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Wed 11th Mar 2020 - Legal Briefing

First Scotland, now Wales. Is England next for MUP? by Michelle Hazlewood

Minimum unit pricing (MUP) arrived in Wales this month accompanied by a lot of media coverage trumpeting a Home Office statement that there are “no current plans” to introduce it in England.

However, licensed operators this side of the border would do well to keep a close eye on the impact in Wales of a 50p MUP, which brings the principality in line with Scotland, which has had the system since May 2018.

The reasoning behind MUP is well known – making formerly cheap, high-strength drinks significantly more expensive will lead to health benefits as people turn away from products such as white cider.

Indeed, British Medical Journal research reveals there has been a fall in the amount of alcohol bought in Scotland. Probe the figures, however, and they show the decrease is among those people who consumed more in the first place and who have been forced to buy less because they’re from low-income households rather than cutting down by choice. Expect a similar long-term impact in Wales, with those already on tight budgets the most affected. It will take considerably more time, though, to derive meaningful trends. 

What, then, of MUP’s short-term implications for retailers in Wales? Some of the things they will have been getting used to in the early days of MUP are important and mundane at the same time. For example, understanding how to calculate the cost of a drink using the MUP formula and whether their till and EPOS systems are sufficiently sophisticated to do it for them. If not, horror of horrors, they might have to do it themselves. 

Dangers lurk at every turn. A moment’s oversight and promotions and offers could see businesses fall foul of licensing regulations if they price drinks below the MUP threshold, while Trading Standards and weights and measures requirements have to be met by displaying prices appropriately. 

Traps lie in wait for unwary retailers, too. Staff discounts that include alcohol must avoid taking drinks below MUP – interestingly, one leading supermarket chain has removed alcohol from its 20% staff discount scheme – while customer loyalty cards and money-off vouchers shouldn’t reduce drinks to less than MUP.

Then there are promotions where alcohol is part of a package – one major brand’s £15 dinner-for-two offer includes a bottle of wine so it will have to account for the cost in its financial records if it’s to ensure the alcohol is at MUP. Then there’s Tesco’s meal deal, which offers a main and side dish, a pudding and choice of wine, beer or a soft drink for £10 – a really acute illustration because there’s even less money to play with and allocate to the alcohol.

Something that doesn’t appear to be covered in the new regulations in two-for-one offers is whether MUP applies to only the first drink or to the second, free one, as well. This isn’t a problem in Scotland, where two-for-one offers are banned, but operators in Wales will have to seek clarification. Get any of the above wrong and you face fines of up to £1,000.

A veritable minefield, then, and one not made easier to navigate by confusion on day one over the cost of the MUP benchmark product – a bottle of wine. Reports suggested MUP at 50p would mean a typical 750ml bottle with about ten units of alcohol would cost no less than £4.69 but a quick calculation shows 10 units x 50p = £5.00, which hardly inspires confidence. There’s some solace for operators, however, in the fact the Welsh Assembly plans to review MUP in five years.  

Almost two full years on from the introduction of MUP in Scotland, the Scottish Government is scheduled to review the 50p threshold in May and a “sunset clause” means MUP will end on 31 April 2024, with the Scottish Parliament set to vote on whether it will continue beyond that date. Before then – after five years of MUP – Scottish ministers will present a report to the Scottish Parliament evaluating its impact. One of two overarching evaluation questions is whether some people and “businesses” have been more affected (positively or negatively) by MUP than others?

That suggests the legislators aren’t solely focused on health benefits and are ready to consider the effect MUP has had, and is having, on operators. However, figures suggesting MUP has significantly cut alcohol-related deaths in Scotland will surely prove compelling evidence for those who are keen to see it adopted in England.

It’s worth noting, however, that whereas Scotland has five licensing objectives – preventing crime and disorder, securing public safety, preventing public nuisance, protecting children from harm, and protecting and improving public health – Wales and England have the first four but no health objective. It means opponents of MUP appear to have a case for it not continuing beyond 2025 in Wales and not being introduced at all in England.

Until a decision is made, operators in Wales must be vigilant if they’re not to fall foul of MUP, while those in England would do well to monitor developments and take the Home Office line about no current plans to introduce it with a pinch of salt.
Michelle Hazlewood is a partner at leading licensing firm John Gaunt & Partners

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