Autumn statement: Tobacco licensing is costly, bureaucratic and unnecessary

Business rates have dominated the retail industry’s reaction to the Autumn Statement this week, and you can see what we have said here.  I wanted to use this blog to talk about another issue, buried deep in the papers accompanying the Chancellor’s speech: tobacco licensing.  The Autumn Statement includes a commitment to consult on whether to introduce a licensing system for vendors of tobacco, which could include local shops.  The government say (and I believe them) that they approach this in an open-minded way, so I’ll try to help by setting out the arguments as I see them.

My starting point is that new licensing systems are problematic.  They cost money, they’re bureaucratic, they bring more uncertainty to retailers who could have conditions applied to that licence, or a cost increase year to year, and they usually come with new training requirements forcing retailers to record and document what they probably already do to make sure staff are complying with the law.  What’s more, I’m unconvinced that such a regime is needed for tobacco.  The authorities can already take away a retailer’s right to sell tobacco for up to six months, and impose unlimited fines on those selling to children.  In Scotland, where we have seen the first steps towards tobacco licensing with a retailer register, there are actually no new powers for enforcement officers to punish rogue retailers, just those that already exist in England and Wales.  Only five retailers in Scotland have actually been removed from the register, and they can start selling tobacco again in six months – exactly the same punishment as English and Welsh retailers receive without the bureaucracy of creating a register.

But, there’s a but.  The Treasury’s document notes that a tobacco licensing system should be considered in the context of tackling the illicit tobacco trade (that’s why it was part of the Autumn Statement, not just a Department of Health announcement).  The black market in both legal tobacco that’s illegally imported without duty paid and in contraband product is a massive problem.  It damages us in big way, costing sales that go to criminals instead, providing children access to tobacco for which legitimate retailers often get the blame, and propping up a criminal supply chain that trades in alcohol and other products too.

So would a tobacco licensing system tackle this problem?  I’m unconvinced it would have an impact beyond the margins.  There are examples of hairdressers and other non-retail businesses selling illicit tobacco.  The argument goes that because these businesses probably wouldn’t get a licence, they wouldn’t be able to trade, but if they’re already prepared to break the law by selling these products in the first place, why would they care about breaking another law?  There are then the convenience stores and newsagents who knowingly sell illicit product – would they be deterred by a licensing system?  Again, I’m not convinced.  These retailers can lose their alcohol licences for selling illicit tobacco, as well as receiving sanctions for the offence of selling non duty paid tobacco.  These people trade in the black market not because there are no penalties, but because they think (too often correctly) that they won’t get caught.  Where we do have a licensing system – in the alcohol trade – there is regrettably still duty fraud, and the licensing system is underused in tackling this problem.

Despite my reservations, I remain open-minded to good arguments about why the benefits of a tobacco licensing system would outweigh the costs.  Let us know your views, and our policy committee will discuss this in due course and make sure we make the best and most representative response to the consultation promised today.

This entry was posted by Victoria on Thu, 26/11/2015 - 11:12