Communities and Local Government CommitteeWritten submission from Japan Tobacco International

Introduction

1. Japan Tobacco International (JTI) is part of the Japan Tobacco Group of Companies, a leading international tobacco product manufacturer.

2. While we feel it would be inappropriate for JTI to comment generally on the transfer of public health responsibilities and budgets to local government, we note that local government does not have power to make regulations in relation to tobacco control.

3. It is unclear, at this stage, whether top tier local authorities will assume responsibility for tobacco policies and programmes as part of their public health remit. JTI considers that there are very real dangers of an inconsistent approach to tobacco-related issues at a local level. This may occur in a variety of areas (different policies on the promotion or enforcement of bans on smoking in different types of public places or the provision of local health services relating to smokers).

4. Variance in the approach of local authorities towards tobacco-related issues would be strongly inadvisable, inevitably leading to confusion and confrontation amongst the public and potentially situations where local approaches may undermine national programmes. Given the importance of evidence-based solutions, the complexity of the regulatory framework for tobacco and the need for complex—and resource intensive—impact assessment, JTI would strongly advocate that whilst being respectful of the authority granted to local government by Parliament, national guidelines and advice are set out on tobacco issues to encourage local government to act within an agreed framework.

5. Notwithstanding the above, JTI would like to take this opportunity to demonstrate that worthwhile and genuine partnerships can be formed with tobacco companies despite the perceptions that exist, and that there is a role for discussions with companies such as JTI in the development of local policy on tobacco issues.

About JTI

6. JTI has its UK headquarters in Weybridge, Surrey, and has a long-standing, significant presence in the UK market. Its UK cigarette brand portfolio includes Benson & Hedges, Silk Cut, Mayfair and Sterling, as well as a number of other tobacco products including roll-your-own tobacco (RYO), also known as hand-rolled tobacco (such as Amber Leaf), cigars (such as Hamlet) and pipe tobacco (such as Condor). JTI manufactures product for the UK market at sites in the UK (in Northern Ireland) and outside it (for example, in Germany). In the UK alone, JTI employs over 1,800 people. Further, JTI has made significant duty and tax payments to the UK Exchequer. In 2011, JTI made payments of over £3.6 billion in tobacco product duty. In total, JTI paid over £4.6 billion in tax in 2011.

JTI as a Legitimate Stakeholder

7. JTI’s view is clear: tobacco products carry risks to health. Appropriate and proportionate regulation of the tobacco sector is both necessary and right. JTI believes that:

minors should not smoke, and should not be able to obtain tobacco products. It is central to our Code of Conduct, our marketing practices, our operational policies and the way JTI does business; and

adult smokers should be appropriately informed about the health risks of smoking before they make the decision to smoke.

8. JTI actively seeks dialogue with governmental authorities around the world regarding policies that may impact on tobacco issues with the aim of ensuring, so far as possible, that proposals meet public policy goals while respecting the rights of all stakeholders.

The FCTC and the Exclusion of Tobacco Companies

9. In February 2005, an international treaty promoted by the World Health Organization (WHO), the Framework Convention on Tobacco Control (FCTC), came into force. To date, 176 Parties have ratified the Convention, including the United Kingdom. The FCTC requires countries to adopt a comprehensive range of tobacco control measures such as banning tobacco advertising and promotion, the introduction of health warnings on tobacco packaging and combating illicit and counterfeit trade in tobacco products.

10. Article 5.3 of the FCTC provides:

“In setting and implementing their public health policies with respect to tobacco control, Parties shall act to protect these policies from commercial and other vested interests of the tobacco industry in accordance with national law.”

A supporting text (WHA Resolution 54.18) urged the WHO and its Member States:

“To be alert to any efforts by the tobacco industry to continue its subversive practices and to assure the integrity of the health policy development in any WHO meeting and in national governments.”

11. JTI understands that tobacco products carry risks to health and thus believes that appropriate and proportionate regulation of the industry is both necessary and right. The adoption of Article 5.3 provides an opportunity to improve the transparency, inclusivity and integrity of the tobacco regulatory process generally. JTI believes that legislative legitimacy, effectiveness and good regulation flow from processes that encompass transparency and participation.

12. Not only are the benefits of stakeholder consultation widely recognised, restricting JTI’s participation in achieving public policy objectives will ultimately damage the effectiveness and legitimacy of tobacco policy.

13. JTI continues to believe that some dialogue, however restricted, can lead to the development of better public policy in relation to tobacco. JTI has not had a meeting with its primary UK government department—the Department for Health—for many years and we contend that as a result many opportunities have been missed to pursue the Department’s objectives more effectively and mistakes that could have been avoided have resulted in poor policy formation and implementation.

Making our Partnerships Work

14. The below given examples demonstrate the successful partnerships that authorities and third-parties are able to have with JTI.

Anti-Illicit Trade

15. JTI is committed to the fight against illicit trade in tobacco and has a number of compliance programmes targeted at contraband, all intended to ensure our products only reach consumers through legal retail trade channels in their intended market.

16. JTI provides support to law enforcement in several jurisdictions, and has signed Memoranda of Understanding (MoU) in over 30 countries. Through JTI’s EU agreement, we are committed to providing 400 million USD over a 15-year period to fight illicit trade in the European Union.

17. JTI has always offered its full cooperation in the battle against smuggling, and participated in a number of public and industry programmes aimed at preventing all types of contraband. HM Revenue & Customs (HMRC), for instance, has acknowledged the success of MoUs regarding government-industry cooperation and noted that “the MOUs set out a framework which has resulted in the incidence of UK manufactured cigarettes being smuggled into the UK falling markedly.”

18. JTI is a member of the joint Working Group with HMRC (and other tobacco manufacturers), which seeks to improve our understanding of the illicit market, identify intelligence gaps and share insight into consumer behaviour. Our Anti-Illicit Trade Operations team also provide information and witness statements to local authorities seeking to understand and prosecute those involved in the illicit trade.

19. JTI and other tobacco companies occasionally meet with both Ministers and officials from HM Treasury and HMRC to discuss the taxation of tobacco products and issues related to tackling the illicit trade.

20. Illicit trade in tobacco products is an issue that needs to be addressed through constructive partnership between the industry, governments and public authorities. It is inconsistent that the UK government is happy to work in partnership in one area (that raised £12.1 billion in tobacco tax in 2011) but not in others.

Youth access prevention and No ID No Sale

21. Retail access prevention programmes have proven to be effective in limiting minors’ access to cigarettes. 90% of retailers surveyed after the introduction of “CitizenCard”, the Government-approved proof-of-age scheme, believed there to have been a reduction in under-age sales; 95% were more confident in asking for ID as a result of the campaign. JTI supports this programme and over 2 million CitizenCards have now been issued. Studies exist which suggest that sales staff who fail to ask for ID are 173 times more likely to sell tobacco to minors. This highlights the importance of encouraging and supporting retailers to ask for ID.

22. CitizenCard also operate the “No ID, No Sale” campaign which was launched in January 2004 to promote and publicise all government-approved proof-of-age schemes. Around 250,000 “No ID, No Sale” information packs, which include age display posters and guidance on how to respond when faced with customers who are unable to provide proof of age, have been distributed to retailers.

23. Minors should not smoke. It is illegal to sell tobacco products to minors. Therefore, certain people seeking to purchase tobacco products should expect to be asked to prove their age, and should expect that retailers will accept only the correct ID. JTI suggests that HM Government takes steps to support such efforts to further build upon their success.

24. The “No ID, No Sale” campaign also aims to help retailers record attempted underage purchases in a refusals register. Every time a retailer refuses to serve someone with an age-restricted product it is suggested that a brief description of the incident and the attempted purchaser is recorded in a register. In the “three strikes and out” environment currently in force, the register enables a retailer to demonstrate to Trading Standards Officers (TSOs) the extent to which they have refused attempts at purchase by minors.

Litter

25. We believe that the increase in smoking-related litter was an understandable consequence of the UK-wide ban on smoking in public places, as smokers have been driven outside to smoke with limited facilities to safely extinguish a lighted cigarette.

26. In light of this, legislative authorities should acknowledge that regulation can sometimes have a negative impact and/or unanticipated consequences; it is important that full consideration is given to these from the outset before introducing any new policies, or new approaches to regulation or enforcement.

27. JTI takes very seriously the need to encourage smokers to dispose of their litter in a way that does not impact negatively on the surrounding environment. We expect smokers, like all members of the public, to accept their responsibilities to keep our environment clean by disposing of all litter carefully and responsibly.

28. The best way to prevent smoking-related litter is through changing people’s behaviour by educating, encouraging personal responsibility and providing solutions for adults who choose to smoke. It is clear that more needs to be done—by local authorities, businesses and hospitality venues—to ensure that smokers are provided with the means to dispose of their cigarette butts responsibly. On its part, JTI produces “Stub-Tidies”, which are portable, reusable pocket ashtrays for distribution to smokers free-of-charge.

29. We continue to investigate ways in which JTI might be able to support a pilot litter bin project, whereby we would provide support for cigarette litter bins within a local authority. We intend to measure the impact of such a pilot project and if effective, would seek to roll the initiative out in other areas.

30. JTI has also worked to form anti-litter partnerships with local authorities and businesses in England and Northern Ireland, and with Keep Britain Tidy and the Campaign to Protect Rural England (CPRE), in order to address the problems associated with litter.

31. In 2010, JTI sat as a member of the Litter Challenge Group, along with the UK Department for Environment, Food and Rural Affairs (DEFRA), Keep Britain Tidy, CPRE and other business organisations. The group was formed in order to develop a nationwide anti-litter campaign, “Love Where You Live”, which was launched in 2011.

32. JTI is now working with Liverpool Business Improvement District and East Gallions Housing Association as part of the Love Where You Live campaign. The details of these projects are currently being finalised.

33. In addition, in June 2011, JTI formed a partnership with Ballymena Town Centre Development Ltd, which has led to the distribution of pocket ashtrays free-of-charge to members of the public through tobacconists and the licensed trade over a number of weeks. We have also provided other local authorities in Northern Ireland with pocket ashtrays as part of their local anti-litter initiatives.

34. In conclusion, we believe the most effective way of addressing tobacco litter is to communicate responsible smoker behaviour through practicable and sustainable solutions. If the problems relating to litter are to be tackled head-on in an effective way, a partnership approach is essential. This means Government, local authorities, NGOs and businesses, including JTI, must each recognise that they have an important role to play in the fight against litter.

Corporate philanthropy

35. Corporate philanthropy is how we describe our choice to contribute to the societies in which we do business, in a way that is meaningful, considered, voluntary, and outside of our commercial operations. We work on many different levels, with small charities as well as globally renowned institutions. We apply a common set of values to decide which charities and cultural institutions we work with. And we view them as partners, rather than simply beneficiaries.

36. Our goal is to help people who are less-advantaged to improve their quality of life, and to promote the Arts.

37. JTI realises its goal of corporate philanthropy through more than 120 partnerships around the world. We support adults and older people in more than 40 countries. This includes, for example, computer literacy programs in Canada and Korea, programs for those marginalized by society in Tanzania, an adult literacy scheme in Holland, neighbourly aid in Poland, and residential programs in the Czech Republic.

38. Some UK facts: In 2011, 29,410 people saw their quality of life improve as a result of our charitable donations; 22% of our employees regularly donate to charity through payroll giving and JTI matches these donations by up to £100 per month; 19 of the organisations we support have been able to spend more time helping their clients; and, in 2011, 541 employee volunteer hours have been donated during work time. We focus on long-term partnerships to make a significant and sustainable difference. Working with these partners we have achieved the following:

Our support has made a difference to over 45,000 of the most vulnerable and at-risk older people in Northern Ireland through an information and advice helpline and 1:1 specialist support. Our funding also created over 1,000 places on a free concert ticket and transport scheme for older people living alone.

More than 3,000 people with disabilities are participating in 15 Discover IT Centres across the UK, an innovative programme supported by JTI. Participants use computers to develop their skills and interests, pursue further education opportunities and increase their confidence.

Nearly 1 million people have seen an exhibition and nearly 100,000 have attended a concert supported by JTI.

JTI’s employee-led Community Care Committees support local charities close to our factory and offices. There is a committee in each of JTI’s UK locations.

Over 300 homeless people have secured employment through JTI’s support of educational and personal development training. The estimated monetary benefit to society of one homeless person on benefits moving into employment is £16,773 (Oxford Economics, October 2009).

We have helped nearly 300 very frail and isolated older people across the UK find friendship through the creation of over 30 friendship groups. 600 older veterans enjoy a Christmas lunch with JTI’s support.

Our support helps promote and celebrate modern contemporary Japanese art through the JTI Acquisition Fund. We’ve enabled our cultural partner to increase its collection of Japanese graphic art and collect works by leading modern and contemporary Japanese artists.

Importance of a Partnership Approach

39. We hope that we have demonstrated in this submission that Government, agencies and other organisations can form productive partnerships with tobacco companies such as JTI, in many instances because of our expertise in tobacco-related issues. JTI sincerely hopes that in the interests of good and workable public policy, it will at a minimum level be consulted by government in the delivery of tobacco aspects of public health programmes in the future.

October 2012

Prepared 26th March 2013