It is a pleasure to serve under your chairmanship, Ms Nokes. For the record, I confirm that I am vice-chair of the APPG on smoking and health.
The Minister may know that in health debates and in correspondence I spend much of my time banging on about health inequalities and the need for a new hospital in Stockton. Although we still need one, this morning I want to address another major health inequality. According to the most recent data from the Office for National Statistics, the average gross disposable income in the north-east is the lowest in the United Kingdom, at £16,995 per household—a full 43% lower than in London, where it is the highest.
Analysis of national data published by ASH has shown that the proportion of smokers living in poverty is also highest in the north-east. In our region, 42% of households containing smokers live in poverty, compared with only 17% in London. That is 112,000 north-east households. The average annual spend on tobacco per smoker is £2,000, so helping my constituents quit smoking will not only improve their health and wellbeing, but put badly needed money into their pockets. Smoking is an addiction. It is not a lifestyle choice. Smokers living in poverty tend to be the most addicted and need the most help to quit.
The Government’s arguments against the “polluter pays” levy are unconvincing. When we considered the Lords amendments to the Health and care Bill on
“cannot accept these Lords amendments, because the proposals would be very complex to implement, take several years to materialise and risk directing a lot of Government resource into something that we do not see as a sustainable or workable way to fund public health. This would also rightly be a matter for Her Majesty’s Treasury.”—[Official Report,
I will address each of these arguments in turn.
First, on the Treasury, as my hon. Friend Bob Blackman said, the Department of Health and Social Care already oversees a similar scheme for pharmaceuticals, put in place by health legislation that is a model for our proposals, so there is already a precedent for the Department to take the lead. It is clear that the Treasury would need to be involved, but the scheme we propose is not an additional tax. Rather, it is a pricing and profit control scheme put in place by health legislation and overseen by health Ministers.
The Minister for Health provided no evidence to justify his statement that the proposals would be “very complex to implement”, would need
“a lot of Government resource”,
and would not be a
“sustainable or workable way to fund public health.”
Indeed, evidence provided to the APPG by independent export analysts and economists demonstrates the opposite. The Department of Health and Social Care has a track record of more than 50 years of overseeing the pharmaceutical scheme. The expert analytical, finance and economic skills needed to run the tobacco levy are no different and the Department already has a team in place.
Let us not forget that the pharmaceutical market is complex. It has an enormously varied range of products, is constantly evolving and has heavy research and development costs that have to be taken into account by the analysts. More than 60 pharmaceutical manufacturers operate in the UK. Indeed, some of them are in my Stockton North constituency. Tobacco manufacturing is far simpler. Cigarettes and rolling tobacco are commodity products, cheap as chips to make. Only four manufacturers account for more than 90% of the market. Selling cigarettes is highly profitable, far more than pharmaceuticals or consumable staples. Imperial Brands sells around four in 10 cigarettes smoked in the UK and made a 71% operating profit in 2019, which is £71 in pure profit for every £100 of sales. It is not alone. The average for the big four manufacturers was 50%. By way of comparison, a 10% operating profit margin is considered average and Associated British Foods, Britain’s largest food manufacturer, made only 6% in 2021.
Clearly, some Government resource and expertise would be needed to develop a tobacco-specific scheme, but the potential returns, which would vastly outweigh the running cost, make it a no-brainer. As we have heard, £700 million a year could be raised from the four major tobacco manufacturers on sales of £14 billion, provided we could cap their profits at no more than 10%. At last, we have a Brexit dividend for the NHS, though it falls well short of the £350 million a week promised on the side of a bus not so long ago.
Market failure justifies the scheme, for this is an industry dominated by four big companies making eye-wateringly high profits from selling lethal products that kill most of their consumers. The extremely high profitability of cigarettes makes them as addictive to the companies as to the smoker. Big tobacco says it wants to turn over a new leaf and move out of cigarettes but shows no signs of doing so. Why would it? Selling cigarettes is far more profitable than any of the alternatives. The levy would provide the incentive the industry needs to deliver the Government’s ultimatum. That is a crucial function of the levy—a point Ministers seem not to have taken on board.
Lastly, the Minister for Health said it would
“take several years to materialise”.
That is not the case. The Government have already wasted three years when they could have put the scheme in place. I join my colleagues in inviting the Minister to meet the APPG officers and our independent experts to discuss our proposals. However, let me say in closing that if the levy had been implemented three years ago, we could already have invested £2 billion in smoking cessation and be well on our way to being a much healthier nation.