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July 25, 2022

Minimum Unit Pricing in Scotland: Why the targeted policy has had a minimal impact on the consumption of the targeted group.

In the UK, alcohol-related societal problems have grown significantly over the last several decades. Alcohol deaths in the UK are now more than twice as high as they were in the 1980s. Specifically in Scotland, in 2017 the alcohol-specific death rate per 100,000 people was 20.5, while in England it was 11.1; an 85% difference.1 From self-reported data, the heaviest 10% of drinkers accounted for 49% of all consumption in 2017/18.2

As a result, on 1 May 2018, Scotland implemented Minimum Unit Pricing. Minimum unit pricing (MUP) sets a value at which a unit of alcohol, irrespective of the product it is sold in, cannot legally be sold below. In Scotland, the MUP was set at £0.50 per unit.

MUP is intended to reduce the alcohol-related illnesses and burdens in society through limiting access to cheap, high-strength drinks, which are disproportionately consumed by heavier drinkers.

However, last month a report conducted on behalf of Public Health Scotland found the following: ‘The introduction of a £0.50 MUP in Scotland led to a marked increase in the prices paid for alcohol by people with alcohol dependence. There is no clear evidence that this led to reduced alcohol consumption or changes in the severity of alcohol dependence among people drinking at harmful levels.’3

Data is still emerging and some of the planned analysis of health impacts has been hampered by the Covid-19 pandemic. However the minimal impact on consumption amongst harmful drinkers is in sharp contrast to many optimistic pre-implementation forecasts of MUP’s effectiveness.

This was led most notably by the University of Sheffield’s Alcohol Research Group, whose modelling originally for the Department for Health, has been influential in the ultimate implementation of an MUP. So why does the evidence suggest it has not yet gone to plan?

Almost everyone who is involved in alcohol policy agrees with the first three of the following four statements:

1)     Negative economic externalities are disproportionately associated with heavy drinkers.

2)     When designing alcohol market interventions, the goal should be reducing the consumption of the heaviest drinkers.

3)     Heavy drinkers tend to be those most dependent on alcohol.

4)     Those who are most dependent on alcohol, tend to change their consumption the least when faced with a higher price.

Over many years, Cebr has argued that as heavy drinkers are more dependent on alcohol, they will be less likely to reduce their consumption, following increases to prices. In other words, they are more price inelastic than moderate consumers of alcohol.4 However, this has not always been accepted by other researchers.

In 2018, in a submission to the Health, Social Care and Sport Committee of the National Assembly for Wales, the University of Sheffield’s Alcohol Research Group stated the following: ‘Cebr argue that the elasticities (i.e. the relationship between price increases and consumption changes) used in our model should be smaller for hazardous and harmful drinkers than moderate drinkers.  This is contrary to our analysis of the price responsiveness of UK consumers.’5

However, the trend of heavy drinkers being less responsive to price changes is well supported. This includes analysis by the European Journal of Health Economics specifically looking at the UK market6 and by Agricultural and Food Economics in Switzerland.7 Similarly over the last two years, we have conducted extensive work in the South African alcohol market, where our modelling shows that the same trend causes similar policy challenges.

It is not just for consumption levels amongst harmful drinkers, that some of the promised benefits have not been observed. In analysis conducted by Cebr for Molson Coors in 2018, we argued that a disproportionate burden of the policy would fall upon the poorest in society and that the policy would have significant regressive impacts, which the Sheffield study understated. This is particularly pertinent, given the current cost of living crisis.

However this also was not always accepted. Citing a paper produced by the Institute for Alcohol Studies, in May 2020 a ‘Mythbuster’ article produced by Alcohol Focus Scotland, busted the myth that ‘Dependent drinkers can’t cut down so they – and their children – will go without food.’ This referenced research stating that ‘heavy drinkers would reduce their drinking by 7% per year on average as a result of MUP, bringing significant health benefits’.8

Meanwhile the University of Sheffield’s Alcohol Research Group claimed that ‘for the heaviest drinkers in the most deprived groups, we estimate that their spending on alcohol would decrease as a result of the reduction in the amount of alcohol they buy’.9

This again has not been borne out. The same harmful drinking review published last month, found that ‘People drinking at harmful levels who struggled to afford the higher prices arising from MUP coped by using, and often intensifying, strategies they were familiar with from previous periods when alcohol was unaffordable for them. These strategies typically included obtaining extra money, while reducing alcohol consumption was a last resort…MUP led to increased financial strain for a substantial minority of those with alcohol dependence as they obtained extra money via methods including reduced spending on food and utility bills, increased borrowing from family, friends or pawnbrokers, running down savings or other capital, and using foodbanks or other forms of charity’.3

These are just a few examples, but a quick online search of forecasts for the impact of MUP and reports on the policy post-implementation, can easily unearth many similarly embarrassing contradictions.

So should it have been obvious that MUP would not lead to a decline in consumption amongst those drinking at harmful levels?

It is true, that MUP is a targeted policy, in terms of disproportionately impacting the consumption of products consumed by heavy drinkers. However the evidence is starting to suggest, as Cebr has consistently argued, that this simply isn’t enough to overcome the broader poor efficacy of price-based interventions, when targeting a subset of the population who just aren’t very responsive to price changes. Underplaying this dynamic, is the most likely cause for the discrepancy between pre-policy forecasts and post-policy impacts.

1 ONS. (2019). ‘Alcohol-specific deaths in the UK: registered in 2018’.

2 Public Health Scotland. (2020). ‘Monitoring Report 2020’.

3 https://www.publichealthscotland.scot/media/13486/evaluating-the-impact-of-minimum-unit-pricing-in-scotland-on-people-who-are-drinking-at-harmful-levels-report.pdf

4 In economics, the responsiveness of demand to price changes is measured by the elasticity of demand. It is reflected in a ratio that measures the percentage reduction in demand for a product in response to a 1% increase in its price. If an individual, or group of individuals is not very responsive to a price change (specifically a 1% increase in price leads to a less than 1% fall in consumption levels), then they are referred to as price inelastic.

5 https://busnes.senedd.cymru/documents/s75560/Gohebiaeth%20a%20gafwyd%20ar%20l%20ir%20ymgynghoriad%20ddod%20i%20ben%20-%20Prifysgol%20Sheffield%20Saesneg%20yn%20unig.html?CT=2

6 https://link.springer.com/article/10.1007/s10198-018-1009-8

7 https://link.springer.com/article/10.1186/s40100-014-0015-0

8 https://www.alcohol-focus-scotland.org.uk/media/440013/mup-two-years-on-mythbuster-may-2020.pdf

9 https://www.sheffield.ac.uk/research/features/minimum-unit-pricing

For more information please contact: Owen Good, Head of Economic Advisory Email ogood@cebr.com Phone 07367 065075

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