General election special: what it will mean for the drinks industry

29 April, 2015

The Responsibility Deal is teetering on a knife-edge and the drinks industry faces a series of tough battles after the general election, according to the Wine and Spirit Trade Association.

Whatever the outcome of the election, the trade will probably be faced with a government that is increasingly keen to interfere in alcohol policy, the trade body warned.

The Conservative party has not included the Responsibility Deal in its manifesto, despite it succeeding in stripping a billion units of alcohol from the market, while Labour has been a vocal critic of its efficacy.

The WSTA’s policy manager Carlo Gibbs said: “The Labour party believes the Responsibility Deal has failed. It hasn’t gone as far as it needed to. The Conservatives aren’t standing by it or trumpeting it as a big achievement. We have Responsibility Deal pledges we are all looking to deliver. We don’t know what’s going to happen to those.”

Chief executive Miles Beale added: “Neither Labour nor Conservatives are particularly pro-minimum unit pricing. But whichever one is leading a minority government or a coalition will be under more pressure and dealing with minor parties that are more interventionist.

“We have to be prepared for more intervention coming from a minor party whether in government or not. Alas we will have to look at battles we have had coming back a second time around.”

Of the main two parties, Labour looks like giving the drinks industry the hardest time if it gets into power.

It has pledged in its manifesto to take targeted action against high-strength, low cost products – singling out cider – that it claims fuel problem drinking.

Gibbs said: “Generally parties follow through with what they say in their manifestos. They aren’t gospel or set in stone, but they offer a good indication.

“The Labour party has provided the largest agenda when it comes to alcohol. Their proposals are about ensuring health is at the heart of all decision making.

“They want to put health on the agenda for licensing, so the director of public health at a local authority would have a say in licensing. This would be difficult for the industry to work with.”

Labour wants calorie counts on all alcohol labels, and has also pledged to launch a review on whether alcohol companies should be restricted when it comes to advertising their products.

“They want to have a review on alcohol advertising and this was a watered down version of what they were proposing,” said Gibbs. “Andy Burnham, the shadow health secretary, was particularly keen on advertising restrictions. They changed it at the last minute from a policy to a review, but there are forces in the Labour party that want to push for it.”

He added: “Alcohol policy is firmly on the agenda for Labour. They are the most interventionist of the main parties, but they aren’t there on minimum unit pricing. They don’t want to seem anti-business, to be raising the cost of living or making a nanny state.

“The Conservatives are a lot lighter on alcohol than they were five years ago. They have had a strong agenda and they have done quite a lot. We would expect them not to have a big change of agenda, no strong measures to see greater restrictions. There has been no mention of minimum unit pricing.”

Off Licence News polled a range of suppliers and found that the overwhelming majority said the Tories would be the trade’s best bet in the general election.

Sixty-four percent voted Conservative in our survey, followed by 17% for a Conservative/Lib Dem coalition, while just 8% went for Labour.

Suppliers felt that the Conservatives, or a continuation of the ruling coalition, would help stabilise the economy.

Martin Chapman, director of Peter Osborne Fine Wines, said: “I can’t see that election results affect overall sales. Perhaps if the Conservatives were to win, it might create a feeling of stability, any other result might cause alarm at which times people don’t spend.”

Six percent said a Conservative/UKIP coaltion would work best for the trade. Three percent each voted for the Liberal Democrats and a Labour/Lib Dem coalition.

But 31% of suppliers didn’t pick a party, saying they were unsure who would be best for the trade.

And Gibbs warned that life might not all be rosy under a Conservative rule. “They don’t talk about the Responsibility Deal,” he said. “They launched it to great fanfare. It’s their policy of making business do more without seeming like a nanny state. However they don’t want to talk about it in this manifesto. That’s a warning for the industry.

“They don’t see it as a major achievement. That’s something we need to consider going forward.”

But he added: “Conservatives are less in favour of taxation and prohibition than Labour. Labour is much more likely to be interventionist.”

The real wildcard in the upcoming election is the emergence of smaller parties that will have a far greater say than ever before when all the dust has settled.

A party would need 323 seats to command a majority, and all the polls currently suggest that a hung parliament is inevitable, with Labour neck and neck with the Conservatives and minor parties surging.

An aggregate of polls predicts the Conservatives will end up with 272 seats, with Labour on 271 and the Liberal Democrats on 26. That would leave both main parties well short of the required seats, and a coalition with the Lib Dems would not be enough to carry them over the line.

This is largely due to the resounding performance of the Scottish National Party.

Pollster Owen Thomas, from Populus, said: “In every previous general election Labour has won the popular vote in Scotland, usually by a big majority. This time the SNP is polling at 47% of the vote, with Labour on 25%. Yesterday it went up to 52% for the SNP. 

“It’s unheard of to see that sort of swing. We regard a 12-point swing as a huge landslide. We are looking at a 20-point-plus swing here. This is a massive factor for why Labour is not going to get the votes it needs.

“In 2010 Labour had 42% of the vote and won 41 seats. The SNP had 20% of the vote and won six seats. A 25-point swing would leave 53 SNP seats, five Labour seats and one for the Liberal Democrats.

“If Labour can restrict it to a 15-point swing it will hold on to 22 seats, with the SNP taking 33.

“People at Labour and Conservative HQs believe their support will increase in the last two days. I would suggest support for the others will hold up. People don’t like politics and will vote for anyone but the main two parties.”

But he added: “I believe the Tories will sneak it right at the last moment, but I believe Labour and the SNP will win a huge number of seats. I suspect the Tories and Lib Dems will get there – just. Although the polls would say Labour, Lib Dems and SNP.”

Whatever the outcome, smaller parties like the SNP, UKIP, the Greens, Plaid Cymru and the Democratic Unionist Party will have a far greater say in all policy – including alcohol policy – after the election, whether as part of a coalition or as an active voice in a minority government.

Beale said: “It’s highly likely that a smaller party will be relevant and all those have a particular view on alcohol. At the moment it’s only two parties in a coalition. We have a public health minister who is from one party and a home office minister from another. Next time it could be three or even four parties in a coalition.”

UKIP opposes minimum unit pricing. If they get in a coalition it would probably be off the agenda.

The SNP is actively pushing for minimum unit pricing in Scotland, but would be unlikely to want to force it on the people of England and Wales.

But the other minor parties are all in support of a 50p minimum unit price.

“It’s a simple policy to put forward for the Greens and so on, it’s easy to understand and they can put it on their manifestos without having to come up with policies of their own,” said Gibbs.

Every party believes something needs to be done about licensing fees, which haven’t changed for 10 years.

The Conservatives are the bookies’ favourites to gain the most votes and the most seats, although Ed Miliband is favourite to become Prime Minister as the likelihood of an anti-Tory majority block formed by rival parties increases.

Experts predict that it will take around 10 days to form a government after the general election if, as predicted, nobody wins a majority.

Last time around there was pressure from the markets for a coalition to form quickly as nobody knew whether a coalition would work. This time around the markets will be more confident that a coalition can work and will give the politicians more time for horse trading as they negotiate a coalition or seek to enter Downing Street with a minority government.

If a coalition is successfully formed, there will be a coalition agreement full of pledges.

“If something appears in the coalition agreement, they will most likely do it,” said Gibbs. “If minimum unit pricing is in, it will be a much tougher campaign to stop it than previously, when it wasn’t in the coalition agreement.”

He expects it to be far more difficult, however, for the next government to push through policies that are met with fierce opposition from the general public.

“Gone are the days of Tony Blair having 418 MPS and being able to force through an unpopular policy,” said Gibbs.

But he added: “Alcohol taxation and high-strength taxation is on the agenda of the government and the other parties. It would not surprise me if one of the first things we hear from the new government is a review of alcohol taxation.”

Beale said: “No one knows what’s going to happen. There is a really high chance that the party that wins the most seats doesn’t form a government. Alcohol is not going to be top of anyone’s list when it comes to forming a government. It’s going to be a while before we learn what will happen. In the current climate, the closer you can get to politicians that influence this, the better. The results we have had in the last two Budgets have happened because we have been able to get an interaction between our members and MPs.”

Focus on local councillors

Local councils are the real driving force between prohibitionist alcohol policies and the trade should devote more attention to them, according to the WSTA.

All the focus is on the race to become Prime Minister, but the WSTA believes lobbying local councillors could be even more effective.

Policy manager Carlo Gibbs said: “Localism is one of the most important points, because there is a lot of support among local councillors for being able to intervene in alcohol policy.

“If you look at high-strength bans and minimum unit pricing, they have been pushed at a local level. When it comes to alcohol regulation, the driving force is at a local level. We have to be alive to what’s happening at a local level and how we deal with local councils.

“From what we have seen, the political parties don’t have a great view on the stuff we deal with. It’s going on at a local council level. But it’s up for grabs and the industry needs to be clear on what it is doing in a social responsibility space. Everything we oppose and everything we fight, we need to say it won’t work because of X, it will cost everyone money because of X.”

Chief executive Miles Beale added: “MPs now understand the industry and are much more likely to support it. The prevailing narrative of alcohol as the root of all evil has changed in the past two years. If your MP keeps the seat, stay in touch, if you have a new MP, get in touch, but pay close attention to your local councillors. Ask yourself which politicians in your area you can get close to and influence.”

Waiting on the chief medical officer

A new government will have to react to new chief medical officer guidelines on alcohol consumption, but the WSTA urged the trade not to panic.

The chief medical officer started a review on unit guidelines – currently no more than 3-4 per day for a man and 2-3 for a woman are suggested – back in 2011, and the results are due soon.

Gibbs said: “The chief medical officer is taking the longest review ever taken on anything. It is independent of government and has its own budget. They have brought in the people that conducted the Sheffield University study on minimum unit pricing to help them. That’s worrying for anyone in the industry.”

But he added: “I can’t see a government being able to reduce those guidelines without coming under considerable attack from the media. Saying a woman can’t drink a glass of wine a night and a man can’t drink a pint of 6% abv cider would be a deeply unpopular policy.

“The government will announce some sort of recommendations. It’s a political decision coming from the top. They might not change the unit recommendations, but they might add things like you shouldn’t drink at all when pregnant or when under 15, or if you are over 65 you should only drink X, you should have two days off a week – we think the government might build on top of the existing guidelines.

“If guidelines change, 80% of labels will have to change as 80% of labels have this information under the Responsibility Deal pledge.”




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