28 11 2012

Photo: RoSPA

There is drinking and then there is driving and for many right-minded people, ne’er the twain shall meet. But is there a place where putting them together makes sense? A place where combining one with the other would add up?

I have been watching the unfolding debate about a statutory minimum price per unit of alcohol with some interest. Not for the same reasons as many others but more from the perspective of, yet again, watching a government in action which quite plainly does not understand the difference between strategy and good strategy nor (worse) the difference between tactics and strategy.

What has this got to do with mixing drinking and driving? Let me explain.

The Government’s logic is to introduce a minimum price of 45 pence per unit of alcohol as a way of reducing the binge drinking culture evident across England and Wales (there is separate legislation for Scotland from the Scottish Parliament of 50 pence per unit).

On the face of it, what the Government calls a ‘strategy’ is actually a tactic to address the issue. If booze costs more, people will drink less. It is somewhat simplistic but few alternatives have been put forward and there is the unfair burden on the non-binge drinking tax-payer of policing and health costs caused by the issue which might be met out of the extra income raised by the State.

But pause a moment. That is not what is actually happening. Yes, there is a 45 pence per unit increase on the way but, strangely, on Sky News’ Sunrise programme this morning, Secretary of State for Health Jeremy Hunt stated that this is not a revenue raising measure.

Not a revenue raising measure? What did he mean? Within 20 minutes Sky’s team of reporters had dug and found the answer; the extra money is retained by the seller of the alcohol, the State is not raising a single extra penny through this ‘booze-tax’.

It’s a good job the country is flush and doesn’t need to raise any extra income through genuine taxation at the moment.

Only it does. That is why the Government is umming and ahhing over whether to keep or cancel the proposed 3 pence per litre increase in fuel levy due in January.

This is where my drinking and driving analogy comes in. The media and others call it ‘joined-up thinking’ which is what we strategists call integrated planning (or more precisely, in this example, vertically integrated planning).

We have a struggling economy; we need to get business moving. Take me, picking a random couple of days from my recent diary as an example.

On 8th November I drove from Nottingham to Potters Bar for a client meeting in the morning. In the afternoon I went on to Woking to meet another client before heading for Goodwood and a business dinner that evening. The following morning I headed from Goodwood to Royal Wootton Bassett for two days work with another client before heading back to Nottingham on the evening of 10th November.

The relevance? Like many other businesses I can only carry out these essential journeys by car, which means putting fuel in that car, which means paying extortionate taxes on that fuel. The train would prove both inefficient and expensive, even without the above inflation fare rises announced today. If the Government’s plan is to get cars off the roads and their drivers onto trains then that part of their strategy is badly lacking in ‘joined-up thinking’ or integration (in this case horizontal).

Who bears the cost of these types of expensive journeys? Initially me, but in the end, you.

Yes; you. Whether it is me allowing for my costs in what I charge my clients and they then pass on to their customers or any other form of petrol or diesel driven transport used for business, ultimately the cost comes back to you. Everything, right down to the food you buy in the supermarket gets there because it is transported by vehicles reliant on heavily taxed fuel. Even if you don’t own a car, you are indirectly paying the fuel levy in almost every purchase you make.

Now, let’s try some of that joined-up thinking. Imagine two commodities; one is essential the other is not. Let’s name these two commodities; we’ll call the essential one ‘fuel’ and the non-essential one ‘alcohol’. Let’s then assume we need to raise income for the exchequer in a fair and equitable way. Assuming VAT on both, on which one would you add further taxation; the essential or the non-essential? Would you consider it even moderately sensible to tax (heavily) the essential while increasing the price of the non-essential without exchequer benefit? Especially at a time when even further taxation on the essential is being considered?

On the face of it putting up the price of alcohol and taxation on petrol are unrelated. But start thinking strategy not tactics, start thinking in an integrated way not in silos and the absence of common sense becomes more apparent.

This thinking should spread through the many arms of government as it should through all businesses; I have used drinking and driving only as examples as they are both currently in the news. But taking that example; how would your business fare if the quality of strategy, the difference between the strategic and the tactical and the depth and breadth of integration were examined?

© Jim Cowan, Cowan Global Limited, November 2012

Read more blogs by Jim Cowan


Twitter @cowanglobal




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