Media briefing: Chancellor Should Act on No Smoking Day
02 March 2017
In her first speech as Prime Minister, the Rt Hon Theresa May MP committed to “fighting against the burning injustice that, if you’re born poor, you will die on average 9 years earlier than others.” 
This year, the Budget comes on the same day as national No Smoking Day (Wednesday 8th March), and the Chancellor is being urged to take further action to cut the number of smokers and reduce the harm that smoking causes.
- Increase the tobacco tax escalator from 2% to 5% above inflation
- Increase taxes on hand rolled tobacco by 15% above inflation until they are equivalent to those on manufactured cigarettes
- Introduce a tobacco retailer licensing system, with costs met by the tobacco manufacturers
- Give a Government commitment to adequate funding for public health, including returning business rates to local authorities in a way that is fair to poorer communities with higher smoking rates.
The Government is also urged to:
- Publish a new tobacco control plan for England without further delay
- Commit to effective and continuing mass media campaigns to encourage smokers to quit
- Reconsider its decision not to proceed with a levy on tobacco industry profits
This Briefing shows how Britain’s world class record on tobacco control is now threatened by public spending cuts, particularly on public health, and sets out how tax policy could be used to fund tobacco control work and to reduce smoking prevalence rates.
A tobacco tax escalator to reduce the affordability of tobacco was first introduced under a Conservative government in 1993, with the then Chancellor stating that this “is the most effective way to reduce smoking”.  An escalator of 2% above inflation is now in force for the duration of the current parliament.  To raise the money needed to pay for effective tobacco control, ASH wants the escalator increased to 5% above inflation. The tobacco industry is lobbying to try to get the escalator removed altogether. 
Tax increases have been shown to be effective in reducing health inequalities and reducing youth uptake as price increases have a greater effect on lower income smokers than on the general population. [6,7] The positive health impact of taxes is greater when some of the revenues generated are used to support comprehensive tobacco control strategies.  However, in recent years the UK has been less active than other countries on tobacco tax policy, particularly Australia. The Australian Treasury indexes tobacco tax increases to average earnings, and in its 2016 Budget announced additional increases of 12.5% every year from 1 September 2017 until 1 September 2020. 
In the UK there has been significant “downtrading” by smokers, both to cheaper brands of cigarettes and to hand rolled tobacco, encouraged by the tobacco industry’s pricing strategy. Cheaper brands are targeted at the young, the poor, women and those living in areas of the country with high smoking rates who are most in need of protection from tobacco industry marketing tactics. Tobacco taxation should be revised, including by sharply raising tax on hand rolled tobacco, and by setting a Minimum Excise Tax on cigarettes at the highest possible level. The rate will be announced in this year’s Finance Bill.
Tobacco and Public Health
Smoking prevalence has declined rapidly in England amongst adults and children since Governments began to implement comprehensive tobacco strategies from 1998 onwards. The latest figures show adult smoking prevalence in England has declined by more than a third from 27% in 1998 to 16.9% in 2015  and by two thirds among children.  However, as smoking is uniquely lethal, killing half of long-term smokers prematurely, it remains the leading cause of preventable death in the UK. Previous reductions in smoking prevalence have been driven by co-ordinated Government action set out in successive tobacco control plans. The last plan expired in December 2015, and despite repeated assurances, the Government has yet to publish a new one. 
Half the difference in life expectancy between the richest and the poorest social groups is due to differences in smoking prevalence.  To tackle this, the Government needs to ensure adequate funding for key tobacco control measures – particularly mass media campaigns, smoking cessation services and tackling illicit tobacco. Adequate funding for tobacco control is also need to achieve the “radical upgrade in prevention and public health”, which NHS England’s Five Year Forward View recognised as essential to ensure the “future health of millions of children, the sustainability of the NHS, and the economic prosperity of Britain”.  The cost of smoking in England was estimated in 2014 to be £12.9 billion a year, including about £2 billion in costs to the NHS and £1.1 billion in social care costs.  Social care costs have since risen to about £1.4 billion a year (£760 million to local authorities and £630 million in private funding).
The Government has cut funding for public health, following the transfer of public health functions to local authorities under the Health and Social Care Act 2012, supported by a ring fenced grant, originally of £2.8 billion in 2015/16. But in June 2015, the Chancellor announced an in year cut to this grant of £200 million, in the 2016 Autumn Statement it was announced that the grant would be reduced by a further £84 million in 2017/18 and by an average of 3.9% each year until 2020.
These cuts, plus general tight constraints on public spending, have led to sharply contracting budgets for local authorities. In the latest annual survey of tobacco control leads in English local authorities, covering 2016/17, smoking cessation budgets had been cut in almost three in five authorities surveyed, and 45% had cut budgets for other tobacco control work, including trading standards enforcement and action on illicit trade. 
National mass media campaigns are known to be effective in persuading smokers to quit. In 2009-10, funding for such campaigns was nearly £25 million, but by 2015/16 it had been reduced to £5.3 million, with further cuts expected in 2016/17. 
To help pay for effective tobacco control across England, ASH has called for the introduction of a levy on tobacco manufacturers.  In the 2014 Autumn Statement, the Treasury announced that it would consult on the introduction of a levy on the tobacco industry, stating that “Smoking imposes costs on society, and the Government believes it is therefore fair to ask the tobacco industry to make a greater contribution.”  However, the Treasury subsequently decided not to proceed with a tobacco industry levy on the basis that “the impact of a levy on the tobacco market would be similar to a duty rise, as tobacco manufacturers and importers would pass the costs of a levy on to consumers. This is supported by HMRC analysis which shows that a levy of £150 million would only raise £25 million after behavioural effects.”  However, the Government has since announced that it will proceed with a levy on sugary drinks, despite claims from the drinks manufacturers that the cost would be passed on to consumers. 
Despite being some of the most profitable companies on earth, tobacco multinationals currently pay little or no corporation tax. For example, British American Tobacco plc (BAT) and Imperial Tobacco Group PLC (Imperial) are both based in the UK. BAT paid no UK corporation tax in the 2013 financial year, despite being domiciled in the UK and making about £6 billion in global operating profits. Imperial only paid £6m in UK corporation tax for the 2013 financial year, despite global adjusted operating profits of £3.2bn. 
Commenting: Deborah Arnott, Chief Executive of Action on Smoking and Health said:
“Britain’s global leadership in cutting smoking rates is under threat because of an apparent lack of Government focus on what remains our number one health challenge, repeated cuts in funding for public health and failure to make the tobacco industry pay a proper bill for the harm their products cause. This year’s Budget takes place on No Smoking Day. This would be an excellent moment for the Chancellor to commit to vigorous action to support tobacco control and meet the Prime Minister’s promise to tackle health and social inequality.”
 Statement from the new Prime Minister Theresa May. 13 July 2016.
 Budget submission by ASH & UKCTAS, Jan 2017
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 Tobacco taxation in the UK: Tobacco Manufacturers Association. Accessed 2 March 2017
 The World Bank. Curbing the epidemic: governments and the economics of tobacco control. May, 1999.
 Amos A, Bauld L, Clifford D, et al. Tobacco control, inequalities in health and action at a local level. York, Public Health Research Consortium, 2011.
 Chaloupka F, Yurekli A, Fong G. Tobacco taxes as a tobacco control strategy. Tobacco Control 2012; 21:172-180
 Jha, P and Peto, R. Global effects of smoking, of quitting, and of taxing tobacco. New England Journal of Medicine 2014; 370:65.
 Treasury, Australia Excise rates for tobacco
 Annual Population Survey, 2015. ONS, 2016
 Smoking drinking & drug use among young people in England in 2014. HSCIC, 2015.
 In response to an oral question from Lord Rennard in the House of Lords on 23 February 2017, Lord O’Shaughnessy, Parliamentary Under-Secretary of State at the Department of Health, said: “we are at an advanced stage of development of the plan, and we will be publishing it shortly”.
 Smoking: Written question – HL1194. 26 July 2016
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 Costs of social care ASH toolkit, economic estimates by Howard Reed, Landman Economics
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 UK pushes ahead with sugar tax BBC News Online 5 December 2016