Binge drinkers should be priced out

Septiembre 3rd, 2010 admin

Raising the price of alcohol will reduce binge drinking – just look at Scandinavia

Is booze too cheap? Scotland’s health minister this week bravely proposed a minimum unit price, which would force supermarkets to raise prices markedly. A bottle of Asda vodka would rise from £7.97 to £11.81, while a four-pack of Carlsberg Special Brew would increase from £6.16 to £8.10.

It has prompted a predictable response from free-market liberals. “It is clear that the public does not support these plans and the vast majority believe it would make no difference to their alcohol consumption,” said Tory health spokesman Murdo Fraser. The Centre for Economics and Business Research chipped in with “the case for minimum pricing is extremely weak”. Maybe they’ve never seen Romford, Cardiff, Newcastle or any other of Britain’s town centres blitzed by binge drinkers on a weekend night.

The “vast majority” (if Fraser’s figures are true) are just plain wrong if they believe that raising prices makes no difference to their booze consumption. A 2004 World Health Organisation study into pricing could not be more direct. “Almost all of the econometric studies have shown that a rise in the price of alcoholic beverages leads to a fall in alcohol consumption, and a decrease in prices generally leads to a rise in alcohol consumption.” Any other conclusion is moonshine.

If the Scots need convincing about price controls, just cross the North Sea.

It’s a peculiarity of the engrossing Stieg Larsson books that all the characters seem to neck back insane amounts of coffee. Maybe it’s because, unlike us, they can’t pop down the off-licence a few minutes before 10pm for a five quid bottle of Hardy’s.

Sweden is famous for high alcohol prices but restrictions in Norway are perhaps the tightest in Europe. Supermarkets aren’t allowed to sell spirits or wine, just low-alcohol beer. Pubs charge eye-watering prices. I’m not exactly the most temperate drinker myself, but when I visited Oslo, a fourth glass of wine was a stretch too far for my wallet. Over at the “Vinmonopolet”, the national drinks monopoly, anyone in their 20s was being age-checked, and quite a few refused.

Our socially liberal, permissive cousins in Scandinavia have no hang-ups about controlling alcohol abuse, yet in binge-Britain any suggestion of raising prices, or, whisper it quietly, ordering the supermarkets what to do, is met with horror. The nanny state has already grabbed our fags, how dare they take away one of the few remaining pleasures for working people?

What, like liver disease? Or some boozed-up idiot smacking you in the face? That’s always a great pleasure. In Norway, the volume of alcohol consumed per head fell through the 1970s, 1980s and 1990s, while in Britain it has staggered ever higher. Indeed, Norwegians drink less today than in the 1850s, when a boom in cheap spirits took the country into the same blind-drunk corner that Russia finds itself in today.

Scotland led the way on the smoking ban and now it’s the first to take on the booze barons. But there is a drawback. As we report on Money’s front today, Glasgow has the worst longevity in Britain, but that does at least give its residents the best annuities. So now we’re even grabbing their pensions …


Payment protection insurance: if you really want it, where do you go?

Septiembre 3rd, 2010 admin

As new rules by the FSA come into force, the industry is bracing itself for £2bn-worth of mis-selling claims. So if you need cover get the very best advice

There is nothing wrong in the principle of payment protection insurance – it’s just that it was (and in some cases remains) hugely overpriced, and contained terms that made it difficult for many to claim. But what if you really want a protection policy to cover your mortgage or credit card payments if you became unemployed or fell sick?

The key is not to buy PPI from the company that sells you the mortgage, personal loan or credit card. In nearly all cases it will be poor value – and about as daft as buying overpriced travel insurance in a travel agent, rather than going online.

So where do you go? Your first step should be moneymadeclear.org.uk, the government’s independent financial advice website. It offers a product comparison service, and it doesn’t try to sell you anything. Moneysavingexpert.com is another useful site for finding the best value.

Moneymadeclear’s PPI service asks several questions – age, employment status, etc – then gives a list of providers and costs. We asked for quotes for a 30-year-old male employed for 40 hours a week on a permanent contract.

The differences between the best quote and what you might otherwise pay, was startling. On credit cards, the cost of a policy that would pay out £500 a month of cover ranged from £7.90 a month at iprotect to £39.50 at Capital One through to £79 at MBNA. The higher-priced policies tend to offer better levels of cover, but not always.

It was a similar picture with mortgages. For a 30-year-old with an £800-a-month home loan, PPI ranged from around £12 a month at iprotect and Pinnacle – which works out at £3,600 over the lifetime of a 25-year mortgage – through to £62 at Abbey/Santander and £74 at Nationwide, equal to more than £22,000 over the period of the mortgage.

But these figures need to be treated cautiously. Terms and conditions vary widely, and the price will reflect the number of payments the policy will make, and how long you have to wait for it to pay out. The message is clear – shop around, go to independent suppliers and save a small fortune.

Consider the following:

• Insurers “cherry pick” customers. If they think the risk of a claim is high, they will price the policy accordingly – or turn you down. Dennis Haggerty, marketing manager of iprotect, says the company has recently taken the decision not to accept civil servants or anybody who works for a local authority, because of the risk of job cuts.

• If you have been made redundant in the last year (even if you got another job straight away), have been in a job for less than six months, or your company is already making cutbacks, most providers will not cover you.

• Older people pay more than younger people. That’s because if you’re 50-plus, the chances of finding a job on your former salary are slimmer, so the insurer is likely to have to pay out for longer. Claims on the sickness part of the policy are also higher.

• Most insurers do not offer instant cover, and will only confirm after making checks. Usually, these focus on your employer, with special reference to any planned lay-offs. For applicants with medical problems they may ask for a doctor’s report.

• The typical “waiting period” for making a claim is 120 days. In other words, you will have to be unemployed for four months before being able to claim. In that time, you may have found another job, making the policy pointless. If you want a shorter waiting period, say 60 days, the price of the policy rises, in some case steeply.

• Policies typically pay out for 12 or 24 months. The longer the payout period, the higher the premium.

• Rates can, and will, be reviewed. If you take out mortgage protection, and unemployment starts rising steeply, the insurer may come back to you and demand higher premiums.

Haggerty, of iprotect, says the company put up rates by 5-25% earlier this year, although a few older customers saw rate increases of nearly 50%.

Cardif Pinnacle, one of the major providers of mortgage protection policies to banks and building societies, increased rates for some customers by 20% earlier this year.

• In general, low-cost providers of PPI include iprotectinsurance.co.uk, justclick4cove.com (good for under 45s), paymentcare and britishinsurance.com. Patrick Collinson


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