Examination of Witnesses (Questions 420
- 439)
TUESDAY 3 JUNE 2008
MR ROB
CHESTER, MR
JAMES LOWMAN,
MR ROB
HAYWARD OBE AND
MR ALAN
BROWN
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Westminster and other inner London boroughs—we have withdrawn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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