Tobacco and Vapes Bill

Written evidence submitted by Gawith Hoggarth & Co. Ltd to the Tobacco and Vapes Bill Public Bill Committee (TVB14)

Executive Summary

· Potential local and national job losses through the closure of our site, having a direct impact on downstream businesses.

· £1m/month loss to the treasury from excise duty losses from our business alone.

· Many Gawith Hoggarth product categories are already far below the 5% smoking population threshold to be considered ‘smoke free’. Therefore, the banning of these OTP products will have negligible impact on government smoking population targets.

· The acceleration of an already thriving illicit tobacco market, leading to further organised crime and policing resource.

Introduction

Gawith Hoggarth remains the last production facility of Pipe and Rolling tobacco in the UK. Our family has been producing tobacco in the Lake District for 250 years and forms part of the local heritage history whilst remaining a well-known employer in a struggling market town. Our customer base involves approximately 700 other business entities generating around £18m of turnover, some of whom rely heavily on the sale of our products and would also be threatened by this legislation. Although our business has significantly developed its export order book over recent years, without the UK market our business runs a high risk of failure due to cash flow restrictions associated with international trade.

The case for Other Tobacco Products (OTP) categories to be exempt from the Bill

Since this Bill aims to reduce overall smoking prevalence to below 5% of the population, the inclusion of OTPs within it will make negligible difference to its result since OTPs contribute <1% compared to the current smoking population of around 12%. In addition, there is a high risk of creating a subdivision of illicit trade in OTPs that does not currently exist, increasing demand on enforcement agencies. Without any published impact assessment of how this Bill affects businesses involved with OTPs, the government has no real estimation of the economic costs.

Treasury Losses

Over the past 12 months our average excise duty submissions are £1.09m/month. The closure of our business would increase treasury losses beyond this revenue through erosion of national insurance, corporation taxes and PAYE contributions in addition to the required welfare to support our 30 staff. These losses would seem to be poor collateral value when considering the negligible impact OTP on the ‘Smoke Free Generation’.

Prohibition Realities

All product prohibition will certainly lead to increased organised crime and increased enforcement costs. The decades following this legislation will see tobacco trading akin to marijuana across county lines, increasing serious organised crime and the destruction of young lives who become involved in it. These fiscal and social costs should be considered as they will be difficult to reverse once embedded in society.

Recommendations

The Bill is introduced in 2 phases. The first phase to include cigarettes and RYO tobacco to be reviewed after (3) years, comparing any proportionate change of duty clearing between these categories and OTP. If there is no significant shift towards OTPs, they remain exempt from the Bill until the duty clearing data reaches a threshold in proportion of cigarettes and RYO. At this point OTPs could be included in the age limits applicable at the time.

Since OTPs already fall far below the governments smoking cessation targets this would form a very practical approach to achieving government targets whilst minimising losses to the treasury and livelihoods.

April 2024