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Tobacco: Illicit Trade

Volume 773: debated on Tuesday 14 June 2016


Asked by

To ask Her Majesty’s Government, in the light of the Protocol to Eliminate Illicit Trade in Tobacco Products and the European Union Tobacco Products Directive 2015, which state that there must be tracking and tracing systems in member states and that the parties to the Protocol may not delegate their responsibilities to the tobacco industry, what assessment they have made of whether the current pilot scheme to help tackle illicit tobacco, using the tobacco industry’s Codentify authentication system, is consistent with their obligations under the Protocol.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and in doing so I remind the House of my presidency of the Chartered Trading Standards Institute.

My Lords, the implementation process for the protocol and directive’s requirements for track and tracing systems has not yet been agreed. The Government will ensure that this complies with the requirement not to delegate responsibilities to the tobacco industry. HM Revenue & Customs sees no conflict between this requirement, or the more general restrictions on the involvement of the industry, and public health policy and its current use of Codentify as a product authentication tool.

I thank the noble Lord for his reply, especially as I understand that he has flown overnight from China to give it. But does he not agree that at a very difficult time for trading standards in attempting to halt the flow of illegal tobacco products, the tobacco industry cannot be allowed to regulate itself and use its own tracking and tracing system on packets of cigarettes, when there are far more independent and less flawed systems available to government?

I thank the noble Baroness for her kind remarks. As far as tracking and tracing is concerned, there are many systems that could be used. Until the EU has decided on the requirements, Revenue & Customs is not going to look at different systems. But when it does, it will look at them openly and not rely on the tobacco industry to do it—as it is required not to do under the convention.

My Lords, I apologise to the House for my youthful impetuosity a moment ago. The Royal College of Physicians has concluded that e-cigarettes should be encouraged as an aid to giving up the smoking of tobacco. The European Union has decided, via the tobacco products directive, that e-cigarettes should be discouraged. Which side are the Government on and what are they going to do about it?

As far as the Treasury is concerned, it does not impose duty on e-cigarettes because tobacco is not involved and it has no plans to do so.

My Lords, does the Minister think that the tobacco industry could ever be trusted to act against smuggling, given its proven record of grossly oversupplying certain markets where tobacco taxation is at a low level, particularly to encourage the smuggling of its own products into other countries such as the UK, where levels of tobacco taxation are rather higher, thereby depriving the Exchequer of more than £2 billion a year in revenue which it should be receiving?

My Lords, it is not the tobacco industry’s duty to prevent smuggling. It can help the Government, but it is HMRC and Border Force which are there to control smuggling.

My Lords, can my noble friend confirm that it is the Government’s intention to ratify the WHO protocol on the illicit trade in tobacco?

Yes, my Lords, the Government wish to ratify the protocol as soon as they can. They continue to work towards ratification of the protocol, although many measures are already in place—for example, a register of tobacco manufacturers. They have recently consulted on the requirements of Article 6 of the protocol on the mandatory licensing of tobacco machinery and the possible licensing of the supply chain.

My Lords, the House will be grateful to the Minister for the reassuring replies that he has given to the questions addressed this afternoon. Can he also assure the House that, in developing a strategy on this, he will consult our fellow members of the European Union? They will also have clear ideas on how to keep the tobacco industry at arm’s length over such an important issue. Will that continue over a considerable period of time?

My Lords, the Government will certainly consult their European partners. The whole point about dealing with smuggling and illicit trade is that it is a cross-border matter, and therefore it is essential that there is a pan-European agreement on how to deal with it. The Government certainly intend to continue doing that.

Will my noble friend say when the European Union finally ceased to subsidise the growing of tobacco in Greece? It was still being subsidised into the 1990s. When did it actually stop?

I am afraid I do not know the answer to that, but I am sure that my noble friend will be able to tell me.

My Lords, a past parliamentary report indicated that one in three of the cigarettes sold in the shops and streets of London was illegal. Has that situation improved and can the Government give us the latest update on those figures?

There is a big problem with the illicit trade in tobacco, although it has come down over the last 10 years. The tax gap has reduced and there has been a small reduction in the amount of smoking. As for the reduction of revenue that we get due to illicit trade, there has been a small improvement in that, down from 22% to 10% on cigarettes and from 61% to 35% on tobacco. But things change, and the problem evolves continually, so it requires a lot of extra effort. In the Budget, the Chancellor announced extra money to combat this problem.

My Lords, if the noble Lord does not know the answer to the question put by the noble Lord, Lord Tebbit, would he be good enough to discover it and let the rest of us know? Could it be that the EU is still doing that?