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Lord Clement-Jones: My Lords, I thank the noble Lord, Lord Monson, for tabling his amendment. It takes account of some of the points made in response in Committee. However, like the Minister, I am afraid that I do not believe that changing the definition of "specialist tobacconists" at this stage will add very much to the Bill. I consider that it risks opening substantial loopholes which we can be sure will be exploited by the tobacco industry.
It bears repeating that the need for that definition is in order to allow a considerable concession to its beneficiaries. As such, therefore, I am keen to ensure that the number of those beneficiaries is kept to a minimum. I make no apology for that. In fact, I agree with the noble Lord, Lord Monson, when he said in Committee that he believed we would know a specialist tobacconist when we saw one. I believe that all Members of this House will agree that it is important to ensure that the definition catches such establishments and does not allow other sellers of cigarettes, cigars and even snuff to latch on to its coat-tails in order to continue to advertise.
During the debate in Committee—the Minister referred to this—we heard much about the experience of the Netherlands. Like the Minister, I contacted colleagues in the Netherlands who informed me that, far from being on the ground and working in practice, the Dutch legislation is at a similar stage to this Bill. Therefore, we have no idea whether or not this legislation will work in practice. It is possible that if the Bill reaches the statute book and is put into practice, the Dutch Government will look at the terms of our Bill. Who knows?
In any event, I do not believe that we should necessarily copy slavishly the Dutch or, indeed, any other legislation. I consider that to change the definition to a headcount of brands—be it 100, 150 or even 500—risks leaving a loophole which can be exploited in order to get round restrictions on point-of-sale advertising.
I believe that noble Lords will agree that by no definition should W H Smith be considered a specialist tobacconist. However, its branch in Victoria station sells 94 brands or brand variants of tobacco products. I know that because I arranged for them to be counted this morning. It would not be difficult or costly for W H Smith to stock one or two packets of another 56 brands. Under the amendment of the noble Lord, Lord Monson, that would make W H Smith a specialist tobacconist.
I expect that, were the amendment to be accepted, a bewildering array of, for example, Marlboro brand variants would spring up overnight, making it even easier for shops to become specialists. However, a definition set out as a percentage of turnover, which, as the Minister explained, is easily collectable—indeed, all shops should know what their turnover is on each product line that they sell—would ensure that
a shop such as W H Smith would not fall into the specialist category, and it would not matter how many different brands of Marlboro became available.In addition, it is considerably more reasonable to ask the hard-pressed trading standards officer who is policing this provision to cast an eye over the books of a specialist tobacconist in order to ascertain what proportion of its turnover comes from what type of product than it is to pore over a list of all brands stocked by all the tobacconists in the area.
I believe that the 50 per cent test in the Bill strikes roughly the right balance and that we should keep this section of the Bill as it is. Lest we forget, this clause gives a special concession to a particular type of shop—around 380 in number—which is not given to the tens of thousands of other shops which also sell tobacco products. I believe that it is right to err on the side of limiting the concession to as few shops as necessary. The current drafting strikes more or less the right balance, allowing specialist shops with a legitimate concern to continue to advertise their products in a controlled way, while preventing others from exploiting a potential loophole. Therefore, I do not believe that the amendment should be included in the Bill.
Lord Monson: My Lords, I thank the Minister for his reply. I am sorry that he was not able to get a sponsored trip to the Netherlands, which in recent years has been a rather more cheerful country than Belgium. However, I am grateful to him for his research as, indeed, I am to the noble Lord, Lord Clement-Jones, for his information on what is happening in Holland. It puts us in the picture. I must confess that I did not know that that country's legislation was not yet up and running.
There has been one definite benefit from moving this amendment. I am delighted to hear from the Liberal Democrat Benches an assertion that we should not slavishly automatically follow European legislation. That must be a first from those Benches.
I suspect that this matter will be revisited in the Commons, if and when the Bill reaches another place, by which time the Dutch legislation may be in place and working. Then, that House, as shall we, will have the chance to study how it is working out. On that assumption, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 35 and 36 not moved.]
Clause 9 [Prohibition of free distributions]:
Lord Palmer moved Amendment No. 37:
- Page 4, line 17, at end insert—
The noble Lord said: My Lords, I have a degree of hope in moving this amendment. I wish for a moment to quote from the Explanatory Notes to the original
It is arguable that the ban that the clause contains on coupons is not justifiable on the grounds that it is an infringement of human rights and that it is disproportionate to the objective and likely outcome of the Bill. It is not, however, the purpose of my amendment to permit the giving away of products for the purposes of market research or to make such a challenge.
When the manufacturers wish to make price offerings discounted from the regular price, they currently have three principal means available to them: revised terms to wholesalers and/or retailers which enable those wholesalers and retailers to make discounted price offerings to smokers; on-pack discount price marking and pricing flashes, such as "10p off"; and in-pack price offerings.
There can be no guarantee for the brand owner that revised price terms to the trade will automatically filter through to the consumer. And I know that from bitter experience from when I was a travelling salesman, albeit not involved in selling tobacco products.
On or in-pack special price offerings have more certainty for both suppliers and consumers. There are, however, significant advantages to all concerned—suppliers, customers and indeed the Government—in suppliers having the ability to make price offerings by way of in-pack coupons. This amendment would permit that, provided that the in-pack coupons only offered a price discount on a single subsequent purchase of the product. By means of such a coupon, the supplier can have certainty that the price offer actually reaches the customer that it is intended to.
There is no hidden motive in this amendment. Indeed, I believe that the amendment should have the support of the proposer of this Bill and the Government. I suggest that they should be more comfortable with in-pack price offerings rather than those which may be made prominently on the outside of packs or by other means. I beg to move.
Lord Filkin: My Lords, Clause 9 prohibits, with certain clearly defined exceptions, the distribution of free gifts and coupons designed to promote tobacco products. These forms of marketing are an important part of tobacco companies' efforts to keep people committed to and hooked on smoking products. If direct advertising were to be banned and if this form of marketing were allowed, tobacco companies would undoubtedly divert even more effort into free gifts and coupon schemes for the reasons to which we have referred earlier.
In particular, that form of marketing can be targeted at lower income smokers. A document provided in 1999 to the Health Select Committee in another place concerning the Kensitas Club Gift Scheme read:
I grant that the intention of the noble Lord, Lord Palmer, is not to widen the scope of the exemptions to enable tobacco companies to continue to promote their products, but the Government believe that that would be its effect. Therefore, we are strongly unsympathetic to it.
On the coupon amendment, Clause 9(5) defines a coupon as,
The purpose of a coupon is to provide an incentive for a person to make a further purchase of the product. This is the same whether coupons are accumulated in order to qualify for a free gift or whether a single coupon entitles the holder to a discount on his or her next purchase. In that sense there is no distinction between the two types of coupon schemes.
We know from the survey undertaken in 2000 that nearly 70 per cent of smokers want to give up. Coupon schemes undermine their resolution. They are not just a way of promoting brand loyalty. If the Government were to accept this amendment, the possibility of a discount on their next packet of cigarettes may become much more commonplace with the effect that that would weaken the resolve of those smokers who wish to give up.
The Government do not believe that the market research amendment is necessary. The Government have no plans to stop research into tobacco product development. There is nothing in the Bill to stop market researchers from contacting smokers and asking questions with a view to helping tobacco companies to develop their products and compensating them for their time, provided that this compensation does not take the form of tobacco products, coupons or anything that is intended to or has the effect of promoting a tobacco product.
"( ) For the purposes of subsection (1), a coupon shall not be deemed to have the purpose or effect of promoting a tobacco product if it only provides for the product with which it is packed or sent to be sold at a discount on a single subsequent purchase of that product.".
"Clause 9 bans any free distribution whose purpose or effect is to promote a tobacco product . . . The effect of the clause will be a ban on the giving away of branded products, such as cigarette lighters, so as to reduce the amount of tobacco branding on display to the public as much as possible. The clause also bans the use of coupons, such as the schemes whereby coupons inserted into cigarette packs are collected by customers and can later be redeemed for tobacco or other goods".
2 p.m.
"Who are we talking to: Glasgow's smokers—they smoke because they enjoy it. They also love the gift scheme, with over 50% of the club franchise unemployed this probably explains its popularity".
"a document or other thing which (whether by itself or not) can be redeemed for a product or service or for cash or any other benefit".
This amendment seeks to add a proviso to Clause 9(1) that a coupon is not a coupon if it can only be used to obtain a discount on a subsequent purchase of the same product. We believe that if the amendment were accepted it would drive a significant hole through the proposed ban on coupons that promote tobacco products and would provide a powerful incentive to keep smokers hooked.
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