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The Maynard Doctrine: Making people healthier - time to use the price mechanism?

Professor Alan Maynard OBE suggests a taxing approach to the health problems caused by alcohol and sugary foods. Minimum pricing per unit of alcohol and new taxes on highly-fattening processed foods could help change habits and raise revenues.

This time next year, the Conservatives will be in power and the NHS will be facing significant reductions in resourcing.

Typically, such parsimony is accompanied by Ministers lauding the merits of health promotion and non-NHS investments which affect health.

Given the inevitability of such tactics to divert public attention from the financial distress in the NHS, is it possible to persuade the Tories to be radical?

Radical policy north of Hadrian’s Wall
Looking north, the English can see radical policy-making at work. The Scots have banned “happy hours” in which alcohol prices are discounted to enhance consumption. Their government has also banned “two for one” promotions of alcohol products. This is a very sensible response to the acute problems created by the use and misuse of alcohol in Scotland.

Even more radically, the Scots are proposing to introduce legislation this autumn to control the minimum price of alcohol e.g. 40 pence per unit of alcohol is proposed. This would effectively double the unit price.

The Chief Medical Officer in England, Sir Liam Donaldson, has also advocated a minimum price policy and suggested a 50 pence per unit. Sadly, the CMO’s influence on policy has been marginalised.

Moderating heavy drinkers’ behaviour
Research evidence indicates that heavy drinkers tend to buy cheaper alcohol, so minimum prices might affect their behaviour effectively and moderate the damage they inflict on themselves and the NHS.

Given European Union tax laws, raising the price of alcohol more generally is quite difficult given pressures to harmonise tax systems and tax rates.

Furthermore, general tax hikes increase the incentive to smuggle. Minimum price policies would be regressive and may affect smuggling; but the health gains could be considerable. Moreover, the weak rate of devalued sterling against the Euro reduces that attractiveness of this option.

’ In England and Scotland, the alcohol industry is much agitated about minimum price policies - even though it could increase their income ‘

In England and Scotland, the alcohol industry is much agitated about minimum price policies - even though it could increase their income. Such policies may be regressive and a burden on the poor; but they would of course reduce street disturbances, accidents and healthcare demands in primary care and hospitals.

In over two dozen US states, there are taxes on soda and sugary drinks. Earlier this year, there was discussion amongst policy wonks in Washington of the use of such tax revenues to assist the funding of the Obama reforms of healthcare (if they ever occur).

The sobering figures on obesity
In the USA, nearly one-third of all children and adolescents -some 23 million individuals - are obese, and consequently at greater risk of developing type 2 diabetes, heart disease and other illnesses. The research evidence shows that young people, the poor and those already overweight are particularly responsive to price changes created by tax hikes on sugar sweetened beverages.

The Government’s Foresight Report on obesity in 2007 forecast that by 2010, 28 per cent of women and 33 per cent of men would be obese. Advocacy of increased taxation of sugar-sweetened drinks in the UK is growing (see New Scientist, August 2006) as the obesity epidemic spreads from the USA.

A sugar tax
Given the current inability of government policy to curb the growth of obesity, a sugar taxation policy that may have beneficial health effects and raises revenue in a time of fiscal difficulty could be attractive to Whitehall.

Will the current government and the administration in 2010 be prepared to be radical and use pricing policy to influence alcohol and sugar consumption? They will face the same sort of response from industry that tobacco pricing faced some decades ago – reports predicting damage to UK PLC’s employment and exports.

But if they are interested in improving population health, such policies may produce more health gains than pouring additional resources into the NHS to treat those fundamentally damaged by over-use of these products.

Perhaps the best thing the NHS could do to reduce the health damage of alcohol and sugary processed foods would be to ban such products from retail sale in their premises whilst they await a dawning of sense amongst our political masters and their policy makers in the Department of Health and H.M. Treasury!

Using the price mechanism to moderate alcohol and sugary processed foods damage to population health will never be a complete cure - but in conjunction with other policies which inform consumers better, it should be attractive to any radically-minded government anxious to improve health and balance the books in Whitehall.