Standardised Packaging of Tobacco Products Regulations 2015

Lord Faulkner of Worcester Excerpts

Monday 16th March 2015 Lords Chamber

[Lord Naseby (Con)]

My Lords, the House knows that I have no interests to declare in relation to the tobacco world. I do not smoke, I never have smoked and I do not own any tobacco shares. What I do declare is that for 30 years of my life, before coming to your Lordships’ House or the other place, I worked in marketing, sales, market research and consumer attitude research. I bring those skills to my analysis of the latest evidence before us on standardised packaging.

I also bring the latest evidence that we have on the incidence of smoking today, which was published only a few days ago. I applaud as much as anybody else, and as the House will applaud, the fact that the percentage of adults who smoke in this country has come down to 18.7%. That is the smallest percentage in any developed country. The important point, according to research by a company called Simply E Liquid, is that the key determinants are the new anti-smoking laws, particularly the ban in pubs and restaurants, and the popularity of vaping.

It is against that background that we have to assess whether it is necessary to go as far as my noble friend on the Front Bench in relation to standardised packaging. He is right to say that Sir Cyril Chantler is an eminent paediatrician. He is someone I have known for a great many years; I studied at the same college as him. However, I have to say that eminent paediatrician he may be, but eminent marketer or market research man he is not. That is a key point in relation to the evidence from Australia.

I want to look at four aspects that affect standardised packaging: Australia, HMRC, Codentify, which my noble friend did not mention, and the impact on the packaging industry, which, again, my noble friend did not say a word about. Let us turn first to Australia, which is one of the key dimensions. As my noble friend rightly says, it is the only country to have introduced standardised packaging. It was claimed that the rate of new smoking would decline. In fact, today it is at a seven-year high in Australia. That is evidence from the Australian Institute of Health and Welfare. It was claimed in evidence from the Australian National Accounts that standardised packaging has not accelerated the decrease in tobacco use. It has not accelerated the pre-existing downward trend of smoking rates; that comes from the work of Kaul and Wolf. Health warnings have not become more effective following the implementation of standardised packaging. That comes from the Department of Health and Aged Care in Australia. According to recent work by KPMG, since the introduction of standardised packaging, illegal tobacco consumption in Australia has now grown to its highest level in seven years. By mid-2014, illicit tobacco consumption stood at an unprecedented 14.7% of the market as a whole, some 25% higher than it was in 2012. Those are the facts against which we have to make a decision, which the country will have to accept or not. But those facts were not exactly what my noble friend on the Front Bench talked about. Most of them were not referred to but they are vital in analysing whether standardised packaging works.

I now turn to HMRC. My noble friend put great emphasis on its work but the survey or evidence he cited was from prior to HMRC’s publication on tax gap figures in 2014. So there is further evidence now that my noble friend has, for one reason or another, chosen not to put before the House this evening. The illicit trade in tobacco products costs this country £2.1 billion. It is my view that that money would be better spent on the health service. If we look at some of the components of that, HMRC has now stated that standardised packaging will provide a suitable environment in which the illicit market in white cigarettes will continue to grow. It argues that it is possible that the introduction of standardised packaging will lead to increased attempts to infiltrate counterfeit products into the lower end of the retail supply chain. Finally, HMRC has accepted that plain packaging could increase the likelihood of small local retailers getting into trouble and being prosecuted.

I turn briefly to the Codentify system, something that noble Lords could be forgiven for not knowing much about and which was not even mentioned by the Minister. The draft regulations before us do not provide for the inclusion of Codentify markings on tobacco packs. One must ask: why are they not included? Codentify is a product security and authentication tool that provides a unique, secure identifier for each individual packet of cigarettes and hand-rolling tobacco. It allows manufacturers and, in some ways more importantly, Customs officials to authenticate products and trace the origins of packs all the way from the start of the manufacturing process right through to when they are sold. It plays a vital role in the fight against the illegal tobacco trade because it allows law enforcement officers to check. Without Codentify, it will be impossible for manufacturers to use that existing security and authentication technology between May 2016, when, I understand, the new system is to come in, and May 2019. Why May 2019? Because that is when the second tobacco product directive will be introduced and there will be a new tracking mechanism.

It is all very well for the Minister for Public Health in another place to state that this is being looked at. It is not good enough for your Lordships just to look at things when they are so vital. My noble friend talks about public health. There is nothing worse for public health than having illicit counterfeit cigarettes floating around the market. I hope that when he comes to reply, he will address that issue. Without a means of tracking, I do not see how we will be able to restrict illicit goods entering the market.

The third issue is packaging. As one who has worked in it for many years, I can say that the print industry is very complex; it is not simple. The Minister in another place stated:

“The print industry has known for some time that standardised packaging has been under discussion—the issue has not been recently sprung on it, so it has had a chance to consider how to respond”.

The Honourable Member for Bradford South, Mr Gerry Sutcliffe, disputed the Minister’s claim. He is a former print worker. He told the committee that such a claim misunderstood the nature of the packaging business:

“It takes time in the printing industry, which is very competitive, to offer alternative proposals, even if those are for standardised packaging. It will take at least 18 months to two years for the designs to be made and the buyers and marketers to go out to try to change people’s opinions”.—[Official Report, Commons, Twelfth Delegated Legislation Committee, 9/3/15; col. 24.]

He said that in Bradford alone there are 400 jobs in the packaging industry that may be put at risk and that, with other tobacco control measures that have been introduced, such as a display ban, three years were allowed to make adjustments, which is a reasonable length of time. In this case, it is only 18 months. Why has the time been reduced? It is far too short a timescale. The Consumer Packaging Manufacturers Alliance, which represents a number of packaging companies in the tobacco supply chain, has called for a delay in implementation of the plain packaging regulations if they go through. That will give people time to adjust and understand what the changes are. A great many people do not really understand how complicated and unique the packaging for cigarette products is. It involves gravure printing, rotary embossing and hot-foil stamping. Many other markets do not use those elements and certainly do not involve the huge volume involved.

I appeal to your Lordships to think very hard about the necessity to go as far as is suggested in the Government’s Motion. The introduction of plain packaging for tobacco products will not produce, in my judgment, the results claimed. I base that on the evidence from Australia, which has been authenticated by various government bodies there. I have given the quotations and where they come from.

Frankly, plain packs are little more than a smuggler’s charter. They offer criminals a wonderful template that will allow them to copy tobacco packaging easily and thereby infiltrate the supply chain more effectively. The extraordinary exclusion of the Codentify system from standardised packs will further drive the illicit trade and illegitimate supply and will make it far harder to detect and seize. Without a reasonable revision for adjustment for the packaging companies, hundreds, perhaps thousands, of jobs will be put at risk. Is this really part of the enterprise economy or is it just another example of the UK wishing to be a world leader?

The Motion before us is not needed. The evidence is not there and, on top of that, although my noble friend says that it will never affect another industry, I frankly do not believe him. This will adversely affect trademarks and intellectual property rights and it will affect many other industries as we move forward. It is not a sound Motion and it should be rejected. I beg to move.

[Lord Faulkner of Worcester (Lab)]

My Lords, unlike the noble Lord, Lord Naseby, I am pleased to welcome unreservedly the regulations moved by the Minister and to congratulate him not only on the way he introduced the debate but on the part that he played in persuading his ministerial colleagues that the introduction of standard packaging for tobacco products will make a significant contribution towards public health. I thank him for the kind words that he spoke about me and the other four members of the group, from all sides of the House, who saw the opportunity to add amendments to the Children and Families Bill to introduce a range of tobacco control measures.

The Minister has described in great detail the steps that the Government have taken since the amendments were added to that Bill. The most important of those was the study by Sir Cyril Chantler, who concluded that standardised packaging,

“is very likely to lead to a modest but important reduction over time on the uptake and prevalence of smoking and thus have a positive impact on public health”.

All the objective evidence—I stress the word “objective” for reasons I will explain in a moment—supports the case for standardised packs. It would, in the words of the Canadian Cancer Society:

“(1) eliminate promotional aspects of packaging; (2) curb deceptive messages conveyed through packaging; (3) enhance the effectiveness of health warnings; (4) reduce tobacco use”.

It is precisely because the adoption of these measures will work that the tobacco industry has been spending such enormous sums of money in its efforts to defeat them. The tactics it has followed are consistent with everything it has done to oppose tobacco control measures since the 1950s. First, it attempted to discredit the results of Sir Richard Doll’s research that proved the link between lung cancer and smoking. Then for years the industry denied the addictive properties of nicotine. It lobbied extensively and expensively against every piece of legislation aimed at reducing smoking prevalence, from curbing sponsorship and advertising, protecting people from the effects of second-hand smoke, limiting displays of tobacco in retail outlets, and now these regulations on standard packaging.