Tobacco Advertising and Promotion Bill [Lords]

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Tim Loughton: We have been over that argument time and again. Another case that we have made before relates to brand sharing. A legitimate argument relating to brand switching could be advanced in reply to the hon. Gentleman, but a further implication is involved, as the Minister said on Second Reading in response to a proposal for a sunset clause that we shall revisit in Committee. She gave the reason why a sunset clause would not work, which is that it is difficult to determine which factors bring about a reduction in smoking. Advertising may or may not be one, as may other trends in society. Pricing most certainly is one, as we have seen the effects under successive Chancellors who have used it for that purpose. We believe that there is a case that has not yet been answered of an advertising ban being counter-productive if it will lead to tobacco manufacturers having to resort to other means to promote their brand, one of which might be price cutting. Price sensitivity is a key issue, as we have seen in the increase in the number of cigarettes coming to this country in the past five years.

Our perfectly reasonable case is that banning advertising may not have any impact and may be counter-productive, increasing smoking, because price cutting will be an alternative to which tobacco manufacturers will increasingly turn. The hon. Gentleman's point is answered perfectly by mine.

John Barrett (Edinburgh, West): Is the hon. Gentleman aware that many studies have concluded

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that a reduction in advertising is directly linked to the consumption of tobacco products? A study by Dr. Clive Smee reviewed 19 studies, and another by the National Bureau of Economic Research in the United States studied data from 22 countries. Both found a direct link between tobacco advertising and consumption. More importantly, the World Bank—

The Chairman: Order. We are discussing issues that go wider than the amendment. We must stick to that.

Tim Loughton: Indeed, Mr. Pike. We are returning to the Second Reading debate. I could, but I shall not, refer to several other reports that produced diametrically opposed views. My point is that there is no incontrovertible scientific evidence that the reduction in smoking that the Minister claims will be brought about by the ban on tobacco advertising—which I want, too—will be the effect. I do not want to go down that route again.

We have had a full debate on the amendments and at this stage I do not propose to press them to a Division, although I would like to be able to return to them on Report. There are considerations that the Minister has not properly addressed, particularly in respect of the Swedish case, and for that reason I ask her to publish the legal opinion. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Wilshire: I beg to move amendment No. 13, in page 2, line 23, leave out

    '(other than an in-flight magazine)'.

I shall deal with the amendment as briefly as possible, but I must detain the Committee for a few moments. It is never possible to disassociate oneself from one's position in the party, but on this occasion I am not speaking as an Opposition Whip. The issue is primarily a constituency one. I have been briefed by British Airways, but I own no shares in the company and the only benefit that I receive from it is the same as that which is available to every Member of the House.

The significance of the matter for me is that British Airways employs 35,000 people at Heathrow, of whom many are my constituents. Many of them are British Airways shareholders, and the knock-on effect of jobs created by the company is huge. Therefore, its continued prosperity—and that of many other airlines in and around the United Kingdom—is crucial to me as a constituency Member of Parliament, as it is to many other Members.

The implications of the amendment are significant. If the Bill is not amended, there will be problems. The in-flight retail sales figures are—for British Airways, which is probably the biggest—about £60 million. Interestingly, Britannia Airways, the largest of the British charter airlines, has reported sales of £29 million. Given the much tighter costings on charter tickets, the prosperity of the charter airlines depends heavily on their in-flight retail sales. If that means of making a profit were to be removed, the price of holidays would increase.

The implications are fairly serious. To put things into perspective, global tax-free sales are worth nearly US$3 billion, of which tobacco accounts for 14 per

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cent. In-flight duty-free sales account for about 8 per cent. of that total. Europe is one of the biggest sectors of that market, and airlines flying in and around Europe would be more seriously affected than those operating in other parts of the world.

David Taylor: I am sure that the Committee would be interested to hear about those figures in more detail. Can the hon. Gentleman say what proportion of the £60 million sales achieved by British Airways in relation to tobacco products is gross profit and what proportion that represents of their annual operating costs, or their annual revenue, or their annual profit?

Mr. Wilshire: I understand the hon. Gentleman's point, but that is fairly sensitive commercial information, and I suggest that he contact British Airways, Britannia Airways, Virgin and other British airlines direct and asks whether they will give him that information. I can say that they are significant, but I am not at liberty to produce figures that I have been given in confidence.

There are a number of other misconceptions that it is important to clear up. The reference to in-flight magazines creates the impression that the pamphlet at the back of the seat, containing articles and crosswords, is the offending item. Indeed, it does contain advertisements. Since the abolition of duty-free within the European Union, airlines operating in and around Europe find it incredibly difficult to separate duty-free from non duty-free. Therefore, a habit has developed over recent years: there is an in-flight magazine of the sort that we all understand, and there is a shopping list. We are not talking about the major British airlines' in-flight magazines; with regard to British Airways, we are talking about what is, in effect, a mail order catalogue. For several years, in-flight magazines have not contained tobacco advertisements: what we are talking about is a separate page that advertises what is for sale.

The matter under discussion produces problems for the airlines. The Bill does not prohibit the display of packages; we have been down that route. If one walks through a duty-free shop in an airport, one sees stacks of cigarette cartons, but an airline cannot do that, as it has no means of displaying packets of cigarettes, or the other items that it offers for sale. It can only display such items on its price list. If we prohibit the production of in-flight magazines in this way, we will discriminate against the airlines, and the airports will benefit as a result. However, the airports do not benefit the community as much as the airlines and the businesses that use them, so this is a point-of-sale argument as well.

We have heard many arguments that the tobacco industry is busily trying to get more people to smoke, but almost all the airlines prohibit smoking on flights; British Airways and other British airlines operate a total non-smoking policy, as do almost all the airlines in the world. Therefore, airlines are not trying to encourage more people to smoke; in fact, the opposite is the case.

When the Bill was introduced in the other place, it discriminated between British airlines and non-British airlines, but the Government accepted an amendment

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that got rid of that, and I hope that they will do the same thing again. The Bill says that a defence is provided where the principal market of a publication is not the UK. If a publication is here, but it is not intended primarily for here, it will not be caught by the Bill. That is fine. However, the Bill goes on to say

    ''other than an in-flight magazine''.

No justification is offered as to why in-flight magazines should be picked on. Their principal market is not the UK. I have not yet heard an argument that they must be exempted because, although the UK might not be their principal market, they are still a loophole. If the Minister can offer me such an argument, I should be grateful to hear it.

Even though the Government have accepted the amendment that removes the apparent discrimination between UK airlines and non-UK airlines, there is still a serious danger of discrimination. When we were discussing the definition of publications, I flagged up that we would need to return to this matter when we reached clause 4. It is relevant. A British airline that produces its price list in the UK will be caught, unless it is exempted. That creates a danger: if a foreign airline's price list is not produced in the UK and does not have the UK as its target market, but it is in the pocket on the back of the airplane seat, that raises the serious issue of what is publication. British airlines will be caught. They will have to do something, and that might be what the Government wish to achieve. However, the definitions of publications that we were offered provide a loophole for foreign airlines: they can say, ''We are not publishing in the UK; we are coming in, landing and going away again, which hardly amounts to publication.'' Earlier, the Minister said that British airspace is part of the United Kingdom. If the definitions are what she wants us to accept, an aircraft flying from New York to Paris in British airspace would be caught by the provision, but common sense would have to be applied. Will the Minister apply common sense to this matter?

Are the Government prepared to listen to arguments about why they should not discriminate against British airlines, why they should not make it more difficult for us to compete in world aviation, why they should not put jobs in the United Kingdom at risk—the principal market is not the United Kingdom—and why they should not add extra costs to people's holidays if they do not intend that to happen?

5.15 pm

Even if the Government will not listen—the Minister is not listening at the moment—to these arguments, I draw the Minister's attention to the fact that the lead times that the Government envisage after the Bill reaches the statute book are very short. I hope that she understands that those who produce price lists for such volumes of goods have to undertake purchasing, designing and marketing many months in advance.

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