Annex
PARTIAL REGULATORY IMPACT ASSESSMENT
Our comments on the Partial Regulatory Impact
Assessment are as follows.
CURRENT SITUATION/VOLUNTARY
ROUTE
We acknowledge that while the Public Places
Charter did not reach the agreed target with regard to formal
written smoking policies, it did achieve a great deal in terms
of awareness and positive action on smoking issues across the
industry. It would have benefited further, in our view, from stronger
support from the Department of Health and the Health and Safety
Executive in terms of raising general customer awareness of the
Charter. Public demand for smoking restrictions has now increased
since the launch of the Charter at the end of 1999, and the BBPA
welcomes the RIA recognition of the pub industry's voluntary action
plan launched in September 2004 (Paragraph 20). Our industry is
now leading the way towards a presumption of smoke free areas,
and the provision of customer choice.
COSTS OF
ACTION ON
SECOND-HAND
SMOKE
Implementation costs
The RIA ignores the impact that the smoking
ban has had on the licensed trade in Ireland. Retail alcohol sales
have not been affected mainly because of the growth in the off-trade
sales as people choose to drink and smoke at home. According to
the Vintners' Federation of Ireland[45]
(VFI), rural pubs have been worst affected by the ban. The VFI
is aware of just over 200 licensed premises that have closed since
the introduction of the smoking ban in March 2004. According to
the CSO in Ireland, 7,600 jobs were lost in the hospitality sector
in 2004. This equates to 150 jobs per week. There is no reason
to believe that the impact in England and Wales would be any less.
The same impact would result in the closure
of approximately 1,000 pubs. Taking into account the ban on smoking
in public places in Scotland, an estimated 33,600 jobs in pubs
and bars in the UK would be lost as a result of closures and decreased
trade[46].
Furthermore, 5.9% fewer jobs would be created in our sector, which
has always been a major source of employment opportunities for
a wide range of people of different ages and skill levels[47].
In Ireland, volume sales in pubs have declined
between 10% and 15% and in some cases, the decline is as much
as 25%. The trend is increasingly away from pubs to drinking at
home. In 2004, draught sales fell by 6% and sales for packaged
beer went up by 9%[48].
For the first seven months of 2005, draught sales are down by
8% while packaged have gone up by 15%[49].
There is no evidence that non-smokers are visiting
pubs in increasing numbers or that increasing numbers of pubs
are diversifying into food or other areas, so there has been no
replacement of lost trade.
Unintended consequences
The RIA suggests possible costs to business
and local authorities of cleaning up/providing disposal facilities
for cigarette butts outside premises. With the exception of cigarette
bins which could be provided by premises, any other form of disposal
facilities and street cleaning are surely a matter for local authorities.
THE OPTIONS
Option 1—The Voluntary Approach
Voluntary approaches have been successful in
many areas, notably offices and cinemas. It is not surprising
that the hospitality sector has taken longer to address smoking
issues than other sectors, due to the social nature of our industry.
However, substantial progress is now being made on a voluntary
basis. With Government support, this progress could still be greatly
accelerated.
Option 2—National Legislation Banning Smoking
(without exemptions)
The Government recognises the difficulty that
without whole-hearted support, such an approach will not be popular
with a large section of the general public. The Association agrees
that at this stage, the opportunity for choice in the hospitality
sector is desirable and necessary.
Option 3—Local Authority Discretion
The industry remains vigorously opposed to this
approach. There needs to be consistency of approach to smoking
issues at a national level. Although, initially devolving powers
to local level would seem a way of enabling flexibility and supporting
choice, previous experience shows that this is not always the
case and the resulting inconsistencies can cause more problems
than solutions.
In reality, local bans would not actually provide
for flexibility or customer choice in those areas where local
authorities opted for a complete ban. They would also cause confusion
for businesses, customers and tourists alike.
Option 4—National Legislation Banning Smoking
(with exemptions)
As Option 4 is the basis of the consultation
document, we have commented in detail on the approach, including
the timetable, above.
The RIA states there would be an overall reduction
in second-hand smoke through the creation of separate smoke free
premises and smoking premises. We believe it would be better to
reduce the overall risks across all pubs rather than only some
of them.
The RIA highlights that some pubs may choose
not to serve food in favour of allowing smoking and estimates
that 10-30% of pubs might be smoking. According to the BBPA/ALMR
Smoking Survey, we estimate that in the region of 34% of pubs
in our sample alone may be smoking throughout under the Government
proposals.
Net sum of all costs and benefits
(i) Implementation
With regard to signage, we believe that if this is
to be prescribed for all premises, there is likely to be a cost
to the industry of removing and replacing existing signage in
excess of £1 million. Costs could be minimised if signage
was only required in those premises where smoking was permitted,
which should be a significantly lower number of premises.
(l) Revenue losses to Exchequer
We believe that the Exchequer may also experience
losses from falling alcohol sales in no smoking pubs. Approximately
£2.5 billion could be lost in duty, and a further £3.8
billion in VAT, a total of £6.3 billion in revenue.
(n) Unintended consequences
As per our previous comments above, we do not believe
there should be any additional costs on our sector for cleaning
costs etc.
In commenting on implementation costs above,
we have outlined the impact of the smoking ban in Ireland 16 months
on in terms of the job losses, volume sales lost and pub closures.
We are therefore concerned that the table contains no estimate
of loss of income to the hospitality industry in England, yet
some losses will of course be inevitable. The effect on small
businesses in the community, particularly in marginal rural pubs,
will inevitably be dramatic, as small losses in income will lead
to their closure and consequent loss of employment for the local
community.
Competition assessment
We do not disagree with the assessment of competition
issues for Options 1 to 3. However, with regard to Option 4, the
impact of allowing members in membership clubs to choose whether
to allow smoking or to be smoke-free is potentially very damaging
to pubs, particularly in the club heartland of the north of England
where pubs and membership clubs in particular are in direct competition
for local custom. In the interests of a level playing field for
licensed premises, it is essential that the same rules apply to
clubs as to pubs. We refer you to our comments in response to
Question 7 of the consultation on this issue.
Rural proofing
According to the Rating Database[50]
18,692 pubs in England and Wales have a rateable value of £10,000
or less, and would be at risk of becoming marginal businesses
where any loss of income as a result of the impact of the proposals
could result in their closure. There is no reference in the RIA
to a "small business litmus test" being carried out.
We would strongly suggest that further consideration is given
to the impact of the proposals on small businesses in general,
and small hospitality businesses such as rural pubs in particular.
Enforcement and sanctions
We agree that further consultation is required
on the enforcement arrangements and would wish to be fully involved
in this. We do not understand the reference to "licensing"
in paragraph 43. Since smoking in public places will obviously
be covered by specific, separate, legislation, it surely cannot
be the intention to make any link with the licensing of hospitality
venues for alcohol and entertainment. Any conditions relating
to smoking attached to such licences would be ultra vires,
since conditions should not duplicate the requirements of other
legislation.
September 2005
45 VFI News-July 2005. Back
46
Centre for Economics and Business Research Ltd (CEBR)-2005. Back
47
CEBR-2005. Back
48
Irish Brewers Association. Back
49
Irish Brewers Association. Back
50
Rating Database 2004. Back
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