Clause 1 - Rates of tobacco products duty
Finance Bill
10:45 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
May I add my voice, Mr. Gale, to the Committee's chorus of approval and satisfaction at the privilege of serving under you during the course of our proceedings. I heard you say in response to a remark by the hon. Member for Kingston and Surbiton that it was for you to referee the Committee. We have heard a lot, not least from the hon. Member for Buckingham, about jousting. I must confess that I do not associate the hon. Members for Buckingham or for Christchurch so much with jousting as I do with the World Wrestling Federation and all that goes with it. Therefore, I fear that your skills as a referee may well be sorely tried in the course of the proceedings, but I have no doubt that you, who have wrestled with the best of them, will be able to keep us all under control.
I do not think that such refereeing will be necessary in relation to clause 1. It is an innocuous clause. Smoking is the single largest cause of preventable illness and premature death in the United Kingdom, killing about 120,000 people every year. Research has consistently shown that the price of cigarettes does affect demand, so maintaining the high price of tobacco encourages people to stop smoking and deters people—particularly the young—from taking up the habit. As a result of the large real-terms increases in duty under this, and previous Governments of all political persuasions, cigarette prices in the UK are now at historically high levels. Our decision to raise duties in line with inflation this year will help to maintain the real price, and will discourage people from smoking. I believe that the whole Committee would share that sentiment.
The clause increases rates of excise duty on all tobacco products by approximately 1.9 per cent. in line with inflation, with effect from 6 pm on 17 April 2002. The representations that we have received from health and anti-smoking groups in the run-up to the Budget made clear that they believe that
''greater emphasis should now be placed on raising prices through addressing the trends that tend to drive price down rather than increasing headline tax rates for cigarettes.''
Those trends include the supply of cheap, unregulated tobacco through the smuggling market. As hon. Members know, that problem had been worsening rapidly before the financial year 2000–01 and, without action, it was estimated that smuggling would account for more than a third of the market by 2003. Therefore, I am happy to report to the Committee that, as a result of action taken in our tackling tobacco smuggling strategy, we are now on track to put the smuggling problem into reverse by 2003. In our view, that will help to increase the average price that
consumers pay for cigarettes in the United Kingdom. There is, therefore, widespread support among health and anti-smoking groups for our duty policy on cigarettes and our so far highly successful efforts to clamp down on the unregulated supply of cheap, smuggled tobacco.
I hope that hon. Members will feel able to echo that support and take this concrete step to ensure that we continue to bear down on the problem and send a clear public health message to would-be consumers of this product. I commend the clause to the Committee.