Action on Smoking and Health (ASH) has welcomed a report from IPPR’s Health Commission that sets out a vision for future health policy.

One of the main requests in the report is for the government to adopt a polluter pays approach to fund prevention and create market incentives for businesses to move away from the sale of unhealthy products.

They have backed calls made by ASH, the Smokefree Action Coalition and the APPG on Smoking and Health for a price-cap style levy. This would cap the wholesale price of tobacco and reduce the company's profit margin. Retail prices would be kept the same by the introduction of the polluter pays levy, which would go to the state and could fund prevention activities to support more smokers to quit. The health charity has estimated that such a levy could raise £700m in the first year.

Currently tobacco companies make significantly higher profits than other manufacturers. Imperial Tobacco, the biggest tobacco transnational in the UK with over 40 per cent of the market, made a net operating profit margin of 66.5 per cent in the UK in 2023, while BP’s net operating profit in September 2023 was estimated to be 11.1 per cent. The average for UK manufacturing is under 10 per cent.

A levy would require primary legislation so as a first step the government should introduce a windfall tax in the budget.

Rob Branston, an associate professor at the University of Bath, worked with ASH to develop the model. He said, “Tobacco companies make excess profits in the UK, far more than most companies, while selling a lethal product.

“The government could raise an additional £700m a year while having the additional benefit of maintaining current high retail prices, which disincentivise smoking. As a first step tobacco manufacturers should be subject to a windfall profits tax in the forthcoming budget.”

Working with Landman Economics, ASH estimated that smoking costs public finances £11.3bn per year with the total cost to the economy estimated to be £46bn a year. Investment in tackling smoking in this parliament would reduce the costs to public finances by four per cent and the costs to the economy as a whole by 17 per cent.

Hazel Cheeseman, deputy chief executive of ASH, said, "Spending to reduce smoking makes sound economic sense, providing immediate returns which grow over time.

“However, governments often find it difficult to spend on prevention even when the evidence of impact is clear. A levy on tobacco companies provides the resources needed to create a smokefree country at pace, delivering benefits for British productivity and reducing demands on public finances.”

References available on request.

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