National Assembly for Wales

Y Pwyllgor Cyllid

Finance Committee

07/12/2017

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

David Rees AM
Jane Hutt AM
Mike Hedges AM
Neil Hamilton AM
Nick Ramsay AM
Simon Thomas AM Cadeirydd y Pwyllgor
Committee Chair

Y rhai eraill a oedd yn bresennol

Others in Attendance

Janine Hale Prif Swyddog Ymchwil (Economeg Iechyd), Llywodraeth Cymru
Principal Research Officer (Health Economics), Welsh Government
Tracey Breheny Dirprwy Gyfarwyddwr Polisi Camddefnyddio Sylweddau Llywodraeth Cymru
Deputy Director, Substance Misuse Policy, Welsh Government
Vaughan Gething AM Ysgrifennydd y Cabinet dros Iechyd a Gwasanaethau Cymdeithasol
Cabinet Secretary for Health and Social Services

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Ben Harris Cynghorydd Cyfreithiol
Legal Adviser
Catherine Hunt Ail Glerc
Second Clerk
Gareth David Thomas Ymchwilydd
Researcher
Georgina Owen Dirprwy Glerc
Deputy Clerk
Leanne Hatcher Ail Glerc
Second Clerk
Owen Holzinger Ymchwilydd
Researcher

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle y mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 09:32.

The meeting began at 09:32.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Bore da a chroeso i gyfarfod y Pwyllgor Cyllid y bore yma. Mae ymddiheuriadau wedi'u derbyn gan Steffan Lewis. Rwy'n jest atgoffa pawb i dawelu unrhyw ddyfeisiadau electronig hefyd. Mae cyfieithu ar y pryd, wrth gwrs—cyfieithu ar sianel 1 a'r sain gwreiddiol ar sianel 0. A oes gan unrhyw Aelod fuddiannau i'w datgan o ran y Bil hwn, yn fwy na'r arferol, felly? Nac oes.

Good morning and welcome to the Finance Committee meeting this morning. We have apologies from Steffan Lewis. Just to remind everyone, please, to put your electronic devices on silent. Simultaneous translation is on channel 1 and amplification is on channel 0. Any declarations of interest from Members for this Bill, more than normal, therefore? No.

2. Papurau i'w nodi
2. Papers to note

Felly, fe wnawn ni symud ymlaen jest i nodi y papurau sydd gerbron y pwyllgor. Mae yna ddau bapur a hefyd set o gofnodion y ddau gyfarfod diwethaf. A gaf i jest dynnu sylw'r pwyllgor at un o'r papurau, sef cynllun ffioedd Archwilydd Cyffredinol Cymru? Fe wnaethom ni edrych ar hwn fel rhan o'r papurau pan oeddem ni'n edrych ar amcangyfrifon yr archwilydd cyffredinol, ond mae'n rhaid i ni hefyd nodi a chymeradwyo y cynllun ffioedd yn ffurfiol. Dyna beth yr ym ni'n ei wneud heddiw. Felly, gyda hynny, a ydy pawb yn barod? Ocê, diolch yn fawr. Rwy'n gweld bod pawb yn fodlon gwneud hynny.

We will move on, then, just to note the papers before the committee. We have two papers and a set of minutes from the last two meetings. Can I just draw the committee's attention to one of the papers, which is the Auditor General for Wales's fee scheme? We looked at this as part of the papers when we were looking at the auditor general's estimates, but we also have to note and endorse the fee scheme formally. That is what we are doing today. Is everyone content? Thank you very much. I see that everyone is content to do so.

3. Bil Iechyd y Cyhoedd (Isafbris am Alcohol) (Cymru): Sesiwn dystiolaeth
3. Public Health (Minimum Price for Alcohol) (Wales) Bill: Evidence session

Fe wnawn ni droi, felly, at yr Ysgrifennydd Cabinet, Vaughan Gething, a'r Bil sydd ger ein bron heddiw. A gaf i jest ofyn i'r swyddogion ddatgan eu henwau a'u swyddogaethau, jest ar gyfer y cofnod hefyd, os gwelwch yn dda?

We'll turn, therefore, to the Cabinet Secretary, Vaughan Gething, and the Bill we are looking at today. May I ask the officials to introduce themselves, for the record, please?

Bore da, good morning. I'm Tracey Breheny, I'm the deputy director for substance misuse policy, Welsh Government.

Morning. I'm Janine Hale from knowledge and analytical services.

Ocê, diolch yn fawr iawn i chi. Croeso mawr i bawb. Fe wnawn ni ddechrau yn syth, os ydych chi'n hapus, gyda cwestiynau ar y Bil Iechyd y Cyhoedd (Isafbris am Alcohol) (Cymru). Os caf i ddechrau—i'r Ysgrifennydd Cabinet—cyflwynwyd y Bil gan Rebecca, wrth gwrs, yn wreiddiol, yn gynharach yn y tymor. Wrth gyflwyno'r Bil, fe wnaeth hi nodi nad yw'r isafbris wedi'i bennu ar wyneb y Bil a bod mwy o waith i'w wneud, rwy'n credu gan yr uned yn Sheffield, i bennu beth a fyddai'r pris—ac, maes o law, mewn rheoliadau y byddai hwnnw'n cael ei benderfynu. A fedrwch chi ddiweddaru'r Pwyllgor Cyllid ynglŷn â'r gwaith hwnnw, ac a ydych chi'n disgwyl i hwnnw gael ei gyhoeddi rhywbryd yn y flwyddyn newydd fel yr oedd, rwy'n credu, Rebecca Evans wedi ei amlinellu?

Okay, thank you very much. Welcome to you all. We'll begin straight away, if you're happy for us to go straight into questions, on the Public Health (Minimum Price for Alcohol) (Wales) Bill. If I may begin—a question to the Cabinet Secretary—this Bill was introduced by Rebecca, of course, originally, earlier in this term. In doing so, she noted that the minimum unit price is not set on the face of the Bill and that there is more work to be done, I think by the unit in Sheffield, to look at what that price would be—and, in due course, it's going to be specified in regulations. Can you let us know about that work and what the latest is on that, and do you expect it to be published sometime in the new year, as I think Rebecca had suggested?

09:35

Yes. I'm happy to confirm that. As you'll be aware, the original 2014 modelling that was done for the draft Bill in the last term of the Assembly set out the impact of minimum unit prices in 5p increments from between 35p to 70p. The update of that work is due to be published early in the new year. I've been given a note saying we expect it to be in February next year. So, that will be available and it will help to inform our approach to setting a minimum unit price here.  

Ac, os felly, beth fyddech chi'n—a derbyn nad ydych chi am osod yr isafbris ar wyneb y Bil ar hyn o bryd, beth yw eich canllaw ynglŷn â sut y byddwch chi'n gosod yr isafbris? A ydych chi'n defnyddio'r effaith ar iechyd, a ydych chi'n defnyddio'r effaith ar leihau troseddau, absenoldeb o'r gweithle, er enghraifft? Dyma'r buddion sydd wedi'u gosod yn y Bil ac mae yna arian wedi'i bennu wrth y buddion hynny. Ble ydych chi'n mynd i daro cydbwysedd rhwng gwahanol buddion y Bil a'u rhoi yn erbyn y costau?

And, therefore, what would you—considering that you don't, therefore, want to set it on the face of the Bill at this time, what would your guidance be about how you would set that minimum price? What about health impacts, for example—what about impacts on reducing crime and workplace absence, for example? These are the benefits that have been set out here, of course, and they're all linked to money. Where have you struck the balance there between those different advantages against the costs?

Obviously, the updated modelling work will be important for us to consider as we go through setting a price and considering what we do. If you think about chronologically where we are, we've got the current evidence base from Wales, the modelling work that's been done. The latest reports take account of further data about drinking behaviours in Wales as well. The report in February will be there for us to consider, that will be made available, of course, as well and we've plenty of comments around that too. As we move through the passage of the Bill, we're thinking about how the Bill sets out what we then do. Because we'd expect that, once the Bill has been passed, we've got a positive procedure to set the minimum unit price, so the Assembly will have a vote, and we'd have to set out the approach we're taking. We'll probably want to consult again and say, 'Well, here's what we propose to do and why'. Then we'll be able to set the price.

The other important point to consider is that we're doing this on modelled evidence, but, by that point, we'll have some real evidence from Scotland. They expect to introduce their minimum unit price in April or May next year, so we'll have real-time evidence as well about some of the impacts on some of the questions that we've said you can't accurately or definitively predict right now, for example, retailer revenue and other things. As we do that, we'll have to set out the balance that we will strike about both the expected benefits, the impact on devolved areas and non-devolved ones like police and crime, for example, as well. 

Thank you for that. In that case, what would be your best guess as to how you might revise the regulatory impact assessment? The usual process would be, after Stage 2, there'd be the possibility of revision or possibly after amendments have been taken as well. Have you got a particular timetable in mind for when you might re-look at the regulatory impact assessment and say, 'Well, now we've got this new information from Sheffield we'll be pursuing this line and we'll model that more firmly, then, in the impact assessment'?

We'll have to think about what the report says. I don't want to second-guess what the report will tell us. What I'm not anticipating is that the updated report in February will say, 'Actually there's no public health gain to be made at all'. It is about the conversations we're having with a range of different partners, from trading standards, about what it means for them, to the obvious ongoing conversations that retailers and others want to have with us. I don't want to try and second-guess when, but I think we'll want to take the opportunity to update the impact assessment during the passage of the Bill, because, by the time people are asked to vote for a final Bill, I want people to be up to date and informed on the Government's thinking. Because this is—. I think it's a progressive measure, but it's also a novel measure as well. So, I think we need to provide evidence and reassurance to Members because there are a variety of views within different parties and also different partners within and outside this place.

Thank you, Chair. Just looking at this issue of the evidence base, clearly you've used the Sheffield alcohol research group—it might be useful for you just to say some more about them. Obviously, they've done the work for Scotland, I understand—because, inevitably, there are criticisms and challenges to that. You know, just say some more about why you chose Sheffield and are there any other alternative models for calculating estimates that you could consider in terms of costs and benefits in this Bill?

Well, the University of Sheffield have the greatest relevant expertise in modelling this type of work and that's why the Scottish Government chose them. Also, given the work they've done in Scotland, it seemed the sensible thing for us to do. In terms of comparing what we're trying to do, Scotland is the most obvious comparator for us. They're broadly at the same stage—they're slightly further ahead in having passed a Bill, but have systems and alcohol-related behaviours that seem more similar.

We've also looked at work in Canada as well and at what they've done—they've had a variety of approaches between different provinces—but Sheffield have the most relevant expertise. Others have been critical, but you would expect that in any event. It would be unusual if people accepted one group and one model, and said, 'This is the only game in town', but I'm completely content that this is a proper basis for us to make the legislative proposal, and we do think that there are significant public health gains to be made.

09:40

Obviously, the Sheffield modelling is looking at a single estimate of the costs and benefits of the Bill, but this is going to be looking at the potential benefits and at the length of time over which they could be measured. So, did you consider looking at a range of potential benefits as opposed to looking at—? Or Sheffield, indeed—have they looked at this, in terms of getting perhaps a more accurate picture?

Well, they've looked at changing some of the underlying assumptions to come out with a figure. I think the difficulty, if you come up with a range of measures for each of the particular areas of gain, is you'll have such variety that I think it would be very difficult to try to understand what the likely impact is. So, actually, when you look at the reports that Sheffield have done, they go through in some detail, actually, how they've arrived at their assumptions and the model that they're providing. 

So, again, whilst you could have a variety of ranges within that, they're trying to model both the certainty and the uncertainty in there as well. Modelling uncertainty is rather difficult, but, within this, I think there's, again, a really sound basis to say that there is a significant public health gain to be made on the basis of the modelling, and, as I said, in Wales we're now in the fortunate position of being able to look at the real-time evidence of Scotland before the end of our legislative process.

Evaluation, obviously, is crucial to this. We have to consider the review, also, of the minimum unit price. Do you think that could be difficult, in terms of leading to differing costs and benefits?

Looking at evaluation, it's part of what we've deliberately built into the Bill. So, five years after minimum unit pricing is live in Wales, we'll have an evaluation, and we've committed money in the impact assessment to do that. But, of course, as well as our own assessment of the legislation here, we'll have several years of learning from Scotland by that point as well, and they'll have their own evaluation that we'll be able to borrow from and understand too. So, I think there'll be a decent amount of evidence at that point to understand whether we want to continue with minimum unit pricing.

It's part of what, actually, in the Supreme Court's judgment—they placed some importance on the fact that not only would there be an evaluation from Scotland, but they would have a clause to look at whether this regime would continue, as well, and that point about whether it is a proportionate means of achieving a legitimate aim. In Wales, we have a similar provision, so we will have to positively opt to continue with the regime within six years of it starting. So, there's a timescale for the evaluation, for when it starts—after five years of a decent evidence base to determine whether there is a real public health benefit to be gained, or whether it has been gained. Also, we have to then positively opt, as an Assembly—so, it's not just about Ministers saying we're going to do this. Ministers have to bring forward regulations that the Assembly will have to vote for. So, there are significant safeguards, I think, built into that, so it's more than just evaluation.

Just very briefly, on the cost, I assume that it would be a normal distribution of the information, of the range that has been found by Sheffield. If you do a t-test, you get a 95 per cent confidence between two numbers. We've had this discussion on other Bills, on the importance of, actually, not just trying to pick a midpoint, but actually giving some sort of indication of what it's going to be between at 95 per cent confidence. This is not trying to blame the Government, or anybody else, for anything, but it just gives an understanding of where we are and what it could or couldn't be.

Sheffield have taken a deliberate decision to approach uncertainty by looking at the assumptions underlying the model. To be able to calculate confidence intervals around each of the parameters that are estimated from the model would require that information on all of the different data sources that are fed into the model. Some of the data sources that they used going into the model don't provide those calculations of uncertainty. So, to enable them to do that, they would have to put a whole host of additional assumptions in to calculate those on those data sets to feed in. Other data sets that they use have very large sample sizes, so there's very little statistical uncertainty about those. So, the approach that they've taken, and that they've had feedback on from peer review and from other experts in the field, is to actually look at the structural assumptions underlying the model and test the sensitivity of the outcomes to those.

09:45

Well, it's been published in The Lancet and Addiction, which are both high-quality journals and would have gone through a peer-review process. They have also spoken to other experts within the field. I couldn't give you the detail on that off the top of my head without checking that.

Modelling is all very well, but the outputs from modelling depend crucially on the inputs, and disentangling different effects, which are often impossible to do statistically. I would prefer to look at information on alcohol pricing as it is in the real world—throughout Europe, for example. Well, we've got in the EU alone 27 different countries with different rates of alcohol taxation and very, very substantial differences in price. In Britain, the average duty on a pint of lager is 14p, and we currently—. In the EU, rather, the average duty on a pint of lager is 14p, compared with 52p in Britain, and the average tax on a bottle of wine is 44p, compared with over £2 in Britain. In France, of course, taxes on alcohol are very, very low. Alcohol taxation rates vary from over £2 on a bottle of wine in Ireland and the United Kingdom to below 50p in a very large number of these countries. Is there any statistical evidence that there's any relationship whatsoever between alcohol taxation, which is the equivalent of minimum pricing, and alcohol-related deaths?

Well, there's a fundamental disagreement between us there, because you're saying that taxation is equivalent to minimum unit pricing, and it isn't.

No, it isn't, with respect. That's part of the point, because when you look at what the Supreme Court said and, actually, the challenge that was pursued through Europe by the Scotch Whisky Association, they tried to make that argument that actually taxation is the way you should deal with this. But we know perfectly well, in the real world, that taxation can be—. The impact of taxation can be soaked up by larger retailers, in particular. If you go into a supermarket and you buy very cheap, high-strength alcohol, you can get a range of other deals as well and you know that the retailer is actually subsidising that product, effectively as a loss leader. We know the UK Government, for example, itself wants to do something about less-than-cost-price alcohol, so that is a real issue. Setting a minimum unit price means that the impact of taxation is actually set aside. What you do is you say there is a minimum price below which alcohol cannot be sold, and that avoids some of the challenges about retailers who actually are subsidising their product for the public. And the Supreme Court, again, agreed and acknowledged that a minimum unit price was a proportionate means of achieving a legitimate aim, because they recognised that alcohol duties were not actually an effective means of addressing the disproportionate impact of hazardous and harmful drinking. So, there's a fundamental disagreement between us that I don't think is going to be bridged because I don't expect to persuade you take a different view, but that's the disagreement that exists.

The Supreme Court was considering the legal argument of the distinction between alcohol pricing policies on the one hand and taxation on the other. They weren't conducting an economic analysis of the effects of price on consumption, and that's the point I'm making here. You can buy alcohol in every country in Europe more cheaply, virtually, than you can in Britain, and the price varies significantly around the EU. What I want to know is: what are the figures for alcohol-related deaths in each country in the EU, related to the price that you pay for, say, a bottle of wine or a bottle of 4.8 per cent proof beer? And that might, actually, give us rather different results from the academic modelling that you've been looking at. 

With respect, we go back to our fundamental disagreement, don't we? You again said about the impact of—

Well, but then you're asking about information—. I think there's a fundamental disagreement about what we're really talking about. We're not talking about 4.8 per cent beer that you would buy in a pub or somewhere. We're talking about high-strength, cheap alcohol that is sold at a very cheap price to make it accessible, in very large quantities, and the harm that that does is incontrovertible. There is a significant impact, looking at alcohol-related deaths in this country, behaviours in this country, harm caused in this country, and that is what we are trying to address here. Because you know as well as I do that, as well as the price of alcohol, there are behavioural changes around this as well. If you go to other countries, there are different attitudes—collectively and individually—to alcohol consumption. That's also why we don't say that a minimum unit price is the answer, on its own, to all alcohol-related harms. We have never said that. It's important to see this as part of the range of measures we want to take to develop a different attitude towards alcohol, and some of that is already happening. For example, younger people are more likely to either abstain from alcohol or to drink in moderation. Now, that doesn't mean to say there aren't challenges with some young people who drink to excess. So, it's about understanding what range of measures could we and should we deploy as a nation to try and change our relationship with alcohol. And, you know, it's reinforced by guidance that all the chief medical officers give about consumption. But that, in itself, we don't think is enough. We think there's a firm evidence base upon which to proceed, and this is about reducing the harm that alcohol causes, and, in particular, high-strength, very cheap alcohol, and that's what this Bill aims to address. 

09:50

I think that we would be better informed if we had the information I asked for, so I'm just going to ask you if you'll be able to provide it for us. 

Well, I'm saying that the basis on which we're proceeding isn't the basis on which you're asking for information. 

Well, the answer is we just have a straight disagreement about the relative impact and I'm not going to chase around 27 different European Union countries. If you want to do it yourself, that's a matter for you. I think the Government have set out a perfectly reasonable case and a powerful case to do something about high-strength, cheap alcohol in this country, and that's why we've proposed this particular initiative—

I suspect we're not going to get any further this morning on that, so—

No, well, we aren't, because the Government aren't going to provide the information I've asked for. That's the only—

You can ask for all the irrelevant information you like, Neil. This is about the Government setting out its case on the legislation before this Assembly and whether we really think there is public health gain to be made by having a minimum unit price for alcohol.

Yes. That's the difference between our two roles: our role is to scrutinise you and to ask you for information on the basis of which we can make—

We also have the other committee, which—you know, the health committee can also ask these questions. But I think David—

Bearing in mind the health committee can look at this—we're obviously on a policy issue. But, on that particular point, if you agree with me, there is an issue of societal behaviour across different nations and the approach they take to alcohol, which is not really easy to measure and doesn't really come into statistics, but they do, obviously, influence statistics. So, some of those figures are going to be very difficult to use to assess this approach, aren't they?

Yes. Look, you can broadly say there's a northern European attitude to alcohol and a southern European one. But, actually, that, in itself, is an overgeneralisation. But we know that there are different attitudes to alcohol use. You see it, for example, in the way that—I talked about young people, and the fact that young people are more likely to abstain or to drink moderately, but we also know that there are a range of people who preload and drink very cheap alcohol before going out into town as well. So, the behaviours are different as well, even within the same age group. The societal attitude towards alcohol is part of what we need to try and address—because there are different attitudes to alcohol consumption in different countries, and I think it would be healthier if we had a slightly different attitude to alcohol. I say this as someone who—I would place myself as a moderate drinker myself. I'm not someone who abstains from alcohol. But there's something about how we have a more responsible attitude to alcohol and understand how we would enjoy alcohol, and equally understand the challenges that go with it. But this is about addressing hazardous and harmful drinkers, where there's real harm being caused, and we see that in the statistics—sadly—each year, of alcohol-related harm, including alcohol-related deaths. 

Okay. We'll move on on that, I think. Nick Ramsay, please. 

Diolch. Morning, Minister. The Adam Smith Institute has suggested that heavy drinkers, who I think you would probably be wanting to target through these sorts of policies, are less likely to be dissuaded from drinking by these price changes. How has this been factored into the cost and benefits of the Bill?

Again, that's been part of what the Sheffield modelling has looked at, and I think there's a discord about some of the terms that we're using. When the Adam Smith Institute talk about 'heavy drinkers', Sheffield talk about 'hazardous and harmful drinkers', and I think the Adam Smith Institute, with respect, are really talking about dependent drinkers, and there's a big difference between people who are doing harm and those who are actually dependent on alcohol as well. I accept that for some dependent drinkers price isn't going to matter to them, but, actually, when you think about what the modelling sets out, the rationale for doing so, the reality that a number of people are sensitive to price and it will change some behaviours and alcohol intake, again, we think there's a good basis on which to proceed. Again, this goes back into Jane Hutt's questions about criticisms and different models that have been made. So, I know that criticism is there. We expect that, as we get through with the additional evidence we'll get from the updated modelling in Sheffield—I think that will reinforce the case to take this legislative measure forward, but I'm aware of the criticism and I still think we're doing the right thing.

09:55

It is difficult in this area not to go into the policy, isn't it? I'll do my best. I think you've also said that you don't expect there to be a large increase in dependent drinkers accessing hospital services with—[Inaudible.] Do you think there will be any additional costs, for instance, for the health service if people are trying to find alternatives?

Well, again, there's a difference between dependent drinkers—. I don't think this measure is really going to significantly address dependent drinkers because people who are generally addicted to alcohol, I don't think, are the most likely category of drinkers to have their behaviour changed, but there are other people who aren't dependent on and addicted to alcohol who are still acquiring significant harm, and it's that group of people that we think this measure is most effective at targeting. And we actually want more people to access the help and support that's available—we think that's a good thing. The challenge for the health service will be—and we go into a slightly different area of scrutiny about how we have budgets and services that are capable of dealing with the demand that we want to see coming into those services to help people to manage the harm that alcohol causes. But, of course, in managing that alcohol harm, there is a range of other benefits. That's why the impact assessment looks at a range of different gains to be made, both in reduced absences from work and reduction in crime as well as the actual direct health impact itself as well. So, we try to think about all of those things and the additional benefits to be gained from this particular public health benefit.

There's a common theme coming through in these questions and answers, which is that you've repeatedly said now that this isn't aimed at dependent drinkers. So, it's aimed at a different section of people who drink heavily but aren't dependent. Am I right in saying that?

That's where we think the greatest gain is to be made. That's very clear from the reports we've had done and the modelling as well. We'll know more, actually, about behaviours of dependent drinkers from work that Scotland's already started, actually. They're undertaking a range of work themselves about the impact of their legislation and talking directly to dependent drinkers. So, again, we'll be interested in the direct evidence from that, and if there is a policy change that we need to make in the health service as a result then obviously we'll have a firm basis on which to do so.

What stats have you used to determine what a dependent drinker is? Is that somebody who would be medically classed as an alcoholic? There are a lot of people who drink very heavily who probably wouldn't call themselves dependent drinkers, but, once it's taken away from them, they probably would change their mind.

Well, we're talking about people who are addicted. That's what I would say a dependent drinker is. And actually that addiction, that physical addiction, and the challenges of withdrawal are difficult to manage. Lots of us in this room will know people who are addicted and other people who aren't necessarily addicted but we recognise that we might be concerned about their drinking. Changing the price in particular—and the impact is differentiated across economic gradients—. The modelling shows—and it gives us a proper basis to move forward—that there is going to be gain to be made with that category of drinkers, so hazardous and harmful drinkers as opposed to dependent drinkers.

If I tried to tell you that this legislation in itself was going to make a significant impact on dependent drinkers then I don't think that would be supported by the current modelling that we have, and I would expect, quite rightly, to be asked some very difficult questions about that. So, I'm being direct and honest in the scrutiny here about that.

I never said you weren't, Minister. [Laughter.] Okay, let's get to the heart of the criticism of this policy, which is, aside from whether you're dealing with addicted drinkers or non-addicted drinkers or social drinkers or whatever: will this Bill not reggressively harm people on lower incomes compared with people on higher incomes, who will continue to be able to afford to drink whatever the cost?

I think that depends on what your view is on what harm is done. The modelling recognises that there would be a differential impact on lower socio-economic groups on price and on spend. It also, though, recognises that there is a disproportate health gain to be made there as well, because, when you look at the most recent evidence on modelling from Sheffield, it reinforces previous evidence that the numbers of hazardous and harmful drinkers—or the numbers of drinkers in the population are lower in the lower socio-economic group, but the numbers of hazardous and harmful drinkers are disproportionately represented in the bottom fifth and the bottom two fifths of the population, and they make up a disproportionate number of people who suffer alcohol-related harm, including death as well. So, you either take the view that it's more important to protect people's ability to buy cheap alcohol, because otherwise you're hitting someone in the pocket, or you take the view that, if you don't do something about it, you allow people to carry on with behaviours that we all recognise produce significant harm. And this isn't, as I said, just about price in itself. The price is part of the approach but not the whole approach we ought to take.

So, as I said, there is clear evidence of a disproportionate health gain to be made as a result of this measure being introduced. As I say, it's a public health measure, and I don't think that the Government should be setting itself out to maintain the ability to have high-strength, very cheap alcohol. And that is what we're talking about in addressing this Bill.

10:00

By having a minimum unit price, we're doing what we think is going to be effective.

If it's something that's inherently harmful, why not ban it?

There's a challenge here about—. As I said, I'm not someone who is promoting abstention—

—as what every person should do. Prohibition has shown not to work particularly well. And, actually, there's a challenge there about whether Government would have the power to do it, or whether it's desirable. And we're setting out that we think this is the desirable and effective measure to undertake.

We know from past experience that—[Inaudible.] Okay, you've said that it's not designed to deal with people who are addicted, but if people are used to getting their alcohol in this way, then they will potentially do whatever they can to get that, so they'll take money from other budgets. So, in terms of a household budget, are you concerned, or have you done any analysis at all, of the household around that drinker, and whether money will be diverted into the additional cost of the alcohol and therefore away from other issues in the home—looking after the children, buying food, heating, whatever it might be? Have you done any analysis of the possible effects of that?

There's a recognition in the modelling done that people would make different choices, and we actually think that most people will make a choice not to consume as much alcohol. But I could not look anyone in the eye and say that no drinker will make a choice where they actually compromise on other areas of spending to continue drinking alcohol.

You come back to the same choices about raising the price on any product, whether you make cigarettes more expensive and whether people choose to continue buying cigarettes and not spending more on heating or food as well. And we come back to the fundamental point and purpose of the Bill. We think that there are significant health gains to be made by doing something about high-strength, cheap alcohol. And it's partly about recognising if we want people to change their behaviours, the Bill itself isn't the only measure to do that. So, obviously, we have to see it as part of the whole, as well as recognising the contribution it can make on its own. But some of the questions that you're asking, I think, are rather more in the field of some of the comments that both Jane Hutt and David Rees have made about wanting to change people's attitudes towards alcohol and towards the other choices they make, and also the support that we provide people who positively want to have a different relationship with alcohol.

Just on that point: this is not a tax bill, but it is a fiscal measure designed to change people's behaviour. You'd accept that premise—that's what's behind it. What gives you the confidence to feel that people on lower incomes who are already making what you could call a poor choice from the point of view of their health in prioritising alcohol spending above other food spending or rent spending or heat spending, or whatever it might be? They're already making that choice because the statistics do show that, in terms of proportion of income spent. These are not dependent drinkers, but those who are drinking hazardous and harmful amounts. So, what gives you the confidence that just adding another fiscal measure in there will change their behaviour—not everyone, obviously—and will have the significant effect that you've set out in the RIA?

Because we recognise that people are sensitive to price, and it does change people's behaviour. If you look again at the lower socioeconomic group, then it has the highest rate of people abstaining from alcohol or being moderate drinkers as well. So, actually, as a proportion of that overall population group, the number of hazardous and harmful drinkers is lower than any other income section of the population. The challenge is that particular group of hazardous and harmful drinkers are actually acquiring a disproportionate amount of harm as well. I'm asked about the other choices that are made, or forced upon people, in that particular income group. If you look at the modelling, there is good evidence that changing the price points, which can't be avoided in the way that if you just used taxation—retailers can potentially make the alcohol cheaper in any event. That price point will then make a difference in people's behaviour. And that, again, is supported by the modelling that has been undertaken by Sheffield. That's also the base from which the Scottish Government have acted, and the Scottish Parliament have acted in passing their legislation as well.

10:05

Just to go back to Nick's question, can we just be clear that you don't have any hard information on the substitution effects, as economists call them, and what Nick was talking about that people take money from a different budget to carry on buying alcohol? There is no actual statistical evidence for that; this is just an assumption that you're making.

It's modelled evidence. It's a model and it's based on a series of assumptions, but, then, if you're only looking for statistical evidence on the impact of a measure like this, it hasn't happened anywhere yet. And so we're at the novel end of policy and legislation, and that's accepted. In the Government's case, we don't say there is hard statistical evidence of a comparable system and we can look at that and the choices that people will make. But, again, that's why you have assumptions and that's why you have modelled evidence. And we do know, for example, that people do make different choices, depending on income groups, about the price of goods and services. So, I think there's a reasonable basis to do so, but I couldn't tell you that we have statistical evidence on this measure, for this income group, in real time, because it's a novel policy. We will, though, as I say, have real-time evidence from spring onwards about the position in Scotland.

I won't pursue this too far, but I just want to ask one more question about it. Of course, we've had a lot of evidence, over the years, of the effects of price changes upon consumption patterns. And one should be able to extrapolate something from the information that is publicly available, which would guide you in this respect. I don't know what the minimum price, obviously, will be, ultimately, and therefore what the price jump will be and the extent to which that will affect consumption patterns, but you can make reasonable assumptions from information that is already in the public domain, or other information that is available to you inside Government. I wondered whether that had been looked at.

That evidence has gone into the modelling work that Sheffield university have done. That's why we've set out and provided that as evidence as the basis to bring forward legislation. You will have heard earlier from Janine Hale about the reality of the evidence that Sheffield are taking account of, and they're taking account of updated evidence, producing the report we just had at the end of last month and the report that we expect to have in February. Again, they will set out the incremental changes in a minimum unit price of between 35p and 70p for what we think the actual impact on behaviour will be. So, you'll have that evidence, again in the most authoritative form possible, and it will set out the factual basis upon which that evidence is then provided.

Yes, there's one more question. The chair of Wales Heads of Trading Standards told the Health, Social Care and Sport Committee that to maximise compliance it's not just a question of having the minimum price, but people have got to be aware of it. Otherwise, there's a danger, when they get to the supermarket, they'll just stick it in their trolley with everything else and they—. I mean, I don't often check the price of things I'm buying. If it's remarkably over at the end, I will—

I'm not sure that's a confession you should make in public, but that's a matter for you. [Laughter.] 

Well, I don't really have time, to be honest—I'm running around doing all the AM things, so I just put it all in the trolley. So, is there not a danger that people will not be aware—. Well, I think it's actually quite a good question. They won't be aware of it, unless you actually spend money on raising awareness. You obviously don't agree.

No. Your characterisation of—you don't know how much things cost when you buy them.

You wander around the supermarket checking the price of everything?

Well, look how many politicians don't know the price of a pint of milk. [Laughter.]

You can go to Co-op and pay more, but then you know you're doing something different in choosing to go into that shop, and also whether you're buying a pint, two pints or four, but we digress slightly.

On your point, Nick, about the information that needs to be provided, both to the public but also to retailers so that retailers are aware of what the expectations are and what the law will require them to do, should the Assembly pass the Bill, that's part of an ongoing conversation between officials in the Government and trading standards. To be fair, there's been a very constructive series of conversations that have taken place.

I actually think that you're in an unusual category in not looking at the price of goods, because most people are price-sensitive, and certainly we think about those hazardous and harmful drinkers, particularly in the lower 40 per cent of income rates—I think people will definitely look at the price of the alcohol they buy. Because, again, we're talking, significantly, about people who buy very cheap, high-strength alcohol. And it would be fairly unusual if they continued to purchase the same products at a different price point and not worry about the cost of them. They will see that cost when they go to the till, frankly, and if they haven't bothered to look by that point, they'll definitely notice it.

So, actually, we're rather more interested, if you like, in the information and the education part, because there'll be significant interest, as this Bill continues its passage through the Assembly, whether it's passed or not, and so there'll be significant public awareness in that sense. If the Assembly passes the Bill, we then have to work with our trading standards colleagues and the retailers for them to understand their obligations under the law and how we make sure that the information and the education side of it is done properly. Actually, there's a conversation ongoing about how to use the budget that we've allocated and the proportions in which to use it to make sure that retailers themselves understand their obligations as well. So, there is work to be done, but, actually, we're in a very good place with trading standards—

10:10

I probably got distracted by talking about my shopping habits and the different—[Inaudible.] But I think the heart of this question is, and you mentioned it yourself, earlier, actually—you said that the minimum price is simply one part of a package. So, there must be a cost surrounding the other elements, aside from the minimum price, and have you got an estimate of that? So, in terms of educating people about this change, have you got—?

The chair of the Wales Heads of Trading Standards said he estimated around £200,000 to actually raise public awareness. Does that fit in with your ideas?

Yes, I know that's a comment that he's made, and that's part of the conversation with us about how to use the budget over those three years. I may or may not want to use more of that in the first year to have that conversation with retailers, and officials are meeting with the Welsh Retail Consortium in the near future as well. So, there is an ongoing conversation about that. If you look at the other parts, and what we do to try and educate and inform people about alcohol, and that's set out in the impact assessment, I can't recall the percentages and the numbers that we use, but if you want us to, we can write to you and highlight which part of the impact assessment it is, or we could just send a note to the Chair and say—

Yes, if you could send a note. The one point, before we move on, that I just wanted to raise from both of your replies, both to Nick Ramsay and Neil Hamilton, I think, is: since this current RIA sets out a range, 35p to 70p, I think, and you're having more work done for the new year, and in your reply to Mr Hamilton, you said about the assumptions that had been made—we accept that this is not in operation elsewhere at the moment, or not in western Europe, anyway, so we're not able to factually model that. So, you're making assumptions, which is reasonable to make for a novel policy proposal. But isn't it implied in the replies you've given so far that if you go to the lower end of that range, the 35p to 70p, then you're going to struggle to make these assumptions stand up? Implicit in the replies so far is a minimum alcohol price of 50p plus, is it not?

What's implicit is that we'll have the best available evidence on the modelling of what the differential is between 35p and the 70p. We then have to make a choice. Fifty pence has been a helpful place to actually set out what it would look like, because it's an easier number to understand and then to do calculations on the back of. When we have that evidence about the different increments, we'll have to set out the Government's case of why we think we set it at—whether it's 45p, 50p, 55p, 35p, 70p—whatever it is. We would expect to do that, and do that properly in an upfront, public manner as well. So, I wouldn't read in, but there is a definite assumption that it has to be at 50p or higher, but we'll, of course, set out the potential between 35p and 70p from the Sheffield report, and then we'll have to set out why we have elected to choose the measures that we do ultimately choose to put forward to the Assembly for approval.

Are you likely to set that out—it may not implement it, the regulations may not be ready to go by the end of the process, at Stage 4, basically, with this Bill, but are you likely to tell the Assembly what your chosen level is by Stage 4?

I'd expect that we would set that out, and we'd then consult on our proposal. So, we'd have a proposal to consult on, rather than saying, 'Tell us what you think on anything.' I think we should be upfront and say, 'This is our proposal and we're consulting—'

Because, by then, the assumptions should have been modelled thoroughly enough for you to make—

[Inaudible.] [Laughter.] The command paper and fiscal framework are based upon a no-detriment rule. Does the Cabinet Secretary have any concerns that the reduction in alcohol duty raised in Wales would trigger a reduction in the Welsh block grant?

Well, it's an interesting point. I don't think it would do, because you have to think about what is your real impact on revenues in the first place and how significant and material is that. Because my understanding is the effects have to be material and demonstrable, and in demonstrating a change in taxation you always think about all those other things we're trying to do as well in persuading people to have a different relationship with alcohol, and that probably means consumption goes down. Not only that, though, but because this is a public health measure I think it would be a hard sell politically for the UK Government to say, 'You've introduced a measure that has saved more lives, but we want more revenue off you as a result, because it's changed alcohol revenues that the Exchequer has collected.' And in any event, you'd also have to think about what the impact is, and not just in this area, but we've also set out that we think there are benefits to be gained in the workplace, with fewer absences. That should actually lead to an increase in tax revenues, but also a reduction in crime. Again, that's currently not devolved, so that would be of benefit to the UK Treasury if you saw a reduction in crime. So, you'd need to look at the whole thing, and would you be able to demonstrate that the Treasury is suffering a reduction as a result?

Again, if you think about a different area—smoking, for example—every UK nation is trying to reduce the number of smokers. If we do that successfully, then there'll probably be less revenue for the Treasury. If we're more successful in Wales than other parts of the UK and we reduce our current rates as we want to, and we've committed to doing so, I think it would be pretty unusual if the UK Government then said, 'Because the revenues from smoking have reduced in Wales, because you've reduced the number of smokers, we want to take some money off you.' So there's politics in this, and also there's a consistent policy drive from all of the four Governments within the United Kingdom, who want to see a different relationship with alcohol. This is about how we think we can be effective in doing that.

10:15

I think the command paper talks specifically about any changes in taxation or any fiscal changes rather than any other changes. So, I think that smoking is not quite analogous.

That exact point about smokers has been mentioned twice now. You're right that smoking cessation has been successful, and the amount of smokers now, I think, is 20 per cent, maybe under 20 per cent of the population, and that's happened without a minimum price for cigarettes, hasn't it? So, the taxation of cigarettes has worked. Why is alcohol being treated differently? Because you said earlier that a minimum price is better than taxation. Taxation would of course not harm the Treasury and not harm the Welsh Government's budget. So, why not taxation rather than a minimum price? Why is smoking different?

Actually, we know that taxation in itself isn't the only effective response to reducing smoking rates. It's partly about education and about how you persuade people about the very real harm that people can see and have caused. We've also taken different legislative measures. We have banned smoking in a variety of parts of life. So, Neil Hamilton earlier said, 'Why don't you just ban alcohol if you think there's a harm to it?' Well, actually we have banned smoking in a range of areas because we recognise the harm that's been caused. It's understanding what is the right policy measure and whether that includes legislation. As with smoking, we have introduced legislation. This is the legislation that we think will be helpful in helping to reduce the harm caused by alcohol at the high-strength, cheap end of the bargain.

It's also worth noting on this particular point about the fiscal impact on a fiscal framework that UK Government policy is to monitor the implementation of minimum unit pricing. They haven't said definitively they will never introduce a minimum unit price in England. They are sceptical at elected representative level, but you'll know that there's a significant body of medical opinion that includes England that thinks this is the right thing to do. So, I think the UK Government will look at what we're doing here, they'll look at Scotland as well, and you may well find that, as with other measures where Wales and/or Scotland have taken the first step, ultimately the UK Government will follow on behalf of England. I think there's every prospect that this would be, or could be, one of those areas.

The last question from me: price increases not driven by either taxation or increased cost of manufacture will by necessity increase retailers' profits.

In the impact assessment we've indicated we think there's likely to be an increase in profit as a result.

The question is: is this acceptable and should a voluntary levy be introduced to support alcohol abuse charities on those who, in some cases, will be making, depending on the charge—? Some will make on volume, but if they only make 10p a transaction, the number of transactions in some of the large supermarkets will generate quite a lot of money, for example.

Yes, it's interesting to think about this particular area because I wouldn't be confident setting this out today without the power to make a compulsory levy on retailers on those profits, and we would have a whole different range of conversations and scrutiny and you could expect the industry itself to be unhappy if we wanted to introduce a compulsory levy.

Your question was about a voluntary levy. The challenge there is that it would be voluntary, and I would not be robustly confident that retailers would voluntarily offer up part of the additional profits they could expect to make on the back of this, because at the moment they already subsidise the cheaper end to bring people in, because they think there's value to them as a business in doing so, given all that they sell. There's no harm in us having a conversation with them about it, and about where their, if you like, corporate social responsibility lies in taking a measure that will raise the price and which we think will have a significant public health gain to be made, and what then happens. But I would not be robustly setting out today that agreement on that will be made. 

Scotland, interestingly, had a levy for a couple of years. They called it, I think, a public health levy on larger retailers and sales that they made for tobacco and alcohol. It only lasted two years and, interestingly, that was partly because larger retailers, even though they weren't happy about it, they frankly swallowed it and continued to sell alcohol and tobacco and it didn't change the price of alcohol or tobacco in those outlets. And equally from the Scottish Government's point of view, they couldn't demonstrate that all the money being raised had gone into the public health agenda. There's something about if you set out something that looks like a hypothecated measure, you then need to be able to demonstrate that it's coming into that particular part as a genuine addition, rather than being used to fill the bottom line as well.

So, there are challenges about that, but we're meeting with the Welsh Retail Consortium and we'll happily raise the issue that has been raised here. I think it's reasonable for us to have that conversation with them, but I wouldn't want to see the passage of the Bill interrupted by saying, 'You must have a voluntary agreement for a levy', because I suspect that's a conversation where the initial answer is likely to be fairly short and end in 'O'.       

10:20

If you can't make a voluntary levy compulsory, what you can do is publish how much that company has given as part of the voluntary levy. As with the companies who think corporation tax is a voluntary contribution, when the size of how much they're paying in corporation tax is published, then some of them increase it quite considerably.  

A levy isn't voluntary, but if we're asking for a voluntary contribution then, look, that's a conversation we'll have with them. We all know that within the group of larger retailers in particular, there are differences in view about what they do on a range of things. We were just talking about the price of milk, and that's a good example of, actually, where people make different choices about what they do. Some retailers may want to do that, others may not, but you've raised the issue and I'm happy to indicate that we'll talk to the retail consortium about it, but as a side point as opposed to the fundamental purpose and point of the Bill. But I recognise the issue you raised.

Just for clarity, there are two issues that have come out of Mr Hedges's question. One is, in effect, the windfall profit that the retailers would have. Your own regulatory impact assessment says that's £27 million a year. That's an awful lot of money, and there's an awful lot of pressure—moral pressure—that you can exert on retailers if they're making that amount of profit from a Government intervention in public health, I would imagine. And I welcome the fact that you're going to have that conversation with them, and I hope that the Assembly itself can have that debate as well, because that might help focus on some of that. 

Given the question that's been asked, and I wouldn't be surprised if a similar question was asked in the Health and Social Care Committee, not only the conversation but we'll need to, I expect, report back on the sort of conversation that's taken place. But, you know, happy to do so.

Thank you for that, and on a more specific question—one that is in your actual domain—the impact assessment also says that the cost to the UK Treasury of this measure will, in fact, be £5.8 million a year, which I think is demonstrable and relevant. So, I think the UK Treasury may well be interested in losing nearly £6 million a year from Wales. You talked about the other benefits to the UK Treasury of this measure in terms of workplace absence, crime and so forth. Those are perfectly reasonable things to state, but they're outwith the fiscal framework. The fiscal framework was very narrowly drawn on a no detriment basis in terms of policy initiatives in the different countries. So, are you actually having that conversation with Treasury at the moment, and are you actually going to seek some kind of written undertaking, or understanding at least, or protocol with Treasury to understand how this Bill might operate and how Treasury are likely to then use this Bill in interaction with the Welsh block grant?   

Two things. The first, of course, is that Scotland are proceeding ahead of us, so they're going to have to have the conversation with Scotland as well.

10:25

They have a slightly different fiscal framework, remember. 

But the second point is that we've had correspondence with the Government and officials are meeting before the end of this month, and I expect that that will be part of the discussions that will take place between officials. The Governments are due to speak around the Bill, and I expect that will be part of the conversation as well. 

Can I ask, therefore, because this committee is particularly interested in the fiscal framework—it's something that we keep an overview on, and keep an eye on, usually with the Cabinet Secretary for Finance, of course—are you able, when you've had those further conversations, to share that with the committee as appropriate?

Yes. I think we can find a way to share appropriate information. We'll talk to the Cabinet Secretary for Finance as well, but again, you've raised the issue, and rather than saying, 'We've met, but we can't tell you and won't tell you', I think we'd want to try and find a way to have a reasonable conversation. 

The meeting that the Minister has mentioned is with Home Office officials because that's where the lead on alcohol policy is. It's on the nineteenth of this month. But they are kind of co-ordinating, if you like, or performing a co-ordination role, so we will certainly pick this up. The Treasury have not raised this with us directly, and until last week, we hadn't had any formal response from the UK Government on the Bill. So, this is the first official-to-official response that we've had. 

I understand the Home Office is famous for its understanding of devolution, so best wishes.

I've met with a previous Home Office Minister who had lead responsibility in this area, and he was deeply sceptical about the value of the policy, but they are officially monitoring it. His main concern was the night-time economy, as opposed to the public health end of it. But that's a differing perspective taken. I guess if I'd met with a Minister in the health department, they might have had a slightly different take on the value of it. And that's part of the challenge of Government, is it not?

Thanks, Chair. Just before I go on to another question, I'll ask about the public health supplement in Scotland issue. You highlighted that it was temporary—I accept that—and that you couldn't prove it was ring-fenced. But, surely, the fact that you can't prove how it's been ring-fenced is not a reason not to look at it and to consider it. Mike Hedges talked about voluntary and then he talked about corporation tax. Now, corporation tax is different because, as I say, it's a tax and people have published to demonstrate to the wider public that they are doing their duty, and a voluntary contribution is not necessarily doing your duty. I understand all that. But they are making profits, and your own figures say, as the Chair said, £27 million in profit. And that's not going anywhere other than into the pockets of the retailers. So, if we are looking at public health—and I think one of the first questions that was asked was how we can help with the associations and organisations looking at substance misuse—surely a levy of some sort to compensate for our making sure that we put it into public health, and it is ring-fenced, and you put in place the measures to ensure it's ring-fenced, is possible, isn't it?

Anything, well, nearly anything is possible. But I'm trying to indicate that whilst we'll have a conversation with them, we're talking about something that is voluntary, so I don't want to hang my hat on that and say, 'Yes, there will be definitely be something' because I'm not in control of that and I shouldn't try and indicate that I am. But we'll have the conversation and we'll report back on the outcome of that conversation. I suspect it will be a conversation over time, to be honest.

But there's the second part about if money were released on that basis, would it be that it would come to the Government, or would it be that there'd be investment in other services, for example? Well, I can't control that and set that out for you today and I don't want to try to, because I'm trying to talk about the Bill that we've got, the measure that we're taking, and why we think it's the right response to the public health challenge that we've got. 

And on the point about whether we do something that isn't voluntary, I hesitate about our powers to do so, and I don't want to try and set us out on to a track that potentially gets us into a fight where I don't think there's a particular gain to be made, bearing in mind the cost and the time and political energy that would have to be spent from having that fight. So, we'll talk about voluntary measures, voluntary contributions, and as I said, I'll happily make sure that we report back on the status and the content of those conversations, but, again, just a warning around the fact that the reality is that I don't think that you would find that there would be agreement on voluntary measures to be made in a matter of weeks, because, apart from anything else, we haven't implemented a Bill yet.

We haven't passed the Bill, and I think we're unlikely to see something real until we get to having passed the legislation, which I hope the Assembly will do, and then see it become real, and then I think those challenges about profits that have yet to be made will become rather more real and bite. And, equally, we'll see the change in retailer behaviour, or not, a year in advance of us, in Scotland as well, and that will really help us because most of the retailers we're talking about, the larger retailers in particular, exist in Scotland as well as they do in Wales. If they agree to voluntary measures in Scotland, then it'll be difficult for them to avoid doing so here as well.

10:30

In a sense, another question is: obviously, you've also included the support you're offering, and you were talking about communication and education to encourage people, but, small businesses, the support that you're going to give to them—I suppose I want to understand what type of support, particularly to small businesses. Also, in the modelling, did the model look at the impact on small businesses on the borders? Because clearly there could be a move on the border region for shopping to go across the border, and therefore small businesses may lose out as a consequence. So, has the model looked at that? Has the Welsh Government looked at the implications on those businesses, and what support generally will you be offering small businesses?

We think there are about 3,000 smaller retailers in Wales, so, actually, for all of our trading standards colleagues, that's a manageable number of people that they will have some contact with in any event. It's about how that contact works and how they actually look to educate and inform those retailers in advance, because I think we'd all be very surprised if a larger retailer took the significant reputational risk of not complying with the law, should the Assembly pass it and it be implemented. So, we're talking about what happens to those smaller retailers in particular. Actually, those smaller retailers are again likely to see an advance in their profits, if we're right. There'll be some change in behaviour, but, on what they sell, they'll probably make more as a result.

On your point about cross-border impacts, there is always a potential for cross-border impacts, and I know that the Chair talked about Hay-on-Wye and the Three Tuns and the Co-op over the road in England. What I'd say is that, actually, if you go to the Three Tuns—which is a fine establishment that does good food as well—you're probably there for a different purpose than if you're buying off-licence alcohol from the Co-op down the road. It's about understanding the difference in behaviour and whether you're really comparing like with like.

In some parts of the country, it's more likely people will go and make those off-licence purchases, and there's a recognition of: well, what does that do to those retailers? But if you're really not going to get into your car to do that, because there are few places where you can walk over the border in a reasonable distance, then what really makes a difference is people's time and the additional time they'd need to use, the additional cost of taking their own transport or public transport and the saving that they would make to buy cheaper alcohol over the border. I am sceptical about the likelihood of people making a cross-border booze cruise to collect large amounts of alcohol, because we're talking about the very cheap, high-strength end of the market that is likely to be changed. I think it unlikely that we'll see a significant cross-border impact. But, of course, we'll want to understand, in real time, the impact and, again, we'll see this in Scotland. There is a border between Wales and England too, and so we'll want to understand some of that impact to inform us about our model too, but I don't think it takes away from the significant public health gain to be made, which is the point and purpose of the legislation.

I don't dispute that and I challenge a little bit the comparison with the border between Scotland and England and the border between Wales and England, because there's a far more sparse border between Scotland and England than it is between Wales and England. We were in north Wales only last week and we know, clearly, for many of those businesses, it is just across the border—it's two or three miles—[Inaudible.]—about the implications.

My other point is that there are comparable areas where the border is porous and people can and do transfer across.

But can I also ask, on the question of small businesses: there are many microbreweries now in Wales and they are both producers and retailers, so what support are you offering them in that sense, because the retail side of their business will be impacted upon?

I'm not aware that our microbrewers are particularly engaged in the high-strength, very cheap end of the market. That does not tend to be where microbrewers make their money. They don't pitch themselves as competing with own-brand, very cheap alcohol. So, I don't think it's really an issue for them.

If you look at what we're talking about, we're talking about roughly £1 a pint, as the minimum unit price or maybe slightly more, but that's pretty cheap anyway for most people. So, I don't think we're really talking about disadvantaging microbrewers, but we will need to think about, of course, as we go through this, what are the differential impacts. There'll be a differential impact on on-trade; it might help on-trade, but that isn't the point and the purpose of the Bill. The point and the purpose of the Bill is public health.

Okay. Mr Hamilton, you've had several nibbles, but if you still—. There's just about time—five minutes, I think, if that's okay.

10:35

I just want to ask a couple of questions about the likely effect of the Bill on alcohol producers. The RIA discusses the impact on them and says that it may potentially lead to difficulties for firms to enter the alcohol production market if market prices are below the minimum unit price level, and there may be a reduction in demand for own-brand value products as the minimum price may lead to an increase in price up to the level of more premium brands. So, that would affect disproportionately certain areas of the market for producing alcohol. I was wondering if you had any idea what the financial impact is likely to be on producers of own-brand alcohol sold by retailers, given the concerns that are set out in the competition assessment in the RIA.

Own brands and budget brands—we'd expect that they would want to think again about how they respond. We'll know more about the response of retailers and producers at both ends—again, not just about the real-time impact in Scotland, but about whether people will make choices about having a lower-strength product to maintain the same price. That will be a matter for retailers and producers themselves.

There's something about where is the Government's interest in this. We set this out as a public health measure and there's something about: are we really, as a Government, going to be looking to try to support people who would want to produce and sell alcohol below the minimum unit price? Well, if the business model is built around providing high-strength, cheap alcohol, then that's a challenge for us as a Government about whether we'd want to actively support that in the way we introduce legislation. As I said, I'm just coming back to the point and the purpose of the Bill as a public health measure.

Actually, as a public health measure, we think it stacks up. When it comes to those issues about producers and retailers, there will be a floor for everyone. So, new entrants into the market would be equally as affected as anybody else. They wouldn't be disadvantaged compared to other people and other producers. As I said in reply to David Rees, you tend not to find new entrants into the market who are at the budget, high-strength end of the game. Those people tend to be people who are selling high-volume contracts to larger retailers. That's where the significant mischief exists, and that's what we're trying to address in this piece of legislation.

The gain will be more people not suffering alcohol-related harm, fewer admissions, more people ending up in work, more people making better choices, and frankly more people still being alive. The year-on-year impact, we think, is over 60 deaths being avoided. I think that's a significant and positive reason to want to take this measure.

A related concern is that minimum unit price might lead to reduced competition and some established producers becoming financially unviable in that situation. Again, have you made any assessment of the financial impact of this potential situation?

Well, that would require us to have access to that information, and whilst it might have been made in submissions about reasons and concerns why not to proceed—and you would expect those to be made, let's be honest about the world in which we're in—no one has shared with us that financially sensitive and commercially sensitive information, and I would not expect them to do so, on a basis that we could then disclose. So, we're talking about something that is a hypothesis rather than real-time information and real-time evidence, which is something that you were asking for earlier, of course.

Indeed. You've already spoken about the impact on cross-border trade, which I was also going to ask a question about, but I think David Rees did put the point that there are significant population centres that are relatively close to the border—Nick Ramsay's constituency, of course—and there will be a temptation for people to, instead of going to Chepstow, go somewhere else. 

No names, no pack drill. And when the Severn bridge tolls end, of course, that'll be a significant inhibition on the equivalent of a booze cruise being removed, so I wonder to what extent do you think there will be a sort of leakage in this respect in the effectiveness of your policy.

I think the cross-border trade at the moment is less than 5 per cent—we're talking about what we do with the 95 per cent and how much leakage there is into that 5 per cent. We're also talking about people's time, and people's time is precious—the time it would take to make different choices. If you're talking about very local retailers, part of the advantage of buying local is you can walk to them. I walk to my local shop when I buy something, and I know that I'm almost always paying more than if I walk significantly further or if I go out in my car and drive somewhere to buy the same product in a larger retailer. But I make that choice because my time matters to me, and actually I like to support local retailers as well, which is a slightly different point. But if you're then saying you want to interrupt people's time and the additional cost of travel—there is a cost to travel—then actually you're talking about, I think, fairly marginal choices for people about whether they'd really say, 'It's worth me going and loading up my car over the border to go and buy a huge amount of alcohol'. To make that a really significant choice in value terms—. I am not persuaded that that is so significant an issue that it will mean that the public health gains we expect to make in this public health legislation will not be realised. As I've said, to come back to the point and the purpose of the Bill, it is a public health measure; that is why we're introducing it, that is what the modelling says we could and should do as a result and we're not then saying, 'This is a measure to advantage or disadvantage Welsh businesses'. Actually, as I say, Welsh business should benefit from the avoidance of harm caused by the successful introduction of this piece of legislation.  

10:40

I think this will have to be the final point, if we may. 

Just a very quick one. I understand all those arguments and the purpose of the Bill, but have you set aside any funding in this Bill in relation to supporting any businesses that may find themselves in difficulties as a consequence? 

If there is an extreme case then, of course, any business could make a case to the Government for support, but this legislation, the impact assessment and the money set aside does not propose to provide direct financial support to businesses. But there is an ongoing conversation about information, about how we make it easy for retailers to be compliant with the legislation to inform themselves and their customers about what is coming. 

I'm sure it is, but we will have to wind up. You'll have to save that time for your shopping, Nick. 

We have detained the Cabinet Secretary a bit over time, but I'm sure we're grateful and thankful for the evidence. There are a few things that we agreed we'd either have from you as things emerge or later in the new year, so we'll keep the correspondence flowing on that. We'll send a transcript for veracity, of course, and thank you for coming in this morning. Diolch yn fawr iawn i chi. 

4. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o weddill y cyfarfod ac ar ddechrau'r cyfarfod ar 13 Rhagfyr 2017
4. Motion under Standing Order 17.42 to resolve to exclude the public from the remainder of the meeting and the start of the meeting on 13 December 2017

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

We'll go straight to a motion to to go into private session under 17.42.  

A ydy pawb yn hapus? Hapus. 

Everyone happy? Yes. 

Derbyniwyd y cynnig.

Motion agreed.

We'll go into private session then. Diolch yn fawr iawn. 

Daeth rhan gyhoeddus y cyfarfod i ben am 10:42.

The public part of the meeting ended at 10:42.

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