Clause 1 - Rates of tobacco products duty
Finance Bill
8:55 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
I welcome you to the Chair, Mr. McWilliam. It is a pleasure to serve under your co-chairmanship. I know from experience that you are fair and firm, and I look forward to seeing that twinkle in your eye to which my right hon. Friend the Chief Secretary referred earlier.
I also look forward to the scrutiny process that the Committee is about to embark on and to our debate with hon. Members on the Opposition Front Bench. I notice that the Liberal spokesman, the hon. Member for Yeovil, is virtually sharing the Front Bench. I trust that the physical positioning does not presage a political repositioning, even though the hon. Member for Arundel and South Downs might welcome it.
Clause 1 increases the excise duty on all tobacco products in line with inflation, raising the duty on a typical packet of 20 cigarettes and on a 25 g pack of hand-rolling tobacco by 8p, and increasing their cost by 9p when VAT is added.
The increase supports the Government's desire to reduce smoking prevalence by maintaining the real price of cigarettes. Smoking is the single greatest cause of preventable illness in the UK: it is responsible for the premature death of about 120,000 people every year.
The effects of tobacco are not restricted to smokers: a recent report by the British Medical Association entitled ''Smoking and Reproductive Life'' stated that studies showed links between smoking and fertility problems, cervical cancers, miscarriages and low birth weight. The report and its statistics underline the case for reducing the prevalence of smoking. As a result of the real terms duty increases introduced by the Government and previous Administrations, tobacco prices in the UK are at an historically high level. A decision this year to raise duties in line with inflation in the Budget will maintain their real price and thereby continue to encourage people to smoke less or to quit altogether, and to discourage children and young people from taking up the habit.
We believe that we can achieve those results without increasing smuggling, and since the introduction of the strategy to tackle tobacco smuggling three years ago, which my right hon. Friend the Chief Secretary played an important role in launching, Customs has succeeded in halting the growth in cigarette smuggling to the UK, and last year exceeded the target we set it yet again, restricting the illicit share of cigarettes still further to 18 per cent., compared with 34 per cent., the projected level of the illicit market if no action had been taken to counter the problem.