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Lord Tebbit: My Lords, will the noble Lord allow me to intervene? I hope that it does not spoil the noble Lord's reputation to be caught agreeing with me. I hope that he will not place too much emphasis on the point that he has just made. After all, it is not only cigarettes that are in the vans and cars; it is also good, decent wine and other such products--and we do not want to get into that, do we?

Lord Dubs: My Lords, I do not disagree. Good wine comes into this country too. Although I do not buy it in Calais--I buy it in local off-licences--I understand what goes on. But, as I said, that trade undermines both Treasury policy and health policy as regards smoking, and I take exception to that. I wish our European partners had the same attitude to trying to reduce smoking as successive British governments have had. The problem would be solved if the French and other EU countries increased their tobacco taxes to the same level as ours.

That said, I am convinced that abolishing cigarette advertising would make a material difference to the number of cigarettes smoked. That is why I support the direct measures in the Bill. It is an elementary aspect of marketing that all those who sell products have to find new entrants to the market to make up for those who die--the more so when the product that they sell kills their consumers. Therefore, the danger in health terms is that young people are lured into smoking and are persuaded that it is acceptable as a result of visible advertising and sponsorship. Preventing that is the particular strength of this measure.

Perhaps I may ask my noble friend a couple of questions. I have been puzzling over the meaning of subsection (2) of Clause 10, which has the rubric "Prohibition of sponsorship":

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I am slightly puzzled as to the legislative basis for that form of wording. The Explanatory Notes seek to elaborate on the provision:

    "For example, it is not intended to prevent a tobacco company supporting a theatrical production and being acknowledged for so doing, provided that the acknowledgement mentioned solely the name of the company and not any of its products, and did not involve any special treatment of the tobacco company",

I find that rather difficult. In the cigarette advertising that appears on billboards and elsewhere, frequently only the name of the company is featured. Given the explanation in the Explanatory Notes, the clause may allow the sponsorship of tobacco by mention of the company rather than of any specific product. That would be sufficient to undermine the purpose of the legislation. I hope that my noble friend will persuade me that I have got this wrong and that the Bill is more robust in that respect. I fear that that may not be the case.

I wish to raise two further points. One relates to airports and airlines. I have tried to follow the arrangements for in-flight magazines. As I understand it, cigarette advertising will not be permitted in magazines produced by airlines based in this country whereas magazines produced by foreign airlines may contain such advertising. Have I got that right? My second point is a related one. What about advertising on the "air side" at British airports--when one has gone through passport control and Customs on one's way out of the country? Will the legislation apply to that element too? My noble friend nods. I hope so.

Finally, I turn to a point raised by the noble Lord, Lord Geddes. I do not believe that there is an inconsistency in permitting a habit such as smoking and accepting that it is legal but saying that advertising promotion and sponsorship should not be legal. It would be quite wrong to make smoking illegal. It might be good for the health of people in this country, but it would be wrong in principle. But I see nothing wrong in doing everything possible to discourage young people from starting down that road. That is surely the supreme strength of this measure.

4.25 p.m.

The Viscount of Oxfuird: My Lords, I wonder whether the Bill will do all the things that it purports to do. I have the view that it is totally geared to today's television mentality. It simply fails to address anything other than that which is negative; and that is essentially lazy.

Where are all the provisions in the Bill to provide an inspiration to smokers to give up? That would be positive action. All that we have before us is a further banning order, which seems to be the only thought pattern that is currently available intellectually. Perversely, a ban on advertising will have a severe effect on the very source which is important: the health warning. It must surely be possible for us to have some indication as to whether the Government regard the warning advertisement as an effective tool in the overall programme of reducing the consumption of tobacco products among the young.

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It is sad to note that, since 1997, tobacco consumption has risen by 6.5 per cent, whereas in the previous 25 years there was a persistent decline in the consumption of tobacco products; a 37 per cent reduction was finally achieved. There was a reason for that: each year there was an increase in tobacco taxation. But tobacco remained affordable; the increase did not have the effect of promoting the criminal level of smuggling that we see today.

If we look at the current situation, we see a taxation level that promotes illegal smuggling at 34 per cent; namely, over a third of the total cigarette equivalent market is now non-UK duty paid. The total loss to the Exchequer is some 9,000 million. That figure of one-third in the period since 1997 must concentrate the mind of any serious anti-smoker. It represents a massive loss of revenue. It apparently equates to 3p in the pound on the standard rate of income tax.

I know from experience with my own children that the forbidden fruit of tobacco is tried at an early age. By the time young people reach 24 or 27, they are much more involved in life: they are involved in sport and activities which take over mentally from the desire to run behind the bike sheds or whatever encouraged them to smoke in their youth.

But what effect does the withdrawal of product advertising have on the very young? They choose the product that tastes best to them and, when forewarned by the health statement, they probably choose a product with a low-tar, low nicotine content. This information and choice will be denied to them, which could possibly even add to the health risk.

I believe that we would all recognise that the young are resourceful; their income is minimal, comparatively, and the power of "word of mouth" is great. It is therefore not surprising that they will find sources of supply which will conform to their budgets. The difference between a packet of cigarettes costing 2.50 and one costing 4.33 is a very considerable incentive to seek out the illegal supplier. It is also a temptation to buy in larger quantities if their budgets permit it.

It is therefore not surprising that the effect of advertising is negated when such a disorderly market exists. I ask again the question: why is it that the Government have not carried on with the original agreement between the tobacco industry and health Ministers where these issues were discussed and solutions found? The current agreement has not been modified since 1995. As we all know, marketing is part of the total management concept. It is part of the discipline. As I said at the beginning, if one wants something to happen one has to consider all the factors by involving all the interested parties. I am convinced that the solution to a reduction in the consumption of tobacco products by the young must rely on orderly market discipline and the removal of the smuggled products over which we have no control. Therefore, we must seek the professionalism of those people who have the experience. I cannot support the Bill as it stands at present, but I look forward to tabling amendments as soon as possible.

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4.32 p.m.

Lord Harris of High Cross: My Lords, I hope that it is not necessary for me to say that my fundamental opposition to this Bill runs far wider and deeper than the narrow interest I declare as a lifelong pipe smoker and the chairman of FOREST, which is the premier European organisation that defends the rights of smokers to light up, I hope always with due courtesy and consideration.

It is not necessary to be a smoker to see that outright censorship of advertising, as the noble Lord, Lord Geddes, said, whether of tobacco or any other legal product, is the plainest denial of the prized freedom of individuals to have access to the information that they wish to have. At a more mundane level, this Bill would violate the right of competing businesses, including corner shops, to communicate freely, as we have heard, with their own customers.

Such a far-reaching statutory prohibition, which is unprecedented in a free society in times of peace, would require some special explanation and justification. One does not have that special justification. In a moment I shall come to the conflicting evidence in surveys on smoking and advertising.

In my view what is almost as deplorable is that this Bill marks the abrupt departure of Her Majesty's Government from the civilised practice over decades of constructive discussion and voluntary accords with the tobacco industry which, without the sledgehammer of legislation in the past, have effectively delivered restraints on advertising messages, sampling, direct marketing and the rest. Again, without precedent, an industry which is among the leading British exporters is shunned as a pariah in a display of petty puritanical pique.

The Government's justification is their hope that the Bill will improve health. I regard that as being highly debatable and questionable. We had similar high-minded hopes from this Government in the recent past for education, the National Health Service, crime, transport and many other things. They are hardly promising precedents. Ministers claim that ending tobacco advertising will reduce consumption at some stage in the future by 2.5 per cent. It would be difficult to reconcile that with the fact that we have just heard of consumption now rising, after decades of gentle decline, without any stimulus whatever from increased advertising. That 2.5 per cent turns out to be the purest speculation with no attempt to establish a foundation in science or experience.

In the Minister's regulatory impact assessment, we have further statistical licence. On page three it puts the cost of so-called "smoking related diseases" to the National Health Service,

    "in England alone up to 1.7 billion a year".

By page six that estimate falls to,

    "around 1.5 billion and 1.8 billion"

for the whole for the United Kingdom. As an effort to show the cost of smoking to the community, all these figures are completely pointless because the arbitrary

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costings ignore entirely the fact that, until recently, 10 billion was gathered every year by the Exchequer from taxes on smoking. That was before over-taxation caused the revenue to fall from 10 billion to teetering around 7 billion a year. But that is still four times the presumed cost to the National Health Service of the so-called "smoking-related diseases".

Here the Government's simplistic aim runs into further trouble. Smuggling and the illegal importation of cheap European cigarettes and hand-rolling tobacco have flooded many parts of the country with supplies at almost half the price of the corner shops, which brings a further unintended knock-on effect. By undermining retail tobacconists, who cannot legally sell to youngsters under the age of 16 years, cigarettes have become available on the streets at half-price with no questions asked.

Even this restless, reckless reforming Government should have learned some modesty from experience. Have they not learned already something about the laws of unintended consequences in education, drugs, crime and even now in the foot and mouth outbreak? At the very least they might now do themselves a favour by heeding rational arguments on the likelihood--I should say "the certainty"--that these good intentions will again be mocked by frustrating failure.

The analytical miscalculation at the heart of this Bill is the naive assumption that advertising automatically increases the total market demand. As a serious student of advertising over many years, I say that that was the outcome in developing markets such as those for detergents, fridges, washing machines and television sets in the 1960s and 1970s. But when markets mature and approach saturation, advertising shifts to fighting over brand shares, including keeping out cheap foreign imports. Only a novice would expect that advertising a new soap, a soup or a cigarette would have us all buying more and increasing the total demand.

When one looks at these claims and counter-claims there is almost no end to it. I enjoyed the Independent, which I do not always read. It recently said that there is,

    "no evidence that advertising encourages young people to smoke".

It went on to say that youngsters start smoking because it is considered "cool" among their peer group; because it helps them to lose weight; or because it is disapproved of by adults. More weighty is the report of the Office of Population Censuses and Surveys on why children start smoking. It found that advertising had no significant effect. In 1996 the hard-headed KPMG consultants found,

    "overwhelming evidence to support the proposition that advertising bans on tobacco products do not reduce consumption".

Private Eye went one better, as one might imagine. In January it carried a letter from Michael Stewart who reported on a study of 22 OECD countries which revealed that the six with advertising bans showed, on

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average, an increase in consumption, compared with the trend in countries without bans. That is to say, in countries without bans smoking diminished at a certain rate, but in the six countries with bans it did not diminish at a greater rate.

Since the 1970s there have been dozens of studies purporting to test whether advertising is a significant factor in the extent of smoking. In 1999, the IEA obligingly published a report entitled, Does Advertising Increase Smoking?, by Dr Hugh High of the University of Cape Town. He reviewed what he called the "voluminous literature" on the relationship between smoking and advertising. On any balanced assessment there is no comfort at all for the promoters of this Bill.

One of the more pretentious earlier reviews of evidence was the Smee committee report published by the Department of Health in 1992. After a showy parade of econometric and statistical analysis of 19 published studies, it concluded weakly that a majority showed a positive relationship between advertising and tobacco consumption. The snag was--when one looked deeper--that the studies varied widely in quality and most of them lacked statistical significance. If there were time, I could quote from the Smee report. It states, for example, that where advertising does have an effect on consumption, it is a transitory effect. Consumption responds initially but then falls back unless one keeps on increasing the advertising. A progressive increase in advertising is necessary to sustain a given initial increase in demand.

The weighty conclusion of the prestigious research group, Henley Marketing Dynamics, was bluntly that,

    "the analysis undertaken in the Smee report does not justify its findings".

Indeed, Smee himself acknowledged weaknesses in its data, some of which was derived from the Norwegian equivalent of our own Action on Smoking and Health (ASH). Hugh High's devastating evidence, summarised in Table 5, shows that following bans in Iceland, Norway, Finland, Italy and Portugal, introduced between 1971 and 1983, consumption fluctuated, but compared with the decline in countries without bans there was no additional reduction in smoking.

The commonsense conclusion is that the dominant influence on the general decline in smoking which we have witnessed has been the gruesome, and I believe exaggerated, counter-advertising of the health warnings. To the extent that banning advertising simultaneously reduces public exposure to these warnings, a long decline in smoking could slow down or even be reversed. As with fox hunting, I hope that the House will resist an authoritarian Bill which panders to political prejudice and yet would fail in its professed purpose.

4.43 p.m.

Lord Mason of Barnsley: My Lords, I must first declare an interest; I am a pipe and cigar smoker. Indeed, I have smoked a pipe for the past 57 years. I also formed the Lords and Commons pipe club over 20

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years ago. We have about 100 members in both Houses. I am not happy about this Bill but I shall not oppose it. There is a health drive behind it which I appreciate.

I am not a member of FOREST, unlike my noble friend who has just addressed the House, but I do believe in the freedom and the right to enjoy tobacco. Freedom and tolerance towards smoker and anti-smoker should be the creed to follow--it would certainly help to lessen the feelings against each other.

To smoke a cigarette, cigar or a pipe is a person's choice, and whether smoking, drinking alcohol or smoking cannabis or pot, they are fully aware of the risks and, indeed, constantly advised of the dangers to health of pursuing their pleasure. But I stress that there should not be annoyance to others. I also believe that undue pressure is unwarranted. It does seem odd that those who drink alcohol, causing many horrible road deaths, death to themselves, illnesses and disease and a burden on the health service, do not receive the same waves of wrath as the tobacco smoker.

The tobacco smoker feels he is being told and controlled, and to him it is anathema in a democratic society. Tobacco is still a legal product and it has the legal right to be advertised. I know that tobacco companies argue that they are directing their advertisements not at young or potential customers but at the competition between competing brands. Well, be that as it may, the point is that they are being singled out for public and unfair chastisement. Now under this legislation so strictly to control their right to advertise and promote their products, banning their advertising and promotion to this extent is almost the final step to stop smokers being informed of their tobacco choice.

Seventeen million smokers will also feel aggrieved. But my main concern is the Chancellor's policy on tobacco taxation, which has been mentioned already by the noble Viscount, Lord Oxfuird, and the noble Lord, Lord Harris of High Cross. But, first, I note that on 22nd January in another place the Minister, Alan Milburn, said,

    "I believe that people have a right to choose to smoke. If that is what they want to do, they have a right to do it".--[Official Report, Commons, 22/1/01; col. 656.]

And then on 1st February my noble friend Lord Whitty in your Lordships' House said,

    "It should be recognised that a significant minority of the population still smoke. The interests of that minority should be borne in mind, as well as those of everyone else ... we need to take a proportionate approach to this".--[Official Report, 1/2/01; col. 880.]

Well said. There is no vendetta then. Well, why punish the smoker? Why are not these Ministers telling the Chancellor that there are 17 million smokers constantly being punished through his tobacco taxation policy? And where is the proportionate approach?

The Government's policy of constantly increasing taxes on cigarettes is self-defeating and has had quite the opposite effect to what was intended. Smoking is on the increase for the first time in 25 years and I believe that it is the increasing official price of tobacco

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that has brought this about. The tax on legally imported cigarettes is now so ridiculously high that it has created an enormous black market in untaxed smuggled cigarettes costing the Treasury between 2 billion and 3 billion a year. With cut price cigarettes and masses of cheap imports, more young people now find it easier to start smoking.

I know, of course, the measures that have been taken to curb this smuggling--1,000 extra Customs officials and a national network of x-ray scanners. Add that on to the Chancellor's lost revenue and it has still not stopped smuggling. I believe that the Chancellor's policy is wrong. It is expensive; it is an aid to smuggling and the crime that goes with it. It is a smuggler's charter, an inducement to crime, with smuggling gangs operating now in the clubs, the schools and the back streets of our towns. Add that to the cost of the Chancellor's tobacco taxation policy. I also believe that some of these illegal, cheap imported cigarettes have a higher tar content and are therefore more harmful to young smokers. Therefore his policy in that respect is dangerous too.

The Tobacco Manufacturers' Association--I have no connection with it--made it clear in its submission to the Chancellor that the UK tobacco tax is now the highest in the world and has created a situation where smuggling is spiralling out of control, law and order are being undermined, cigarette consumption is increasing and legitimate retailers are going out of business. Yet in spite of those dire warnings the Chancellor still increased the tobacco tax. A packet of Regal king size will now cost 4.28, compared with 1.47 in Spain. One in three smokers is now buying his cigarettes from illegal sources. Some evidence came from cigarette packets found on the terraces of football grounds. For example, last season 41 per cent of packets found at Ipswich after one match were non-duty packets.

The Government estimate that in 1999-2000 total cigarette consumption was around 76 billion of which 13.6 billion--18 per cent--were smuggled. Even by the Chancellor's own reckoning, the measures he has introduced to contain smuggling seemed to be designed to accept that 18 per cent to 20 per cent will be smuggled. And this Bill on advertising and promotion will not stop that.

Finally, I draw the House's attention to an Answer to a Written Question in another place given by the Paymaster General, Dawn Primarolo as recently as 7th March. At col. 229 of the Official Report, she said:

    "As part of the 'Tackling Tobacco Smuggling' strategy, Customs are pursuing a target for 2000-01 of holding illicit market penetration to 21 per cent of the UK cigarette market, equating to 2.8 billion in lost revenues. Customs' assessment for the calendar year 2000 suggests that 22 per cent of the UK cigarette market is made up of smuggled cigarettes, equating to 2.9 billion in lost reserves".

What an admission! And how many hospitals could we have built?

I say to the Chancellor and to the Government: stop punishing the smoker. Is it not worth cutting the taxation on tobacco? It might--I emphasise "might"--prompt a short-term increase in legal

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cigarette smoking but it would help to kill off the illegal trade, the smuggling crooks, crime in our urban districts and, after a little time, as before under the voluntary agreements, I believe that the reduction in smoking would then continue.

4.52 p.m.

Lord Naseby: My Lords, I have been involved in marketing all my life. At one time I confess that I was responsible for some years for the advertising of Senior Service, Park Drive, Hamlet, Old Holborn and a number of other old brands. I have never smoked in my life.

Like other noble Lords, I accept the medical evidence although I note in passing that the incidence of lung cancer rises steeply with age. According to Professor Thatcher of the Christie Hospital NHS Trust, Manchester, 82 per cent of patients are now over 65 and 47 per cent--that is, nearly half the patients--are over 75; so at least they have passed their three score years and ten. So perhaps the evidence is not quite as strong as everyone says traditionally.

There is no purity of principle as regards the Bill. It is just perceived to be politically correct. No one on either side of the Chamber has the guts to ban cigarettes. No government ever had the guts to ban smoking. We know that this Government are not good at coping with challenges.

The noble Lord, Lord Mason, told us about illegal smuggling. I do not need to add to what he said. The situation is not being coped with. We are flooded by cheap cigarettes. Why, therefore, do the Government persist in ignoring the importance of price? However, I take issue with the noble Lord on this matter. All the evidence in relation to smoking is that the lower the price of cigarettes, the greater the consumption. Even the Chancellor in his latest Budget did not increase the price of cigarettes by a great deal. I do not think that the Bill will work. However, if it were to succeed, the resources that the tobacco manufacturers spend on promotion will now be available to reduce the price of cigarettes. Your Lordships will know that there is fair latitude from the profit margins of cigarette companies to reduce the price of cigarettes.

If one wants further evidence, let us consider eastern Europe. Cigarettes are cheap in eastern Europe and consumption is high. If all promotion or communication is removed, the resources that would have gone into that factor will now go into reducing the price, and consumption will increase.

It is clear that the Bill will not work. It will not reduce consumption. On Clause 2, the Explanatory Notes state:

    "It is not intended that the public at large, journalists etc should be prevented from commenting on tobacco products or that the representation of smoking and tobacco products by those engaged in creative or artistic pursuits (actors, painters, products etc) should be prohibited".

So lifestyle promotion will continue. Only commercial brand communication is to be constrained.

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The Explanatory Notes continue:

    "Subsection (4) exempts persons who do not carry on business in the United Kingdom".

Why are we supporting overseas companies? There seems to be a huge hole there.

The noble Lord, Lord Dubs, commented on in-flight magazines. UK airlines do not carry only passengers from the UK. I think that British Airways would be somewhat offended if it were told that the majority of its passengers were UK citizens. They are not. Why should it be constrained?

My noble friend Lord Tebbit commented on Clause 7. I do not believe that a single Member of this House can allow Clause 7 to be agreed to. It gives the Secretary of State an all-enveloping power: that because there may be some developments in technology he or she may have the right to introduce an amendment to the Bill without debate.

Clause 9 refers to free samples of allied products. The Minister referred to sunglasses, umbrellas, windcheaters and so on. The Explanatory Notes state:

    "For example, branded clothing might be sold for two thirds or more off the usual price".

What is the usual price? Is it the Gucci price? Is it the Marks & Spencer price? Is it the Asda price? Is it the market trader's price? What happens if they are last year's goods? Can one not have sale prices? How many noble Lords have visited retail parks where prices are cut to the margins? The clause will not work. The poor trading standards officer has to assess whether the price is right or wrong. It is an impossible job. The power will not work.

I know a little about brand-sharing. I feel somewhat sorry for Branson. Presumably he cannot have Virgin cigarettes because he already has an airline and a host of other dimensions. But he will not be allowed to have Virgin cigarettes because they would share the brand name. The provision will remove the whole of the own-label business. No supermarket can have an own-label cigarette. Sainsbury, Asda, Tesco and so on will be denied it. That is an interference with their trade.

We know that attempts at a passing-off action fail. The Government must have that knowledge--but perhaps not the Department of Health. The DTI certainly has such knowledge.

With regard to enforcement, I feel extraordinarily sorry for the trading standards officers. In Northamptonshire a few years ago, one saw the genuine pressure under which they worked regarding the problems of counterfeit and unsafe products. Are we really saying that, as a priority, they must check the displays of the corner tobacconists and newsagents to ensure that they are not offending the provisions of the Bill?

The Bill is riddled with dangerous precedents. I hope that the Minister will take seriously the words of the noble Lord, Lord Harris, and his experience of advertising, which I totally concur with from my own experience. The Bill interferes in the legitimate communication between a business and its known customers. It gives unfair advantage to foreign

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companies. It flies in the face of all economic experience. Clause 7 is totally unacceptable. To ban the promotion and communication by any means of a product that is legally manufactured, sold and bought is totally wrong and unprecedented in peacetime.

5 p.m.

Baroness Gibson of Market Rasen: My Lords, I begin by expressing my support for the aims of the Bill. As my noble friend Lord Tomlinson said, it is another election manifesto promise that is being kept. I particularly welcome the ending of tobacco advertising in sport. I shall be pleased to attend a football match or watch it on television--hopefully a match that involves Ipswich Town, whom I have followed for many years--and no longer have to see advertisements for smoking, which are currently difficult to avoid.

I recognise that since 1995 there has been a voluntary agreement relating to advertising and tobacco promotion, which the Tobacco Manufacturers' Association has tried to monitor. However, there have been a number of examples of adverts being placed close to schools or hospitals. Although some of them have eventually been removed, they can encourage smoking by children and by others who are already ill, however briefly they appear. I therefore believe that the Bill is needed.

I shall raise two particular issues on which the Bill may cause consequential problems. The first is a question of employment. I have spoken before in your Lordships' House about smoking and declared an interest as a former senior official of the Manufacturing, Science and Finance Union, of which the tobacco workers' section is a proud part. I am aware that the Bill may not directly affect employment, but presumably tobacco companies do not spend millions of pounds on advertising for fun. I understood from them last week that they believe that advertisements promote tobacco and smoking. If so, it surely follows that lack of advertisements may deter smoking, which in turn will threaten the jobs of those in the tobacco industry.

Additionally, such extra regulation may make tobacco manufacturers think twice about continuing their business in the UK. I have already been told personally by one large tobacco company that it cannot diversify any more than it has done already and that in any case it believes that there is an anti-tobacco attitude in the UK, which means that future investment must be made abroad. One of the companies that provides filters for cigarettes has told me that its machinery has been tailor-made for such filters and is no use for manufacturing other products. If the machinery cannot be used to make filters, it will have to be scrapped, the factory closed and the workforce dispensed with.

I do not know whether those companies are bluffing, but if they are not, jobs would appear to be under threat. Under those circumstances, I ask my noble friend the Minister and other Ministers, when

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dealing with issues relating to tobacco manufacture, to remember the need for alternative forms of employment for any workers threatened.

Thanks to efforts of the tobacco workers' union over the years, we are talking not about poorly paid, part-time jobs, but about skilled, well paid posts for men and women. Just as I have argued in the past for alternative employment for miners, steelworkers and those in the rural communities, I argue that those working in the tobacco industry--many of whom, ironically, are non-smokers--have a right to the same consideration.

My second worry has already been touched on by a number of noble Lords. It concerns the possibility of increased smuggling of cigarettes into this country. It is very helpful that the Government are encouraging smokers to stop smoking by the use of patches and other methods. I greatly welcome that. However, some people will continue to smoke despite those incentives being placed in their way. It often follows that the cheaper the cigarette, the more they will smoke. Despite increased surveillance, we know that criminal elements in other countries are targeting the UK as a country into which cigarettes can be smuggled. Those smuggled cigarettes may well be stronger than some and may come from countries with little or no health protection provision relating to tobacco products.

Last year the UK manufacturers claimed to control 93 per cent of the UK cigarette market, but they now fear that that percentage may decrease rapidly. Already a number of previously unheard of cigarette brands and counterfeit produce of dubious quality are smuggled into the UK market. I understand that they come from as far afield as China. I also understand that smuggled cigarettes are being sold from ice-cream vans, thus targeting children and young people.

Clause 2(4) says:

    "It is not an offence ... for a person who does not carry on a business in the United Kingdom to publish or cause to be published a tobacco advertisement by means of a website which is accessed in the United Kingdom".

Does that mean that the world-wide web can be used for the advertisement of cheaper and smuggled cigarettes? Can the sales outlets from which they can be obtained also be advertised? I hope that my noble friend the Minister will be able to reassure me on those points.

I look forward to my noble friend's responses on those two important issues of jobs and the smuggling of tobacco products. I reiterate that overall I am in favour of the Bill.

5.7 p.m.

The Earl of Liverpool: My Lords, the first thing that strikes me about the Bill is that it is by any standards a draconian measure. Tobacco is a recognised legal product, the manufacture and distribution of which employs around 60,000 people in this country and, it is estimated, more than 100 million world-wide.

The Bill would introduce a comprehensive ban on tobacco advertising and sponsorship by any company in the sector going about its legal business and trying

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to protect its market share. That is a drastic step. What is the reasoning for it? The Minister has said that it is hoped that it will reduce consumption by 2.5 per cent. He prayed in aid the Smee report, but there is other empirical evidence on the subject and even the Smee report cannot prove that that 2.5 per cent reduction would be achieved. The noble Lord, Lord Harris of High Cross, quoted the 1996 KPMG report. At the risk of testing your Lordships' patience, I shall repeat its conclusion. It said:

    "There is overwhelming evidence to support the proposition that advertising bans on tobacco do not reduce tobacco consumption".

The 1990 report by the Office of Population Censuses and Surveys found that advertising had no significant influence on why children start smoking. The Macdonald surveys of 1993 came to the same conclusion, stating:

    "There is no evidence in any of the studies to suggest that if advertising were banned it would make the least difference to the propensity of children to smoke".

Therefore, noble Lords may take their pick, but the Smee report is by no means the only report to which we should pay attention.

Perhaps there is another reason why the Government are pressing ahead with this legislation. Certainly it was in their manifesto, but my personal view is that it has more to do with demonstrating to the country at large that the nanny state under new Labour is very much alive and well. Whatever the reasons, I believe that the Government are misguided.

Furthermore, I believe that their tobacco policy is confused and contradictory. On the one hand, they have committed increased resources to education and smoking-cessation programmes, which are to be commended; on the other hand, they have pursued an excessive tobacco tax policy which has had the predicted perverse consequence of encouraging smuggling on a massive scale. Many noble Lords have already referred to that.

The resultant countrywide availability of low-price, black-market products has led inevitably to increased total consumption. Since this Government came to power in 1997, it is estimated, as has already been stated by my noble friend Lord Oxfuird, that UK tobacco consumption has increased by 6.5 per cent. That follows a period of 25 years of persistent decline.

It must be said that the one thing that this Bill will not do is reduce the upward trend of tobacco consumption that we have seen since the Government took office. The reason is that, without brand advertising or promotion, the prime means at the disposal of manufacturers will be to compete on price. It does not take a genius to work out that, with smuggling unabated and a general downward pressure on UK retail prices, consumption will continue to rise.

As we have already been told, the revenue lost to the Exchequer as a result of the excessive tax increases imposed since 1997 totals almost 9 billion. That is an enormous sum of money. During the same period, consumption has increased, and that has had three

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major adverse and unwelcome effects on the country. The first is that children have gained wider and easier access to tobacco products through indiscriminate selling by illicit traders.

The second effect is the increased level of criminality in the population. It is estimated that 5 million people in the UK are now involved in smuggling, or illicitly selling or buying tobacco on the black market. This is big business for the hardened criminals, who employ tactics of intimidation and violence.

Thirdly, thousands of legitimate retail businesses have been seriously affected financially. Some have even been put out of business. Something must be seriously wrong when one can buy a packet of cigarettes on the black market for 2.50 while the retail price, as we have already heard, is 4.33 or thereabouts. That represents a saving of 42 per cent, or almost 2, per packet. Therefore, of course people will be tempted to buy smuggled products. Indeed, even the Paymaster General admits that in the year 2000 22 per cent of all cigarettes smoked in this country were smuggled. That equates to 18 billion smuggled cigarettes--quite a heady figure--and a loss to the Revenue, again, as we have already heard, of almost 3 billion a year.

In my view, by far the worst smuggling statistic is in relation to the hand-rolling tobacco sector. It is reliably estimated that 80 per cent of all hand-rolling tobacco in this country is non-UK duty paid. That is a staggering figure. It is very difficult to try to rationalise that the ban on advertising and sponsorship proposed in the Bill will have any effect on reducing that figure or, indeed, overall consumption.

If a manifesto pledge is found to be misguided because of the consequences that its implementation would have, I believe that other more appropriate means of achieving the Government's objective should be found. It is possible that the Government have come to the same conclusion. The timing of the introduction of this Bill into your Lordships' House means that it will be almost impossible for it to pass into law if an election is held in May this year.

I want to touch briefly on the health implications. It is undoubtedly true that smoking cannot be regarded as good for one's health. One of the reasons cited for the introduction of this Bill is that it is believed that it will reduce consumption by 2.5 per cent. Quite apart from the fact that such a reduction in consumption cannot be convincingly argued against the facts, that says something very serious about the interference in our lives by this Government and about their lack of consistency.

If noble Lords are considering drugs that damage health, they should take, as an example, drink. It is, if one likes, another legal drug. Let us consider the burden that patients hospitalised as a result of excessive consumption has on the National Health Service. The Royal College of Physicians estimates that drink-related health problems could account for up to 12 per cent of total NHS spending--that is, approximately 3 billion a year. Will the next step of this Government be to introduce a similar ban on

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drink advertising and sponsorship, saying confidently that that will free up so many thousand National Health Service hospital beds? If they do, in my view the case will be equally unproven and equally unfair.

Where does that sort of approach end? Why not ban car advertising? I am not being terribly serious in asking that question but, after all, cars kill children and cause many thousands of deaths and injuries every year. We are beginning to witness an increasingly regulated state interventionist mindset which runs counter to what this Government profess to aspire to; namely, joined-up thinking, less legislative burden and the reduction of red tape.

In the context of legislative burden and red tape, I want to touch on Clause 7, to which my noble friend Lord Tebbit and others--the noble Lord, Lord Naseby, in particular--referred. I regard it as a Henry VIII clause. I have been in this House long enough to know that the one thing that can be guaranteed to antagonise your Lordships and arouse suspicion is the insertion into a Bill of a Henry VIII clause. Therefore, I shall strongly oppose that clause in Committee.

As currently drafted, the Bill gives incredibly wide-ranging powers to the Secretary of State. Clause 7 is one example; there are others. The power which it confers is aimed at Internet and electronic promotion of tobacco. It would, I believe, be wholly wrong to allow such powers to stay in the Bill. This is a very complicated area which will require proper parliamentary scrutiny if for no other reason than to avoid the law of unexpected consequences. The electronic aspect and the attempt to cover that in the Bill are, frankly, a minefield.

Quite apart from that, but no less serious, are the powers of entry into premises, as set out in Clause 14. That clause gives an enforcement authority rights to enter premises by force. Such premises could include private homes where part of the home is used as an office or where the occupant or company is under suspicion.

Then we come to the absurd aspect under Clause 4, which states that apparently no offence is committed if tobacco advertising appears in a magazine whose principal market is not the United Kingdom and which has been published on the Internet. This is the Alice in Wonderland aspect of the Bill. We all know that the Internet knows no international boundaries, as is graphically illustrated by the fact that another way of describing it is "the world-wide web". Therefore, it will be very difficult, or even impossible, to say where the principal market is aimed.

There are so many loose ends in the Bill. To what extent this Government can legislate on such matters in Scotland, as they set out to do in Clause 13, is just one more matter that I should like to question--never mind the question of whether this legislation would fall outside the Treaty of Rome and EC legislation on free trade practices. In his opening remarks, the Minister made a point of saying that European Council Directive 98/43/EC is the very legislation on which this Bill is based. However, it was annulled on 5th October 2000 following a legal challenge.

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The Bill is misconceived and presents a very dangerous precedent. It is unfair for an industry that is going about its lawful and legal business to be discriminated against in this way. The voluntary agreements that are in place between the industry and government have worked well over the years and have, until the recent draconian tax increases, achieved a year-on-year reduction in consumption.

If the Government are serious about their objective, they should dispense with the Bill, reduce excise duty to more sensible levels and continue to have a dialogue with the industry through voluntary agreements.

5.20 p.m.

Lord Monson: My Lords, perhaps I should start by mentioning that I am a supporter of FOREST--wholly unpaid, of course--although I am not sure that that is relevant to the Bill, which relates to an advertising ban, not to a smoking ban.

No government in a free society should create yet another criminal offence or extend the scope of censorship--both of which the Bill will do--without a very good excuse. I submit that in this case the Government have not got that justification. In this country, as in all democratic countries, smoking has always been a perfectly legal activity. It has normally been taxed quite heavily for health, social and revenue reasons, in the same way as alcohol is heavily taxed. However, fiscal "dissuasion", so to speak, is one thing, but criminalisation is a very different matter. The latter is particularly inappropriate with regard to tobacco advertising because it is clear that no adult will be induced to smoke more or to take up smoking for the first time in consequence of seeing an advertisement. Indeed, with regard to adults, social pressures nowadays are all in the other direction, especially in Britain and the United States.

The Government may argue with reason--they have not yet advanced this argument--that libertarian principles sometimes have to be subordinated to the protection of minors and that that is their main aim in the Bill. Were they to do so, I should suggest that that argument would carry more weight if the Government had not recently devoted massive efforts, including the use--or possible misuse--of the Parliament Act, to ensure that 16 and 17 year-old boys and girls can legally be subjected to a practice that is far more harmful to their health than smoking a cigarette will ever be. The noble Lord, Lord Tebbit, made a point along the same lines.

It is not advertising that tempts young people into smoking, as the Independent said in an excellent leading article on 9th December last year, an article mentioned by my noble friend Lord Harris of High Cross. "Epater la bourgeoisie"; "Thumb your nose at your elders"; "Taste the forbidden fruit"; such have always been the natural inclinations of young people throughout the western world. If smoking were made compulsory, we could be certain that the young would give it up as soon as they could.

One might add to the inducements that young people face to take up smoking the example set in southern Europe, where smoking is still chic,

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particularly among women. Are we going to ban young people from travelling to Italy or Spain? Although I am afraid that I have only rarely seen the television soaps that were mentioned by the noble Lord, Lord Tebbit, what should we do about old films that are shown on television and in which the handsome hero and ravishing heroine play every scene with cigarettes firmly clamped between their lips? Will the BBC and ITV be ordered to censor those films in the same way in which politically correct zealots in the United States have managed to airbrush out of photographs of Franklin Delano Roosevelt the cigarette that was permanently in his hand?

One suspects that the Government and the anti-smoking lobby would like tobacconists to resemble the betting shops of old. Noble Lords will remember that previous governments tried to make them as austere and forbidding as possible in order to discourage people from gambling. That did not work, and now betting shop proprietors have been allowed to brighten up their premises and make them more consumer friendly.

One also reads today that the drive against cannabis is being relaxed in practice if not in law. So much for consistency!

How will the proposed draconian restrictions help anyone? The Government make half-hearted murmurs about the prospect of a 2.5 per cent reduction in smoking. As several noble Lords have pointed out, that figure has been plucked out of thin air and is not supported by any evidence; it is simply a "guesstimate". Despite the comments of my noble friend Lord Walton of Detchant, the evidence regarding Norway is ambiguous. Although tobacco advertising has been banned for a long time, consumption has risen by 41 per cent over 20 years. I do not know whether that is to do with the prosperity that resulted from the oil boom, but it is a fact. Moreover, consumption in the United Kingdom, the Republic of Ireland, the Netherlands, Belgium and Luxembourg--there is a ban in none of those countries--has fallen more sharply than it has done in many countries in which a ban is in place.

Smuggling has not been taken into account. Throughout history, punitively high taxes have led to smuggling. Smuggling is viable when distances are short, as they are between France and Britain, and when population densities are high, as they are in this country: it would not be particularly viable to smuggle to Norway. Since the price of smuggled cigarettes is lower overall than highly taxed cigarettes, consumption will increase, as was pointed out by the noble Earl, Lord Liverpool, the noble Viscount, Lord Oxfuird, and the noble Lord, Lord Naseby.

What does an advertising ban mean? It means that manufacturers will be able to compete not on quality but only on price. Unless I have misunderstood the Bill and the Minister's opening speech, manufacturers will not be able effectively to inform the consumer that brand A contains less tar and nicotine than brand B; they will not be able to encourage customers to experiment (for example) with cigarettes that are made

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from air-dried tobacco, which contains less tar than flue-dried tobacco; and they will not be able to encourage people to experiment with cigars and cigarillos, both of which, I understand, contain less tar than cigarettes, or even with snuff, the advertising of which is inexplicably going to be banned although medical opinion deems it to be virtually harmless.

Quality--or at least the possibility of quality--will be replaced by cheaper quantity, whether legal or illegal. I have smoked enough awful state-monopoly tobacco in post-World War II Europe to know what I am talking about.

Such an illiberal Bill obviously needs much detailed scrutiny in Committee and probably during its later stages as well. Theoretically, there are 13 months of this Parliament left to run. There can clearly be no question of the Opposition agreeing to curtail debate and to agree to the Bill virtually on the nod should the Government decide to call an election 12 months earlier than they are obliged to do.

5.28 p.m.

Lord Hardy of Wath: My Lords, I begin by declaring an interest. I am a smoker and member of the club to which noble Lords have referred. I have enjoyed its hospitality, although I have no financial interest. From time to time I have also enjoyed hospitality from the establishment that came into my constituency at a time when unemployment had reached unimaginable heights. It created more jobs than we had seen for some years previously--and, indeed, subsequently. That establishment held the packaging material and tobacco of a major company. I did not and do not smoke the products of that company.

That reminded me of the concerns about the protection of brands. The tobacco industry says that it is keen to advertise in order to protect brands. If advertising is prevented, especially if the illegally imported trade is to continue, the danger of a reduction in British production in favour of overseas production will not do this country very much good. It is for that reason that I hope the Minister will pay particular attention to that argument.

In relation to smuggling, I take the historic view that the smuggler is popular. The smugglers in Napoleonic times were among the most popular people in the country, although they were providing considerable assistance to the French economy. Our concern may be rather more widely distributed throughout Europe if we consider the attitude of those countries within the EU which grow tobacco.

My anxiety relates to whether the statistical base of the Government's argument is correct. My noble friend quite properly referred to the World Bank and the research in that regard. He suggested that it was almost certainly correct. I do not disagree. My concern is that this Bill may well encourage and provide ammunition for the maintenance of the assault on smokers which those of us who smoke have witnessed with increasing frequency in recent years.

I have been smoking since my early teens. I was smoking when I was a schoolmaster--I referred to this in a recent debate in the House--and was left with a

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class of over 40 children and no classroom. I had decided to stop smoking at that time but found it increasingly necessary mid-morning and mid-afternoon to have a quick cigarette in the staff room. I could not do that now and therefore would probably have been subject to the term "stress", which I do not believe we encountered before 1970. I would have been able to sue my local authority for several hundred thousand pounds and regret, perhaps, that I was not a policeman in London.

Those of us who smoke fear that we will be increasingly badly treated. For example, after a great deal of effort we persuaded the last government to accept the scheme for the compensation of miners with bronchitis and emphysema. But they included a rather nasty little condition. If a miner was seen to have been a smoker, then the benefit he could receive was significantly reduced. A miner who was born in the middle of the 1920s and started working down the pit in the middle or late 1930s, at which time he probably started smoking, would have been smoking for at least a score of years before there was any clear medical evidence that it was harmful to him. Yet now we penalise him for starting to smoke in the 1930s. It suggests that the last government were as anti-smoker as are the present government.

My other anxiety is that this Bill will reinforce those who are opposed to smoking per se, and who often use the passive smoking argument quite violently. The noble Lord, Lord Walton, was right to say that although the medical evidence of the harm caused by direct smoking is clear, neither the Government nor anyone else have been clear about the dangers of passive smoking. For example, I understand the World Health Organisation sponsored significant research into passive smoking carried out by seven centres in 12 countries and found no clear evidence. The department has not been clear in that regard and was not clear under the last government.

Let me give an illustration. In 1995-96 a number of my constituents were complaining to me about a ban imposed on smoking by the Rotherham Hospital Trust. It told the employees that there would be no smoking within the hospital and outside it, including the car park. Some of my constituents--one a nursing sister who had not had a day off in 25 years--came to me to say they wished to have a smoking room. I wrote to the trust and the trust replied, saying, "It is not our decision. The Minister instructed us to do this". So I wrote to the Minister. In reply the Minister sent me a copy of the advice he had given to all hospital trusts. It recommended that the National Health Service should discourage smoking but that members of staff should have a smoking room.

When I received that information from the Minister, I wrote to the acting chief executive and asked for an explanation, since he had clearly misinformed me. I asked the trust to reconsider, since 512 members of its staff--some who smoked and some who did not--had asked for a smoking room, in accordance with the advice given by the Minister.

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That was in early May 1995. I had not received a letter in reply in June, July or August, though I had sent reminders. So in early September when we had our annual meeting with the trust, the chairman said, "Gentlemen, I will give you the agenda". I said, "No, I will tell you what the agenda is. Item one, my correspondence and your failure to reply". I immediately received an apology and an assurance that it would be considered. In October I received a letter saying the trust was confirming its decision. I wrote again. In the end I wrote to Madam Speaker--now the noble Baroness, Lady Boothroyd--who permitted a debate on 17th January 1996.

Mr. Horam was the Minister who replied to that debate. I pointed out my experience in the case in some detail. I suggested that the car park ban was a bit odd, because people might wish to go to their car in anxiety, stress or tension. Hospitals are not always the happiest places. The Minister seemed to have been informed that virtually everyone in the whole area apart from myself was unanimously and wholeheartedly in favour of the ban. However, the trust let me know that it would not apply the ban in the car park.

I retired from the Commons in 1997 and just after the election I went to the hospital to visit a friend. Noble Lords can guess what I saw in the car park: prohibition of smoking. There was no justification for that on the basis of ministerial instruction, yet the last government allowed that degree of excessive nannyism--a phrase we have heard on several occasions--and the ban still exists. Yet I have not seen any convincing evidence that passive smoking is as harmful as some of the smoke-finder self-appointed generals seem to suggest.

We should not smoke where we ought not to do so. We should not smoke to encourage young people. My sons do not smoke and I have never in my life, certainly as a schoolmaster for a long time, encouraged young people to smoke. But the difficulty is, as my noble friend Lord Mason said, that people will continue to smoke as long as we have a structure encouraging smuggling and where the smuggler is seen as a hero. Until that issue is addressed we shall see more crime--a crime of growing scale at the present time which has serious implications for society--which makes me uneasy.

I accept that the Bill is a manifesto commitment. I accept that the problem of smoking will continue to require consideration by the Government. I believe that if the tobacco industry is wise, it will continue to try to produce less harmful products. But if it succeeds, it should have the right to advertise them. I trust that the Government will give serious thought to those points, not least to the need to reduce the tensions and hostility between those who hate smokers and the freedom of smokers to smoke in a free society in a responsible manner. I hope also that the Minister will pay particular attention to the need to avoid yet another tranche of job losses in the manufacturing sector.

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5.39 p.m.

The Earl of Northesk: My Lords, I begin by making the point that, in case any of your Lordships had not noticed, I am an inveterate smoker. I am also a member of the Lords and Commons Pipe and Cigar Smokers' Club presided over so ably by the noble Lord, Lord Mason. Against that background I willingly concede that significant health and public policy issues need to be addressed in the context of smoking, tobacco products and their promotion.

None the less, I find the Bill deeply disturbing. One of my major concerns is that there is a sense that the Bill is imbued with an air of fanaticism. However worthy and desirable its objectives, it is weighted firmly to one side of the argument. That makes it all the more important that the justifications which the Government advance for the Bill are properly tested. With that in mind I would ask the Minister if the Government sincerely believe that the advertising of tobacco has been a major contributory factor--many other noble Lords have referred to this point--in the increase in tobacco consumption since 1997 after some 25 years of decline.

I would also ask the Minister to what extent the drafting of the Bill has been informed by consultation and discussions with the tobacco industry. That is important because--I echo the sentiments of my noble friend Lord Geddes--there is an intellectual, if not ethical, inconsistency at the heart of the Bill.

Writing recently in the Daily Telegraph, Tom Utley posed the following questions:

    "What is the purpose of the Government's policy on tobacco? Is it to discourage the British people from smoking? Or is it to raise as much money as possible from smokers, by way of taxes and duty on tobacco?",


    "if the Government were seriously determined to stamp out smoking, why does it not seek to ban the sale of tobacco?".

Like the noble Lord, Lord Dubs, the Government will argue that it is not their intention to stamp out smoking. That begs the question of how appropriate it is that a perfectly legal product--Ministers freely concede that point--should be subject to a comprehensive, unilateral and in many ways arbitrary measure, one of the major effects of which will be to constrain the industry concerned from exercising legitimate commercial freedoms. As Tom Utley points out,

    "The trouble with this government is that it cannot decide whether its purpose is to discourage smoking or to maximise the tax yield from tobacco. It is trying to do a bit of each--and in the process it is failing in both aims".

Far from resolving that dichotomy, the Bill will entrench it.

That polarisation of policy objectives is mirrored in the Bill's provisions for the Internet. We have become inured to the oft-repeated mantra that the Government are aiming to make the UK the best and safest place in the world for e-commerce. That is all

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good and well. But measures such as IR35 and the Regulation of Investigatory Powers Act work against the grain of that ambition. Far from promoting or facilitating the development of e-commerce in the UK, they act as constraints and disincentives. So it is with the Bill which, in terms, reveals a scant understanding of the way in which the Internet works.

The point at issue here is to be found in the drafting at Clause 5(5) which refers to:

    "a tobacco advertisement which is published or caused to be published by electronic means by an internet service provider".

The difficulty is that in no sense are ISPs publishers. Rather, they are the virtual equivalent of the Royal Mail. In terms, the effect of the Bill is to create the prospect of postmen being statutorily empowered to steam open personal mail with a view to censoring its content. That analogy of ISPs as postmen is well established. Thus, notwithstanding the insistence of the Minister that the Bill complies with the e-commerce directive, Article 12 of that measure defines an ISP as a "mere conduit" of information and states:

    "Member states shall ensure that the ISP is not liable for the information transmitted on condition that the provider:

    (a) does not initiate the transmission;

    (b) does not select the receiver of the transmission;

    (c) does not select or modify the information contained in the transmission".

In the same vein, the Defamation Act 1996 states:

    "A person shall not be considered the author, editor or publisher of a statement if he is only involved

    (c) in processing, making copies of, distributing or selling any electronic medium in or on which the statement is recorded".

Self-evidently, the drafting of Clause 5(5) completely contradicts that, yet the effect of the Bill is to make ISPs liable for third-party content on their servers. At the same time, as my noble friend Lord Lucas pointed out, they are required to comply with the terms of the Regulation of Investigatory Powers Act, which provides that unwarranted interception of material is illegal. Moreover, in so far as third-party content can be defined as personal data, the provisions of the Data Protection Act also apply.

In other words, ISPs are operating under a growing burden of regulations which increasingly pulls in conflicting directions. The potential consequence of that should not be underestimated. It could be the straw that breaks the camel's back. ISPs will no doubt give serious consideration to the desirability of migrating to less burdensome regulatory regimes, should the Bill be enacted in its current form. That would leave in tatters the Government's ambition to make the UK the best place in the world for e-commerce.

I conclude with one small thought. The British Codes of Advertising and Sales Promotion, administered by the Advertising Standards Authority

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require that, among many other restrictions, advertisements should:

    "be legal, decent, honest and truthful".

As things stand, that applies as much to the tobacco industry as to any other. Yet, since January last year, the codes have not applied to any advertisement whose,

    "principal function is to influence voters in local, regional, national or international elections or referendums".

Given the nature of the Bill before us, what are we to make of the fact that the Government are comfortable with the concept that political parties do not have to be legal, decent, honest and truthful in their advertising? Is it too churlish to suppose that there is a slight whiff here of pots and kettles?

5.46 p.m.

Lord Faulkner of Worcester: My Lords, I start by declaring an unpaid interest as a patron of the Roy Castle Lung Cancer Foundation. Unlike the previous four speakers, I wish to give complete and unreserved support to the Bill. I do so because it is a measure which will make an important contribution to public health and saving lives. As we have heard from the Minister, it may save as many as 3,000 lives a year; the equivalent of the number who are killed each year on our roads. But even if the number is not as great as that, I would agree with the comments of the health spokesman for the Liberal Democrats in another place, who stated that even a small decrease in smoking that might result from an advertising and promotion ban would be worthwhile. He said that if only a few lives were saved or a few families were spared the misery of seeing one of their loved ones die a horrible, lingering death, it would be worthwhile. If people avoided having to undergo expensive and particularly nasty treatments, and if that resulted in only a small saving to the National Health Service, it would be worthwhile.

In particular, I welcome the fact that the Bill for the elimination of tobacco advertising and sponsorship should have a direct result on the number of children and young people who start to smoke. I am aware that the apologists for the tobacco industry outside this House and, from what we have heard today a few in it as well, who oppose the Bill claim that all advertising and sponsorship does is to promote brand loyalty and encourage smokers to switch from one brand to another.

We heard that argument, in particular, from the noble Lord, Lord Harris of High Cross. He claimed--I am sure the noble Lord will correct me if I have his argument wrong--that cigarette advertising was analogous to the advertising of soap powder. He said that it does not increase consumption; and that all it does is to increase brand awareness. The noble Lord nods in agreement. There is one big difference. Soap powder does not kill 120,000 customers per year. Therefore, soap manufacturers do not need to replace that number of customers each year with new ones. Because tobacco kills, the manufacturers of that product need to attract new customers. If noble Lords

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have any doubt about that, I suggest that they look at what the Health Select Committee in another place found when carrying out its investigation into the conduct of the UK tobacco industry. The Committee obtained, properly and legitimately, the internal working papers of the five advertising agencies retained by the tobacco companies. Those papers filled 16 large boxes of documents. They reveal a shocking story of deceit, a cavalier disregard for people's health, especially the young, the poor and the vulnerable, and a determination to get round the restrictions.

The advertising agencies make no secret of the fact that their campaigns are intended to encourage people to start and continue smoking, especially young people. They aim to enhance the social acceptability of smoking; to increase per capita consumption; to recruit new smokers and to discourage existing ones from giving up.

They know that children are more aware of tobacco advertising and influenced by it than are adults. Earlier this month, the British Medical Journal published the results of a study which showed that out of a sample of 629 young people aged 15 and 16, around 95 per cent were aware of tobacco advertising and all of them had seen some form of advertising at the point of sale.

The industry is obviously aware that the general advertising ban is coming, but it is hoping that there will be exemptions which allow point-of-sale brand advertising, particularly in convenience stores. An article in The Grocer of 3rd March quotes the managing director of a leading Scottish chain saying that the tobacco companies

    "have realised the last place they will be able to advertise in the UK will be in the convenience stores. Every day I get a phone call. They offer all sorts of things".

That can include a complete store re-fit, provided that retailers meet their criteria. I hope that my noble friend will be able to reassure us that the ban on tobacco advertising can be extended to point-of-sale material in shops which are used predominantly by children.

Children do not buy the cheapest brands. In 1995, the BMA reported that 61 per cent of children who smoke, smoke Benson & Hedges, the most heavily advertised brand. In Scotland, according to research by the University of Strathclyde, the children are smoking Lambert & Butler, again, a product which is extensively promoted.

Sponsorship of glamorous sports provides another way for the tobacco industry to make an impact on the youth market. The Lancet published research in 1997 which showed that boys are nearly twice as likely to become regular smokers if they are motor racing fans. University researchers at Strathclyde have shown that children associate Marlboro with "fast cars and excitement".

Sponsorship is the continuation of tobacco advertising by other means, including through the BBC. Embassy snooker achieved 376 hours of television coverage and cumulative viewers of 385 million in the 1996-97 season.

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Some sports have resisted tobacco money, notably association football and the Olympics. I should be most surprised if my noble friend Lady Gibson saw any tobacco advertising at Ipswich. I am not aware of any way of advertising tobacco in football. However, many other sports, such as cricket, rugby and snooker, have offered a willing vehicle for promoting tobacco. Sport, with its associations with action and youth, offers excellent images and role models to the tobacco industry.

That is especially important in recruiting young smokers; a process of exciting experimentation eventually consolidated by addiction. That approach is described in a tobacco industry internal document as follows:

    "A cigarette for the beginner is a symbolic act. I am no longer my mother's child, I'm tough, I am an adventurer, I'm not square. As the force of psychological symbolism subsides, the pharmacological effect takes over to sustain the habit".

That is taken from the speaking notes of Philip Morris's, vice-president for research and development delivered at a company board meeting and revealed under disclosure rules at a US court hearing.

When the Indian associate of the British American Tobacco group sponsored the Indian World Cup cricket team in 1996 with its Wills brand, a survey showed that smoking among Indian teenagers increased five-fold. There was also a marked increase in false perceptions such as, "You become a better cricketer if you smoke Wills", and "Teams with more Wills smokers will fare better". Contrary to the widely held perception among school children, the Indian cricket team had no smokers at all.

I hope that the Government will keep a close eye on everything that the tobacco companies get up to. Philip Morris, for example, provide Ferrari with 45 million a year and it is looking for ways to divert its advertising and sponsorship budgets into new ways of dodging restrictions. Unless it is stopped, we will see more brand stretching--the creation and advertising of spin-off products such as Marlboro clothing--all used to promote tobacco, particularly in the youth market.

We have heard a certain amount in the debate about tobacco smuggling. I wonder how many of your Lordships saw in the Independent on Sunday a long article headed, "Tobacco giants traded with drug barons". I shall quote only a short extract from it.

    "Two of the world's biggest tobacco manufacturers knowingly sold cigarettes worth billions of pounds to Latin American drug barons and to a smuggling ring based in Britain. Court papers lodged in New York claim that Philip Morris and R J Reynolds had 'a scheme to smuggle cigarettes on a worldwide basis'...The two tobacco corporations also set up lobbying groups to further maximise their profits by demanding tax cuts because the smuggling was the result of unreasonably high cigarette duties".

How strange it is that we have heard that argument on a number of occasions today. The article continues,

    "The two companies 'control, direct, encourage, support, promote and facilitate the smuggling of cigarettes into the European Community'...They make arrangements for smugglers to pay for their purchases through Swiss bank accounts".

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And so it goes on. The companies are facing legal action brought by the EU Commission for an estimated 3 billion lost in taxes over 10 years. If they lose, they could be forced to pay damages and fines totalling 12 billion. When we talk about smuggling, we ought to be aware where it starts.

Furthermore, I wonder whether my noble friend saw the article in the Financial Times on 20th March about a

    "second wave of even more devious marketing techniques".

The article states:

    "In the US as part of an agreement with the federal authorities, Philip Morris has begun a string of community 'antismoking' initiatives. As part of the initiative, a school book cover distributed to 43,000 schools in California shows a colourful cartoon snowboarder with the words "Don't wipe out. Think. Don't Smoke'. Although education bodies were delighted at first, they later noticed something sinister. When studied closely, the snowboard appeared to resemble a lit match and the snow cigarette smoke".

Those of your Lordships who have ever attempted to persuade your teenage children not to smoke, as I have, know that if you associate anti-smoking messages with boring establishment bodies, you enhance smoking's rebellious connotations and turn it into a rite of passage. So we can be sure that the tobacco industry will be able to afford the best and most expensive psychologists who specialise in teenagers and we can expect to see lots more "reverse advertising" based on the belief that if kids are told not to do something, they do the opposite.

What will make a difference is a ban on cigarette advertising and rigorous action against smuggling. Norway, Finland and New Zealand have all recently prohibited tobacco advertising as part of a comprehensive tobacco control strategy. The per capita consumption of cigarettes dropped by between 14 and 37 per cent after the ban took effect. That is why this Bill is so important and why we should welcome it unreservedly.

5.58 p.m.

Lord Glenarthur: My Lords, it may be a Bill of modest size in terms of its dimension on paper but I believe that it is a Bill of truly major significance. Although the noble Lord, Lord Hunt, did not use these words, the Minister for Public Health in another place described the Bill as "a ground-breaking measure". I presume he means something which has not been done before. He based that remark on two counts. First, it introduces a comprehensive ban on tobacco advertising and sponsorship. Secondly, it makes specific provision to address advertising on the Internet. I believe that the Minister in the other place was excessively modest; the Bill is much more significant than merely "ground-breaking".

I have spoken on the subject previously and have had a number of conflicting interests to declare. First, I hate smoking, which is well known by most of your Lordships, although I have learnt to be tolerant. I have no hostility whatever to those who wear the tie that is being sported by the noble Lord, Lord Mason of Barnsley, who is not in his place, and others who are members of the same club.

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Secondly, between 1989 and 1996 I worked for Hanson plc, which owned Imperial Tobacco. Following the Hanson demerger, I continued for a couple of years as an adviser to the Imperial Tobacco group. Thirdly, during that period and subsequently I was chairman of an NHS trust, which did not exactly encourage smoking, and I am now governor of Nuffield Hospitals where the same conditions apply. I have never smoked, although, interestingly, for a short time on medical advice I was encouraged to take snuff. I dabble in that now only occasionally.

Paragraph 1 of the regulatory impact assessment which was published last year states that,

    "The ban is to cover any means of bringing a tobacco product to the attention of the public".

That is a far more ambitious and comprehensive objective than a simple ban on tobacco advertising and sponsorship. It also goes much further than the principle which I believe was in the Labour Party's manifesto pledge at the time of the general election in 1997. That principle, which was far more modest, was to ban tobacco advertising, but somehow the Government's ambitions have grown: first, by the inclusion of a ban on sponsorship, and, secondly, by their support for the European directive on tobacco advertising, which in October of last year was annulled by the European Court of Justice. This Bill largely mirrors the provisions of that directive. I believe that the principled objections to the directive apply just as much to this Bill.

Like the directive, the Bill was promoted by the Department of Health. No one would expect it to be essentially a Bill about health with predictable health provisions, which I am certainly keen to support. In that respect I share the views of the noble Lord, Lord Walton of Detchant. But the Bill is not just about health, any more than was the directive which, according to the European Court of Justice, was wrongly promoted as a single market measure. The provisions of this Bill appear to be concerned almost solely with issues of business and commerce which I believe are more appropriate to the Department of Trade Industry than simply the Department of Health.

Of course the Bill has a health objective. The health risks of smoking are well known and have been generally recognised by successive governments. The connection made by the Government is that tobacco advertising and promotion has the effect of increasing tobacco consumption and the prevalence of smoking; in other words, for the Government, tobacco advertising is a public health issue, as the noble Lord, Lord Hunt, said at the beginning of the debate.

In the light of the observations of the noble Lord, Lord Walton of Detchant, I entirely agree that there is some evidence to support the contention that the limited tobacco brand advertising permitted in this country might be responsible for an increase in the prevalence of smoking. But no one is able to justify that completely.

Similarly, there is no reliable or convincing evidence that this Bill, which bans any means of bringing tobacco products to the attention of the public, will

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reduce consumption. It is a piece of guesswork. Even the Government admit in the Explanatory Notes to the Bill that their justification for the Bill is no more than an assumption, made for the purpose of the Bill, that the outcome will be a reduction in consumption in the long term of about 2.5 per cent.

The Government have prayed in aid two studies. The noble Lord, Lord Hunt, referred to the Smee review published in 1992. That was carefully dealt with by the noble Lord, Lord Harris of High Cross. However, perhaps the noble Lord could have referred to one additional point; namely, that those data were probably flawed. But, even more significantly, the author of the report made clear in a statement published in The Times on 22nd January 1993 that the Smee review,

    "looked at the conflicting evidence of bans in other countries and made no estimate for the UK".

What is the value of that particular piece of evidence?

The second report cited by the Government is the much more recent review published by the World Bank in 1999. The principal relevant conclusions of that report were: first, that price increases on cigarettes were highly effective in reducing demand, and that policymakers should use as a yardstick the tax levels adopted as part of the comprehensive tobacco policies of countries where cigarette consumption has fallen. Secondly, non-price measures can reduce demand for cigarettes but comprehensive bans can reduce demand by more. It does not say that they always do, any more than the report claims to have specific relevance for the UK where tobacco advertising and promotion is already severely limited.

If the first conclusion is truly valid, why does this country now have the greatest tobacco smuggling problem of any country in Europe, as so many noble Lords have said? If the loss is 1 or 2 billion a year, since 1997 the Exchequer has lost between 8 and 9 billion of potential tax revenue, which is a very substantial figure. Worse than that, children have gained easier access to tobacco products. Thousands of legitimate retail businesses have been affected. As my noble friend Lord Oxfuird said, perhaps most important of all--and most disappointingly to all those who wish to see fewer people smoking in this country--tobacco consumption has increased since 1997 by 6.5 per cent. I fear that this Bill will not assist in any way to reduce that consumption: it may well have the perverse effect of increasing it.

My noble friend Lord Naseby referred to price as the most important determinant of tobacco consumption; indeed, the precept which underpins the general policy of governments is to increase tobacco excise as a means of reducing overall consumption, except when it leads to the development of an illicit market in smuggled products. However, I note that the increase in tax in the previous Budget was remarkably small. I wonder why.

Without the ability to undertake brand advertising and promotion, which is the objective of this Bill, the sole means by which manufacturers will be able to compete one with another is by distribution and price.

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That will lead to a major change in market behaviour and purchasing. Prices will become a much more significant factor, as my noble friend Lord Liverpool said, with competitive pressures reducing average prices in the medium to long term. Just as consumption is known to fall when prices rise, so consumption will rise as prices fall. I am, therefore, deeply concerned by the consequences for tobacco consumption which lie in this Bill. I believe that the Government's assumption of a reduction in consumption of 2.5 per cent is misplaced and misconceived. The Bill will increase, not reduce, consumption or the prevalence of smoking.

But matters are worse than that. The Bill goes to inordinate length to ban almost every possible avenue of communication between manufacturers. Your Lordships have heard before, and will hear again from me, that it is not against the law to manufacture or import tobacco products provided that the regulatory requirements relating to them are met. It is not against the law to sell tobacco products, except to children under 16. Those products are sold through more than 200,000 retail outlets. It is not against the law to buy and smoke tobacco products, and one third of all adults in the UK--15 million people--smoke. That is hardly a minority habit.

To return to the public health comments of the Minister in the other place, this Bill is a ground-breaking measure. Worse than that, to impose a total ban on all advertising, promotion and sponsorship relating to perfectly legal products is unprecedented. But other substantial freedoms which are restricted by this Bill have been referred to by many noble Lords this afternoon. Freedom of speech and expression is largely curtailed. The Bill does not even permit a manufacturer to initiate any contact with the customers for his products that may conceivably promote, or have the effect of promoting, those products to those persons. He is not permitted to do that even when the individual has expressed a desire for such communication. Therefore, the freedom of the individual is greatly limited by the Bill.

I understand that the Government seek to justify such an extreme provision by claiming that it is morally unacceptable for a manufacturer to make contact with smokers who at that point may be trying to give up smoking. The Government cite market research that indicated that 70 per cent or more smokers say that they would like to quit smoking. I am sure that that is the case. I am all in favour of it. However, the Government's policy is misguided in telling smokers how difficult it is to give up smoking, while, at the same time, urging them towards pharmaceutical products that may help them quit. The simple reason for that is that there are millions of people who have given up smoking in this country without the need for any assistance. Indeed, I understand that ex-smokers significantly outnumber current smokers.

My noble friend Lord Geddes referred to two lines in Clause 4(1)(b) of the Bill. I agree with every word that my noble friend said; it is a further demonstration

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of the Government's enthusiasm for banning things and their lack of enthusiasm for freedom of speech, other than perhaps in certain selected spheres such as culture. The Bill attacks the right to intellectual property in its provisions on what the Government call brand sharing. Why is that particular provision in the Bill necessary?

I should like to pick up on what my noble friend Lord Northesk said relating to e-commerce. I would simply stress one point that I am not sure that he referred to. That is that if the EC e-commerce directive must be undertaken by the Government by 17th January next year, why are the Government bringing in legislation in advance of that particular date? As the noble Earl said, in this country we try to make the best and become a market leader in e-commerce.

My last point relates to Scotland. Why should the regulations in Scotland applying to advertising at the point of sale, displaying of products, advertising in the shops of specialist tobacconists and the timetable for the ending of a sponsorship agreement, be any different from those in England, Wales and Northern Ireland? Perhaps the Minister in his closing speech will tell us whether that has anything to do with human rights law and the possible challenges to the Bill that might be made in Scotland.

The Scotland Act 1998 requires all Scottish legislation to be compliant with the European Convention on Human Rights. Legislation can be struck down by the courts if that is not the case. The courts do not have the same power with regard to legislation at Westminster, even if in subsequent proceedings the courts make a declaration of incompatibility which remains intact unless repealed or amended by Parliament.

There are far more certain ways by which we can achieve reductions in tobacco consumption and not have to pay the excessive price that the Bill demands. Nothing significant is being achieved by a policy of intense hostility to tobacco. It will not produce the intended reaction in the population. What is needed is a thorough review of the Government's overall anti-smoking policies in advance of any legislation and, I would also add, a review which ignores political correctness and prejudice.

6.13 p.m.

Lord Palmer: My Lords, smoking is the most disgusting habit ever invented. It is my biggest regret that, aged 17, I started to smoke. I am pleased to say that I have not smoked a cigarette for 11 years, as I vowed to my children that I would quit after my maiden speech.

I must declare an interest in that I smoke cigars and belong to the all-parliamentary Lords and Commons Pipe and Cigar Club, so ably convened by the noble Lord, Lord Mason. I apologise for not wearing my club tie this evening. I also should declare that my old family firm Huntley & Palmer Foods was eventually acquired by R J Reynolds Tobacco; and I think that the noble Lord, Lord Naseby, must have forgotten that he also used to promote our products.

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I was told this morning that the debate would end at around 6.30 p.m. If it ends very much later than that, I fear I shall be unable to stay for the closing speeches. I apologise in advance to the House if that is the case. However, the tradition of staying for closing speeches seems to have gone by the way following the example of the noble Lord, Lord Bassam of Brighton, who was absent for the closing speeches at the end of the Second Reading of the Hunting Bill--a Bill which he introduced into your Lordships' House.

Personally, I think that all smoking should be banned. However, we all know that that is totally impractical as Her Majesty's Government would greatly miss the 10 billion annual revenue. But we must be realistic. Smoking of tobacco products is legal in all countries in the world. As long as it is legal, it must be wrong not to be allowed to promote it. I echo the elegant words of the noble Lord, Lord Geddes. I also totally agree with the remarks of the noble Lord, Lord Tomlinson, and others, about the idiotic case of tobacco subsidies being given to our European partners to grow tobacco. I hate the way that "banning" has become the new "in" word of Her Majesty's Government.

After the Countryside Alliance rally in Hyde Park three years ago, the Daily Star, of all papers, had an editorial which stated:

    "Let's have a Bill to ban banning".

How I echo those words.

With three teenage children, one of whom has never smoked and two who have just given up, I am fortunate to come into contact with a great many teenagers. Unfortunately, many smoke and none of them is influenced by cigarette advertising as to whether or not to smoke. It is simply a matter of brand loyalty. Her Majesty's Government must take that matter on board.

Would not the Government be better employed tackling the large numbers of illegal cigarettes now so freely available--a matter mentioned today by almost every speaker--rather than abolishing advertising which has virtually no effect on consumption? The Government claim that banning advertising will reduce consumption, and yet they have not come up with any conclusive evidence to prove this theory.

There is one matter that concerns me tremendously. We must not forget that there is well-documented health advice on all tobacco advertising. However, if a ban ensues, that advice will no longer be available for the public to see.

If the Bill was going to have the desired effect of stopping people smoking then I would support it, but such a badly flawed Bill as this will not have the desired effect. I believe that the Bill is political correctness gone completely over the top. I am afraid that I cannot support it.

6.17 p.m.

Viscount Simon: My Lords, I was fascinated by the reminiscences of the noble Lords, Lord Geddes and Lord Walton of Detchant. I, too, took advantage of

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the cheap cost of cigarettes in the 10 years that I was at sea. I gave up 30 years ago when I was forced to do so by a bout of encephalitis and meningitis which formed some kind of aversion to cigarettes. Despite that aversion, I lit up friends' cigarettes because I still had the desire for another eight years. Eventually the aversion won and I have not smoked for many years.

I am grateful to the Government for bringing forward the Bill, which should be whole-heartedly supported. I must declare an interest as I suffer from asthma contracted some six years ago which is made very much worse by inhaling any form of tobacco smoke, and, therefore, would benefit personally from fewer people smoking.

My noble friend Lord Hardy of Wath was somewhat dismissive of the effect of passive smoking on people. I can inform him from personal experience that I will have--I define the word "will" as 100 per cent certain--a serious asthma attack in less than 20 seconds if I inhale certain forms of tobacco smoke.

Let us make no mistake about the issue, the effect of the Bill would be a substantial reduction in the number of people smoking and, more importantly, the number of people dying from smoking. With the Bill we have a chance of saving thousands of lives each year. The Government's estimate is that 3,000 lives a year will be saved through banning advertising. That is almost exactly the same number as those killed on the roads each year. As a nation we are rightly prepared to spend huge sums of money to reduce the number of road deaths; with the Bill we could save the same number of lives without spending anything. The figure of 3,000 a year may even be a cautious estimate, because the World Health Organisation believes that almost twice that number of lives could be saved.

The tobacco companies, and their representatives in this House and in another place, will say that there is no need for the Bill, that advertising does not lead to anyone taking up smoking. That very much begs the question of what on earth this advertising is for if not to encourage non-smokers to smoke and to discourage smokers from giving up. Furthermore, if that is the case, why are they wasting such huge amounts of money on pointless advertising?

The chairman of McCann-Erickson, an advertising company that has handled multi-million pound tobacco contracts, backs up this view. He said:

    "The cigarette industry has been artfully maintaining that cigarette advertising has nothing to do with total sales. This is complete and utter nonsense. I am always amused by the suggestion that advertising, a function that has been shown to increase consumption of virtually every other product, somehow miraculously fails to work for tobacco products".

That is, in effect, somewhat contrary to the viewpoint of various noble Lords who have spoken in the debate.

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