Tobacco Manufacturers’ Producer Responsibility

Paul Burstow Excerpts

Monday 23rd March 2015 Commons Chamber

[Paul Burstow (Sutton and Cheam) (LD)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to undertake a programme of research into the costs and benefits of introducing an annual levy on sales to be paid by tobacco manufacturers, with the proceeds to be used to support tobacco control measures, to discourage young people from starting to smoke tobacco, to help existing tobacco smokers to stop smoking; and for connected purposes.

This Bill is about establishing the principle that the tobacco industry, which has done so much to harm our society, should pay more than it does now to help reduce the harm that it might do in the future. Like the majority of Members in this House, I warmly welcomed the announcement by the Chancellor last autumn—it was in the autumn statement—that he would consider a levy on tobacco manufacturers and importers. I strongly agreed with him that:

“Smoking imposes costs on society and the Government believe that it is therefore fair to ask the tobacco industry to make a greater contribution.”

I welcomed the announcement by the Leader of the Opposition that his party was also committed to such a levy. It is right in principle that the tobacco industry should pay for the damage that its addictive and lethal products cause. The industry is one of the most profitable on earth. The two largest tobacco firms in the UK market, Imperial and Japan Tobacco International, hold around four fifths of the UK market and achieve joint profits of about £1 billion a year. Charging those firms to help clean up the damage their products cause is a rational and justified extension of the “polluter pays” principle to public health policy.

In the United States, the tobacco industry is required, under the Family Smoking Prevention and Tobacco Control Act 2009, to pay an annual “user fee” to the Food and Drug Administration to fund tobacco regulation and wider tobacco control activity. In effect, that fee is independent of the wider US fiscal regime, and the proceeds are controlled directly by the FDA.

As of 31 March 2014, the US Food and Drug Administration had collected $1.88 billion in manufacturer user fees, of which it spent $1.48 billion. About half a billion dollars went on public education, and another half billion went on scientific research projects to support additional FDA regulations on tobacco products.

In the UK, there is a policy parallel in the energy companies obligation, which places a legal requirement on the energy industry to invest in energy efficiency and related measures, especially for poor and vulnerable households. That leads us to a key problem with both the Chancellor’s and the official Opposition’s approach to the levy. The Treasury consultation on the levy, which was announced in the Budget but is still ongoing, does not include any commitments on how the money raised should be spent. Instead, it seems that the levy will be used simply to go to the Exchequer.

If a tobacco levy is introduced, the tobacco industry will have to decide whether to pass on to consumers some, or all, of the cost in higher prices. That would of course have some public health benefits, as price increases are known to be the single most effective policy lever in reducing smoking prevalence. However, the potential benefits to public health can be fully realised only if the levy is used to fund tobacco control action, which is designed to increase the rate of quitting tobacco use over and above what might otherwise be expected as a result of price rises.

I strongly believe that at least some of the funds raised should be directed towards actions to reduce the harm caused by tobacco consumption. A research paper by the economist Mr Howard Reed suggests that £500 million could be raised without much difficulty every year from a levy based on sales data. If the programme of research proposed in this Bill were carried out, it would show that the recurring cost of tobacco control activity at every level—local, regional and national—could be met from the proceeds of the levy. Indeed, it is likely to generate a fund sufficient to support these activities as well as assisting deficit reduction.

That would include national action through Public Health England and regional strategy through regional offices and any future regional governance structures, and tobacco control work by local authorities and in the third sector. The funding would cover: stop smoking services, mass media and public education campaigns and research, and efforts to tackle illicit trade at local and regional level. It could also fund new initiatives such as a positive retail licensing scheme to help ensure that retailers do not face any new costs. I also note with interest that the Communities and Local Government Committee has recommended that some levy proceeds be used to help clear up the litter and environmental problems caused by discarded cigarettes.

Local stop smoking services play an essential role in helping people to quit. However, following the transfer of the public health function to local authorities, which I support, those services are vulnerable, because of the financial strains placed on local authorities and the difficult choices that they have to make.

There are already grounds for concern about how many people are being reached by stop smoking services. Indeed, the Health and Social Care Information Centre reported in 2013-14 that the number of people quitting had fallen relative to the previous year. Although stop smoking services are demonstrably highly cost-effective and greatly benefit the whole of society, the direct savings they deliver go mainly to the NHS and not to the local authorities that pay for them. That applies also to local action by trading standards officers and others, for example when it comes to reducing the scale of illicit tobacco trade. The Exchequer benefits financially from that action, not the local authorities.

I draw the House’s attention to NHS England’s “Five-Year Forward View”, published in October of last year. This includes a section entitled, “Getting serious about prevention”, which states:

“The future health of millions of children, the sustainability of the NHS, and the economic prosperity of Britain all now depend on a radical upgrade in prevention and public health.”

Those words will remain simply a pious hope if we do not find new ways of financing public health policy and that would in turn mean that the chances of bridging the £30 billion NHS funding gap identified in the forward view forecast will not be achieved.

The Bill also proposes that research should be conducted into how the levy could be assessed and collected. I would favour basing it on sales data made public by manufacturers at a local and regional level as well as a national level. That would allow resources to be focused on the areas with the greatest sales and the greatest prevalence rates, better targeting tobacco control in the future.

Like most of us in this House, I was delighted when the former Health Secretary, the right hon. Member for South Cambridgeshire (Mr Lansley), said that he wanted the tobacco industry to have no business in this country. Smoking still causes hundreds of thousands of premature deaths across the UK every year and for every death caused by smoking, 20 smokers suffer from smoking-related disability. That is a terrible toll of death, disease and disability. It is why we must carry on seeking ways to improve public health measures to tackle smoking. A tobacco levy could provide vital funds for that purpose and I am confident that the programme of research proposed in the Bill would show just that. I therefore commend the Bill to the House and hope that Members will support it.