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Baroness Finlay of Llandaff: I should like to add a few observations on the amendment. I appreciate the representations made by the noble Lord, Lord Monson. I am sure that it is not his intention to weaken the Bill, but I am concerned that the amendment and those grouped with it could do that.
I remain unconvinced of the need to define specialist tobacco outlets in a different way since a point of sale is exactly that, a point of sale. For consumers seeking to make a purchase, they will go to whichever point of sale best meets their needs. However, it seems sensible to define a specialist in terms of turnover rather than in terms of the number of items stocked; otherwise I do not see why premises which previously would not have been classified as a specialist oulet could not be persuaded to stock one or two items of up to 100 separate classified products and thus immediately fall into that proposed category. As a result, a number of so-called specialist outlets could abuse the role and position of those outlets that are truly specialist.
If a specialist outlet is defined in terms of business turnover, because every business must keep accounts, it would become clear that 50 per cent of the turnover is related to the specialist activity. The moment one tries to impose any other method of collecting data, a burden is immediately imposed on small businesses. To that end, I fully accept what has already been said; that is, that tobacco specialists are small businesses. Personally, I believe that a threshold of 50 per cent is quite generous for a specialist retail outlet, but so be it. I fully support that anything over 50 per cent of turnover should allow an outlet to qualify as a specialist organisation.
However, given that the general tenor of the Bill is to seek to decrease the sale of tobacco and tobacco products, in particular to young people who are vulnerable to advertising, I would have grave concerns about any clause that sought to weaken that original intent.
Lord Naseby: Why would a specialist tobacco outlet be particularly attractive to teenagers? Earlier today all Members of the Committee acknowledged that the Bill seeks to address young people. By their nature, specialist tobacco shops are not shops that are attractive to teenagers. I should have thought that the incidence of teenagers using specialist tobacco shops would be extremely low.
I would also suggest to the noble Baroness that perhaps she is not totally au fait with the modern specialist tobacco shop or other specialist outlets. Those retailers know about a great deal more than simply turnover. The modern niche market player at the retail end of business knows exactly what the profitability is on each line. He will know what takes place month by month. Sales are not the determining factor other than that a certain volume of sales is required in order to run a viable business. Overall profitability and profitability by line are equally important.
Baroness Finlay of Llandaff: I fully accept that a specialist retailer will know a great deal more about his products than the level of sales. The quality of specialist knowledge about the products is what would define a specialist outlet. However, the difficulty is that that is a qualitative judgment. The role of the wording in the Bill is to provide a simple measure that can be determined in a numerical sense; that is, sales of
tobacco would total either over 50 per cent or under 50 per cent of turnover. I fully understand that the amendment proposes to take the arbitrary standpoint of 100 brands of tobacco products. But as I have said, that is a relatively arbitrary cut-off point.I fully accept that teenagers do not go into specialist tobacco outlets, but my concern is that other outlets which are currently very attractive to teenagers could easily start stocking 100 products and then become re-designated as specialists without having any of the specialist's expertise that has been referred to.
Lord Peston: I think that, once again, we might bring in some common sense. To the question, XWhat is a butcher?", the answer is, XSomeone who sells meat". It is not someone who derives this amount of profit from this or that bit of meat; they are in the meat business. A bookshop is one which sells books. A specialist tobacconist is someone who specialises in the sale of particular products. I am indebted to the noble Lord, Lord Monson, for telling us that there are 380 of them. I assume he is saying that he has spoken to some of those who call themselves specialist tobacconists but are not so Xspecialist" that more than half their business is in these products. How can they call themselves specialists if typically their products are not these special items? Wearing my economist's hat, I am a bit lost by that.
Lord Monson: All I can say to the noble Lord, Lord Peston, is that you know a specialist tobacco shop when you see one. The atmosphere, as has been intimated, is old fashioned and rather fogey-ish, and therefore not attractive to young people. They stock virtually nothing but tobacco products.
Lord Peston: I very much agree with the noble Lord, Lord Monson, and therefore I would expect to find cigars, snuff, pipe tobacco and smoking accessories as typical products. I can see the shop and therefore I am not at all clear what the noble Lord is on about. We are trying to make some progress—I do not say this in any acerbic spirit to him—with a rather important piece of legislation. I read Clause 6 as making a concession to these people. This is saying to them that they get a special right with regard to a special class of advertisements because of the business they are engaged in. Some of us, given my attitude, would never make such concessions, but one is offered here and therefore I would ask again: what really are they on about?
Lord Naseby: Before the noble Lord sits down, perhaps I can help him. He is an economist. I read economics, I have been in business, and I got an Upper Second at Cambridge, which is not too bad. However, leaving that aside, a specialist tobacco shop—I appreciate that this is a concession and I am pleased that the noble Lord, the promoter, recognises that these places are in a different category— may well sell cigarettes, but they are cigarettes of a specialist nature.
I do not smoke and presumably the noble Lord does not either—certainly I would hope he does not; otherwise he might be found questionable in some of his views. These people would sell Turkish cigarettes and all sorts of different types of Xgut-rot" tobacco that none of us would ever contemplate smoking. They are knowledgeable in advising those consumers who want them about special types of cigarettes. That is why I think that the yardstick of 50 per cent of revenue is actually a little too high a hurdle. I accept that the promoter wants high hurdles everywhere but I think that, for once, this is too high. I come back to the point already mentioned. If the Netherlands, where the incidence of smoking is higher than here, have got something on the ground that works, why on earth do we not just take what they have got?
Lord Hunt of Kings Heath: The figure of 380 is similar to the one that I have of the number of specialist tobacconists who will be affected by the Bill. I readily acknowledge that many of them are small, family businesses. Certainly, when the Government were drafting the Bill originally, there was no intention to try to put those specialist tobacconists out of business. That is why the concession was made.
I understand that my noble friend Lord Peston and other noble Lords would have preferred not to make such a concession. There are arguments on both sides, but, when the Bill was being drafted originally, the Government felt that it was right to afford some protection for the specialist shops, many of which are small family businesses. We can come on to the issue of whether 50 per cent of sales is the right figure, but clearly the Government have sought to achieve a balance between protection and, as in other aspects of the Bill, ensuring that there are no loopholes through which other retail outlets might use these provisions to get round the intent of the Bill.
To be classed as a Xspecialist tobacconist" and to be allowed to advertise specialist products in the shop or affixed to the outside of the premises, a person must derive half of his or her sales on the premises from pipe tobacco, snuff, cigars and smoking accessories. That seems to be a reasonable qualification. If the shop owner derives a substantial part of his income from these products, he is more likely to suffer loss if he is not allowed to advertise them.
I listened with great interest to the noble Lord, Lord Monson. I well understand his intent, but, in many ways, the test that he seeks to apply is more arbitrary than the one chosen by the drafters of the Bill. Some businesses may sell more than 100 brands but find that sales of each brand are low and that the bulk of their income comes from non-tobacco items. In that case, they will not be substantially dependent on tobacco sales and will not particularly need the right to advertise in-store.
We need to go back to what the Bill seeks to do—that is, to ban tobacco advertising. Clause 6 allows limited concessions for specialist shops to take into account the needs of small businesses and not to place undue burdens on them. The Bill does this on the basis of sales. If we move away from sales to a test based on
the number of brands a shop carries, there is a danger of a loophole. The noble Baroness, Lady Finlay, made the point that if you move to a test based on the number of brands a shop carries, anyone can then potentially call themselves a tobacconist and avail themselves of the provisions of Clause 6.I should point out to the noble Lord, Lord Monson, that the test in his amendment is based on tobacco products not Xspecialist" tobacco products. Clause 6(1)(b) makes clear that the provisions regarding advertising by specialist tobacconists do not cover cigarettes and hand-rolling tobacco. It does not make sense to include a test based partly on cigarette brands sold as a criterion for advertising specialist tobacco products.
Amendment No. 50 refers to Clause 6(2), which allows a limited exemption for in-shop advertising by specialist tobacconists. It allows them to advertise snuff, cigars and pipe tobacco inside their shops and on their shop fronts, provided that they comply with any regulations that might be made in relation to this. It does not allow them any special dispensation to advertise cigarettes and hand-rolling tobacco.
The clause defines a Xspecialist tobacconist" as someone more than half of whose sales on the premises derive from the sale of cigars, pipe tobacco, snuff and smoking accessories. The amendment seeks to lower the threshold for qualifying as a specialist from one-half to one-third of turnover. The noble Lord, Lord Naseby, asked me if I could put my hand to any particular research that suggests that 50 per cent is the appropriate figure. I regret that I cannot refer to a BMJ article or even to primary research. However, it seemed to me that the figure was chosen as a sensible balance: if you made the threshold lower, it would create too many loopholes; on the other hand, you did not want a higher threshold because that might make things difficult for the specialist tobacconist. It is based on a common sense approach.
The noble Lord asked about consultation with trade associations. I understand that consultation did take place with trade associations at an early stage when the original Bill was being drafted and taken through the other place. My understanding is that the 50 per cent threshold did not cause particular concern.
As someone who used to run a trade association, in a manner of speaking, I understand the points that the noble Lord raised about those who do not belong to trade associations. I must say that I am not instinctively in sympathy with organisations that do not belong to trade associations. In terms of normal government business, we generally have to deal with the trade associations.
I now turn to Amendment No. 51, which seeks to delete the phrase,
- Xon the premises in question",
Giving greater latitude would be inappropriate. These products are still dangerous. Although they are not very popular among smokers now, that might change. If we were to expand the criterion for qualifying as a Xspecialist tobacconist" to, for example, mail order and Internet sales, surely we should be going against the whole purpose of the Bill.
Amendment No. 52 seeks to widen the meaning of Xshop" in Clause 6(4). The term Xshop" is not exhaustively defined in the clause. I believe that, like many matters in the Bill, in the event of dispute it is best left to the courts. However, it appears to me that a long-established temporary unit could well be held to be a Xshop". But to allow the amendment could create a loophole and could lead to more doubt.
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