Henry Featherstone is Head of Policy Exchange's Health Unit.
Smoking remains a controversial issue in our society. And today, our report, Cough up, has re-ignited the debate. First, let’s be clear that smoking remains the biggest single preventable cause of death and serious disease in our society – 83,000 deaths in England last year. But it’s legal, some people enjoy it and tobacco duty raises £10 billion for the Treasury.
So why all the fuss? Well, because for the first time we have exploded the popular myth that smoking is a net contributor to the economy. Our research finds that every single cigarette smoked costs the country money - 6.5 pence each time someone lights up. That’s £2.82 billion in lost revenue each year, when we’re running a budget deficit of £177 billion. So following earlier Policy Exchange research that indicates that tobacco taxes are the most popular way to raise additional revenue, we suggest that tobacco taxation should be increased by 5% in the next Budget. This would see the price of a typical pack of cigarettes rise by 23 pence from £6.13 to £6.36 per packet and generate over £400 million for HM Treasury.
Ah! I hear you say, but won’t increasing taxes just increases smuggling? Not necessarily. Since 2000 there has been a concerted effort to tackle tobacco smuggling into the UK and as a result the market share of smuggled cigarettes has fallen by 50%. This has been achieved through increased co-operation with some tobacco companies, but sadly not all of them. It should also be noted that the type of tobacco that is most frequently smuggled, hand rolled tobacco, is the tobacco which enjoys the lowest level of duty.
Of course the
risk of just ratcheting up tobacco tax is that it ends up being regressive,
since poorer people are more likely to smoke. So we had identified about
£180 million of interventions to reduce smoking prevalence aimed at
particularly hard to reach groups like pregnant teenagers. We suggest
that direct financial incentives to stop
smoking of £10 per week should be offered to pregnant women of, or below, the
age of 20. This would cost £36 million annually and would be very
cost-effective, with NICE already identifying huge cost benefits for reducing
smoking in pregnancy. If we’re going to be serious in our attempts
at reducing health inequalities and stopping the cycle of tobacco addiction,
then we need to do what works.
