With calls growing for England to follow Scotland and Wales in introducing minimum unit pricing (MUP) for alcohol, a new report from the Social Market Foundation has called for a windfall tax on retailers to prevent supermarkets from profiting unfairly from the policy.
The think tank’s report, “The Price is Right”, highlights how MUP – which sets a legal floor price for alcohol, currently 65p per unit in Scotland – is proven to reduce alcohol harm. But it also warns that, without further action, the policy could hand retailers an estimated £550 million in extra profits annually across Great Britain, while reducing Treasury alcohol duty revenues by over £300 million.
The authors propose a new Minimum Unit Tax (MUT) to complement MUP, ensuring that all alcohol sold is taxed at a minimum rate of 36p per unit. This, they argue, would better target the products driving retailer windfalls, without significantly affecting moderate drinkers or increasing prices further. An MUT at 36p would raise nearly £500 million; a higher rate for cheap spirits could push the total to £659 million.
Although raising alcohol duty across the board is an option, the report finds this would be a blunt tool – poorly targeted and politically risky. Instead, the MUT model offers a more precise way to reclaim windfall profits and bolster public health.
For devolved governments like Scotland and Wales, which lack powers over alcohol duty, the report explores alternative tax routes such as licensing fees or levies through the business rates system – though these are considered more complex and less effective.
The report concludes that while MUP is effective and popular in Scotland, public confidence could be undermined if supermarkets are seen to benefit disproportionately. A targeted tax, it argues, would safeguard the legitimacy of the policy and support wider public health goals.