Inside Whitehall: A sober look at costs led to the alcohol price U-turn

For every pound that a new regulation cost industry, a pound would have to be saved…

 

Share

“When beer is cheaper than water, it’s just too easy for people to get drunk on cheap alcohol,” he said. “So we are going to introduce a new minimum unit price for alcohol.”

Yet a year later the Prime Minister’s plan was ignominiously dropped for what, at the time, seemed rather unconvincing reasons. At the time Westminster gossip was that minimum alcohol pricing had been killed off by the Tories election strategist Lynton Crosby – who wanted to remove unpopular policy “barnacles” ahead of the general election.

But the real story behind the unexpected abandonment of the policy is rather more complex and interesting.

It revolves around an independent government body – which almost nobody outside Whitehall has heard of. And it has implications for a vast array of important policies.

The story starts with David Cameron’s pledge to lead the first government in recent times to leave office having reduced the burden of regulation on industry.

To do this he promised a new “one-in, one-out rule”, meaning that for every new piece of regulation the Government introduced – another piece would have to be scrapped.

But what was not widely recognised at the time was that this rule did not refer to “pieces” of regulation, it referred to the “cost” of that regulation. Thus for every pound that a new regulation cost industry, a pound would have to be saved from scrapping a regulation.

And that’s where Regulatory Policy Committee (RPC) comes in. Its job is to independently scrutinise every government policy and sign off on its financial impact.

Every year it publishes a scorecard showing how much the Government has or has not saved. Its latest report shows that 105 domestic policies have cost business £128m while, at the same time, 73 policies have reduced regulation by £274m.

In order to meet his pledge Mr Cameron cannot sign off any policy that will significantly increase the cost to business – and on the current scorecard he only has £136m to play with.

In its assessment the RPC warned that a minimum unit price for alcohol could lead to a big cost to industry in reduced sales.

It concluded: “It appears that the Home Office has not taken fully into account the ongoing impact on business resulting from higher prices for alcohol and some loss of sales due to reduced alcohol consumption.”

Thus while there was opposition to the policy within Government, the RPC assessment was a significant factor in the U-turn and the decision to abandon the minimum alcohol pledge. And it’s not just the policy that has been affected by RPC assessments. It was also a factor in the delays to bringing in plain cigarette packaging, plans to cut the fees charged by private pension providers and the roll-out of smart meters to cut electricity consumption.

Now all these are profoundly important policies – which most people would say are in the wider public good. But to a greater or a lesser extent they have been affected by the Government’s red tape challenge and the public are none the wiser.

Most people would agree that cutting the burden of regulation on business is a good thing. But what if that “burden” of regulation can save lives, cut carbon emissions or make people better off in retirement? It is certainly a debate worth having – and a public debate – outside the confines of Whitehall and a regulatory policy committee.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Read Next
Syrian refugee 'Nora' with her two month-old daughter. She was one of the first Syrians to come to the UK when the Government agreed to resettle 100 people from the country  

Open letter to David Cameron on Syrian refugees: 'Several hundred people' isn't good enough

Independent Voices
Amjad Bashir said Ukip had become a 'party of ruthless self-interest'  

Could Ukip turncoat Amjad Bashir be the Churchill of his day?

Matthew Norman
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us