter at least two problems - firstly society will rapidly become very much less free; secondly, we will not be able to agree on the problems that should be addressed by coercive measures and that will lead to huge conflict.
Martin - "Actually one of the effects might be to reduce the alcohol concentration, which has been rising over recent years." If we are to have alcohol taxes, there is a strong case for basing the taxes on the amount of alcohol in the drink. There are some substantial oddities in the system at the moment (I think over-taxation of beer relative to cider, but I am not an expert).
Actually 4 bottles of Tanglefoot for £5 (500 ml @ 5% ABV) is exactly 50p per unit. My local corner shop is selling 4x500 ml cans of imported Becks for £4.50 which is 45p per unit. And that's before you start looking at cheap whisky and vodka and slabs of Carling and Fosters. Also, contrary to what Martin says, in recent years a large number of beers and ciders such as Stella, Strongbow and John Smith's Extra Smooth have had their alcoholic strength reduced.
I agree with Philip's last comment. There are some peculiarities around excise duty and banding. And various measures to protect Scotch and so on. a taxation system which related directly to the amount of alcohol would be better. Abuse of alcohol is more of a problem than most of the other social evils you mention because people other than the perpetrator are often damaged by people who are drunk. Much more than people who consume other drugs. It seems reasonable to take measures against these external costs. And of course we need to ensure that the manufacturers bear the costs.
"And of course we need to ensure that the manufacturers bear the costs." Um no. We need to ensure that the person inflicting the cost bears the cost.
In a reasonably competitive market, only consumers will bear the cost of taxes and, unless you deliberately create monopolies, manufacturers cannot bear the cost. Under MUP, manufacturers might actually benefit.
I work in the public sector and you would not believe how much tobacco/alcohol control industry bumph passes my deak - much of it before it is published and still at the planning stage. I'd lose my job if I made it public - although I will one day. What gets me is that it used to be illegal for public money to be used for political purposes - yet a lot of the stuff they send me openly refers to lobbying MPs and trying to persuade members of the public to write to their MPs to demand political action. The Publicity Code attached to the Local Govt Act used to specify that the ban on spending public money on politics applied to local govt AND other public-sector bodies. The Code was revised in 2010 (possibly 2011) and the foreword was changed to exclude a ban on the other public sector bodies. The ban remains on local govt politicking, although many councils break the Code. It gives carte blanche for the NHS, police, fire etc to spend on politicking. They fund Community Interest Companies so it is at arms length. Suerly it is still ellegal though? There is a convention within the constitution that public money should not be used for politics. Is a breach actionable? Does anyone know? Incidentally, I FOI'd one of these fake charities and - presumably by using Goggle - they tracked me down and contacted my boss to ask if I 'had a problem' with alcohol'. Truly astounding. Chris, keep up the good work.

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