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This is a live blog of the first day of the hearing of the appeal brought by the Scotch Whisky Association and others, concerning the lawfulness of the Scottish Government’s plans to introduce minimum pricing for alcohol. Please refresh the UKSC Blog homepage throughout the day in order to get the latest posts. Today’s live blog team comprises Emma Boffey, Laura McEwen, Lorraine Walkinshaw and Will Anderson, from CMS. 

1630: Day 1 Summary

Day 1 of the appeal has now concluded.

Today, the Court heard from counsel for the appellants, Aidan O’Neill QC. In his submission, this case is about whether minimum unit pricing is a lawful means for achieving the Scottish Government’s aims: (1) decreasing consumption among the population generally; and (2) decreasing consumption among hazardous and harmful drinks. He says there are a whole variety of ways that pricing can be used to achieve these aims, legitimately. One of those options is to raise excise duty on the sale of alcohol, which Mr O’Neill submits would achieve at least the same health benefits as minimum unit pricing.

Mr O’Neill QC asked a key question of the Court on a number of occasions during his submissions: why not tax?  In his submissions, taxation is a more flexible approach and has more opportunities to achieve the same health and societal benefits.

Throughout the day, the Court spent some time in dialogue with Mr O’Neill QC on whether the policy was intended to tackle excess alcohol consumption in the poorer sections of Scottish society, or the population as a whole. Mr O’Neill QC’s submission is that there is clear evidence that taxation is appropriate, if the aim is to reduce alcohol consumption across the general population, as tax affects everyone.

This afternoon, the Lord Advocate appeared in person to begin his submissions on behalf of the Scottish Government. He will continue those submissions tomorrow morning. The Lord Advocate began his submissions by telling the Court that Scotland has a per capita consumption of alcohol which is higher than England and Wales. The alcohol mortality rates for men in Scotland are also double than those in England and Wales, with a similar pattern for women. The Lord Advocate submitted that the greatest harm from excess alcohol consumption is experienced by those who live in deprived areas.  The Lord Advocate submitted that the greatest health benefits from minimum pricing will be secured in the hazardous and harmful drinkers in poverty and that they are most at risk of alcohol related harm.

The Lord Advocate told the Court that the aim of the policy is to promote cultural change. In his submission, it is a balanced measure without a disproportionate effect on moderate drinkers. In his submission, it is addresses an issue which cannot be specifically addressed by excise duty: the impact on health of consumption of alcohol which is cheap relative to its strength.

The Lord Advocate submitted that excise duty is not as effective as minimum pricing on its own. A minimum price is targeted at products priced cheaply compared to their strength. Taxes affect all drinkers. Minimum pricing recognises the majority have a responsible relationship with alcohol. He concluded his submissions for today by noting that the Scottish Government has reached the conclusion that tax alone does not achieve their intended aims.

The Lord Advocate will finish his submissions tomorrow morning. The Court will then hear from Counsel for the UK Government, Philip Simpson QC, before Mr O’Neill QC offers a reply on behalf of the appellants. Join the UKSC Blog again for further coverage of the appeal from tomorrow morning at 1030.

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1600: Court is adjourned for the day and will resume at 1030 tomorrow morning.

1559: The Lord Advocate says the BRIA has looked at the question of reaching the aim by an increase in tax but the Government has concluded that tax on its own does not achieve the aim. The Lord Advocate observes references to a report which states, that having looked at various options, there is a compelling case for considering a range of pricing policies.

1555: The Lord Advocate continues from the BRIA that a minimum price per unit is not open to absorption in pricing by retailers like tax can be.

1552: The Lord Advocate, reading from the BRIA, states tax increases are sometime absorbed by the retailer or producer. This can result in no reduction in consumption and harm and the price of other groceries can go up as a result.

1550: Looking at the BRIA, the submission by The Lord Advocate is that excise duty is not as effective as minimum pricing on its own. A minimum price is targeted at products priced cheaply compared to their strength. Taxes affect all drinkers. Minimum pricing recognises the majority have a responsible relationship with alcohol.

1545: The Lord Advocate invites the Court to consider the Sheffield study as it illustrates that cheap alcohol is purchased and is disproportionately consumed by hazardous and harmful drinkers. Lord Hodge acknowledges the figure is quite striking.

1540: The Lord Advocate makes the submission that in the BRIA is an analysis of the proportionality of the measure, supported by specific evidence and supported by the Sheffield April 2016 study. Lord Mance asks about the analysis looking at matters from one side and the measure affects the market whereas there is no real analysis of it being done by an uplift in excise duty which would have some benefit in reducing drinking overall. The Lord Advocate states he will address alternatives. In relation to the markets The Lord Advocate submits it is wrong to say the impact on the market was not addressed in the BRIA.

1537: The Lord Advocate submits that the measures are time limited to evaluate after five years and the legislation will expire after six years if not renewed and states there are uncertainties. One significant source of uncertainty is that minimum unit pricing may encourage retailers to purchase cheaper products due to the mark-up. The Lord Advocate states the Government is not able to address all elements of uncertainty but this is a time limited measure.

1535: The Lord Advocate in response to a question from Lord Reed states that a benefit is that discounting cannot be made as with excise duty.

1531: The Lord Advocate submits the measure is easy to understand and enforce. It sets a retail price floor and prevents trading down. Measures without a price floor would be less effective. There is evidence retailers may discount alcohol as described in the BRIA. A measure which does not permit trading down will be a more effective measure than a measure which does not. The Lord Advocate states it is a benefit of the measure that it directly addresses price.

1528: The Lord Advocate states from a health point of view, the higher the price the better. This measure seeks to strike a balance. It is complimentary to the effect excise duty has on consumption. It is not an either or. The key feature is it focuses on an issue which cannot be specifically addressed by excise duty, being the impact on health of consumption of alcohol which is cheap relative to its strength.

1525: The Lord Advocate says it is important to notice that reductions are in a targeted way. The reason it is extended to moderate drinkers is that they do consume alcohol under the minimum price. Lord Sumption asks whether The Lord Advocate’s submission is that the minimum price approach affects moderate drinkers less than an increase in excise. The Lord Advocate agrees it is. The Lord Advocate states the aim is to promote cultural change and it is a positive advantage that it does not affect the products enjoyed by moderate drinkers. This is a balanced measure without the disproportionate effect on moderate drinkers.

1520: The Lord Advocate directs the Court to the estimated impact on hazardous and harmful drinkers and those in poverty which he says leads to health outcomes and in particular the relative change in deaths. This recognises the greatest health benefits will be secured in the hazardous and harmful drinkers in poverty and that they are most at risk of alcohol related harm.

1515: The Lord Advocate states that moderate drinkers drink less than those in poverty and do not tend to purchase the products which would be affected by minimum pricing. As a result, minimum unit pricing is a direct response. It directly addresses the retail price to the consumer. It places a floor price which prevents trading down. It directly targets those who will benefit most, namely hazardous and harmful drinkers.

1513: The Lord Advocate addresses the Court that the analysis of the issue must be considered and cites the Sheffield study, which was discussed by Mr O’Neill QC earlier this morning. The Lord Advocate submits that vodka is of particular relevance in its sale in Scotland versus England and Wales, at the rate below the fifty pence rate.

1510: The Lord Advocate addresses the Court that Scotland has a per capita consumption of alcohol which is higher than England and Wales and alcohol mortality rates for men in Scotland were double than those in England and Wales, with a similar pattern for women. The greatest harm is experienced by those who live in deprived areas. Alcohol related deaths are eight times higher in the lowest quintile versus the highest quintile. Hazardous and harmful drinkers are at greatest risk of harm.

1507: The Lord Advocate addresses appropriateness and necessity as from the BRIA.

1503: The Lord Advocate states that this is a time limited measure of six years and the measures are underpinned by policy analysis.

1501: The Lord Advocate submits that the minimum pricing model is easy to apply and enforce and that it will be an effective intervention. It is noted that is not disputed.

1459: The Lord Advocate begins his submissions and invites the court to reject the appeal.

1458: Mr O’Neill QC asks whether it is possible to reduce alcohol consumption by fiscal measures and answers in the affirmative.

1455: Mr O’Neill QC states that the two-fold objective includes the reduction of consumption amongst moderate drinkers.

1451: Mr O’Neill QC refers to the Lord Ordinary’s judgment and states that he applied the wrong test and refers to the referral to the Court of Justice of the EU.

1441: Mr O’Neill QC is submitting that deaths from drinking in the poorest communities in Scotland could be prevented by taxation.

1437: Mr O’Neill QC submits that certain drinks which may be considered  a problem are not caught by minimum pricing.

1435: Lord Hodge is continuing this discussion.

1432: Lord Reed and Mr O’Neill QC are discussing the difference in hazardous drinking between the richest and the poorest in Scotland with reference to the aims of the legislation.

1430: Mr O’Neill QC submits that the aim should be defined the aims of the Scottish Parliament when passing the legislation and it should be considered whether this aim can be achieved by other means such as taxation. Mr O’Neill QC submits that this is possible and is the least restrictive option. He submits that pricing can be used to reduce consumption but must be done in a lawful manner.

1420: Mr O’Neill QC states that all parties have agreed that the legitimate aim of the legislation is as identified by the Court of Justice of the European Union.

1418: Mr O’Neill QC submits that there is a clear acceptance that if you are trying to reduce alcohol consumption by the general population “tax is what does it, as tax covers everyone”.

1418: Mr O’Neill QC submits that it is not for the Lord Advocate to redefine aims in the face of new evidence.

1413: Mr O’Neill QC states that this information only became available after the passage of the legislation. In response to a question from Lady Hale, Mr O’Neill QC states that affluence is based on household income.

1405: Mr Mr O’Neill QC refers to the Extra Division’s reference to figures produced by Sheffield University, which conclude that hazardous and harmful drinking are associated with affluence.

1405: Mr O’Neill QC notes that you can only know the least restrictive test if you are aware of the aim.

1400: The Court has returned.

1300: Court adjourns until 1400.

1259: Mr O’Neill QC notes that on that basis, the Supreme Court does not have to consider whether fiscal measures would be less restrictive, that is accepted and is not a matter for the appeal.

1257: Mr O’Neill QC focuses on the test to be applied by the court as to whether there are less restrictive means that can be applied and notes that the Lord Ordinary considered that fiscal measures would be less restrictive.

1250: Lord Sumption puts it to Mr O’Neill QC that a Member State’s constitutional arrangements should not hinder its compliance with its EU law. Mr O’Neill QC agrees and refers to decisions from the German courts which confirm the same.

1247: Lord Kerr asks whether, on that logic, that minimum unit pricing is the least restrictive option available to Scottish argument.

1244: Mr O’Neill QC argues that taking that to its final point that would suggest that the Scottish Government’s only option is to do something that is non-compliant with EU law.

1242: Lord Reed notes that this is a bit of a “plank” in the appellants’ argument because the EU decision requires the relevant authority to have looked at alternative, less restrictive options, but excise duties are not an option that is open to the Scottish Government.

1240: Counsel for the appellants notes that it should be irrelevant in the Supreme Court’s decision that the Scottish Government does not have the power to vary tax. This was referred to at the “elephant in the room” in the decision of the Inner House.

1237: Mr O’Neill QC  notes that minimum pricing does not benefit the public purse, it “simply creates a situation whereby retailers retain the profit“.

1235: Mr O’Neill QC  says that there are a “quiver full of approaches” to ensure tax levies are passed to the consumer.  Counsel offers the example of the approach in England and Wales which requires retailers to sell at or above cost of duty plus VAT. This assumes that the cost of the product is zero so there is no complicated calculation as to the cost of the product.  All that need be known it  the category of alcohol and duty. This is “as easy” as calculating the minimum unit price.

1229: Mr O’Neill notes that there are various ways to structure tax to ensure that retailers pass on all tax levies.

1225: Mr O’Neill QC says that EU law allows small breweries to be given payment holidays from excise duties. So point that craft breweries not protected is not correct.

1215: Mr O’Neill QC says this tax is simply a possibility, which has never been considered by the Scottish Government. He says that the fact that this tax is applied at a regional level is not an issue under EU law, so long as the revenue raised is applied to the cause of the problem.

1214: Counsel says there are many projects and uses the tax revenue could be applied to fund, in order to tackle the problems caused by excess alcohol consumption in Scotland.

1213: Mr O’Neill QC says this shows that you can have a tax, discouraging consumption of a product, so long as the money from that tax is used to deal with the problem created by its consumption. He says, by analogy, this allows for the possibility of a tax to be placed on alcohol, with a view to discouraging consumption, and the tax revenue raised then used for specific health or social use, to deal with the problems caused by excess alcohol consumption.

1211:  The Court are considering the precedent for the Catalonian petrol tax. The revenue was used for the benefit of health matters. The Catalonian government had the discretion to fix the rates.

1208: Mr O’Neill QC says that this provision has been used in Catalonia, Spain, for raising taxes on petrol. He says it allows raising of taxes, within an EU member state, at a sub-national level.

1206: Counsel for the appellants says that EU law allows for the possibility of taxes on alcohol, specifically for health purposes.

1205: Mr O’Neill QC is referring the Court to the concept of parallel indirect taxation within a member state, which he says is allowed under EU law.

1202: Mr O’Neill QC is now discussing indirect models of taxation on alcohol. Can taxation can be specific to Scotland?  He submits, yes, this is possible.

1200: Lord Reed is pressing Aiden O’Neill QC on the “acute” nature of this problem. Mr O’Neill QC says that a more targeted approach is needed to tackle consumption of alcohol among the poorer sections of Scottish society. Lord Reed notes that the poor have less ability to “trade up” under minimum pricing, but taxation will touch everyone’s consumption.

1158: Mr O’Neill QC observes that there is “clearly a problem” with excess alcohol consumption in Scotland.

1157: Mr O’Neill QC says that a general measure is “too much of a blunt instrument” and there “are other ways” to achieve the same aim – a reduction in consumption among hazardous and harmful drinkers.

1156: Lord Reed notes that many of the cases before the Criminal Courts in Scotland feature excess alcohol consumption, predominantly in poorer communities.

1154: Lord Mance is observing that a 22 pence per unit raise in excise duty will hit all drinkers, including the rich, not just the poor.

1152: Mr O’Neill QC is taking the Court back to the Sheffield University February 2016 study. He says that one of the options is volume metric taxation: e.g. tax all products at 22 pence per unit. He says the same benefits are achieved as 50 pence per unit minimum unit pricing. He asks again: why not tax?  He says it is more flexible and has more opportunities to achieve the same benefits.

1148: Mr O’Neill QC notes that the raising of excise duty to these levels might be perceived as “politically unacceptable“. He observes that this model is however followed in various Nordic jurisdictions, including Iceland, Sweden and Finland.

1147: Mr O’Neill QC and Lord Mance are continuing to discuss the table before the Court, which notes the equivalent impact of raising excise duty. Mr O’Neill QC notes that it is an illustration of the Sheffield University model.

1146: Mr O’Neill QC notes that it is “too easy to blame the drink” for this issue. Mr O’Neill QC notes that the Scottish Government may wish to tackle poverty itself, which he submits is the root cause of this problem, rather than solely tackling alcohol consumption.

1144: Lord Reed is observing that, at first instance, the Court found that alcohol related deaths, and alcohol related discharges from hospitals, were overwhelmingly concentrated among the poor in Scotland.

1141: Counsel is explaining that cider is currently taxed less than any other product. Sparkling wine is charged a bit more, with spirits charged “a lot more”. Counsel submits that cider is currently “incredibly cheap”, in terms of price per unit on the current model.

1140: Mr O’Neill QC says another way in which excise duty might be used is to reconfigure the rates. He says, at the moment, there is a major disparity in the taxation of alcohol in the UK. He is referring the Court to a table on current excise rates.

1137: Mr O’Neill QC says the Court does not need to resolve precisely what percentage will achieve the same effect: he submits they only need to be satisfied that an increase generally will achieve at least the same health benefits overall, as 50 pence minimum unit pricing.

1135: Lord Sumption asks whether it is wrong to focus on the effects on extreme drinkers in poorer sections of society. Mr O’Neill QC says yes: the aims of the policy are agreed in the Statement of Facts and Issues before the Court. They are: (1) decreasing consumption among the population generally; and (2) decreasing consumption among hazardous and harmful drinks, generally (not just those in poverty).

1132: Mr O’Neill QC says that the key point is that raising excise duty can achieve precisely the same benefits: lives being saved from excess alcohol consumption.

1130: The Court are continuing to consider the Sheffield University February 2016 paper. Mr O’Neill QC queries why the Scottish Government did not consider other options highlighted in this paper, which he submits, achieve the same health and societal benefits.

1128: Mr O’Neill QC explains that there are different categories of product (spirits, beer, wine, etc). Thereafter, alcohol units would be charged at the same rate within a particular band per product.

1126: Lady Hale and Lord Sumption are asking Mr O’Neill QC how the application of excise duty would work: is it by product, or by strength of the relevant product?

1125: Lord Hodge (one of the two Scottish justices of the Court) is asking Mr O’Neill QC whether you can compare Scotland with England & Wales, when it comes to the consumption and effects of alcohol. Is Scotland different?  Mr O’Neill QC says no, and the Court can consider material from England & Wales too, in his submission.

1123: Mr O’Neill QC now looking at a Sheffield University study in February 2016 on the possible effects of minimum pricing. Mr O’Neill QC says that this paper sought to compare various ways in which taxation policies might be used, compared to minimum unit pricing at 50 pence per unit. He tells the Court that the paper comes to the conclusion that a 13.4% increase in excise duty will achieve the same health benefits as minimum unit pricing.

1120: Mr O’Neill QC and Lord Mance are discussing what can truly be known from econometric models on the effect of excise duty.

1116: Mr O’Neill QC and the Court are considering a HMRC report on the effect of 40% excise duty on alcohol, a proposal which has since been abandoned by the UK Government.

1115: Mr O’Neill QC submits that one way to achieve the desired health benefits is to raise excise duty on alcohol. He tells the Court that the evidence supports “at least the same health benefits” being achieved, by this means.

1112: Lord Reed asks Mr O’Neill QC whether an increase in excise duty for alcohol would need to apply across UK as a whole?  Aidan O’Neill notes this is a new argument made by the respondents for the first time, which he will address further later today.

1111: Aidan O’Neill QC notes that the Scottish Government has made a “political decision” to intervene in the marketplace, in order to decrease consumption of alcohol in Scottish society, and thereby achieve their aim of improving public health in Scotland. Mr O’Neill QC says that this case is about whether minimum pricing is a lawful means for achieving that aim. He says there are a whole variety of ways that pricing can be used to achieve this aim legitimately.

1108: Aidan O’Neill QC says the simple question before the Court is: why not tax, rather than minimum pricing?

1107: Aidan O’Neill QC is addressing the Court on concerns regarding whether two days will be sufficient to conclude the appeal. His view is that the additional material introduced recently ought not to affect the timetable agreed.  Lord Neuberger notes that the shorter and more concise the submissions, the better. The Court hopes that two days will be sufficient to conclude the appeal.

1104: Counsel and solicitors are assembled; Lord Neuberger, Lady Hale, Lord Mance, Lord Kerr, Lord Sumption, Lord Reed and Lord Hodge enter the Court. Aidan O’Neill QC for the appellants is up first.

0954: Good morning from a sunny Edinburgh, as we follow the first day of this much-anticipated appeal concerning plans to introduce minimum alcohol pricing in Scotland. The Court will sit at 11am this morning. We’ll hear first from Aidan O’Neill QC and Morag Ross QC, on behalf of the appellants. At approximately 3pm, we’ll then hear from the Lord Advocate himself, James Wolffe QC. The Lord Advocate is the chief legal officer of the Scottish Government, and followers of the blog may recall he last appeared before the Court on behalf of the Scottish Government during R (Miller & Anor) v Secretary of State for Exiting the European Union & Ors [2017] UKSC 5 (sometimes known as the “Article 50 Brexit appeal”).

 

Welcome to Day 1 of the UKSC Live Blog coverage of the appeal brought by the Scotch Whisky Association, spiritsEUROPE and CEEV, concerning the Scottish Government’s plans to introduce minimum pricing for alcohol in Scotland.

The Alcohol (Minimum Pricing) (Scotland) Act 2012 introduces a requirement that ‘Alcohol must not be sold… at a price below its minimum price,’ in an effort to address increased consumption. The Scottish Ministers have prepared a draft order specifying a minimum price per unit of 50 pence, but neither the 2012 Act nor the Order have been brought into force pending this appeal.

The appellants will argue that the new provision falls foul of European Union law. They argue that it is a disproportionate measure, an unlawful restriction on free movement of goods and also restricts the proper functioning of the Common Agricultural Policy on the production, marketing and sale of wine. They will argue that alternative pricing measures would be less disruptive to free trade and competition across the EU single market, yet still be effective in achieving the Scottish Government’s aims to protect public health.

The case has a lengthy procedural history before the Courts. At first instance, the petition for judicial review was refused, a decision which was then appealed. The case was then subject to a preliminary reference from the Court of Justice of the EU, before the First Division of the Inner House of the Court of Session refused the appeal in light of that reference.

The appeal will be heard by a bench of seven: Lord Neuberger, Lady Hale, Lord Mance, Lord Kerr, Lord Sumption, Lord Reed, Lord Hodge

There are a number of ways to engage with the proceedings next week. The case will be streamed live from the UK Supreme Court on their website.

This post will also be updated throughout the day by a team of lawyers from CMS please so refresh this post regularly in order to keep up to date with the latest content. Today’s team comprises Emma Boffey, Laura McEwen, Lorraine Walkinshaw and Will Anderson, from CMS.