Select Committee on Home Affairs Minutes of Evidence

Examination of Witnesses (Questions 420 - 439)



  Q420  Chairman: Happy hours?

  Mr Hayward: We have taken very strong action in the on trade against those sorts of things, and ministers have welcomed it. The difficulty is that in doing so we are relatively close to consumption law. All things are becoming cheaper because our standard of living is rising, but the margin between ourselves and the off trade rises every time a duty increase is imposed because we have all the other costs associated with it.

  Q421  Chairman: Mr Chester, referring to Mr Salter's question, is it cheaper to buy 12 bottles of lager than 12 bottles of water?

  Mr Chester: I can tell you that Asda's Smart Price water is cheaper than Asda's Smart Price lager, if that answers your question.

  Q422  Chairman: But not Evian?

  Mr Chester: Asda's water is absolutely cheaper than Asda's lager.

  Q423  Chairman: Obviously, Mr Salter has gone to the wrong store. Mr Brown, is Mr Salter correct? Is it cheaper to buy beer than water at Tesco?

  Mr Brown: No, it is not. But the point I would like to make is that where there have been concerns about the consumption of very strong alcohol—I can quote Westminster and other inner London boroughs—we have withdrawn the product from our stores as a way of working with the police and local concerns. We see that as a key example of working together to resolve local difficulties and problem that relate directly to policing and public safety.

  Q424  Martin Salter: Focusing on policing, the evidence we have received is that based on figures over the past 12 months those who pre-load by buying alcohol cheaper from the off trade are two and a half times more likely to be involved in a fight and that is a direct contributory factor in violence on our streets. Mr Hayward, when I bowl you a full toss it would be good if you hit it for six. You just said you would love it if there was a change in the burden of taxation. Perhaps I may invite you gently to go through with us the way that an increase in beer duty in particular impacts on the price of a pint. Obviously, one is talking about VAT and the need for a licensee to increase his or her margins. You might also like to explain to us from your trade's point of view the difference between those who consume alcohol in a controlled and managed environment and, as is so often the case in my constituency, kids who load up on alcohol and drink in public parks and other unmanaged environments.

  Mr Hayward: In relation to "controlled environment", I assume it is a well managed venue. I would share the comments already made that we must get rid of bad venues whatever they may happen to be, whether they are on or off trade. I would welcome it. As far as concern costs, clearly in supermarkets one operates in terms of a multiplier if one provides a service. In a supermarket one provides a product with relatively limited service, ie it is there in a corner shop, whereas in the case of a hotel, restaurant, pub or night club one is not only providing the alcohol but the venue, entertainment, lighting, chilling and all the other factors and one must operate to a margin. At the moment everybody faces increases, whether it is the food industry, our own industry, utilities, rates and the like. The margin between the on and off trade has never been greater. We are in discussion with the Treasury in an effort to find ways to ameliorate the impact on the pubs and bars so we do not lose what is a great British institution which attracts many tourists. One of the things they identify as a reason for coming to this country is to experience British pubs. If there were a way of differentiating between alcohol from the on and off trade we would welcome it. If you would like to make those representations to the Treasury on behalf of all your colleagues I would be only too pleased.

  Mr Brown: Any issue to do with taxation is a matter for government. We will work within those guidelines and directions from government.

  Mr Chester: The overwhelming majority of people who consume alcohol do so responsibly. If you make their weekly shop more expensive that is not something that intrinsically Asda would support.

  Mr Lowman: We have rising costs; we have to pay wages, utility bills and so on, so there is cost pressure on us as well. We are in a different market. The job of Mr Hayward's members is to create an environment in which people want to spend time to eat and so forth; our job is to sell products. The price of water has already been mentioned. If one compares prices in off trade and on trade premises it costs substantially more in a pub because it is a different market, and so it should be.

  Chairman: Before I bring in Mr Davies, I remind those attending this session that this Committee has received statistics which show that 46% of crime in the UK is alcohol-related.

  Q425  David Davies: Are you not being a bit polite to a number of Members of the Committee? Is it not the case that it is nothing to do with price? If we increased the price of alcohol in pubs and supermarkets people would simply start to brew their own as they did years ago, buy take-out wine or illegal supplies from abroad, smoke dope or do any one of a number of other things? The reality is that whether it is £10 or £30 for Stella there are some who will drink too much of it and cause a problem and money is not the issue here? I do not see why the rest of us should be penalised for the actions of a minority. Tell us bluntly what you think of that.

  Mr Chester: I echo that point. I add that we already have the second highest duty rates on alcohol in Europe as far as I am aware. Obviously, other countries have that perception and do not have the problems that the UK has.

  Mr Lowman: I think that is absolutely right. Price is a very blunt instrument and we have to be very careful before we believe that changing price will affect the various forms of alcohol harm that have been discussed. A number of other issues have been discussed. Bootlegging has been discussed. Look at other markets round the world where alcohol is a lot cheaper but they do not have the same problems but have different problems. You also have to look at individual responsibility. The individual who is committing violence is the person responsible for doing that late at night. To me it all points to a much broader cultural problem which is best tackled through genuine partnership working.

  Mr Hayward: I would echo what my colleagues have said in relation to price. It is a fair question. Significantly, earlier you took evidence from Sir Simon Milton. Within his council alcohol is probably the most expensive in Britain and yet he has a problem which we all have to work together to resolve. It is not price driven specifically; there are other factors to which one must give consideration. As Mr Davies says, there is a large number of people in this country who consume alcohol sensibly. We have yet to find a way to tackle the problem cases without it impacting on the rest of society. It is a balance.

  Mr Brown: I agree that this is a cultural issue that has grown up in the past few years. The whole question of individual responsibility is affected by a new culture. As a subject area it is plagued by anecdote as opposed to evidence to identify the actual causes of the problem. It is very easy for people to suggest that a simplistic approach will resolve the difficulties. We are confronted with a far more complex paradigm.

  Q426  Tom Brake: I follow up Mr Brown's reference to "a simplistic approach". Would Mr Chester support perhaps the withdrawal of XXXX, Tennants Super or whatever it is from areas where there is a known problem of heavy drinking or antisocial behaviour? Do his stores do that? Would Mr Lowman expect his members to take similar action?

  Mr Chester: One of the real benefits of the Licensing Act 2003 has been the better links among local stores, police officers and trading standards officers so that the conditions for the sale of alcohol that apply to stores are more locally relevant and appropriate, so I would support that. Perhaps you would repeat the second part of the question.

  Q427  Tom Brake: The second part is really for Mr Lowman. Your stores will take the same action as Mr Brown's. If there is a known problem of heavy drinkers in an area you will withdraw the stronger stuff from the store?

  Mr Chester: Yes, but I have to flag up the issue of competition with the Westminster approach. If you are a brewer of strong lager you will not be too happy if all of the retailers get together voluntarily to take those products off the shelf. One must be very careful about how one does it and so it takes one back to the question of legislation and conditions.

  Q428  Tom Brake: Mr Brown's stores seem to have managed to do that without the competition implications.

  Mr Chester: I can only assume that they can get round it because they have a local conditions on their licence, but I stress that there is an issue of competition in getting together voluntarily so as not to sell certain products.

  Mr Lowman: The Licensing Act 2003 allows that flexibility which is an important point. If conditions are placed on a licence of course we comply with them. We have to be very clear about cause and effect. Is it those particular products that cause problems in an area? That needs to be very clearly understood and the factual basis established. In addition definition is important. There are some strong lagers and ciders which can be characterised in that way. There are also some specialist Belgian lagers which are very strong. How does one catch some products and not others? Definition is difficult.

  Q429  Tom Brake: Heavy drinkers tend to drink XXXX and not the specialist Belgian beers.

  Mr Lowman: Yes, but how does one deal with that in legislation locally? Does one have a percentage level? It is very difficult to think how one could do that in a way that did not catch all those products.

  Mr Hayward: In relation to promotions policy in which one or two Members were interested, I shall submit that to your clerk afterwards.

  Q430  Chairman: Thank you. Mr Brown, do you have anything to add in response to what Mr Brake asked?

  Mr Brown: The key issue for us is to work with the various authorities to address local problems. Our stores are located in local communities.

  Q431  Ms Buck: I am a little confused by the position you take on price. A moment ago you all rallied together effectively warn the government off raising prices and yet a little earlier Mr Hayward in particular argued very strongly that the price differential between on and off-sales had changed the pattern of drinking and people were drinking at home. Price cannot be a factor in one case and not the other.

  Mr Hayward: I did not say there was no influence. Clearly, if you push a product down to a certain price that will influence consumption. What we all say, I think, is that the impact on the market is contestable. The government has a study going on at the moment. The Treasury made an analysis as to whether one could pass through duty and it discovered one could not. There are various influences. I was saying that the margin between on and off trade had now grown to such an extent that it was changing drinking habits quite markedly.

  Q432  Ms Buck: We can go into the nuances, but does price matter or not?

  Mr Hayward: By definition it matters. If you sold it at zero or 1p it is more available; if you push it up there is by definition an influence.

  Q433  Mrs Dean: Obviously, representing as I do the capital of brewing the price and sales of beer are very important to those who work in the industry in my constituency. We are not talking simply about beer. One can buy strong lager for 20p a unit in supermarkets. One is not talking here about baked beans. How do you respond to the claim that selling alcohol as a loss leader is irresponsible, and do you or your members pursue that policy?

  Mr Chester: Price will always be a very competitive issue. I refer back to my earlier point that the overwhelming majority of people who buy and drink alcohol do so responsibly.

  Q434  Chairman: But is it being sold as a loss leader? That is what Mrs Dean wants to know.

  Mr Chester: Certainly, at times we will sell alcohol below cost, and I think the Competition Commission evidence shows that that has been the case. When items are on promotion for short periods that is possible.

  Q435  Mrs Dean: Is it irresponsible to do that because one is not talking about baked beans?

  Mr Chester: I agree that alcohol is a different product which is why we deal with it far more responsibly. We put more due diligence into making sure that we never sell alcohol to kids than into any other area. It is different product but we probably do far more to make sure we control how we sell alcohol than in relation to any other item.

  Q436  Chairman: Perhaps we can have a response from each witness. Mr Lowman?

  Mr Lowman: I cannot speak for every single member or store, but it is highly unlikely they will sell alcohol as a loss leader primarily because the basic economics of the business would make it very difficult to sustain that activity.

  Q437  Chairman: Mr Hayward?

  Mr Hayward: I share Mr Lowman's view. I think the chances of our selling it below cost are virtually zero.

  Q438  Chairman: Mr Brown?

  Mr Brown: In a fiercely competitive market we compete with the pricing strategies of other retailers. I think I have already mentioned that.

  Q439  Chairman: We want a yes or no.

  Mr Brown: We have no policy, but in response to competition we will sell below the market price.

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