On 25 May 2012, the Scottish Parliament finally passed a Bill to introduce minimum pricing of alcohol in Scotland.  Royal Assent has to be given and may have to wait until after we have all recovered from the recent Jubilee festivities (during which, no doubt, considerable quantities of alcohol were purchased and consumed).

This is not the first time that the Scottish Government has tried to legislate for a minimum price per unit of alcohol.  A previous attempt - in the Alcohol etc (Scotland) Act 2010 - was defeated in the final stages of the parliamentary process.  But dogged determination and a parliamentary majority have produced success this time around.

Calculating the impact

The Bill makes provision concerning the price at which alcohol can be sold from licensed premises, by setting out a formula for determining a minimum price per unit of alcohol, which will vary depending on the alcoholic strength and volume.

To calculate the minimum price at which any type of alcohol may be sold, multiply the minimum price per unit (MPU) by the strength of the alcohol - e.g. 10% ABV (S) and the volume in litres (V), then multiply the whole lot by 100.  Nicola Sturgeon announced in the middle of May that the MPU will initially be 50 pence, and is likely to remain at that level for at least two years from commencement of the application of these provisions (currently expected to be April 2013).  

So, a nice bottle of merlot (average strength around 12% ABV) must cost not less than £4.50 and a small (440 ml) can of beer (4% strength) would be 88 pence.

A proposal to introduce a “claw back” provision to recover the perceived profit to retailers, particularly supermarkets, arising from the minimum pricing policy, was rejected in the final stages of the Bill.  On one view such provisions would in any event be unnecessary, as the provisions for a proposed Social Responsibility Levy that are already enshrined in the Alcohol etc. (Scotland) Act 2010 would have a similar effect.  The Levy can be introduced “should (the Government) consider at any point in future that that is a necessary step to take. “   

Will it work?

Minimum pricing has its supporters and its detractors, and passions run high in both camps.  At the insistence of some members of the Health and Sport Committee of the Scottish Parliament, a "sunset" provision was incorporated into the Bill.  The effect of this will be to terminate the minimum price arrangements after a six year period, unless, after a period of five years from the commencement of the arrangements, Scottish Ministers determine by order that they are to continue.  

Either way, the Scottish Ministers must produce a report after five years, after suitable consultation, which evaluates the operation and effect of minimum pricing, focussing particularly on the impact the provisions have had on the licensing objectives of the Licensing (Scotland) Act 2005, (i.e. preventing crime and disorder; securing public safety; preventing public nuisance; protecting and improving public health, and protecting children from harm), and the impact it has had on different categories of people, whether that be according to gender, age, social and economic status or other characteristics.

The UK Government will be watching closely as they have once again proposed minimum pricing as part of their new alcohol strategy (published in March 2012), having previously steered away from the proposal on the basis that it would not be compatible with EU competition law.  In contrast, they are suggesting a 40 pence unit price.

To view the Alcohol (minimum Pricing) (Scotland) Bill as passed click here.