Tobacco and Vapes Bill

Debate between Lord Young of Cookham and Earl Russell

Committee stage
Thursday 30th October 2025 Grand Committee

[Lord Young of Cookham (Con)]

My Lords, I agree with Amendment 12 moved by the noble Baroness, Lady Northover, but I want to speak to Amendment 192, which proposes the introduction of a levy on tobacco manufacturers.

When products cause harm, the polluter should pay. That principle was introduced by previous Conservative Governments; the landfill levy was introduced in 1996 and the soft drinks levy in 2018. After the Grenfell tragedy, we introduced the Building Safety Act to make the construction industry pay for the remediation of high-rise blocks. We should apply the same principle to tobacco.

In a report commissioned by the last Government, Javed Khan looked at three options to raise funds to implement his conclusions. He wrote:

“Introduce a ‘polluter pays’ industry levy on profits from cigarette sales, which can directly fund the full range of comprehensive measures to help us reach smokefree 2030 and make smoking obsolete. This is my preferred option … A tobacco ‘polluter pays’ levy could be introduced in the form of a charge applied as a percentage of these profits”.


It would not impact on the CPI or the cost to the consumer, and it would raise hundreds of millions of pounds.

We debated exactly that proposition on 16 March 2022, Amendment 158 to the Health and Care Bill, proposed by the noble Lord, Lord Crisp, whom I am delighted to see in his place. He said about that amendment:

“This new Clause … would require the Secretary of State for Health and Social Care to carry out a consultation about a statutory scheme for the regulation of prices and profits of tobacco manufacturers and importers. Funds raised by the scheme would be used to pay for the cost of tobacco control measures”.—[Official Report, 16/3/22; cols. 287-88.]


That is precisely what Amendment 192 proposes.

Responding to the amendment, the Minister, speaking then from the Opposition Front Bench on behalf of her party, said:

“This strikes me as wholly pragmatic; a wide-ranging consultation would undoubtedly help to strike the right balance between all the parties involved … The scheme proposed in this group of amendments would provide a well-funded and much-needed boost, and a consultation would allow this proposal to be tested, refined and shaped. I hope that the Minister will accept the opportunity of a consultation but if the will of the House is tested, these Benches will support the amendments”.—[Official Report, 16/3/22; col. 297.]


She was as good as her word: she supported the amendment, along with the Leader of her party and the Chief Whip, and the amendment was carried, later to be overturned in another place. I was therefore surprised that the noble Baroness did not add her name to this amendment when I tabled it, and I look forward to her compelling speech in its favour.

Amendment 192 would require the Government to consult on the introduction of a “polluter pays” levy. Tobacco is a uniquely addictive and lethal consumer product, and this creates a perfect storm for consumers. The tobacco industry in this country continues to be in good health, unlike its customers, and companies continue to make significant profits: an estimated £900 million per year in the UK alone, with average profit margins of around 50% compared to 10% for manufacturing margins.

There are various estimated costs to society of smoking. That from ASH is £43.7 billion a year—perhaps the Government could share their own estimate—and it is the taxpayer who picks up the tab: costs to the NHS, costs to social care, lost productivity to our economy, and higher welfare bills. A “polluter pays” levy ensures that those who can and should pay, do, and implementing it would raise up to £700 million a year.

So how would it work? The Treasury consulted on a levy in 2014 and did not proceed, but what is proposed now is quite different and, crucially, it would not allow the industry to pass costs on to the consumer and would have no impact on the RPI.

The levy model proposed by the APPG on Smoking and Health would introduce a price cap on tobacco similar to what we do with utilities. That would limit the prices to manufacturing costs plus, say, a 10% profit margin. This would be in line with other consumer products and more than generous for an industry responsible for such high levels of harm. The Government would then introduce a new levy on the industry, to be paid for from its profits.

A consultation would allow this model to be “tested and shaped”, providing a much-needed boost to public finances. The public too share our support for this proposal, with 76% of adults in England in favour of a “polluter pays” levy.

I note that the amendment from the noble Earl, Lord Russell, on this same subject proposes to put the proceeds into

“a dedicated fund held by the Department of Health and Social Care”.

I have not included such hypothecation in my own amendment, but I fully support what he seeks to do. Some £700 million a year could be used to support 2 million more smokers to quit just in this Parliament and accelerate progress towards a smoke-free future. It is likely that funds would be left over, which could be used for other public health activities, helping the Government achieve their mission of reducing the gap in life expectancy between the richest and the poorest.

This is a measured, fair and practical proposal. It would protect the consumer, prevent industry manipulation, provide much-needed funding for the Treasury, and ensure that those who profit from an addictive and lethal product made a proper contribution to repairing the damage it causes. I look forward to the Minister’s reply.

[Earl Russell (LD)]

My Lords, my Amendment 194, on a tobacco industry levy and new industry obligations, offers a vital and practical mechanism to make the Bill stronger, fairer and more effective in public health and social justice terms. I am sure there is not a Member present whose family has not been impacted by nicotine addiction, and my family is no exception. The Bill presents an important opportunity to redress the balance between corporate profits gained from selling products that by their very nature kill two-thirds of their users and the burdens placed on wider society that are felt by our health and care systems. Other amendments in this group are based on similar ways of addressing these wider problems and I welcome them. These are problems that, if not addressed, will persist long after the Bill is passed.

My amendment would quite simply make those who profit from harm contribute directly towards repairing it. The tobacco industry continues to generate vast profits from the products it sells and it has huge economic and human suffering costs. I acknowledge that accurate statistical data in these areas is complex, but it has been estimated that the four largest tobacco manufacturers made approximately £900 million in profits annually in the UK, according to one 2023 estimate. I well recognise that tobacco duties are a significant source of government revenue, raising an estimated £8.1 billion in 2025-26, which represents 0.7% of all government receipts and is equivalent to 0.3% of national income. However, this revenue goes towards general taxation.

The health impacts of smoking and nicotine are estimated to cost the UK economy billions of pounds annually, with estimates for England alone reaching up to £43.7 billion if the total societal costs are included and some £2.5 billion in direct service costs for the NHS. These figures are significant and productivity loss and health impacts have big societal impacts. My amendment would require the Secretary of State to introduce by regulation a levy on companies’ profits derived from income from the manufacture or sale of tobacco products in the United Kingdom. The levy would apply annually and would be based on profits attributable to tobacco sales here. The funds raised would be paid to a dedicated ring-fenced account held by the Department of Health and Social Care. As has already been mentioned by the noble Lord, every penny collected would be used solely for the purposes of either smoking cessation services, public health campaigns focused on reducing tobacco harm or healthcare services to treat people living with smoking-related diseases.

It is worth stressing what this amendment would not do. It would not set the rate or the structure of the levy. I have left these details entirely for the Government to determine. The measure is not prescriptive; it would simply establish the legislative framework and would allow Ministers to design and introduce a fair and proportionate levy. It would give the Government flexibility to decide, for example, whether the levy should be assessed by company profits, by market share or by a combination of the two approaches. It would equally be left to the Treasury to investigate and decide, with Ministers, the best way to implement it. The principle of the amendment is the important point, and it is clear. The principle is that the tobacco companies, and not the general taxpayer, should contribute directly the greatest proportion of the cost of the harm that their products cause. It would align, as has been said on other amendments today, with the “polluter pays” model, which is endorsed by health experts across the field. The estimate is that £700 million could be generated annually to help transform smoking cessation services and public awareness campaigns, services that have been hit by cuts.

Although the level of smoking is reducing, some 13% of the UK population still smokes. This has significant impacts. For example, Imperial tobacco holds 40% of the UK market; that market is worth £30 billion annually. Meanwhile, on the other side, the NHS and the Treasury have to deal with the societal consequences of what tobacco does.