As the second reading of the Tobacco and Vapes Bill approaches today, MPs on both sides of the house will be looking for something to say in their speeches after the obligatory throat-clearing of “I believe in freedom but…”. When it comes to anti-smoking legislation, the welfare of children is the usual excuse, but since the Bill’s flagship policy is a ban on adults buying tobacco products, an appeal to vulnerable minors will not cut it this time. The costs of smoking-related diseases to the NHS have often been cited in the past, but it is easy to demonstrate that the £3.1 billion smoking supposedly costs the NHS is much less than the £11 billion the government raises in tobacco taxes. 

What, then, can be used to put a liberal mask on prohibition? The Department of Health and Social Care has prompted MPs with a “factsheet” which claims that smoking “costs the economy and wider society £21.8 billion a year”. Most of this — a whopping £18.3 billion — is due to “lost productivity”. This claim is derived from Action on Smoking and Health (ASH), a pressure group funded by the government, who commissioned Howard Reed of Landman Economics to do some modelling. I have a slight affection for Reed because he co-authored a report with Jonathan Portes that made some predictions about child poverty that were so wrong that I made £1,000 betting against them. 

Reed has been playing Numberwang for ASH for years and every estimate of the “cost of smoking” is higher than the last. In 2019, it was £17 billion. Now, despite smoking rates continuing to fall, it is £21.8 billion. Lost productivity due to unemployment, lower wages and early death are always the biggest component.

ASH have tapped into a rich seam of political concern about economic growth by focusing on these “costs”, but are they really costs? If they are really costs, who pays them? And can nonsmokers expect to benefit financially if smoking somehow disappears? 

In his most recent model, Reed acknowledges that the government benefits from “reduced pension payments due to early death” [of smokers], but refuses to acknowledge that the same is true of healthcare spending. Healthcare in the last year of life makes up about half of the average person’s lifetime healthcare costs, and the last few years of life account for a considerable portion of the remainder. Whether you smoke or not, end-of-life healthcare cannot be avoided, but Reed only includes smokers’ healthcare costs in his model. He is admirably honest about his reason for this omission:

Taken to its logical conclusion, the inclusion of end-of-life healthcare costs in CBAs [cost-benefit analyses] of this type would lead to the perverse conclusion that policies which result in larger numbers of premature deaths in the population have a positive benefit to society because they reduce healthcare expenditure on elderly people.

In other words, if he counted the costs that erstwhile smokers would place on the NHS if they didn’t smoke, the figures would show that smoking saves the government money. True though this is, it would be a “perverse conclusion” for an ASH-funded report to arrive at and so Reed stops pretending to make an economic assessment and makes a moral judgement instead. 

But the big ticket item in Reed’s model is lost productivity. This comprises £1.7 billion in lost output due to premature mortality, £7.3 billion due to unemployment and £9.3 billion due to smokers earning less money than nonsmokers. This comes to £18.3 billion. He also estimates how much money the government would raise in tax receipts if smokers lived as long as nonsmokers, had the same rate of employment and earned the same, giving a smaller but still substantial total of £11.3 billion (how high is the tax rate?!). 

It is true that smokers earn less, on average, and are more likely to be unemployed than nonsmokers. The question is whether this is a direct result of them smoking or because smokers tend to be less educated, live in poorer areas and — to put it simply — are different people. Sixty years ago, the rich and poor smoked at pretty much the same rate. That has changed dramatically. People in routine and manual labour are now three times more likely to smoke than members of the lanyard class and people who have no qualifications are five times more likely to smoke than people who have degrees. It takes an almost heroic level of self-delusion to believe that it is the cigarettes that are holding these people back. 

Reed argues that smokers are paid less and are more likely to be unemployed because their “chronic health problems” mean they take more sick days and make it difficult for them to find work. This will be true in some cases, but his own figures show that this cannot be the main factor. Very few people suffer from debilitating smoking-related illnesses before the age of 40. If smoking-related illnesses were the root problem, we would expect to see the biggest gap in earnings among the oldest group of workers, with virtually no difference between young people. Instead, the pay gap begins straight away with smokers aged 20-29 paid 11.3 per cent less than nonsmokers of the same age. This increases to nearly 25 per cent for smokers in their thirties, but drops to less than 5 per cent for smokers in their sixties. Similarly, the difference in unemployment rates between smokers and nonsmokers is more pronounced among people in their thirties than among people in their sixties. 

All this points to the obvious conclusion that people who smoke in the current year are less economically advantaged than those who do not, but that cause and effect runs in the opposite direction to that assumed by Howard Reed, ASH and the DHSC. We are nevertheless being asked to believe that smokers would earn more and have the same kind of jobs as nonsmokers if only they gave up smoking. In other words, millions of low paid jobs would suddenly become highly remunerated by virtue of the person doing them living a healthier lifestyle. How exactly would this work? One can just about imagine somebody who quits smoking being better able to compete for a managerial career than someone who smokes forty a day, but it is almost impossible to imagine mass abstinence from tobacco leading to a radical transformation of the labour market, with more “room at the top” and less need for menial tasks. 

… they are moralising prohibitionists who have exhausted every other argument

As for lost productivity due to early death, that is none of society’s concern. If I die prematurely due to my own hedonism, that is my problem. Reed portrays it as an issue for the government because if I worked longer, the Treasury would get more money out of me in income tax. This is economically and morally unsound. Firstly, if I lived longer, I would pay more tax, but I would also be using more public services. On average, what a person pays into the system is roughly equal to what they take out. Indeed, as people age, what they take out will exceed what they pay in (although Reed would ignore this because it might lead to another “perverse conclusion”).

Secondly, the idea that people who refuse to maximise their productivity are a burden on the state and require heavy-handed laws (such as prohibition) to squeeze every last penny of income tax out of them is morally repugnant. By the same logic, every part-time worker is a drain on the public purse and everyone who takes early retirement is leeching off the state. The implicit message is that every citizen has a duty to work as hard as possible for as long as possible so that the government can raise as much tax revenue as possible. And if they refuse, the state has the right to use various forms of coercion to force them. It is a ridiculous and sinister logic which would never be used against any other group of people and is only being used against smokers now because paternalistic killjoys cannot admit to themselves, even at this late stage, that they are moralising prohibitionists who have exhausted every other argument.