12 November 2008

MPs and Police Join Forces to Miss the Point on Alcohol

The Home Affairs Select Committee has suggested that the availability of cheaper alcohol should be restricted by banning happy hours and setting minimum prices. The proposals have been given enthusiastic support by Peter Fahy, the Chief Constable of Greater Manchester.

Chairman of the Committee, Keith Vaz said:

“We cannot have on one hand a world of alcohol promotions for profit that fuels surges of crime and disorder, and on the other the police diverting all their resources to cope with it.”

Peter Fahy lent his backing by saying:

"The suggestions by the select committee would make a big difference to the burden on the police and allow us to concentrate on other things like drugs, burglary and robbery. It would also make people believe their streets are safer."

and

"If we didn't have these problems in our country, we would be able to concentrate a lot more of our resources into crime and other issues."

Note the use of the word “believe” in the first quote. He’s at least being honest enough not to claim that the proposals would actually make the streets safer, he’s just claiming that they would change some people’s perception.

The comments by Vaz and Fahy completely miss the point that people who consume alcohol pay for the heavy burden on police they supposedly create. Alcohol carries a high level of duty because of the externalities, such as healthcare and policing, which are created by its consumption. I’d prefer it if the duty were lower and the people who cause trouble while drunk, or suffer health problems because of their drinking, were made to pay directly for the costs they create, but alcohol duty is a reasonable way of pricing the externalities.

People like Vaz and Fahy seem to want it both ways. They call for high levels of duty because of the cost of policing drinkers, but once they get the revenue, they object to spending it on policing drinkers. If the current duty is not covering the necessary level of policing, I wouldn’t object to it being increased, but that would require some analysis of the cost of policing drinkers versus the revenue from alcohol duty, which is something I’ve yet to see.

What is really unusual about the Committee’s suggestion is that it would increase the price, but without any of it going into the public purse to fund the policing which is claimed to be over burdened due to alcohol consumption. This price fixing approach is an attack on market forces as much as it is an attack on drunkenness. They seem to be objecting to the fact that supermarkets are able to out-compete local pubs as much as anything. Now, if there were evidence of predatory pricing, I’d be happy for action to be taken against the supermarkets, but in this case, I don’t see it. The idea that supermarkets could drive all pubs out of business doesn’t really make sense; if there are fewer pubs, drinkers will gravitate to the ones that remain, making them more secure and less susceptible to predation.

I get the feeling that the smoking ban is playing a part here. I imagine the committee would ordinarily suggest an increase in alcohol duty, but at a time when many pubs are struggling, with the ban being pointed to as part of the reason, it would probably create an outcry. By going down the price-fixing route, it would enable the government to reduce the availability of cheaper alcohol, while giving pubs a helping hand against the competition.

1 comment:

Mark Wadsworth said...

Paul, that is pretty much spot on.