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British American Tobacco

Volume 785: debated on Tuesday 17 October 2017


Asked by

To ask Her Majesty’s Government what assistance they have given British American Tobacco in its challenge to the claim for unpaid VAT brought by the government of Bangladesh.

My Lords, Her Majesty’s Government have engaged with the Government of Bangladesh over discriminatory action against British American Tobacco Bangladesh. This engagement includes discussions at senior official levels since February 2015. The engagement was in line with the guidelines of the World Health Organization’s Framework Convention on Tobacco Control. We take very seriously our obligations as a party to the FCTC and guidance in this regard was issued to all posts in December 2013 and again in May 2017 to assist compliance.

I thank the noble Lord for that Answer, but I beg to disagree that this is in line with the United Nations guidelines. I was prompted to ask this Question because the high commissioner in Bangladesh found time to champion British American Tobacco. Given that the activities of tobacco companies in Bangladesh are estimated to cause around 100,000 premature deaths a year, does the Minister really consider that the high commissioner’s actions were consistent with the UK’s obligations under Article 5.3 of the Framework Convention on Tobacco Control, to which we are a proud signatory and participant and which commits parties, including the UK, to protecting public health policies from the commercial interests of tobacco companies?

I have had the good fortune to meet our high commissioner on the ground; she engages in the widest possible way to ensure that both the diplomatic and the business priorities of our interests are protected. I pay tribute to her work in Dhaka in this regard. The noble Baroness referred to guidance. Perhaps I may refresh memories on this issue. The guidance in question is the guidance I have referred to; namely, what we issue to all posts. Any post should not:

“Engage with foreign governments on behalf of the tobacco industry”—

there is an exception—

“except in cases where local policies could be considered protectionist or discriminatory”.

In this regard, the actual issue was of whether British American Tobacco Bangladesh was issued with a retrospective VAT demand of approximately £160 million. Indeed, both the law ministry and the Finance Minister of Bangladesh agree that there is no case to be answered.

My Lords, is the Minister aware that British American Tobacco faces allegations about the exploitation of child labour in the production of its poisonous products in Bangladesh? All its workers there face the severe risk of health problems—they result from the absorption of nicotine through the skin and from the use of pesticides—and further respiratory problems. If the high commissioner is engaged in representing BAT in Bangladesh, will the Minister undertake to ask her also to investigate these allegations and report back to the House on them?

First, I ask the noble Lord to write to me on the specifics of this issue and I will take it up myself. However, perhaps I may correct one element within his question. The high commissioner is not there representing British American Tobacco—she is there representing Britain.

My Lords, the Minister referred to protecting British commercial interests, and if that really is the motivation we have to raise questions. We know that tobacco taxes are recognised by the World Health Organization, the World Bank and indeed the British Government as probably the most effective way of cutting smoking. Does the Minister accept that it is hypocritical to have our diplomats engaged in trying to reduce taxes in countries like Bangladesh, bearing in mind that it sounds as though this is for British commercial interests?

The noble Baroness is right to raise the important issue of the harmful effects of tobacco, but let me assure her that the representation that the high commissioner made in this regard was based on the exception. The VAT demand was levied only retrospectively; in the opinion of the law ministry of Bangladesh, that does not adhere to the country’s legal principles. That point should not be lost. Therefore, we are not batting for the tobacco industry; this is about the high commissioner acting within the guidance issued.

My Lords, does my noble friend not think it extraordinary that opposition parties should attack our high commissioner, who is simply ensuring that the rule of law is upheld? Can he say how many people are employed by British American Tobacco and how much they pay in tax to the Exchequer?

On the second part of the question, in terms of specific numbers, I will write to my noble friend. He is right, as I have already said from the Dispatch Box, that our high commissioners do an incredible job in many sensitive and challenging areas. I refer not only to Her Excellency Alison Blake, but to all our high commissioners and ambassadors around the world. We should commend, not condemn, their efforts.

My Lords, I do not wish to condemn the activities of any representative of the British Government, but the policy enunciated by Andrew Lansley—now the noble Lord, Lord Lansley —in March 2012 was that he wanted tobacco companies to have “no business” in Britain and that,

“both at home and internationally, we will continue to act against the vested and commercial interests of the tobacco industry … My objective is to achieve smoke-free communities; theirs is to make a profit from selling intrinsically harmful products”.

Is that still the Government’s policy?

There is always a concern in the House of Lords; as one noble Lord who introduced me said to me, “Always remember there’s someone who has written either a book or a paper about the subject you’re about to answer on”.

We are entirely consistent; as I have already said, the Government stand very firm on the harmful effects of tobacco on those who indulge in smoking. Irrespective of that point, although it is a pertinent one, it remains true that our high commissioner was acting in the interests of a British company and within the rule of law, and that was qualified by the law ministry of Bangladesh.

The key issue here is the international agreement we have signed up to. The Framework Convention on Tobacco Control says that in low and middle-income countries, the policies of Governments should be to increase tax revenue. That is what we signed up to—increased tax revenue on cigarettes. In the light of this decision in Bangladesh, will the Minister consider whether there is a need to ensure proper enforcement of that international convention?

I hear what the noble Lord says. I assure him that we are one of the leading nations in the developing parts of the world, of which Bangladesh is a good example, and want to ensure Bangladesh’s transfer to being a middle-income country. We are in favour of ensuring that all legal taxes which need to be paid are paid, particularly by British companies. This was a retrospective VAT demand. As I have alluded to on a number of occasions already, the law ministry disagreed with the action of the NBR, saying that there was no scope to demand VAT retrospectively.