Budget: Chancellor’s decision not to proceed with tobacco tax levy is a massive missed opportunity

Wednesday 08 July 2015

Action on Smoking and Health has criticised the Chancellor’s decision not to proceed with a levy on the tobacco industry in today’s Budget. The Government has already held a public consultation on the levy [1] which ASH, supported by more than 120 national and local organisations, believes would help cut smoking rates, improve productivity and reduce pressure on the NHS. [2]

In its response to the Government’s consultation on the levy ASH calculated that a levy equivalent to 25 pence per pack of cigarettes would raise £500 million. Opinion polls show this would be supported by the public if the money raised was used to fund tobacco control measures to help smokers quit and discourage young people from taking up smoking. [3]

As the Chancellor stated: “Smoking imposes costs on society, and the Government believes it is therefore fair to ask the tobacco industry to make a greater contribution.” [4] In addition the recently announced £200 million in-year cuts to DH funding for local authority controlled health budgets [5] make it essential that a new source of funding be found for the new tobacco control strategy the government has announced that it is developing.

According to the NHS Five Year Forward View, even after the £8 billion in additional NHS funding committed by the Government, there will be a funding gap of £22 billion by 2020. The report acknowledges that “The future health of millions of children, the sustainability of the NHS and the economic prosperity of Britain all now depend on a radical upgrade in prevention and public health.” [6]

Deborah Arnott, chief executive of ASH said:

“Smoking imposes a huge financial and health burden on society. As the Chancellor himself has acknowledged, it’s fair to ask the tobacco industry to contribute towards tackling this enormous public health problem.

“The Chancellor’s decision in today’s budget not to proceed with a levy on the tobacco industry is a massive missed opportunity. A levy is essential, with the money raised used to help smokers quit and discourage young people from starting to smoke, if we are to bridge the NHS funding gap, tackle health inequalities and increase economic prosperity.”


[1] Following a consultation on the tobacco levy, the Chancellor announced in the March Budget that HM Treasury would carry out further informal consultation to support the development of detailed policy proposals on the tobacco levy HM Treasury. Budget 2015. HC 1093. March 2014. paragraphs 1.254-5 and 2.147-2.150
[2] Smoking Still Kills. Protecting children, reducing inequalities. London, ASH, 2015
[3] Tobacco Tax Levy. ASH response to a Treasury consultation on a tobacco tax levy.

The extreme profitability of the UK tobacco market and the rationale for a new tobacco levy.
This paper by Dr J Robert Branston & Professor Anna Gilmore of the University of Bath is cited as part of ASH’s response to the tobacco tax levy consultation.

A UK tobacco levy: The options for raising £500 million per year. Howard Reed.

[4] HM Treasury Autumn Statement December 2014, paragraph 2.252
[5] Williams D. Osborne announces £200 million cut to public health budgets. Health Service Journal. 4 June 2015.
[6] NHS Five Year Forward View.