That brings us to the motion to approve the the financial resolution in respect of the Public Health (Minimum Price for Alcohol) (Wales) Bill. I call on the Cabinet Secretary to move the motion—Vaughan Gething.

Motion NDM6684 Julie James

To propose that the National Assembly for Wales, for the purposes of any provisions resulting from the Public Health (Minimum Price for Alcohol) (Wales) Bill, agrees to any increase in expenditure of a kind referred to in Standing Order 26.69, arising in consequence of the Bill.

Motion moved.

Formally.

I call on the Chair of the Finance Committee, Simon Thomas.

Thank you very much, Llywydd. Even though the report of the Finance Committee has been mentioned during the debate that we had on the general principles of the Bill, the Finance Committee doesn’t have much to say on policy here, but we have a great many things to say about the costs and the advantages of the Bill, and that’s why I stand to speak on the financial resolution. 

We acknowledge that introducing a minimum unit price for alcohol is a novel concept and that there are not yet any precedents from elsewhere that could provide a firm indication of the costs and benefits of such a policy. We therefore understand why the estimated costs and benefits accompanying the Bill are based on modelling, but that meant that it was more difficult for us to consider the true financial implications of the Bill. The modelling was only able to give us assumptions for how a minimum price would impact on consumers’ behaviour, and there’s no certainty that that’s how people will act in reality, so we don’t know whether the actual costs and benefits will be as estimated.

It’s unfortunate that the estimates in the regulatory impact assessment are based on modelling published back in 2014 and that the updated modelling won’t available until the latter stages of our scrutiny period. As a result, the information in the explanatory memorandum hasn’t been updated to reflect the revised costs and benefits. So, we would expect the updated version to be published following Stage 2 proceedings and that it should include these changes. We recommended, therefore, that this be done before the deadline for tabling amendments during Stage 3.

It’s asserted that the aim of this Bill is to reduce the alcohol consumption among hazardous and harmful drinkers, but they aren’t the only groups who’ll be affected by increasing the cost of strong alcohol. Dependent drinkers in particular will see a hefty increase in the price they’ll pay for alcohol, and these groups could prioritise spending on alcohol over food and rent, which could exacerbate social problems ultimately, and these social problems have their own cost implications. For some, a minimum price could be an impetus to seek help for alcohol addiction, so support services should be sufficiently resourced to respond to a potential increase in demand.

There will be additional responsibilities placed upon local authorities in enforcing the provisions of the Bill, so local authority trading standards need to be able to use the funds allocated for the additional responsibilities—around £300,000 over three years—in the most effective way. Of course, the estimated cost to local government is based on a minimum price of 50p per unit, but if the actual minimum price is higher, then the financial implications for local authorities could be far higher too.

The estimates predict that the drop in alcohol sales would lead to a reduction of £5.8 million per year in alcohol duty, although this was revised down to £1.9 million according to the latest figures that we received. We are particularly concerned that the implications of such a revenue decrease have not been properly considered in light of the fiscal framework agreement between the Welsh and UK Governments. We would have expected that Welsh Government officials would have discussed the impact of a potential reduction in alcohol duty with HM Treasury. Ultimately, we don’t believe that the Treasury will ignore the fact that they will be losing out on money as a result of this Bill. We therefore expect that a decision will have been made on the impact on the fiscal framework before the Assembly’s final vote on the Bill at Stage 4.

We believe that, in the long term, a minimum price will increase revenue for retailers. The committee is somewhat uncomfortable at the prospect of retailers, particularly those with already high profits, profiting further from the introduction of a public health measure. We believe, therefore, that there is sufficient time for the Welsh Government to implement a mechanism whereby revenue collected from a levy on large retailers could be re-directed for the purpose of improving public health, for example to alcohol or substance misuse charities.

The Cabinet Secretary told us he didn’t expect the Bill to have a significant impact on alcohol producers in Wales or that many customers would cross the border to purchase alcohol in England. Both of these issues though will be dependent on the level at which a minimum price is set—the higher the price, the greater the impact on alcohol producers and cross-border trade.

The level of the minimum price will be crucial therefore, but that will be set through regulations later rather than on the face of this Bill. Whatever the reasons for that, we believe that the regulations should be accompanied by a robust financial assessment and be subject to thorough scrutiny by the Assembly. We believe that the publication of draft regulations, with sufficient time for these to be scrutinised by relevant Assembly Committees, will be the most effective way of ensuring this. We’ve therefore recommended that the procedure for making the regulations is changed to the superaffirmative procedure to allow scrutiny to take place.

I call on the Cabinet Secretary to respond.

Thank you, Llywydd. I'm happy to indicate that we will, of course, update the regulatory impact assessment. A number of the points made by the Chair of the Finance Committee I tried to deal with in the general principles debate, in particular the points about the voluntary levy and the cross-border issues as well. 

On your point about a revenue decrease, officials from the Government have already raised this issue in discussion with Treasury, and there have not been thus far concerns raised by Treasury, but I will of course make sure the Assembly is kept up to date. I expect further scrutiny through the process and I look forward to dealing with these points again as we test amendments at Stage 2, to try and make sure that we deal with what I think is a broadly accepted policy rationale for the Bill and to make sure that we get the detail of it right in practice.   

As the vote on the general principles of the Public Health (Minimum Price for Alcohol) (Wales) Bill has been deferred until voting time, I will also defer the vote on the financial resolution until voting time.

Voting deferred until voting time.

Therefore, that brings us to voting time, and unless three Members wish for the bell to be rung, I will proceed directly to voting. [Interruption.] Are there three who wish for the bell to be rung? We will therefore ring the bell.

The bell was rung to call Members to the Chamber.