Focus - UK lawmakers look to rein in drinks companies

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The consultation launched by the UK government this week represents a strong indication that it has lost patience with the drinks industry, and is moving towards introducing mandatory measures to replace self-regulatory ones. Ben Cooper analyses the reaction from industry bodies and campaigners, and assesses where this week's announcement leaves the industry.

Tuesday was a bad day for the UK drinks industry but it is one that it might have predicted was coming. The UK government has threatened to get tough with the industry - retailers and producers - if self-regulatory measures aimed at reducing alcohol abuse did not prove effective, and it appears that it is now ready to act.

The Department of Health (DH) consultation launched on Tuesday is being widely seen as a prelude to some tightening of regulations, which could possibly take the form of current self-regulatory measures becoming mandatory.

The consultation document was published along with independent Government-commissioned research by organisations such as KPMG and the University of Sheffield suggesting that the industry is not adhering to its own voluntary standards and that alcohol is a far wider cause of damage to people's health than previously suspected.

According to the DH, the cost of alcohol misuse to society is between GBP17.7bn and GBP25.1bn a year, with a cost to the NHS of GBP2.7bn.

According to KPMG's Review of the Social Responsibility Standards for the production and sale of Alcoholic Drinks, conducted for the Home Office, "there is sufficient evidence on the ground to show that both the Social Responsibility Standards and related legislation are being flouted on a scale that suggests corrective action and Government intervention is required."

Under the measures included in the consultation, retailers would have to offer drinks in small as well as large glasses or measures; restrict happy hours or irresponsible price-based promotions; display alcohol in off-licence premises in separate areas; give point of sale information on units, allowing customers to make an informed choice; train staff in shops and venues to recognise and refuse alcohol to underage or drunk customers.

The official DH communiqué seemed clear. It stated: "Manufacturers will be given until the end of the year to put the required warnings and advice on bottles and cans. If the alcohol industry does not abide, Government will move to put a mandatory scheme in place. This would require health and unit information on all drinks containers."

In response, industry bodies suggested that the problems stemmed more from insufficient enforcement of current mandatory provisions under the Licensing Act, and therefore further legislation was not the answer.

Commenting on the research the Government had put forward, Mark Hastings, director of communications at the British Beer and Pub Association, told just-drinks: "It doesn't account for the vast range of laws that are already in place that can be used to deal with the misuse that Government has raised as concerns."

He also said the Government research understated what the industry had achieved in terms of self-regulation. "We firmly believe there are some misunderstandings and misrepresentations of what it is the industry is doing in the documents that have been released," he said.

Hastings said the evidence that had been gathered was "anecdotal" and not representative of what was really going on in the marketplace. The KPMG report itself gave some support to this contention, stating, "on a positive note, from our consultations we also know that there is a critical mass of very responsible stakeholders within the industry."

Hastings' remarks give some indication of the tenor of the lobbying from industry which is likely to be seen over the coming months. He said during the consultation period the industry would be "questioning the fundamental premise that is being put forward that things are bad and getting worse. We would put forward the case that things are improving. What we don't need is a raft of legislation that penalises all businesses and all individuals for the sake of a few people who have problems."

Campaigners not surprisingly welcomed the DH announcement.  Alcohol charity Alcohol Concern said the Government research supported its own findings of "poor practice" within the licensed trade.

"We welcome the fact that Government is finally considering a more robust programme to bring down the levels of harm," said Don Shenker, chief executive of Alcohol Concern. "The combination of a mandatory code of standards among the licensed trade and improved resources to support problem drinkers, will undoubtedly help to bring down the burden that alcohol misuse places on public services. However, the key test will be whether Government is prepared to introduce statutory industry safeguards to protect public health and save avoidable costs."

One of the key facets of this week's announcement welcomed by campaigners is that the gap that they have long alleged exists between the responsibility rhetoric of the industry and what is actually going on in the market appears to have been supported by independent research commissioned by the Government itself.

Rachel Seabrook, research manager at the Institute of Alcohol Studies, said the KPMG report was "quite damning", adding that the fact that it was an "absolutely independent review commissioned by the Government" was significant.

Part of the KPMG report is also given over to examining other self-regulatory and co-regulatory models in existence in other sectors. The research already conducted and the forthcoming consultation may well represent the toughest examination of the effectiveness of The Portman Group in this area.

While Hastings defended the industry's record for self-policing, Frank Soodeen, spokesperson for Alcohol Concern, suggested that the Portman Group was too small an organisation to be able to do the extensive task it sets itself, which extends to all alcohol merchandising, labelling, promotion and online marketing.

Sodeen acknowledged that the majority of licensed retailers behaved responsibly but said it was industry's inability to police the offending minority that is the problem. "Better enforcement is required but also the trade associations have very limited influence over their membership and the wider licensed trade that they purport to represent," Soodeen said. It remains to be seen whether the Government envisages the drinks industry retaining some co-regulatory function.

One small positive for the industry is that the contentious issues of TV advertising and pricing in supermarkets were not included in the current consultation. In recent years, both the content and pre-watershed broadcasting of alcohol advertising have attracted criticism, while heavy discounting of alcohol in supermarkets has been widely debated. Hastings suggested this may have been left to one side for now because of the significant rise in alcohol duties announced at the last Budget.

However, the fact that the consultation period is comparatively short is not a good sign for industry. In previous consultations, stakeholders have been given longer to respond. The consultation period this time is effectively around three months, until October. This is certainly indicative of Government's wish to move swiftly, and could signify that it has a legislative timetable in mind.

As for other political factors, in spite of being branded the party of the 'Nanny State' when coming into power in 1997, the Labour governments of Tony Blair and Gordon Brown have often disappointed activists by eschewing tighter business regulation in favour of self-regulatory initiatives. The drinks sector is certainly a case in point. But there appears to be a strong feeling that action could now be a vote-winner for a troubled administration, which will face a General Election in two years' time.

Campaigners will not be counting their chickens, however. The Government has retreated from legislating before for fear of being branded 'anti-business'. The question is whether those qualms are still sufficiently influential now to afford industry a further last chance.

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