Licensing Act 2003 (Mandatory Conditions) Order 2014
(Limited Text - Ministerial Extracts only)
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Lord Taylor of Holbeach
That the draft order laid before the House on 9 April be approved.
Relevant documents: 40th Report from the Secondary Legislation Scrutiny Committee, 26th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, the order makes provision for the introduction of a mandatory licensing condition banning the sale of alcohol below the cost of duty plus VAT. Some noble Lords will notice that the substance of this order has been debated previously, as the Licensing Act 2003 (Mandatory Licensing Conditions) Order 2014. After some debate, the order did receive the approval of the House. Unfortunately, the process necessary for formal approval of the order did not take place, so we must give the order our consideration again.
The Policing and Crime Act 2009 amended the Licensing Act 2003 to confer a power on the Secretary of State to specify further mandatory licensing conditions relating to the sale and supply of alcohol. New Sections 19A and 73B of the Licensing Act allow for such conditions where the Home Secretary considers it appropriate for the promotion of licensing objectives. The order will apply to all licensed premises in England and Wales. Scotland and Northern Ireland are subject to different legislation.
The Government are committed to reducing alcohol-related harms. We have taken a decision to ban the sale of alcohol below the permitted price—that is, the cost of duty and VAT. This fulfils a commitment in the coalition agreement. It will ensure that the worst cases of cheap alcohol are banned from sale. The ban will prevent anyone selling alcohol at heavily discounted prices. A can—that is, 440 millilitres—of average-strength lager will now cost no less than 40p, and a standard bottle of 70 centilitres of vodka no less than £8.89. The ban aims to reduce excessive alcohol consumption and its associated impact on alcohol-related crime and health harms.
It is estimated that overall alcohol consumption will fall by 10.5 million units in the first year alone, resulting in 900 fewer crimes and 100 fewer hospital admissions. After 10 years, there will be 500 fewer hospital admissions and 14 lives will be saved each year. It is vital that we reduce alcohol-related harm, which is estimated to cost society £21 billion per year, with £11 billion of this being alcohol-related crime. In nearly half of all violent incidents the victim believed the perpetrator to be under the influence of alcohol. The most common type of anti-social behaviour experienced or witnessed—by one in 10 people—was drink-related. This measure will ensure that we take a step towards a much needed reduction in the £21 billion bill that this country faces as a result of alcohol.
In the previous debate, the noble Baroness, Lady Smith of Basildon, raised concerns regarding the evidence upon which we based the policy. I reiterate that the benefits of this policy have been assessed using the University of Sheffield’s School of Health and Related Research model. This is accepted as the best model available for estimating the benefits of this policy. I hope that the noble Baroness found helpful my correspondence following the debate setting out the modelling in more detail. More detailed information on the modelling used by the University of Sheffield can be found at annexe 3 of the impact assessment, which was published alongside the order.
My noble friend Lord Clement-Jones, who is not in his place this evening, raised during the previous debate a question on minimum unit pricing and its effects in Canada. As I noted then, the context of sale in Canada is quite different from that in England and Wales. I hope that my noble friend found my subsequent response outlining the studies helpful.
The modelling from the University of Sheffield estimates that this policy is worth £3.6 million a year in crime reduction benefits in England alone. This figure was laid before Parliament in the impact assessment and the Explanatory Memorandum. The health benefits have also been considered and again laid before Parliament. The Explanatory Memorandum notes an estimated benefit to the public sector in England alone of £1.15 million per year on average over the first 10 years. The impact assessment estimates the wider health benefits to society, as well as the public sector, to be £5.3 million per year.
While the reduction in average consumption is modest, this policy will impact the most on hazardous and harmful drinkers. We know that there is a direct link between the price of alcohol and the quantity consumed by the heaviest drinkers, who tend to favour the cheapest alcohol. We also know that hazardous and harmful drinkers generate the biggest costs for alcohol-related crime. What this policy seeks to achieve is 900 fewer crimes in the first year alone, with a reduction in hospital admissions from 100 in year 1 to 500 in year 10. Two consultations have been held on the Licensing Act and alcohol strategy, in 2010 and 2012-13. Following the results of the consultations, banning the sale of alcohol below the cost of duty plus VAT was considered to be the most pragmatic way with which to tackle the worst examples of cheap alcohol.
I hope that noble Lords will agree with the Government that the introduction of the ban is an appropriate use of the powers conferred on the Home Secretary by the Licensing Act 2003. Accordingly, I commend the order to the House.
Baroness Smith of Basildon (Lab)
My Lords, I am grateful again to the Minister for his explanation, and I admire his ability to keep going today, as this is the fifth debate in which he has taken part. I do not intend to repeat the comments I made previously when this matter was debated. He will recall—he alluded to this—that I challenged the Government on the robustness of the evidence he provided for the policy and its impact. Indeed, I used the 32nd and 35th reports of the Secondary Legislation Scrutiny Committee. I concurred with its conclusion that the effect of this policy, as outlined in the order, “appears to be negligible”. As I recall from the debate, he said that the level of reduction in alcohol consumption would be 10.5 million units in the first year. When the matter was considered further by the committee, it said that that was equivalent to one large glass of wine a year per individual. That does not have quite the same impact as saying 10.5 million units. There was no robust evidence to show that those who most needed to reduce their alcohol intake would do so under this policy.
The Minister alluded to the letter that he wrote to me following the debate. I admit that I had not expected this order to come before us again. Had it done so with no changes, my comments would be very brief, but there are significant changes and new evidence to which he did not refer today. It might be helpful if I did so. The Secondary Legislation Scrutiny Committee in its 40th report drew attention to those changes. I share the committee’s disappointment that neither the Explanatory Memorandum nor the impact assessment was revised on being re-presented to your Lordships’ House in light of the strong and justified criticisms highlighted in the previous debate. It would have been helpful if those had been taken into account before re-presenting the Explanatory Memorandum and impact assessment to your Lordships’ House.
I will raise two issues on which I seek the Minister’s comments. In terms of new evidence, consideration of the Budget is important in assessing the impact of this policy. As was evident from the previous debate, there would be a marginal impact, which has failed to convince the Secondary Legislation Scrutiny Committee that the costs to industry, which would be significant in implementing the permitted pricing policy, could be justified. The impacts would be low and marginal—one large glass of wine a year. The Wine and Spirit Trade Association claimed that the Budget would save the industry £175 million in additional duty payments. That, in turn, would bring down the permitted price at which alcohol would be sold. If the Minister is relying on a higher permitted price to reduce alcohol consumption, he perhaps ought to talk to the Chancellor, who has ensured that the permitted price will be reduced by the reduction and freezing of duty on alcohol.
Other evidence from the Cardiff University study was presented in the committee’s report. I do not know if the noble Lord has had an opportunity to read it, but it makes interesting reading around the reasons for a significant fall in violent crime. The study was unconvinced that alcohol pricing is the most significant factor. There was a 12% reduction in injuries from violent incidents in 2003 and, for the fifth consecutive year, the NHS has recorded a decrease in injuries from violence. This issue has to be looked at again, given the large implementation costs and the impact on the industry. What added value will this policy change brought forward by the order produce for the NHS and policing if you also take into account the economic and social factors, and the policing initiatives that have led to the fall in violent crime? What additional change will this order bring about?
Finally, the impact assessment suggests that doubling the level of alcohol excise duty will reduce alcohol-related mortality by an average of 35%, traffic-crash deaths by 11%, sexually transmitted diseases by 6%, violence by 2% and crime by 1.4%. Although the impact assessment does not specify the timeframe, it says that that would be the impact. That would be pretty impressive but it is not what this policy seeks to do. It is based only on maintaining the current level of excise duty, but the Chancellor reduced it in the Budget. Can we take it that we should now seek an increase following the reduction in excise duty?
We all want the harms from excess alcohol, to which the noble Lord referred in his comments on domestic violence, reduced. However, I have serious concerns.
Baroness Smith of Basildon
There is a coalition Government and it is pretty hard to be optimistic. It is not about minimum alcohol pricing; that would be a completely different debate. The Government have ruled it in, then ruled it out—it will happen, it will not happen. This is about a different issue altogether. I am questioning whether the measures taken and the wonderful responses and results they are supposed to give really measure up. The Secondary Legislation Scrutiny Committee does not think so, and neither do I.
Lord Taylor of Holbeach
My Lords, I tend to agree with my noble friend Lord Tyler. We have had situations today where the measures are agreed in principle but then the Government’s reasoning is challenged. This is another case in which the Opposition are not quite sure where to be on this issue.
Baroness Smith of Basildon
The Minister is right. It is the Opposition’s job to challenge the Government not just on policy but on implementation. In accusing the Opposition of being negative I remind him that this policy was looked at by a cross-party group of esteemed Members of your Lordships’ House on a Secondary Legislation Scrutiny Committee. If I am negative and pessimistic, so are they.
Lord Taylor of Holbeach
The noble Baroness is quite within her constitutional rights to be critical of the Government. If the Opposition welcome a change, which I am sure they do, it would be rather nice if they said so. After all, this policy will deal with a particular class of drinker that I think the noble Baroness and I agree is a problem. We are talking about hazardous and dangerous drinkers, the very people who are attracted by the offer of cheap alcohol, as existed in the past. This measure is designed particularly with them in mind. We know that savings to the National Health Service alone are £5.3 million and the costs related to crime are £3.6 million. We welcome the general trend of a drop in violence, and alcohol is only one factor in a number of measures being taken to deal with violence—just as price is only one factor to deal with alcohol abuse. It does not invalidate its use.
The noble Baroness asked about the Budget and whether we should have changed the figures in the light of the Budget. I emphasise that it is a targeted measure, as alcohol harms. It will stop the worst instances of deep discounting which result in alcohol being sold cheaply and harmfully. The whole point of the order is to ban the worst cases of cheap alcohol sales, but other actions that help local areas to identify and tackle alcohol-related issues are all part and parcel of the coalition’s commitment to dealing with alcohol abuse. I hope that the noble Baroness will recognise the purpose of bringing forward this order and welcome it. With that in mind I ask that the order be approved.