Just for the record, I would like to say that the convener has exercised a power, but she has not done so in my name. I have no objection at all to witnesses being called to appear before the committee. Had I been consulted on the matter, I might have been very happy to subscribe to the view that the convener came to. I am happy to welcome back Mr Beard and to hear what he has to say by way of clarification, but it is a fundamental courtesy for the convener to consult all committee members on any action that she proposes to take. In addition, it would be good if, when she arrives at a view publicly on “Good Morning Scotland”, she speaks for the committee. She was certainly not speaking for me earlier this morning.
I say to Ms Eadie that it was within my power to exercise discretion in the way that I did. I was not compelled to consult her on the matter. However, I did consult the deputy convener before taking the step of inviting Mr Beard back, so that it would not be thought that the decision was politically motivated. It was not. The invitation had to be issued fairly urgently because the Cabinet Secretary for Health and Wellbeing will appear before us next week, so this week’s meeting was the only opportunity we had to hear from Mr Beard.
Let me take the opportunity to make a few points, as I am the only witness for this session. We have been sharing our perspective on minimum pricing and its potential impact not only in Scotland but throughout the UK with all political parties for more than six months. We have shared our belief that anything that is introduced in Scotland risks being extended across the UK, and there is precedent for that. It is interesting that the convener mentioned in her opening comments the consequences of legislation that is introduced in Scotland.
Okay. Well, I am here to help you. There is precedent—smoking is an example—for legislation that is passed in Scotland subsequently being extended throughout the UK. In my position as chief executive of Whyte & Mackay, it would have been naive, verging on commercially negligent, for me not to have taken into account the business repercussions of the extension of the measure throughout the UK. Given the opportunity, I would like to read out a couple of quotes, one of which is from the Scottish Government, in the context of other discussions that have been going on about minimum pricing in other parts of the UK.
The evidence that I am giving you this morning is clear. I am telling you that, consistently, over six to nine months, we have consulted all political parties and identified the real issue for Scottish jobs arising from the eventual introduction of minimum pricing, which it is very clear that some parties—one party in particular at this table—actively support. Let me push back to you a hypothetical question: should Westminster introduce minimum pricing throughout the United Kingdom following its introduction in Scotland—I still believe that it would be illegal—would the Scottish Government defend Scottish jobs?
Let me try to clarify, too. I did not issue a press release after the committee meeting last week. One of the accusations that was made of me following the meeting last week was that I had issued a press release before the committee met last week, which is also incorrect.
I am not saying that you said it. Other committee members indicated that I had put out a press release prior to the committee meeting last week, which is factually incorrect. I repeat the point that I made a few minutes ago that, although there was some push-back about a press release that I did not make, it seemed that, this morning, press releases were totally acceptable. There seems to be a dichotomy there.
It is a pleasure.
That scenario is interesting; we have not modelled it. We are a proud Scottish company and 90 per cent of our employees are based in Scotland. Such a development would be terribly disappointing, should it be a necessity.
I am happy to talk through the figure of 83 jobs that is in my written evidence, which the committee has received. That breaks down into immediate job losses at our bottling facility and is linked to logistics, sales and administration, and distilling. I am sure that members respect my wish not to break the numbers down further, in consideration of our employees.
Possibly. You ask me again to forecast. We have made calculations and I have shared the numbers with the committee.
But you have not accommodated that hypothesis in your figures of 200 to 300 job losses.
No, and part of the reason for that, as I explained last week, is that we are a UK-centric business. Again, though, a Scottish National Party member of the Justice Committee, Nigel Don, said:
In the rest of your evidence, you made comments such as “for Calais, read Carlisle” and suggested that, with the introduction of a minimum price, people could go to Carlisle to purchase alcohol or purchase it via the internet. However, if your figure of 200 to 300 job losses is based on the entire United Kingdom having minimum pricing, why would people go to Carlisle to buy alcohol? The alcohol would be the same price in Carlisle as it is in Scotland.
My problem is that in one part of your evidence you talked about it being so obvious that England would follow Scotland that it did not even need to be mentioned when you gave a figure of 200 to 300 job losses, yet in the rest of your evidence you talked about what you now describe as a period in between, when everyone would flock to Carlisle and so on. Later on in your evidence, you said:
That is out of my hands, but I do not see the same pace of movement towards legislation at Westminster as at Holyrood.
So the 200 to 300 job losses do not exist, in that if a minimum price is not introduced in England, there will not be the 200 to 300 job losses that you spoke about.
If a minimum price of 40p was introduced, it would have a negligible effect in the short term on companies that have focused primarily on whisky. Vodka would be more impacted. One of the requests last week was that we come back with figures for duty plus VAT, which we have supplied to the committee. The figures illustrate that currently more than 70 per cent of the price of a bottle of whisky is related to excise and VAT. The effect of the introduction of a minimum price of 40p would be negligible for whisky. I believe that the Sheffield report indicated that it would have a 2.6 per cent impact on consumption at a UK level. If that is the figure that the Government is now proposing, I suggest that it should be in the bill.
I think that that is correct, although, should a minimum price be introduced at a lower level—my perspective continues to be that that would be illegal under European law—I would want clarity on the process for any subsequent increase in the minimum price, the scrutiny that there would be and whether 40p could quickly become 50p, 60p or 70p. That is a question for you, but I think that the proposal is unclear and risks a fast escalation of price, at a rate potentially well ahead of the retail prices index, that would take us to 50p very quickly. I am the first to admit that that is a subjective view.
Who knows what the future will bring? However, you agree that, at the moment, if a 40p minimum price was introduced there would be no job losses in Whyte & Mackay.
I will be absolutely clear. The price of £10.18 was given at the time of the submission, and you may find that prices have moved marginally in the marketplace, but I will give absolute clarity: it is £10.18 for a 70cl bottle of Scotch whisky at 40 per cent ABV.
If I was completing the column in your evidence on the price for that product, it would therefore be correct for me to assume that the total of £6.34 of duty plus £1.11 of VAT, which makes £7.45, would compare with the price of £10.18 from the date on which you submitted it and with the totals of £11.20 based on a minimum price of 40p and of £14 based on a minimum price of 50p. In my single column, I would not be misleading you or anybody else if I said that the price of a bottle would be £14 with a 50p minimum price, it would be £11.20 with a 40p minimum price, the current price is about £10.18 and a minimum price based on duty plus VAT would be £7.45. Is that correct?
Hence my submission in the past week.
That is very helpful, thank you.
I am a temporary member of the committee and I have thoroughly enjoyed the discussions so far. However, I have a couple of important questions.
And—
Lucky England.
I do not want you to answer that, Mr Beard. We have been quite elastic with the questioning—and quite rightly so—but, at the risk of being accused of being dictatorial, I remind Helen Eadie that she was clarifying the issue of job losses, which we have now examined thoroughly. I do not want to go down the route of the internet, Zeebrugge and so on, because we have already taken evidence on that and we also have Mr Beard’s written evidence. Mr Beard has been well delayed already and I intend to bring this session to an end.
We will resume so that we can make progress. Before we move on to our next panel, I inform members that an additional meeting of the committee will take place at 2 pm on Tuesday 23 March so that we can take evidence via videolink from witnesses who are based in Canada. That, too, will be a public meeting.
No, I do not think that they do. The judgments clarify and emphasise that the complaint in the tobacco case was not about free movement—it was not raised under the free movement article—but was about non-compliance with the tobacco directive. The judgments also say something that was not really said in earlier cases, which is that the health and public order issue can be used in free movement situations—or not, as the case may be—but it is probably not necessarily material to the tobacco directive issue.
Yes, that is a significant difference.
Yes.
To arrive at that situation, would the Scottish Government need to demonstrate that the effect of the minimum pricing policy would be material, which is always a difficult word in legal terms? Deriving from the wider body of evidence—the University of Sheffield study is not the only evidence—a case might be constructed to demonstrate that the exemption in article 36 ought to prevail over the general prohibition on quantitative restrictions in article 34 because the policy could be shown to have a material effect.
But referring to 10 ml of ethyl alcohol is not, in principle, terribly different from HM Revenue and Customs referring to litres or hectolitres of pure alcohol.
The substantive issue is whether what has been proposed is a proportionate and appropriate response to an identified problem. Could the aims have been achieved more simply in some other way? Does it make a difference that people who export to the UK might have to find out what a unit is when they are thinking about how they might do things? Is that too much of an obstacle? That is a difficult question that I do not know the answer to.
That is the case that would be put forward, although I do not know whether it would be accepted. People would say precisely that—they would say that minimum unit pricing is targeted and that simply putting up duty is not a good answer.
But that would be a reasonable case to put.
I want to continue the questioning of the Law Society before I ask about the submission from the City of Edinburgh Council. In the evidence that we have gathered, we have found it interesting to note what has sometimes been omitted from papers such as the Sheffield study rather than what is in them. I found the same with the Law Society’s submission. The other week, Gavin Hewitt spoke about the decision in the case in the Netherlands, which you spoke about. You did not mention that in your submission. Why? I give you the chance to correct me in case I missed a reference to it somewhere and am wrong.
Before Mr McLean answers that, I have a question: would it be relevant for us to have that information?
You can have it if that would be helpful.
I would rather that that did not happen.
That was very helpful.
The point that we make is that paragraph (e) refers specifically—and I will read this, so that I get it right—to an offer that
For the sake of the Official Report, I ask committee members to tell us which page and which paragraph they are referring to when they quote committee papers.
We proposed a clarification to the formula that reads:
I will answer if I may. Perhaps I should have explained the role of the licensing standards officer—it might be useful if I do so quickly now. The LSO’s job is to provide guidance on the legislation and mediation services when there is a dispute and to supervise the compliance of licence holders with the legislation. It is the role of the licensing standards officer, foremost, to ensure that the irresponsible promotion provisions in the legislation are complied with and that irresponsible promotions do not happen. I apologise for stepping in, but it might be that your question is more relevant to me.
It is difficult. I know that that sounds vague, but the 2005 act has been settling in and we have found that, as soon as we think that we are on top of one style of promotion, the goalposts change—I have already explained the issue with off-sales, and the same applies to on-sales retailers.
Is there a danger that the same loopholes could develop if minimum pricing were introduced?
Where is that?
Mr Jenkins, would you like to go first for a change?
Okay. I will briefly set out the OFT’s remit in this debate. The OFT is the UK’s main competition and consumer authority. Our mission is to make markets work well for consumers. As part of that, we enforce competition and consumer law across the UK as a whole.
I am a bit muddled about what an anti-competitive effect is, versus breaching competition law.
I want to ensure that I have understood you. If there were minimum pricing, low-price whisky that was manufactured for sale in supermarkets could be sold in Scotland, but at a higher price. If the manufacturer said that the product could not be sold in Scotland, it would be breaking competition law. If there is a minimum unit price, surely that will mean only that a Tesco whisky is more expensive in Scotland than it is in England.
I had in mind cases in which there was a significant price differential for a product on one side of the border as compared with the other, in whatever way that might arise. An agreement between the manufacturer and the supermarket that the product should be sold on only one side of the border would raise a serious competition law issue.
Not the Government, no. The manufacturer and the retailer.
That is fine.
Mr Jenkins, from what you said earlier, I gather that it would be of interest to you and your area of law only if the Government asked the retailers what the minimum price should be. If the Government set the minimum price and the retailers had no say in it, except perhaps through lobbying early on, there would be no problem from your side as far as the legality is concerned—is that correct?
As far as the legality in terms of UK competition law is concerned, that is right.
Yes. I appreciate that you are talking only about your area of the law. I just wanted to clarify that.
Spoken like a lawyer.
The agreement could be between the retailer and the producer, not involving the Government.
They could not be expected to agree a margin. That would be resale price maintenance, which is not possible. The manufacturer must decide at what price it wants to sell to the retailer and the retailer must decide at what price he wants to sell to the public. The manufacturer cannot tell the retailer at what price he may sell to the public—absolutely not.
Price discrimination, which is what we are talking about, is not automatically illegal under competition law. As Jim McLean just set out, it very much depends on the facts of the case. Typically, it would be a competition law issue only if a dominant player—a firm with large market power—were involved. It is important to understand that price discrimination by a small producer is not, in itself, a problem under competition law. If the product were being sold to a large retailer, I am not sure how easy it would be to differentiate price between England and Scotland; however, that is a practical issue rather than a competition law issue.
Thanks.
How can the police identify—say in the Grassmarket—which pubs should be prosecuted? That will generally fall to the police who are at the scene of drunken behaviour. In the centre of Edinburgh or Glasgow or wherever, how can you identify from the people at the scene which pubs should be prosecuted? Do you think that what is proposed is fair?
I agree with the points that Mary Scanlon made. I said the last time that I gave evidence on this matter that pre-loading is a continuing issue for us. As Mr Shearer rightly said, it would be very difficult to attribute an incident to the fact that an individual took drink in a specific area and to ascertain whether the management of the premises in that area allowed the individual to act in the way that they did. We certainly seek to support the concept of social responsibility, but it is very difficult to tease that out. More work is required to get the views of the police, communities and the trade to establish how best to proceed. Mary Scanlon makes valid points. We could take things further and ask whether it is purely liquor-licensed premises that cause problems or whether late catering premises also cause difficulties by attracting people to stay in a particular location. The short answer is that significantly more work must be done, but, as Mr Shearer said, it is worth going down that route.
The same argument holds. The legislation that covers the serving of alcohol to a drunk individual is the Licensing (Scotland) Act 1976. The guidance on that statute includes two interpretations of the meaning of “drunk”. It comes down to the evidential difficulty—which you highlighted—in knowing whether the individual was drunk at the time when they were served. How do we interpret “drunk” and how do we prove that it was a certain premises that sold the person alcohol?
In putting resources into the area, our effort in the first instance is about trying to prevent things. For example, we get involved in working with youngsters and we go out and issue fixed-penalty notices. In that respect, trying to keep people out of the criminal element is extremely important. However, I repeat that it is a challenging area.
Hang on a minute, Mary. Mr McGowan and Mr Loudon want to respond to your questions.
That is what I was hoping.
You are quoting yourself.
I do not want to mislead the committee, but I think that about two thirds of the alcohol that is sold in Scotland is sold in off-sales.
The figure is 68 per cent.
Do not feel obliged to do that, but we would be delighted to hear your views.
The committee would be alert to such a breach of the right to a fair hearing under the European convention on human rights. I am sure that the Government knows that, from listening to the committee—do not quote me on that, to pick up what Mr McGowan said.
I thought that Mairi Millar and other witnesses wanted to speak.
I hear what you say. It is important to separate the different types of distortions. As a general principle, it is important to take each intervention on its merits, given the market as it exists. We based what we said about the impact of minimum pricing on the Scottish Government’s impact assessment, which suggests a cost to consumers and benefits to retailers and manufacturers.
My concern is that there is evidence that some supermarkets—the big players—do not pass on those tax increases. In trying to deal with people purchasing low-cost, high-strength alcohol, if suppliers and retailers are not passing on increases in taxation, we do not get anywhere.
I have not seen the evidence to which you refer. I return to my basic point, which is that although the level of tax pass-through is inherently uncertain before the tax is put in place, one cannot jump to the conclusion that there will be no price impact in the market. It is a question of policy design, rather than a case against a policy of taxation.
I just want to come back to the OFT finally admitting that below-cost selling goes on in supermarkets and to Mary Scanlon’s reference to a 37.5 per cent increase in price. Such an increase would not be distributed among the supermarkets and retailers. If minimum pricing comes in, what we will see is that the UK Government will receive VAT and corporation tax from them. That is an important point for the committee to consider. Currently, the supermarkets get VAT back from the Government when they sell below cost in order to support them in their below-cost selling, and there is no corporation tax at all, because no profits are made. That kind of selling distorts the marketplace, because the on-trade must buy the product at a dearer level than the level that supermarkets sell it. The Licensing (Scotland) Act 2005 has a provision that means that the on-trade cannot buy from supermarkets, so we could not go to supermarkets and source the cheap drink.
Do you want to respond, Mr McHugh? I feel it is a case of “in the red corner”.
I am sorry—that was a slip of the tongue. We have discussed the issues at our meetings, which include members of the community and so on. The trade is only 25 per cent of the committee, and they became aware of the differentials and how alcohol was being sold.
Just so I kept you in the clear there.
What is the membership made up of?
There are 20 members of the committee, and 25 per cent of them are members of the trade—on-sales and off-sales. The rest are made up of the police, local communities and drug and health bodies.
Are your views the views of the whole committee?
I do not know a lot about this, but I am pretty sure that the wording used in the bill reflects the wording in the Scotland Act 1998, and the levy is not a tax as such.
I would be keen to see something in writing on that.
I do not know that I understand the question. I think that the social responsibility levy is a kind of hypothecated tax sort of thing. I could not say whether it is within competence, but it involves quite a different arrangement from imposing a price that a retailer must charge a customer.
So, you will not be able to use the same instruments in the Scotland Act 1998 to impose that—
No one has asked about the age of purchase or the proposals on the localised limit that could be used to prevent people under 21 from buying alcohol in certain places. Does anyone have views on that? Is it workable? It is dealt with in section 8 of the bill. Before the bill was published, the limit was going to be Scotland-wide, but the Government has now moved to proposing that the decision on the limit be localised, so that it becomes a matter for licensing boards and the police. Is the proposal fit for purpose?
Do you think that there would be displacement if the limit were introduced in a certain area but not in others? The area could be defined quite narrowly.
Yes.
Are you saying that it is another tool or that it is surplus to requirements?
Thank you. That is very clear.
There are obviously one or two products—I will not mention any brand names—that will not be affected by the legislation but which contain significant alcohol. One of them contains caffeinated alcohol. I notice that Strathclyde Police said last January that approaching 6,000 crime reports had included a mention of that branded alcohol. By all accounts, 40 per cent of offenders in Polmont young offenders institution in 2007 indicated that they had used caffeinated alcohol. Would ACPOS and Andrew Barker like to comment on the problems that are caused by caffeinated alcohol? I understand that in the United States the US Food and Drink Administration announced in November that it is considering a ban, and Denmark and Norway have imposed a restriction of 150mg of caffeine per litre for alcoholic drinks. I guess that all of us round the table and in the room are united in purpose in that we want to tackle Scotland’s drink problems. There is no question about that. To what extent do you regard caffeinated alcohol as also being an issue?
I am not sure. I would have to explore that. Caffeine-related products appear to cause a significant problem among a particular part of the population; however, in the much wider context of alcohol issues, it is a small area. In the effort that is going into our whole approach to alcohol, it is more important that we see the big picture and explore how best to deal with that particular aspect at a later date.
We will explore that.
If they are publicly available, you can certainly look at them. Ross Finnie has a question. Then, to be frank, I would like to draw this evidence session to an end.
That is interesting. The end of section 10 talks about “local authority” meaning “a council”. It was my belief that the councils, not the licensing boards or the Government, would impose the social responsibility levy.
We are asking whether the wording of the section leaves the matter open to interpretation. It is not made explicit. We are both inferring that, because the end of section 10 refers to local authorities, that is the case. However, the phrase
I agree, although the “purpose” is mentioned in subsection (3).
That is correct. The issue that Rhoda Grant raised was about the bill’s competence in general. I am merely adding specific issues on which it would be helpful to have your view as to whether it is not competent or, if it is, whether it requires to be amended. Questions have been raised about other sections.
The short answer is that I do not know.
If you are going to comment in writing, we would be grateful if you would extend the range of your comments to cover those issues, which are germane to what Rhoda Grant asked about.
On that point, I thank you all for your attendance and your patience today. As you will notice, the man in the moon definitely does not exist, as he has not opened the window yet and we have been waiting for two and a half hours.
Item 4 is oral evidence on the Alcohol etc (Scotland) Bill. I welcome back John Beard, chief executive of Whyte & Mackay Ltd. Mr Beard gave evidence to the committee last week, but he has been invited back to clarify the evidence that he gave on the estimated number of job losses at the company if a minimum sale price for alcohol were introduced in Scotland. The decision to invite him back was taken in light of Whyte & Mackay’s press release last week stating that such estimates were based on a UK-wide minimum price as opposed to a Scotland-only minimum price.
I may—
Mr Beard has to return to the Economy, Energy and Tourism Committee after appearing here and we have already delayed him by some 20 minutes. That is why I am moving on.
Mr Beard, in your evidence last week, you were quite clear about the 300 job losses that could arise from the introduction of minimum pricing as a result of the Alcohol etc (Scotland) Bill. In that evidence, why were you not clear with the committee that that figure was calculated on the basis of a minimum price of 50p applying throughout the UK as opposed to only in Scotland?
That would be helpful.
Well—
I do not want to go through the stuff about your having been discussing the matter with parties for six months. At no point in the evidence that you gave on the record last week did you explain that that job loss figure was based on a UK policy. You can come along here and hypothesise for as long as you would like to, but last week you did not hypothesise about 300 jobs being lost on the basis of a UK policy. Why did you not explain that to the committee at the time, when you were scaring workers in places such as Grangemouth on the basis of a policy being implemented in Scotland?
Let me comment on that. I believe that we have been entirely consistent. I openly said that jobs were at risk if minimum pricing were to be introduced throughout the UK. I have candidly said that I felt that the questioning last week was, on occasions, weak. We got into a level of detail about the bottles of different types of spirits that one particular police force recovered—the absolute number of bottles by absolute drinks category. Subsequent to the committee meeting, I was asked a straight question about whether our evidence was related to the UK and I answered in the affirmative.
Mr Beard, I am afraid that you have still not answered my question—I do not know whether the convener can assist here. In evidence to the committee last week, you were clear that, by your calculation, 300 jobs would be lost as a result of the introduction of minimum pricing. Why at no point in your evidence did you explain that those job losses had been calculated on the basis of a minimum price of 50p being applied throughout the UK? I would welcome it if you took the opportunity to say why you chose not to provide that information to the committee.
If there is any misunderstanding in my evidence from last week, I would be the first to apologise but I do not apologise for the content of what I told you. I was asked a very straight question subsequent to the committee meeting, which I answered. I was not asked that question by you, who seem to be leading the questions today. If I had been, you would have got the consistent answer that all political parties have had for the past six to nine months.
Before I let other members in, I want to clarify one point, Mr Beard. The letter that I sent you as convener on behalf of the committee said:
If the issue was clarified within three to five minutes, it would have been even more possible, as a matter of courtesy, to pass a note to me as convener to advise the committee of the situation. You could have come back there and then and put it on the record.
As I said, if there was a misunderstanding, I apologise. Today is an opportunity to clarify my statement, which has been consistent over the past six to nine months.
We have another opportunity to ask questions about whether there will be 300 or 83 job losses. It is fair to say that companies in the whisky industry cannot predict where job losses will be in the next five years, as we have seen with Diageo. The minimum price will affect your product, which is also used as an own-brand product for the major UK supermarkets such as Tesco, Asda, Morrisons and Sainsbury’s. The measure will increase the price of your product by 37.5 per cent and will equate the price of own-brand products to that of some single malts.
The issue is important. You are the producer. If what the consumer pays increases by 37.5 per cent, that increase will be shared somehow between the retailer and the producer. It is unfair to say that a producer would sit back and allow a retailer to have a 37.5 per cent increase in profits while the producer received nothing. Will you therefore consider having a separate price for retailers in Scotland from that for retailers in England?
With respect, we will wait until the person behind Mr Beard—he does not have a dagger in his hand, by the way—gives evidence to the committee later. The legality issue will be fully explored with the next panel of witnesses.
Thank you for coming back to the committee, Mr Beard. I must confess to a certain degree of naivety in this business, perhaps because I entered politics only three years ago. At last week’s meeting, the retailers told us that they would not get any of the £120 million and that they were just against minimum pricing on a matter of principle. I took that at face value, but perhaps I should look at that again.
Yes, that is correct. Again, though, in quotations from the Scottish ministers there seems to be a certain amount of gleefulness when other countries consider introducing minimum pricing.
That is an interesting debating point, but it does not really answer my question. I am trying to establish that you were referring only to the UK when you spoke of 200 to 300 job losses and that you felt that that was such a likely consequence that you did not even need to mention that the figure was for the UK rather than just for Scotland.
There are different elements in the question. I have been very clear this morning and I welcome the opportunity to clarify that point. I believe that I have been clear with all political parties over the past six to nine months. The figure of 300 that I quote is a UK-wide figure, although some people around this table hypothesise that the figure may be greater. The figure explicitly related to Scotland for the introduction of minimum pricing at 50p—very clearly, that is the figure that I have taken—is 83 jobs across the company.
I think that you are trying to turn my words. I have now said on several occasions that there is every indication from quotations from the Scottish ministers that success would, to some extent, be the extension of minimum pricing beyond the boundaries of Scotland across the UK. I have heard politicians of all parties reference tobacco and what happened following the introduction of the smoking ban in Scotland and how quite quickly—we would need to check the timeframes—that moved from Scotland across the rest of the UK.
Yes indeed, but there would be no job losses in Whyte & Mackay with a 40p minimum price.
You can just give the reference.
Mr Beard, you referred last week to a current guideline price of £10.18. Can we be clear about this? Is that £10.18 for your product: a 70cl bottle of Scotch at 40 per cent alcohol by volume, not 37.5 per cent?
Yes. As you picked up on last week, Mr Finnie, the calculation for vodka is marginally different. From memory, I think that you quoted a price of £8 for whisky, but the underlying price is closer to £10. There is some movement between whisky and vodka, but you are correct in what you say.
Yes.
Welcome back to the committee, Mr Beard. Can you expand on your submission by telling us about your meetings with officials and how they helped in making your thinking go along a particular route? Were any issues that we have been discussing not covered?
I have not finished, convener. Mr Beard, you know what the impact of this measure will be on those who are directly employed by Whyte & Mackay. Has any consideration been given to its ripple effect on the economy and on subcontractors and others? Has any estimate been made of the number of other jobs that could be lost as a consequence?
That is a good point. We have not done that kind of extrapolation. Arguably, we could do so, but the figures that I have mentioned, in particular the 83 jobs that I highlighted, are factual and based on our own data. I thought that it would be incorrect to extrapolate from that and come up with a figure for the ripple effect.
Are you talking about the specific Scottish impact or the UK impact?
We would like the information in a Scottish context. Powerful though the Scottish Government is, it cannot rule over England.
Perhaps.
I am also very concerned about the impact of the internet, which has been discussed on a number of occasions. I have been increasingly impressed, you might say, by the ease with which, at a click, consumers can shop anywhere in the world and have it delivered to their doorstep. Last night, I was gobsmacked to discover that a 25kg parcel could be delivered to my door for about £14, which is incredibly cheap. If England did not follow the example of this bill, people in a community could import over the border stuff that they had bought on the internet and share the cost of delivery between them. I do not know how many bottles there are in a 25kg parcel, but you can see how cheap that might be.
I—
I, too, thank all the witnesses for their submissions, particularly the Law Society of Scotland. I want to drill down to the very important and much-discussed issue of the legality of minimum pricing. I have two preliminary points, and then one on a more substantive issue.
It is helpful just to get that on the record in relation to the Law Society’s submission. I will move on to my three points, which I think are helpful, although one is still slightly contentious. I want to be clear about what you say about competition law at the foot of page 1 of your submission. There are issues that require debate, but is it your clear view that, in terms of the construction of section 1, Scottish ministers would take the decision on the minimum price and that it would not be a matter of debate among suppliers or, ultimately, retailers, which means that the issue is taken out of competition law and into devolved competence?
We are not talking about an agreement among parties that charge a price; we are talking about legislation that imposes a price, so there is no question of a concerted practice or an agreement among undertakings.
Okay. I move to my second question, which you referred to in your answer to my first question. Last week, when we heard evidence from the Scotch Whisky Association, I asked:
Therefore, there is a real distinction to be drawn, because the alcohol directive to which I referred, and which I should have brought with me last week, makes no such equivalent provision.
Therefore, because alcohol duty is based on the volume of alcohol rather than its price, the cases can be distinguished from the discussion on the bill. The cases might have a bearing, because of some of the obiter remarks that are related to them, but they can be distinguished.
Therefore, the Law Society is directing us that, if those two issues are perhaps not set aside, but are much clearer, we get into the territory of quantitative restrictions under other elements of EU law, particularly article 34 of the EU treaty, and whether the health exemption in article 36 applies.
I move to my third question, which is the matter of substance. Your paper helpfully sets out four possible scenarios and four questions that might arise about what minimum pricing does and whether it comes within the mischief of quantitative restrictions. Then, like an Addison and Steele essay from a different century, on the one hand, you pose four questions that might support the bill, but on the other hand you have four points that might not.
To try to get clarity, I want to press Mr McLean on those points. They are good questions, but we need to press you on them. My third point is about deterring consumption of alcohol by increasing price and clearly relates to the remarks in the ECJ judgments about other means. Indeed, paragraph 25 of the ECJ judgment in the case against France refers to the possibility of using other means, in particular excise duty. The judgment states:
Yes, I think that the policy would need to be shown to have a material effect that could not be achieved simply by putting up prices.
I agree. The point in question might well be made simply because of the unfamiliarity of the measure outside the United Kingdom, but there is a response to it.
No. That is an internal UK matter that is of no interest to Brussels or Luxembourg.
So the fact that that cannot be done does not count.
No. It cuts no ice.
So we would need to move to the other argument about the proportionality and reasonableness of the proposal and the material effect that it would have, and pray in aid the health provisions.
The paper is not meant to be an exhaustive analysis of pros and cons; it is meant to set out the position helpfully and briefly. The omission was not deliberate.
Given that it is the one decision that relates to alcohol—all the others relate to tobacco—I simply say that I am surprised that the Law Society omitted it. Given that you did not mention the decision in your paper, could you dig it out for the committee and supply us with your analysis of it? That would be very useful.
It is the only decision on the minimum pricing of alcohol that the EU has taken, so it is very relevant.
We will be able to judge for ourselves, convener.
Yes, it will save him from being called back next week by the convener.
The term “measure” is used in the mandatory conditions on off-sales and off-sales restrictions in schedule 3 to the Licensing (Scotland) Act 2005. The off-trade has argued that that term is not consistent with a bottle of wine or a can of lager, for example. Our opinion is that the UK weights and measures legislation interchanges the terms “quantity” and “measure” for on-sales premises through intoxicating liquor regulations and, if that interchangeability exists for on-sales, it should also exist for off-sales. We are concerned with a quantity of alcohol, whether it is a bottle of wine or 25ml of whisky or vodka sold from behind a bar.
That last one was on page 2.
Why is the law not enforced better?
I guess that that is because the legislation is so new.
I support what Derek McGowan says. The city of Glasgow licensing board takes a different view from the city of Edinburgh licensing board on the application of the provision on measures for off-sales.
Glasgow having a different view from Edinburgh—there is something new.
Yes, I know—it is unbelievable.
It is in paragraph 9 on page 2 of the OFT submission.
Essentially, competition law applies to firms in the market, and it allows for Government to impose certain restrictions on the market. Government carries out a wide range of functions. Subsidies are permitted under competition law, and there is also tax. Such things can potentially distort competition in markets.
Can we just clarify that, please? You are saying that the manufacturer, not the Government, would be breaching competition law.
If Whyte & Mackay sold the same blended whisky to a grocer in Carlisle for 37.5 per cent less than it sold it to a grocer in Gretna, would that be breaking competition law? I am talking about the same bottle of whisky, the same brand—the same everything.
I am talking about Whyte & Mackay. It has had good publicity today. Everyone in Scotland will be thinking, “I must get a wee dram o’ that Whyte & Mackay stuff.”
If it were to sell what one might call a like grade and quantity—if there were no question of difference and there were equal volumes—
Your answer is based on the assumption that the retailer would retain all the profit from the 37.5 per cent increase in the price resulting from minimum pricing.
It would certainly lead to an increase in cross-border activity.
The problem is that we have no time. The Cabinet Secretary for Health and Wellbeing will be at committee next week.
I turn to an issue that was raised last week—Helen Eadie also raised it today. There are existing laws, such as the Civic Government (Scotland) Act 1982. I got information recently that showed that the number of prosecutions for serving to people who are already intoxicated was barely into double figures. Do you agree that existing provisions are in place and that they could be better enforced? Given that your men and women on the beat are likely to know which pubs have irresponsible landlords, should you not work more closely with licensing boards to recommend that such landlords should lose their licences, rather than everyone being blamed and a tax being imposed on responsible landlords as well as irresponsible ones?
Can I ask the licensing boards—
Yes. That is obviously a substantial percentage. Added to the cheap prices that the supermarkets offer, that links in to the social responsibility issue. The question that we have asked is how we can identify the premises that are at fault.
I think that I had better say something, convener.
No. We must not speak for people.
We would prefer a tax rather than minimum pricing. If it is decided that an intervention in price is the best way of curbing demand for alcohol, the tax and duty method has a number of advantages. First, it does not lead to a transfer of revenue to retailers and manufacturers, so there would be no perverse incentives to encourage them to sell more alcohol. Secondly, the revenues that are raised through a tax or duty could—at least in principle—be channelled into addressing public policy around alcohol misuse.
In the red corner, I would say that, especially now that we are hitting the recession the on-trade is seeing customers heading to the supermarkets because we cannot compete on price. The differential between the supermarket and the on-trade is so vast that it is a no-brainer that the supermarkets are distorting the marketplace, because we can no longer compete—we are not even close. As I said, the on-trade is buying at a dearer price than the off-trade is selling, and that is before we add the VAT on to the cost.
Again, just on that point, who is “we”? You tried to clarify—
It is in our submission: we feel that what I said is going on.
Okay. I will move on to my substantive question, which is on the social responsibility levy. It is my understanding that the levy does not fall foul of devolved taxation laws. I am keen to find out why that is the case. The Parliament does not have tax-raising powers, apart from on income tax, so how can the Parliament implement a social responsibility levy? How does that fall within our devolved responsibilities?
Do you want to write to us about it?
No one is telling the industry what it must charge.
I am sorry. I meant the minimum price that it may charge.
In some respects, it is just another tool from among a range of tools. If there was a significant issue in an area in which it was difficult to differentiate between people of certain ages, the local licensing board and the police could use the provision. However, I would not say that it was a significant tool.
That would be an issue for the licensing board to consider, and measures could be introduced to deal with that sort of problem. However, it might be easier to use it as a tool in a rural area or a small town than in a large urban area. It is just another tool that could be used more locally.
Does anyone from the licensing side want to comment?
It might be difficult to carry out the detrimental impact assessment in order to get the necessary evidence to show that there is a link between antisocial behaviour involving persons under the age of 21 and the consumption by them of alcohol from off-sales.
I appreciate that.
Whether it is a Law Society view or a personal view, I can say that when I speak to board members and ask them how they would ever do this—some committee members may have been on licensing boards—they say, “Actually, it will be very difficult to do it.” I am not sure that it is a tool that is necessary at this time. I come back to the point, which I made at the beginning, about the Licensing (Scotland) Act 2005. As it only really came into force a few months ago, it has not bedded down. That is, to a large extent, because the public are not aware, in the way that they were for the law on tobacco, of the significant changes that have taken place. We got no little leaflets through the door saying, “These are the new licensing rules” on an A4 sheet, which I have suggested to people. The public do not understand the new rules and the trade probably does not understand the new rules quite as it should. The act needs to be understood so that it can bed down and work. If it is implemented in the way that was envisaged, it should work.
Should section 8 come into force at a later date, when the licensing legislation has bedded down? Should it be taken out of the bill?
I suspect that, in a practical sense, section 8 will cause more problems and produce less benefit than is intended.
You support the view that caffeine is certainly an issue that we must address in respect of alcohol-related problems.
Is that a public report to which we can have access?
No, I think that the clerks can explore that.
The relevant licence holder would be, first of all, someone who had a licence. That would exclude a member of the general public who decided to throw a brick through a window—unless they were a licence holder, which would greatly interest ACPOS and might lead to a report on his not being a fit and proper person to hold a licence. However, that is an entirely separate argument, which I will not have.
Convener, you cannot just close down discussion like that. Another member has her hand up.
It is wrong of you to do that.
I may close this if I wish, and I am closing it. Mr Beard has—
That is being dictatorial and Stalinist. We do not have that in this Parliament.
Okay. My question to you, though, was about the evidence that you gave to the committee last week, and that was that 300 job losses would result from the introduction of minimum pricing under the Alcohol etc (Scotland) Bill. I have been through your evidence carefully, and at no point did you make any reference whatsoever to the fact that your figures were based on the possibility of minimum pricing being introduced throughout the UK, whether that was a result of Government policy at Westminster, which could decide to go ahead with it irrespective of what happens in Scotland, or whether it followed the actions of the Scottish Government. Why, in the course of that evidence, given the explanation that you have given here this afternoon, did you not take the opportunity to present that information to the committee last week?
With all due respect, that is not the question that I asked you. You explained that the figure of 300 job losses was based on a 50p minimum price being applied throughout the UK. The evidence that we were taking last week was specifically on the Alcohol etc (Scotland) Bill. At no point in any of your evidence did you explain that the figure of 300 job losses was based on a UK application of that minimum price.
I have never said that, and my letter does not say it.
When you knew that the true position on job losses was going to be out in the public domain—whether as a result of your answering a question or whatever—did you consider contacting me or the clerk to clarify the position so that committee members could be informed before they heard about it through the media?
The media interview to which you are referring took place within three to five minutes of my leaving the room and it involved other members of the witness panel being asked questions as they exited the meeting. Practically, it would have been impossible to have contacted you.
Good morning again, Mr Beard. I am sorry that you have had to return, but thank you for coming.
I agree.
That is one potential scenario. Retailers operate UK-wide. Last week, we discussed the risk of consumers travelling south of the border to places such as Carlisle to purchase product. The committee has taken evidence from retailers. I have seen the figure of £120 million mentioned in the context of the money that could flow to retailers. I am not sure what experience members have of negotiating with retailers, but I think that it would be optimistic to assume that manufacturers would see a share of that money.
That is right. If the price of own-brand whisky increased by 37.5 per cent, it would be priced similarly to many malts. A choice between Tesco’s own brand and a single malt is a no-brainer. There is no doubt that demand would reduce, so jobs would reduce—whether by 83 or more. Is it fair to say that your projections of the reduction in demand and the substitution effect of the minimum price suggest that, in the long term, the loss of 83 jobs could be an underestimate?
Is it illegal for you to sell the same product at one price to retailers in Scotland and at a lower price in England?
I have not tested that.
The person behind you in the public gallery is indicating that it is illegal.
May I come in on that? One of the ambiguities in the bill is that it is not clear where that profit would flow. That has created consternation among on-trade publicans in Scotland, who have their own point of view on minimum pricing. However, the important point is that they need to be aware of the risk that minimum pricing will strengthen the very trade channel that creates some of the problems that the on-trade faces today.
I will certainly look into that. Another example of my naivety is that I thought that when a witness gave evidence on a Scottish bill that evidence would relate to that bill, so I was quite surprised to find that your figures on job losses were for the UK. For the record, can you confirm that you are not talking about the effect on jobs if other countries throughout the world followed the example of minimum pricing, and that your 200 to 300 job losses were estimated just on a UK basis?
There would be a period of disconnect between Scotland and England and Wales. I think that in evidence that you received last week retailers told you that some of their stores in Northern Ireland are some of their highest performing stores. I think that the sixth highest performing Walmart store for alcohol is on the border of Northern Ireland with southern Ireland, to the extent that the Irish Government last year reduced excise duty to overcome the loss of business. Something like 2.5 per cent of the Irish Republic market for alcohol is, I understand, taken by Asda and Sainsbury’s, which do not even have any stores in southern Ireland.
I do not have the full transcript in front of me, but last week I was keen to get across the point that there is a real risk of cross-border trading. From speaking to Government officials over the past few months, I believe that that has been significantly underestimated. I was given feedback by a Government official who looked at the situation in the context of taking a family car to Carlisle. There is enough international evidence—I cited the example of Sweden last week—to say that the issue is far more about organised crime and that there are lots of parallels with what has happened to tobacco.
But all that will happen only if England does not follow Scotland’s example, yet your hypothesis for losing 200 or 300 jobs was based on England almost certainly following Scotland’s example.
I will ask a final question, if I may, convener. I worked out that with a minimum price of 40p, supermarkets’ own-brand whisky would still be cheaper than the others. Although it would be more expensive than it is now, it would still be cheaper than the malts and so on that we have been talking about. What would be your estimate of job losses at Whyte & Mackay—if any—if the minimum price was 40p?
Correct.
I think that we have rehearsed the argument from last week, Mr Beard, and I agree that you were consistent—but we will not go there.
I did not actually do that. I said off the top of my head that the price was £11.30, when in fact it is £11.20. My point, however, is that, although the total of duty plus VAT is an interesting, open and transparent method of suggesting a price below which discounting might not take place, £7.45 is nevertheless materially lower than any of the minimum prices.
I will take those questions in sequence. First, Whyte & Mackay has never been asked to carry out any impact assessment. As I said earlier, trade bodies in the industry have been asked to assess the impact of a minimum unit price of 25p, 50p and 75p, but 40p is the figure that is being floated. The brief talks about 5p increments, but I find it strange that no one has been asked to model that scenario.
We took the opportunity afforded by last year’s restructuring, the output of which I have been briefing the Economy, Energy and Tourism Committee on this morning, to access a number of politicians of all political parties to put across in a pretty forthright way our views on the impact on jobs of introducing minimum pricing in Scotland. Until then, that element of the debate had probably not been covered as much as it might have been, but, given our dependence on the UK and weighting towards Scotland, particularly in the context of the number of jobs that our business has in Scotland, it was absolutely correct for Whyte & Mackay to describe the impact of any introduction of minimum pricing.
Yes, but am I right in thinking that it was Whyte & Mackay that took the initiative to meet the different political parties or were you invited to meetings by Government officials as part of a consultation exercise or to discuss the formulation of the policy?
We took the initiative to meet each party.
If, as you say, you could do that, will you do it? If you submit it to the clerks, it will be distributed to committee members. That information will be helpful, because we have to think about not only direct employment but every job in Scotland.
The Scottish impact, please.
That would breach competition law.
It would indeed.
That is correct.
Yes, they can be distinguished, but they have a bearing because of the remarks that are trailed in them and in earlier cases on tobacco.
Some of us know what you mean.
As was mentioned earlier this morning, a judgment in the 1970s on a case that was about gin in the Netherlands stated that minimum pricing interferes with the free flow of goods. That is the starting point. Therefore, we need to look at how the policy can be justified. In that previous case, the court said flatly that minimum pricing was not justified, so the case against minimum pricing is that, if we want to do something about the price of alcohol, we should simply increase duty and—I think that this was included in the original framework—ban loss leading. Such measures would be easy as a matter of Community law, but I appreciate that there are other reasons why they would not be feasible. We need to start with the question why the Government does not just increase duty. We need to find an answer, which will not be easy.
In the context of the next point, the Law Society’s submission suggests that it would be preferable that minimum pricing
Perhaps what we were trying to get at in the submission is not clearly expressed. It might be suggested that the unit of alcohol is not a known, pan-European concept, which is why we have to show that it is objectively based.
Is it the Law Society’s opinion that that is the substantive issue with respect to the legality of the bill?
Notwithstanding the fact that any complaint by the European Union would be made against the United Kingdom as the member state, is it a reasonable defence for the Scottish Government to aver that it is unable to increase excise?
That is right.
That is helpful. Thank you.
Ian McKee has a supplementary question.
I found that discussion interesting, although it got a bit Addisonian at times. We have heard considerable evidence that people at the lower end of the income scale are perhaps three or even four times as much at risk of developing alcohol-related diseases. They are also the group of people who tend to purchase the cheapest alcohol. What is the Law Society’s opinion on whether the use of minimum unit pricing as a public health measure could be a defence against a complaint about interference with trade? The people who are most at risk would be specifically targeted, whereas putting up duty would affect prices across the scale, and some of the duty increases could be absorbed by sellers.
It would be. It is not difficult to put up a reasonable case for or against minimum unit pricing. That is the case for it.
I was not asking whether you thought that it was relevant; I was asking Mr McLean.
It will save Mr McLean from coming back next week.
I compliment the City of Edinburgh Council on its submission, because it is one of the most practical papers that has been submitted to the committee. There is a danger that we concentrate far too much on minimum pricing. I draw attention to the paragraph at the bottom of page 2. There is a lot about enforcement in that paragraph. It says:
Finally, I ask the police to comment on difficulties in policing and enforcing the existing laws. I would be grateful to have a police perspective on the issues. We have seen in the City of Edinburgh Council paper that there is a law to restrict special offers. Where do the police fit into the situation and what is their view on the difficulties that they are presented with?
My concern with minimum pricing is the difficulty in applying the formula, which, as Derek McGowan mentioned, is complex. There is an issue about whether it would be readily understood by multinational supermarkets and single operators of both off-sales and on-sales premises. In addition, it is intended that the minimum pricing provisions will apply to holders of occasional licences, which can include voluntary organisations. I am concerned about whether members of those organisations would readily understand them. For minimum pricing to work, there must be compliance. That leads on to enforcement issues.
I will come to the police witnesses shortly, but first I have a question for Mr Jenkins and Mr McLean. We have heard quite a bit about whether minimum pricing is competent under EU law. We know—it was confirmed last week—that the competence of the measure would be challenged with the EU if it were introduced. However, I want to move on to competition law, which I know little about, as it is a reserved matter. In my questioning of Mr Beard from Whyte & Mackay, I noted that a minimum price in Scotland could mean—unless the producers were to hand over all their profits to the retailers—whisky being sold at different prices in Scotland and England. Would that be a breach of competition law?
I am sorry if the heat in the room is making anyone uncomfortable. This is a very technological building—someone has hands on a button somewhere that will open the window on my left. It is extraordinary, but only the window on my right can be opened manually. Instructions have been given to get the other window opened, but I am beginning to believe that the man in the moon is in charge of it. I warn you that we may have to wait for ever. You may take off your jackets if you wish, as it is getting quite stuffy in here.
My first point relates to bundled packages of drink. If drinks are sold literally in a package—as two items in the same wrapping—that raises an issue separate from minimum pricing, especially for off-sales but even for on-sales. Prohibiting packages from being sold at a discount is not about minimum pricing—it is about promotion and lawful ways of competing. Some sections of the bill may go a little too far in that area, both from a European point of view and in respect of competence. No one has made that point, but there may be a competence issue in that regard.
Surely the manufacturer, rather than the legislation, would be in trouble.
Not the legislation. We are talking about competition law as opposed to the bill. The question is whether there is an agreement or a concerted practice between two undertakings. That is an example of someone perhaps being considered to have been provoked by the legislation.
I understand that. On the same point, if I can ask Mr Jenkins—
A question that I asked earlier has not quite been answered. I will stick to Whyte & Mackay, as we have had so much evidence from that company this morning. It is looking at a 37.5 per cent difference in price as a result of the proposed minimum price, which is a significant difference. Some of that 37.5 per cent increase in profits will likely go to the retailer; some of it will likely go to the producer. I put the following question to Mr Beard of Whyte & Mackay. If a different price were set—whether for the Whyte & Mackay whisky that is sold as an own brand by Tesco or whoever, or for Whyte & Mackay branded whisky—on the assumption that some of the increase in revenue would go to the producer, would it be breaking competition law for the same product to be sold at a different price in England?
You mean if it were sold by Whyte & Mackay to the retailer, not by the retailer?
If a very large producer were to do that—
The same product.
I would not expect such a producer to discriminate between the Scottish and English purchaser. However, if the producer were considered not to be dominant because there was so much competition in the market—which is a possibility—it might try to enforce that difference through an agreement with the retailer, and that agreement would be illegal.
Absolutely.
The short answer is that it is challenging. Much more work must be done to explore the issue properly, particularly given that movement between premises, including nightclubs, seems to be such a feature. It is worth teasing all that out and putting some effort into having discussions and consultation to see how best what is proposed could be applied. Undoubtedly, late hours and a high number of premises have a significant impact on our operations, but it will be difficult to work out who should be responsible, unless a more broad-brush approach is taken. It is worth taking the journey to try to tease that out.
It is possible to take further evidence at stage 2 of a bill if there are still issues outstanding. That can be done and amendments might be lodged. I just make it plain that it does not have to be the end of evidence sessions.
I want to comment on pre-loading, which is when people buy alcohol in off-sales and drink a lot before they go out. The on-trade in Edinburgh tells us anecdotally that that is a major problem. It links back to our stance on the irresponsible promotions from off-sales that we discussed earlier—buy a crate of beer and get one free, or £10 for a bottle of wine but three for £10, which is equivalent to buying one and getting two free. Those are examples of the promotions that we have seen. Please do not quote me, but I think that about two thirds—
The Law Society of Scotland has identified that it would be difficult to apply a social responsibility fee fairly across the board and to determine to which premises it should be applied. More important, we sometimes forget that the Licensing (Scotland) Act 2005 only came into effect on 1 September 2009 and it gives licensing boards, licensing standards officers and the police a wide range of powers, which are only gradually coming to be recognised and accepted. On occasion, I have described them as a nuclear bomb.
Mr Jenkins, I will pick up on your earlier evidence and on the Office of Fair Trading submission. Paragraphs 6 and 7 of the submission raise concerns about the impact that minimum pricing could have on the marketplace and its effect on consumers. You referred to that in an earlier answer.
You suggest in your evidence that
My next question is to the police. Concerns have been expressed that there would be a rapid increase in the numbers of white-van men darting around the country bringing cheap booze from down south in England if a minimum price was introduced in Scotland. From a policing point of view, given that you support the introduction of minimum pricing, have you considered that possibility? If that type of behaviour begins to develop, could you readily deal with it effectively?
That concern is probably particularly relevant to me, not just as ACPOS president, but as chief constable in Dumfries and Galloway, as most of the alcohol would come through that area.
Similar questions have been asked in relation to the current position with imported alcohol and so on. We scoped the issue with all eight Scottish forces in the very recent past, and there is no indication that such supplies are an issue. I do not know whether opportunities for that would develop. In considering the nature of alcohol consumption as a whole and what we support as an overall package to try to reduce alcohol consumption and its effects on our service provision and on our communities, my view is that it would be a small price to pay if we had to monitor and deal with issues as they arose.
Thank you—that is helpful.
Do you want to comment on that, Mr Jenkins?
Yes. I have a point of clarification on below-cost selling. The OFT and the competition authorities have always been aware that below-cost selling goes on; the question is whether it is a competition problem.
As you are here representing West Dunbartonshire licensing forum—I suspect that that is a lot of people—will you clarify whether you are, when you say “we”, speaking as a publican?
Twenty-five per cent of the—
I do apologise.
Is it operating more as a fine?
No. Let me just think about it for a minute.
We can do that. Basically, it is all to do with the fact that it is a levy. The words have been taken from the Scotland Act 1998 and blended into this bill in order to reflect what can be done rather than what cannot be done.
I certainly cannot answer it.
When you answer, Mr McLean, could you lean towards your microphone? I could not hear what you were saying before.
Placing a levy, a charge or whatever on the industry raises quite different issues from telling the industry what it must charge consumers.
So, you are supportive of the proposal.
It is another tool, but there are difficulties in how boards will put together the detrimental impact assessments without being challenged on whether they have enough evidence to support putting a condition on specific premises within a locality to increase the minimum purchase age without saying that those premises themselves have sold to underage persons.
Strathclyde Police conducted a very specific study in relation to the product to which you refer. The study that you mention on young offenders in Polmont suggested that 40 per cent or thereabouts were drinking daily to a problem extent. There has been a great deal of publicity in relation to that one product, but I suggest that, as you rightly imply, there are issues with alcohol throughout the country.
That has been identified by Strathclyde Police as being a particular issue in its area. Work needs to be done to examine how much of an exacerbating factor it is.
There is also the McKinlay report, which was co-authored by Alasdair Forsyth. If you could allow the committee clerks access to both those reports, that would be helpful.
If the reports are available, it would be helpful to get them.
It is a very quick question. Rhoda Grant raised an interesting point about the competence of section 10, entitled “Licence holders: social responsibility levy”. Mr Loudon appears to be addressing that issue—I am not sure whether he volunteered or whether it just drifted into his lap. The word “levy” might have been lifted from previous legislation, but it is not clear who will impose it and who will set the charge. When the member’s bill to establish a levy on plastic bags for retailers was considered, it was important that that power was conferred on local authorities in order that it was not a national tax. The power to fix the rate had to be at the discretion of the local authority and the levy had to be imposed on each individual retailer in order to avoid its being a national tax. Some of the wording in section 10 might imply that that is going to be the case, but it is not crystal clear. The clarification that Rhoda Grant asked for would assist us in determining the competency of section 10 either in its intent or as drafted.
As you say, it is not clear on whom the levy would be imposed. I have attended discussions between the trade and Government officials in which we have tried to come up with some sort of formula to deal with the situation should it come to pass. One group is looking at the issue from one point of view and the other is looking at it from another, and I doubt that there will ever be agreement on it, as it is such a wide topic. For instance, surely the person who walks out of a pub and breaks a window is responsible for that—not the publican, who may have thrown that person out because he thought that they had had too much to drink somewhere else. There are a range of issues—
No, there are not. With all due respect, you are now arguing policy. Section 10 states:
Sorry. You are right, although we do not know who the relevant licence holder would be.
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