Chancellor urged to make Big tobacco pay for the massive burden it puts on public finances
Action on Smoking and Health (ASH) publishes new evidence on the extent of the burden smoking puts on the public finances as part of joint budget representation with SPECTRUM.
New analysis finds the cost of smoking to public finances is nearly double the revenue raised by tobacco taxes; and that
spending £125 million a year to deliver a smokefree 2030 could provide a net benefit to public finances of £5.3 billion by 2030
a cost-benefit analysis of this investment found a net benefit to society over 50 years of £775.7 billion.
01 February 2023
Action on Smoking and Health (ASH) is today publishing new evidence on the extent of the burden smoking puts on the public finances, demonstrating that in 2022 the costs are nearly twice as much as the revenues from tobacco excise tax and VAT (£21 billion compared to £11 billion in taxes).
Last year’s Khan Review, on making smoking, obsolete commissioned by the government, concluded that to deliver the Government’s smokefree 2030 ambition (smoking rates of 5% or less) would require an additional £125 million annual investment in tobacco control measures. However, on current trends we won’t get there until 2039.
Impact to wider economy
The analysis by Howard Reed of Landman Economics for ASH is based on the latest evidence on the costs of smoking to the UK economy, society and public finances. It shows that the burden smoking puts on the NHS (£2.2 billion) and social care (£1.3 billion) is only a small part of the £21 billion total cost to the public purse. The biggest burden, £17 billion, is due to reductions in taxes and increases in benefits as a result of the sickness, disability and premature death caused by smoking. Smoking doesn’t just harm public finances, it also damages the wider economy at a total cost of £173 billion in 2022.
Reed’s analysis also shows how additional investment to increase the rate of decline in smoking prevalence sufficiently to achieve the Government’s smokefree 2030 ambition (smoking rates of 5% or less) could reduce the burden on public finances by £5.3 billion by 2030. Analysing the longer-term benefit to society and the economy in line with Government requirements for deciding on whether a project should be given the green light  finds a net benefit over 50 years of £775.7 billion.
'Polluter pays' levy
ASH and the multi-university research consortium SPECTRUM are calling on the Chancellor to make Big Tobacco to pay for the burden it puts on public finances and the damage it does to economic productivity. Our recommendations for the March Budget are in line with the Khan review, which recommended that if the government could not find the £125 million investment he called for from the public purse, it should ‘make the polluter pay’.
Cost of living crisis
Investing more to help smokers quit would also help alleviate the cost of living crisis. Smoking is concentrated in the poorest and most disadvantaged in society who can significantly increase their disposable household incomes by stopping. The average cost of smoking (£2,451 a year) is now equivalent to the average household’s annual energy bills (£2,500). Smoking is not a lifestyle choice but an addiction. Most smokers started in childhood, with two thirds of those trying one cigarette going on to become daily, addicted smokers. Once addicted, smokers find it difficult to quit and are much more likely to succeed if they get help; help which needs funding.
Around three quarters of both adults (76%) and tobacco retailers (73%) in England support a levy on manufacturers to pay for tobacco control measures.  
In the UK, in 2021, 13.3% of people aged 18 years and above smoke cigarettes, which equates to more than one in 8 adults amounting to 6.6 million people, based on estimates from the Annual Population Survey (APS).