Minimum Pricing

Minimum pricing is the theory that increasing the price of a commodity will reduce its consumption. It also presumes (in the case of alcohol) that there's a problem to be solved (consumption is increasing,) and that minimum pricing is the answer to that problem (by decreasing consumption.) The real problem here is that alcohol consumption in the UK isn't increasing by anything like that which we are lead to believe - it's actually decreasing.

For example, the UK government has proposed to bring in a minimum price of 40 pence per (UK) unit in an effort to make binge drinking and preloading more expensive and reduce the amount of binge drinking and preloading.

The theory presumes that the commodity being priced in such a way exhibits elasticity and that the particular brands affected are the ones being consumed.

Unfortunately the commodities suggested to be subjected to minimum pricing are fairly in-elastic, in that increasing the price will not affect the demand, and the brands affected are typically far sub-premium that and aren't the ones typically being bought.

Of course, once minimum pricing is enacted, there's the fact that once it is noticed that it's not having 'the desired effect,' (see elasticity above,) there will be calls for the minimum price to increase.

Another thing rarely considered is the inevitable increase in cross-border purchasing of alcohol, and - as pointed out in a reply to the Health Committee on the subject of minimum pricing of alcohol in the UK - 'black-market' transactions:

Specifically, we appreciate that the elasticity of demand varies for different consumers, and that increases in the price of licit goods lead to increased consumption of illicit goods. These two factors have received inadequate attention in the debate over minimum pricing.

All predictions as to how minimum pricing might affect levels of crime, consumption and ill health are necessarily speculative and while the conjectural nature of the evidence is not sufficient reason to discard it, we believe there are sufficient flaws in these projections for them to be treated with great caution.

The reply goes on to mention something else that is rarely mentioned with respect to attempts to control alcohol consumption purely by pricing - home-brewing and home-distilling (of which the former is - currently - legal in the UK, the latter isn't, not that, like a lot of things, stops people from doing it.)

UK Government - Alcohol

As noted above, the UK Government has proposed that there be a 40p minimum price per alcoholic unit. We will ignore, here, the fact that the unit is a completely arbitrary measure of alcohol and not only differs in how much alcohol it represents from country to country, but different countries have different ideas on how much alcohol is the 'recommended daily/weekly intake.'

Asda are currently selling 8x275ml Smirnoff Ice (5%) for £7.50. That's 2.2l x 5 = 11 UK units. Or 68.18p per unit. Tescos are currently selling 3x12X284ml Stella (5%) for £22.00. That's 10.224l x5 = 51.12 units. Or 43.04p per unit.

Proponents for minimum pricing claim that this is intended to target the 'cheaper' brands, and won't affect the more expensive brands (such as Smirnoff Ice or Stella,) but if the cheaper brands are pushed close to the same price point as the premium brands, the premium brands must put their prices up to preserve the 'air of premiumness' they currently enjoy.

The Minimum Price Escalator - Sep 2012

In response to the House of Commons Health Select Committee report of Session 2012-13, the Govenment's reply is out

First they start with (pdf page 5)

The Committee shares concerns about the social impact of binge drinking but we believe it is also important to ensure that the Government’s strategy recognises and responds to the evidence of an increasing health impact of excessive alcohol consumption

Which promulgates the false ideas that

1. there is a problem with binge drinking in the UK - there isn't; consumption of alcohol in the UK has been in decline since 2004/5,
2. the solution to binge drinking is to penalise everyone by increasing the price, instead of penalising the offenders by arresting them, and
3. anything over 2 pints of lager for a bloke in a 'session' is excessive, when the limits were plucked out of thin air.

Anyway, the government's solution to #2 is (pdf pages 7-8):

Given the Government’s decision to introduce a minimum unit price, the debate has been about the level at which it should be set – whether it should be 40, 45 or 50 pence – but the setting of a minimum unit price will not be a one-off event. Once a minimum price is introduced, if it is judged to be successful, the level will need to be monitored and adjusted over time. A mechanism will need to be put in place in order to do this

Scottish Government - Alcohol

The Scottish Government have proposed a 50p minimum price per unit.