How many people actually smoke?
Manchester memories and the black market in tobacco
I picked an empty fag packet off the pavement outside my snooker club on Sunday. This was more exciting than it sounds because they were Manchester cigarettes. I had never come across this brand in the flesh before, although I had read about it.
If you know your cigarettes, you will have noticed that the design has a hint of both Marlboro and Winston about it. You will also have noticed that there is no way this pack could have been sold legally in a British shop. It has no front-of-pack warning and it is not in plain packaging. In fact, there are very few countries where it could have been sold legally and it is very unlikely that someone brought it back from their summer holiday.
Curiously, the company that owns the Manchester brand is registered in London while its exclusive distributor is based in Dubai. The latter has a website which explains in imperfect English that Manchester is “today’s most progressive tobacco brand” and that it encapsulates the “vibe, glam and charm” of Manchester”. It does, however, seem unsure where Manchester is, describing it as “Britain’s metropolis and the ever-beating urban spot in London”.
I first heard about Manchester cigarettes when Australia introduced plain packaging and Manchester became the country’s biggest selling illicit brand. It’s still doing well there. Last December, a man was jailed for smuggling three million of them into Melbourne. The interesting thing about these cigarettes is there are not counterfeits. The big tobacco companies have often borrowed English place names — Pall Mall, Mayfair, Richmond, Marlborough (they later shortened that one) and even Chesterfield — but they have never made a cigarette called Manchester.
When plain packaging was introduced, the worry was that counterfeiters would find it easier to counterfeit the plain packs. Instead, the black marketeers swung in the opposite direction, apparently deciding that if smokers did not like plain packs then they would appreciate an old school pack. Australia was suddenly deluged with “illicit whites” made in China and the Middle East that are principally, if not wholly, produced for illegal sale.
Finding a pack of Manchester cigarettes on a British pavement is a firm sign of industrial scale tobacco smuggling. I haven’t smoked for over a decade so my firsthand knowledge of the black market is limited to what other people smoke and which packs are left on the street, but I have noticed that a lot of them fall under the umbrella of what HMRC calls “non-duty paid”. This covers everything from a sleeve of cigarettes brought back from Majorca to loose tobacco smuggled from China.
It would surprise me if Britain’s black market for tobacco has declined over time
It would surprise me if Britain’s black market for tobacco has declined over time, especially since the price of cigarettes has risen enormously in the past decade. And yet, according to the government’s figures, it has. HMRC’s official figures show that the proportion of rolling tobacco that was sold illegally fell from 56 per cent in 2001/02 to 35 per cent in 2021/22. Over the same period, the proportion of packaged cigarettes sold illegally has dropped from 21 per cent to 11 per cent. One in nine cigarettes being sold on the black market is a lot, but perhaps not as high as you might expect.
HMRC also has estimates of how much tobacco was bought legally from other countries. In the most recent years, this may have been affected by pandemic restrictions and Brexit, but the trend is downwards regardless of which year is used as the endpoint. For rolling tobacco, the figure fell from 15 per cent to 4 per cent between 2001/02 and 2019/20, and from 6 per cent to 4 per cent for pre-rolled cigarettes.
Officially, therefore, the proportion of tobacco that is brought in from abroad, mostly illegally, has roughly halved in the last twenty years. I hate to argue from incredulity, but I find this very hard to believe. When I was a smoker in the nineties and noughties, hand-rolled tobacco was often brought back from Europe or bought from a man in van, but cigarettes with a foreign health warning seemed less prevalent than they are today and I don’t remember ever seeing counterfeit cigarettes or illicit whites.
This is obviously anecdotal evidence and I stand to be corrected, but it is a fact that the amount of tobacco sold legally in the UK has fallen much more sharply than has the number of smokers and this cannot be explained by smokers consuming fewer cigarettes (the average smoker has only reduced his consumption by one cigarette a day since 2011, according to official estimates). It is also a fact that HMRC says that its “cigarette and hand–rolling tobacco duty gap estimates both have ‘high’ uncertainty”.
You can say that again. To work out the size of the black market, HMRC estimates how many smokers there are in Britain and how many cigarettes they smoke each year. It then takes that total and subtracts how much tobacco is sold legally (using tax receipts). Whatever is left is the amount that is assumed to have been brought in from abroad either legally (through duty free shopping) or, much more commonly, illegally. (For 2020/21 and 2021/22, HMRC didn’t even do this; they simply “projected”figures from previous years).
Surveys are used to estimate the number of smokers and the amount they smoke, but it is well known that both of these are underreported due to social desirability bias so HMRC gives them both an unspecified “uplift”. A great deal depends on whether those uplifts are realistic. It seems likely that the amount of underreporting will increase over time as the social undesirability of smoking increases. HMRC estimates that it is already losing £2.2 billion a year from non-duty paid cigarettes. If people are smoking more than it thinks, the real figure will be much higher.
Or it could be lower. My suspicions could be unfounded and my personal experience unrepresentative. But there is an easy way to find out. In the old days, the government would estimate how many cigarettes were non-duty paid by studying a random selection of discarded cigarette packs. For example, they would send people along to a football match to pick up all fag packets that had been dropped and see how many of them were not legit. Thanks to the smoking ban, there’s no point doing that today, but it could easily do something similar with litter bins. Local councils already sift through our recycling. Why not have someone pick out the cigarette packs once a year and make a proper estimate of how many of them are foreign or fake?
The cost of doing this would be trivial. It would be a pittance when compared to the amount spent on largely worthless “tobacco control” research. But I do not sense any urgency from the government to get a handle on how much black market tobacco is being sold in Britain. With the Treasury determined to keep whacking up tobacco duty, both they and the UK Border Force have every incentive to play down the scale of the problem.
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