The Home Office releases definitive guidance on legislation banning the sale of alcohol below cost today, amid renewed criticism that the policy will do little to reduce alcohol-related problems.

The document goes out to all licensed premises – including those with club premises certificates – in England and Wales, as a new licensing condition of the Mandatory Code of Practice.

It provides comprehensive information regarding the implementation and enforcement of the ban, and of the methods of calculating the “permitted price” of alcohol sold.

This “permitted price” is defined as the amount of excise duty levied on an alcoholic product plus value added tax (VAT). Duty is set by HM Revenue and Customs and VAT is payable on the duty element of the product price.

Reports from the Institute of Fiscal Studies and the University of Sheffield have indicated that the ban on below cost sales will have a minimal impact on alcohol consumption, affecting less than 1% products sold in shops and off-licences. In contrast, a minimum unit price of 45p, as proposed by the Government in 2012, is predicted to have a significant impact on heavy drinkers if introduced, preventing more than 600 alcohol-related deaths and 35,000 crimes each year.

Katherine Brown, Director of IAS said:

“Whilst we welcome the introduction of a floor price for alcohol, the ban on below cost sales sets it far too low to have any meaningful impact. Under these proposals, it will still be possible to buy two litres of strong white cider for less than £1, which is going to do nothing to curb consumption amongst children and vulnerable drinkers.

“If the Government is serious about tackling alcohol sold at pocket money prices, it must introduce minimum unit pricing. Canada has seen dramatic reductions in death rates and crimes, and all the evidence suggests that the UK would experience similar health and social benefits if the Government realised its commitment to introduce minimum pricing here.”

The proposed legislation to ban the below-cost sale of alcohol is subject to parliamentary approval, which, if obtained, will be introduced from April 2014. According to the Home Office, the measure will “prevent businesses from selling alcohol at heavily discounted prices and aims to reduce excessive alcohol consumption and its associated impact on alcohol-related crime and health harms”.

Guidance on banning the sale of alcohol below the cost of duty plus VAT can be accessed from the Home Office section of the website.