After the Autumn Statement of November 2015, many Conservatives have criticised George Osborne for his lurch away from the politics of personal responsibility, embodied by his decision to bring in (or at least, declare an intention to bring in at a politically-remote future date) a tax on fizzy drinks.
Other Conservative-minded critics of the Government, in light of the ‘steel crisis’, have highlighted how well-intentioned policies, made without due consideration of their knock-on effects, have increased the cost of doing business in Britain and helped to make heavy industry unviable.
Simply put, this policy would require all retailers who want to sell tobacco products to get permission from the Government to do so.
This is theoretically intended to help crack down on the illicit trade, although it isn’t obvious how it will do this. Black marketeers use a distinct supply chain, and most regulatory policies – such as plain packaging and the duty escalator – tend to make their jobs easier rather than harder.
A more realistic outline of the reasoning behind the scheme is probably that provided by ASH, the hard-line anti-smoking group funded by the Department of Health
They highlight the uses of licencing as to: restrict businesses located near schools or youth-oriented facilities from selling tobacco; reduce the density or number of retailers; prohibit distribution of licences in residential zones; and restrict the types of businesses that can sell tobacco.
Or there’s ASH Scotland, which is reported in the Sunday Times (£) as comparing tobacconists to landmine retailers. Seriously: it’s “like having guns or knives or land mines on open sale”.
Clearly, the Chancellor does not have a huge amount of time for the “individual choice and responsibility” argument – much to the irritation of many ordinary members. But the “unintended consequences case” is also worth considering.
Whilst the initial justification appears to be to crackdown on illegal trade, it is far from clear how it would actually do this. Indeed, it could well have the opposite effect.
As has been demonstrated time and again, penalising legal suppliers only makes the job of illegal distributors easier and their market larger. Higher duties make black market alternatives more cost-competitive; plain packaging makes them harder to detect.
Limiting the number of shops which can supply legal tobacco – which is one of the undisguised ambitions of the control lobby – will again shift the market towards illegal operators, specially if that plan involves the wholesale exclusion of tobacco retailing from large areas such as “residential zones”.
Make legal purchase inconvenient, and you create space for illegal sellers to fill the gap.
Assuming people stay within the legal market, such zoning still stacks the deck against small, local shops. If you need to go to a town centre or out-of-town complex for your cigarettes, chances are you’ll do the rest of your shopping whilst you’re there.
This could lead to a substantial loss of revenue for convenience stores, not only from lost tobacco sales but from a much bigger chunk of smokers’ overall spend.
Such a regime could disadvantage small and independent shops in other ways too: due to the susceptibility of such programmes to mission creep, businesses would face uncertainty and, in all probability, mounting costs from ancillary policies such as new training.
Both of these would be much better absorbed by larger stores and chains. That new burdens favour big players over small is Regulation 101.
Even Scotland, currently the UK hotspot for authoritarian legislation, has shied away from licencing in favour of ‘registration’, which essentially replicates the system operating in England and Wales but with an extra layer of public health bureaucracy thrown in for appearances.
The Association for Convenience Stores, which represents over 33,500 local shops in the UK, has already condemned the idea. James Lowman, the Chief Executive, has said:
“Licensing systems load costs and administrative burdens on retailers, and the registration scheme adopted in Scotland has not been effective in tackling the illicit tobacco trade. We will be responding to the consultation calling on HMRC and enforcement agencies to use the existing resources and penalties to tackle the illicit trade.”
Nigel Evans, MP for Ribble Valley, worked as a newsagent before being elected. He will be leading a campaign in Parliament against tobacco retailer licensing and has taken a very strong line against the proposal:
“What would a compulsory retailer tobacco scheme achieve, other than yet more bureaucracy and costs for small businesses. If the Government wishes to see a reduced number of retailers selling tobacco products they are achieving that aim without an extra regulatory burden as small newsagents have gone to the wall in massive numbers.
“Many of these stores are family run, and find it impossible to cope with the costs and burdens of operating their businesses as it is. The illegal trade of smugglers and counterfeiters is massive and this scheme will do nothing to control this illicit trade.
“This Government was elected with a business friendly approach, less regulation and lower costs. This change is another example of a regulatory burden which will achieve nothing other than hastening the demise of the CTN (Convenience, Tobacco and News) sector in the UK and one must ask, is this what we were elected to do?”
A Conservative Government should stand for consumer freedom, respect for the individual, scepticism of the heavy hand of the state, and – of course – small and independent shops and shopkeepers.
Both for practical and principled reasons, then, the Government should reject tobacco licencing.