Examination of Witnesses (Question Numbers
258-279)
DR PETRA
MEIER AND
MS LILA
RABINOVICH
14 MAY 2009
Q258 Chairman: Good morning. Could I
welcome you to what is our third evidence session of our inquiry
into alcohol. I wonder if I could ask you if you could give us
your names and current positions you hold for the record.
Ms Rabinovich:
My name is Lila Rabinovich. I am an analyst at RAND Europe. We
are a public policy research organisation, independent and not-for-profit.
Dr Meier: My name is Dr Petra
Meier. I am a senior lecturer in public health at Sheffield University.
Q259 Chairman: Thank you. I have
got an opening question for both of you. I wonder if you could
summarise the most important findings of your two different reports,
and how can you be so certain that they are robust?
Ms Rabinovich: We conducted a
study for the European Commission. They wanted us to look at the
link between alcohol affordability, consumption and harms across
the whole of the EU. They also wanted us to give them an overview
of alcohol taxation in the region and to discuss whether price
was an adequate policy lever in light of the findings of our research.
Some of the key findings regarding taxation were that the minimum
excise duty rates set by the European Union have not changed since
1992 which means there has been about a 30% reduction in the real
value of the rates. It is not entirely significant in that most
countries across the EU exceed the minimum rate anyway, but some
countries not by a very significant amount. The excise duty rates
within Member States have also experienced somewhat of a decline
across the EU, although this hides some differences within countries
and in the UK in particular it has not been the case that there
has been a significant reduction in excise duty rates. We also
looked at trends in affordability of alcohol. What we found was
that there has been an increase in affordability in all of the
20 countries that we had data for, except Italy. In eight out
of the 20 countries affordability has gone up by more than 50%
since 1996, which is a very significant amount. In the UK it has
gone up by about 70%, which is more than most other western European
countries. We found that most of the change in affordability was
driven by changes in disposable income, so about 84% of the change
in affordability was driven by increases in income and only about
16% driven by changes in the relative price of alcohol.
Q260 Chairman: We may cover some
of these more detailed areas in later questions. Petra, I wonder
if I could ask you the most important findings and how robust
is your report?
Dr Meier: This was a study funded
by the Department of Health to do systematic reviews of the evidence
linking price to consumption, price to harm, consumption to harm
and to look at advertising and consumption. Three separate areas
to do systematic reviews on. Then to model the likely effects
of a range of different policy scenarios going from our general
price increases through to various levels of minimum prices per
unit of alcohol and also various ways of restricting off-trade
promotions, price-based promotions. That was what we set out to
do. The main findings from the systematic reviews are that the
evidence on the link between pricing and consumption and pricing
and harm is generally very strong, very consistent and has been
contributed to over the last 40 years. The link between advertising
and consumption is somewhat less well developed and there is indicative
evidence, as we like to call it. That is if the evidence points
in a certain direction but is not entirely conclusive. We have
got very good evidence on the link between alcohol consumption
and harm at various levels of consumption. Those are the systematic
review findings. In terms of the modelling, there were two parts.
First, because some of the policy options we looked at target
part of the alcohol market, for example minimum pricing targets
very clearly the cheaper end of the market and much more the off-trade
than the on-trade, so more the supermarkets and off-licences compared
to pubs, clubs and restaurants, it was important to first get
a feeling for who consumes what kind of alcohol and what are the
drinking preferences. The main findings there were that what we
call the harmful drinkers, so probably the top 10% of the drinking
population who drink most of the alcohol, have got a very clear
preference for cheaper alcohol, on average they pay about 70p
per unit, whereas moderate drinkers, the people who drink less
than the Government's recommended limit, would pay about £1
per unit on average. That hides a variation between the off-trade
and the on-trade. In the off-trade the units are much, much cheaper.
The average is about 42p per unit in the off-trade and £1.12
in the on-trade, so quite a significant difference there. In both
settings harmful drinkers drink more cheaply and pay less per
unit of alcohol than moderate drinkers. There is obviously a vast
difference in terms of how much is consumed. Harmful drinkers
on average consume 3,600 units a year and moderate drinkers 240
units a year. That is the difference we are talking about if we
look at the different ones.
Q261 Sandra Gidley: Sorry, can you
say those figures again?
Dr Meier: 3,600 units a year for
the harmful drinkers and 240 for an average moderate drinker.
Those kinds of differences are important when we look at the policy
effects because, of course, if you change unit price in particular
harmful drinkers will be affected more by these policy changes
just by virtue of them drinking so many more units. Any change
that you make on the average unit price in the off-trade will
affect harmful drinkers more because they drink more and also
pay less on average per unit so any increase in price would be
more pronounced. Generally all policies that lead to price increases
are effective at reducing harms in health, employment and in terms
of crime levels. General price increases, those that target the
whole market, tend to be somewhat more effective at reducing harms
across the board. Where minimum prices are particularly effective
is at targeting cheap alcohol and therefore having a proportionately
larger effect on people who drink more, so the difference between
overall harms and the targeting of the different policies. I know
there has been a lot of discussion about different levels of minimum
pricing, but to give you an idea of how different minimum prices
work on consumption and that feeds through—
Q262 Chairman: We will be asking
questions on that. I think what you are both saying is there is
a responsiveness of demand to changes in the price of alcohol
and you both agree with that as a general principle.
Ms Rabinovich: Yes, although it
is worth noting that in the case of our research we looked at
the responsiveness of consumption with regards to changes in affordability
which is a composite measure of price and income. We did not look
specifically at price.
Q263 Dr Stoate: I want to tease out
a few more details about minimum pricing because obviously that
is an important and very topical issue at the moment. I would
like to know what you think would be the effects, for example,
of a 50 pence minimum price for a unit compared perhaps to a 40
pence minimum. What do you think would be the relative effect
firstly on heavy drinkers and then on moderate drinkers?
Dr Meier: The effectiveness of
minimum unit prices goes up quite steeply, so whilst a 20p minimum
unit price does not have much of an effect at all on death rates,
hospital admissions and so on, you see increases at 30, 40 or
50p. For example, in terms of deaths, 30p would be 300 deaths
a year, 40p would be 1,400 deaths a year and 50p would be 3,400.
It is a steep increase in effectiveness.
Q264 Dr Stoate: You are saying quite
categorically that if the minimum price was 50p per unit, which
would make a bottle of wine £4.50, you are talking about
3,000 deaths a year saved?
Dr Meier: Yes.
Q265 Dr Stoate: How robust is that
data? Where is your scientific evidence?
Dr Meier: The scientific evidence
comes from a variety of sources. We have used pricing data from
the Expenditure and Food Survey and cross-validated that with
data from ACNielsen. We have got consumption data from the General
Household Survey and general purchasing levels from the Expenditure
and Food Survey. We used the UK and international literature for
the relationship between consumption and harm. In terms of death
rates there are good studies, meta-analyses, on how changes in
consumption relate to changes in mortality rates. Liverpool John
Moores University has published a report on alcohol attributable
fractions that tells us something about what proportion of morbidity
in 48 different conditions is associated with alcohol. If you
have got cancer rates, for example, it would tell you what proportion
of certain cancers is attributable to alcohol. We have used those
to estimate what consumption change would relate to in terms of
harm outcomes. For the link between price and consumption we have
used econometric modelling using the Expenditure and Food Survey
data.
Q266 Dr Stoate: You really are categorically
saying that if alcohol were 50 pence a unit we would save as many
deaths as those on the road every year?
Dr Meier: In the same region,
yes. There is a confidence interval around them and certain assumptions
are related to some uncertainties in the model but, yes, broadly
speaking that is the case.
Q267 Dr Stoate: That is an incredible
figure, it really is. One of the things we hear against the idea
of more pricing is that it would disproportionately punish moderate
and sensible drinkers who would find their prices going up when
they have not got a problem. Do you think that is an issue or
is this such an important figure that it outweighs those sorts
of considerations?
Dr Meier: The effect on spending
is also entirely disproportionate. For example, a moderate drinker
would only be expected to pay an extra £12 a year whereas
a harmful drinker, because they buy so many units, and cheaper
units at that, would be expected to pay an extra £160 a year.
For the moderate drinker that is a pound a month. It is not up
to us to weigh that. It is up to policymakers to weigh up whether
that is a significant change in moderate drinkers' spending or
a disproportionate response. Just to put that into context, of
course moderate drinkers are not affected by it very much because
they drink more expensive alcohol, more of the alcohol in the
on-trade, which is not affected, and harmful drinkers are using
the kind of alcohol that is targeted by the policy.
Q268 Dr Stoate: Your view is that
the moderate drinkers would be marginally affected but heavy drinkers
would be hugely benefited?
Dr Meier: Both would be benefited.
About 20% of the deaths saved are in the moderate drinkers' group
which could be explained, for example, by road deaths, pedestrian
deaths that would be avoided if people are not drinking. About
20% of the benefits come from the moderate drinkers although,
of course, the harms are mainly concentrated in the harmful drinkers.
Q269 Mr Scott: How do you think that
minimum pricing would take effect on off-trade sales as compared
to on-trade? That is a question for both of you.
Dr Meier: It depends at the level
that you set the minimum price.
Q270 Mr Scott: Let us say 50p.
Dr Meier: Roughly 70% of the off-trade
sector would be affected to different degrees. The value lagers
and so on would be affected more than your bottle of Jacob's Creek,
which is already above that. Generally the off-trade sector would
be much more affected. The average unit price in the on-trade
sector is already £1.12 or something in that region. It would
only affect that part of the on-trade sector that really sells
very cheaply, which has got very extensive happy hours or free
drinks for certain groups, otherwise I do not think they would
be particularly affected by this.
Ms Rabinovich: I defer to Petra's
view. In our research we did not do any modelling on the possible
effect of the particular policies so I cannot comment except from
what I have read in Petra's report.
Q271 Dr Taylor: Can we look at some
other countries, and I think this is particularly to Lila. How
do you respond to what Tesco's have told us in their written submission:
"It is too simplistic to apportion responsibility for problem
drinking to the price of alcohol alone. If low-cost alcohol were
the only factor then countries such as France and Spain, where
prices are much lower than in the UK, would have similar problems,
and countries like Finland, where alcohol is expensive and its
availability restricted, would not". How do you counter that?
Ms Rabinovich: There are many
aspects to that question. First of all, at no point in our research
do we say that price is the only factor influencing consumption.
In fact, it is very clear that it is not and we know that cultural
and socioeconomic changes also have an important effect, for example
urbanisation, changes in tastes, competition from non-alcoholic
drinks, all of them seem to have an effect on consumption as well.
Having said that, the other issue is we do not compare the way
in which individual countries respond to price. We do not compare
how Finnish people respond to price versus UK people. What we
look at is relative to what the situation was in 1996 in the EU
as a whole, which is the first year for which we have data, how
has affordability changed and how have people across all the countries
responded to that change. What happened in Finland, for example,
which traditionally had much higher prices than most other European
countries, was that affordability went up by a very significant
amount because prices went down when taxation went down in 2004,
but it was a trend that had begun earlier. Consumption went up
and harms went up as well. France and Spain are completely different
countries and affordability did go up in those countries but the
changes in harms and consumption do not match the changes that
were experienced in Finland. It is not about comparing one country
with another, it is about looking at what happened relative to
an earlier situation within each country.
Q272 Dr Taylor: You accept that there
are many other factors as well as price?
Ms Rabinovich: Absolutely, yes.
If that was not the case then Finland, which has a high price,
would not have a problem, an increase in taxation and price would
get rid of all alcohol consumption or alcohol harms, but that
is never the case. Pricing policy can only be one of many alcohol
policies.
Q273 Dr Taylor: In your experience
is the culture in Finland, for example, the culture of going out
to get drunk rather than just going out to have a drink?
Ms Rabinovich: I cannot say other
than from what we have seen in the literature and the evidence
appears to be that there has been an increase in binge drinking
and going out to drink to intoxication in Finland. Further than
that I cannot really comment, I have not been to Finland.
Q274 Dr Naysmith: The studies that
you have carried out are different and looking at different things
but in the same sort of area. Both studies suggest that minimum
pricing would result in cost savings for the National Health Service
and the criminal justice system in particular. What is the evidence
for saying that? How would these cost savings be broken down?
Dr Meier: How did we arrive at
the cost savings? We got unit costs for healthcare and we used
Home Office figures to estimate the costs associated with each
type of crime and breaking those down by violent crime and burglaries,
so the crimes that are attributable to alcohol. It is probably
fair to say that our evidence base on health is much wider. There
are literally thousands of studies on health so the findings are
likely to be much more robust. In crime there are studies but
much fewer of them to tell you exactly how crime would respond
to consumption changes and price changes in particular. We have
been using the most recent evidence on that association and the
model of that through consumption changes. Our model always looks
at price changes, consumption changes and then how would consumption
changes be likely to affect crimes. In terms of crimes we have
used acute drinking rather than chronic drinking as the driver
of crimes, your binge drinking if you will, so the maximum drinking
that someone does in a day, whereas most health harms are associated
with how much people drink on average.
Ms Rabinovich: Without doing any
actual modelling I cannot comment on how you arrive from minimum
prices to savings in health.
Q275 Dr Naysmith: Okay. A number
of other people have asked how robust these studies are and you
have answered that, which I assume is because you are very confident.
Have your studies been attacked by anybody who thinks the findings
are not as valid as you think they are?
Dr Meier: We know that there is
a report that has been commissioned from CEBR to attack our study.
We have been trying to get hold of it for a while now and have
not been able to see it. I have to say our report has been through
lots of peer review by various experts, including economists.
There has been a counter-study commissioned by ASDA on pricing
which was not particularly scientifically robust, so I am waiting
with bated breath to see whether the CEBR study is any better
than that.
Q276 Dr Naysmith: How do you know
about this CEBR study?
Dr Meier: How do we know about
it, because it has been hinted at in the press that there is some
kind of counter-study where—
Q277 Dr Naysmith: What does CEBR
stand for?
Dr Meier: Good question! The Centre
of something or other Research.
Ms Rabinovich: Economics and Business
Research.
Q278 Chairman: That is something
we can probably get a hold of.
Dr Meier: Generally the argument
seems to centre around whether or not moderate drinkers are more
or less price sensitive compared to harmful drinkers. There have
been a number of studies that seem to suggest that harmful drinkers
are somewhat less price sensitive in the region of where if you
had a 10% price increase harmful drinkers would decrease their
drinking by about 3% whereas the total population would maybe
reduce their drinking by about 5%. Our study approaches this slightly
differently. We break down responses to different price categories
to different beverage types and to off-trade or on-trade price
changes, so we cannot really compare our results neatly with those
very high level aggregate econometric measures. We have done this
breakdown because the pricing policies under discussion do affect
only part of the market so it is really important to know how
people respond to the price changes in those parts of the market
rather than overall alcohol over the whole population.
Q279 Dr Naysmith: Thank you. Have
you had any attacks on the robustness of your findings?
Ms Rabinovich: Yes. Unlike our
colleagues from Sheffield we did receive reports commenting on
or criticising our study. In particular with the econometric analysis
the criticisms were so vague that it was very hard to understand
exactly what they were getting at, except they were saying that
we did not use the appropriate econometric methods to conduct
our analysis and if we had used more suitable means then we would
have arrived at more robust results. There was no specification
about what more suitable means would be. Like our colleagues in
Sheffield we also had our report peer reviewed, including by econometricians.
We are confident in our analysis.
| 
