The government is setting the minimum price on alcohol as excise duty plus VAT.

The move effectively establishes a floor of 38p on a 440ml can of lager and £10.71 for a litre of vodka. Production costs will not be included in the calculations.

“Banning the sale of alcohol below the rate of duty plus VAT is the best starting point for tackling the availability of cheap alcohol and will send a clear signal to retailers and the public that government takes this issue seriously,” said Home Office minister James Brokenshire.

He claimed the move was a cost-effective way to stop “the worst instances of deep discounting”.

Reacting to the news, BBPA chief executive Brigid Simmonds said: “This is a clear measure that can be implemented quickly and will stamp out the worst cases of below-cost selling. However, it will not have a significant impact on low-priced alcohol in supermarkets.”

Health groups have also criticised the move, claiming the price floor is too low to have any impact on excessive drinking.

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