My Lords, I hasten to say to your Lordships that I do not smoke and have never smoked. In considering the amendments before us this afternoon, it is worth giving some of the official statistics rather than the aspirational ones. Smoking rates in England continue to decline year on year and that has been a trend for the last 30 years. According to the Office for National Statistics in 2021, smoking rates in England have declined significantly, from 20% in 2011 to 12% in 2020. The decline in the number of smokers has resulted in a reduction in the cost to the NHS of treating the impact of smoking. In 2015, Public Health England estimated that the total smoking-related cost to NHS England was £2.6 billion a year, when 18% of the population smoked. This figure and the corresponding cost to NHS England over the last five years have declined further, given the 12% smoking rate in England in 2020. According to NHS data published in 2019 on smoking, drinking and drug use among young people, the number of young people aged 11 to 15 smoking has declined dramatically, from 16% to just 5% in 2018. According to the Office for National Statistics in 2021, only 12% of 18 to 24 year- olds in Great Britain smoke, a major reduction from 26% in 2011 and the lowest smoking rate across all age groups except the over-65s.
By way of background, according to the most recent HMRC tax gap data, illegal smuggling and consumption of illicit tobacco cost Her Majesty’s Government £2.3 billion in lost revenue in 2019-20, a figure that remains unchanged from the fiscal year 2016-17, which reinforces the fact that the Government’s anti-illicit tobacco strategy is not working. It ought to be working, when you have a situation where a group of companies is working with the Department for Health and has done over many years. Frankly, it is a sad reflection on the status of HMRC that this illicit tobacco importation is increasing. You have only to look at what is happening in Dover or any of our other ports today to see why it is increasing. It is a pathetic and embarrassing performance at Dover at the moment, the net result being not just tobacco but illegal alcohol and so on coming in.
Now we look at the idea of a levy, something that has never been in the manifesto of a Conservative Government to the best of my knowledge. A levy on any company prescribed by government, even companies
trading locally, certainly does not fit into the basic elements of our financial and economic strategy. If it was just a levy on cigarettes, there might be half a case, but this is on anything to do with tobacco. Most of all those other products have no effect on people’s health—they are a matter of enjoyment—but this idea goes across the whole lot. It has not been thought through.
It is all very well my noble friend Lord Young on the Back Benches saying that there was a consultation in 2015 on a levy on tobacco manufacturers’ profits and the Government concluded that it would be unworkable, but that was because we were in the EU so it has all changed now. I say to my noble friend on the Front Bench: I would have thought he had enough on his hands without introducing a complicated levy, but that is my personal view. There was an exchange between the Exchequer Secretary and the then shadow Exchequer Secretary, confirming
“that our position regarding the 2015 consultation stands. A levy would be a complex”—
this is not going to change—
“and costly way of raising money to fund tobacco control measures and would be unlikely to provide a stable revenue stream.”
I say to my noble friends on all sides of the House that tobacco manufacturers already invest hundreds of millions of pounds every year in R&D and highly skilled jobs to bring to market alternative smoke-free nicotine products. Some of your Lordships may use e-cigarettes, nicotine pouches or heated tobacco products. Further tax increases on manufacturers as a whole will have the effect of reducing that investment, which is not a very clever way forward.
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The introduction of a levy additionally would represent only a further punitive tax on a legitimate legal product and would unfairly have a direct impact on consumers who have made an informed choice to smoke and are fully aware of the risks associated with smoking. The Government already have two tools to raise money from tobacco: excise and MET—minimum excise tax—which could be used much more efficiently.
Frankly, the chief beneficiaries of the levy will be those criminals who supply and trade in illegal counterfeit and contraband tobacco, as more consumers are pushed away from being able to afford legitimate tobacco products. We see that today—it is happening this very hour. The introduction of a profit cap on individual companies, as suggested by some pressure groups and the signatories to these amendments, is entirely inappropriate and anti-business for a highly competitive consumer goods industry with a growing range of innovative products that are already heavily taxed and highly regulated.
My noble friend raised in evidence the PPRS. That was dropped by a former Government because as far as they were concerned it was not working. The pharmaceutical dimension of the Department of Health brought in NICE instead, so my noble friend is not right to call in the PPRS as an example of a success.
The introduction of the profit cap is in my judgment entirely inappropriate and anti-business for this highly competitive goods industry. To conclude, it would send out an extraordinarily negative signal that the
UK is hostile to business at exactly the time it is trying to position itself as a leading destination for global investments, enterprise and economic growth. Existing taxes on tobacco products are already among the highest in the world, accounting for over 90% of the price of cigarettes. Again according to HMRC’s figures, the Government collected £12.5 billion in excise and VAT from tobacco products in 2020.
I say to my noble friend on the Front Bench that I understand that the Government are bringing forward their tobacco control proposals, and of course we will look at those carefully. However, as someone who comes from a medical household, I know that other parts of the health service urgently need attention. The whole of the GP practice situation in our country is in very deep trouble at the moment and that is where the money should be spent, not on trying to administer some marginal levy system which will not work and will cost Her Majesty’s Government a fortune.