Clause 319 - Rates of tobacco products duty

Part of Finance (No. 2) Bill – in a Public Bill Committee at 12:30 pm on 18 May 2023.

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Photo of Gareth Davies Gareth Davies The Exchequer Secretary 12:30, 18 May 2023

There was quite a bit in there, but a lot of it was related, so I will do my best to address those points. First, to my right hon. Friend the Member for Calder Valley, I will need to educate myself a little better on heated tobacco, but if he would like to write to me, I will provide a more detailed response. I will address his comments on vaping, together with those of the hon. Member for Wallasey, in a moment.

The hon. Member for Wallasey mentioned hand-rolling tobacco and the connection to illicit trade. I want to clarify for the Committee that the fact we are raising the rate so significantly—6% plus RPI—is to help hand-rolling tobacco prices catch up with cigarettes to help us towards our Smokefree 2030 ambition. I wanted to provide that clarity because I did not in my opening remarks. The hon. Lady alluded to various calls to do more and to raise prices even more, and she referenced the OBR’s estimates for that. I will take that, together with the point she raised about the Khan review recommendations. We have to get the balance right with this taxation, as the hon. Lady said. If it is too high, it is likely to push people into the illicit trade. That is a known fact. That is one of the reasons why we have not proceeded with the 30% suggestion from the Khan review. At every review, we are trying to get that balance while also seeking to improve our enforcement action on illicit trade.

I referred to the updated review from HMRC and Border Force that is coming out later this year. I do not want to pre-empt what it is going to say or what it may achieve, but I certainly await it with eager anticipation. I would also add that the Finance Act 2022 included new sanctions, such as enhanced penalties, to strengthen the agencies’ enforcement abilities. That is a key focus of the Government right now.

The hon. Member for Wallasey talked about vaping. This is obviously a Department of Health and Social Care lead. Vaping is a matter that is discussed frequently in the House. It is an important tool to help people move away from tobacco smoking. She referred to the increased use of vaping by children and the impact on the environment. Those are important points. As I mentioned, the Under-Secretary of State for Health and Social Care, my hon. Friend Neil O’Brien, is very engaged in this matter and has launched a call for evidence on the use of vapes by children. We will set out our response as soon as that is published.

The hon. Member for Wallasey also mentioned the policy idea of a cap on net profits. Of course, we keep all taxes under review, and new ideas are always considered. I am not well versed in the merits or pitfalls of that specific proposal, but I am very happy to look at it in due course.