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Artillery Row

The poverty of anti-smoking laws

Smokers are not a drain on the economy

In case you missed it, the big idea from the Conservative Party Conference this year was to extend the ban on selling cigarettes to children by one year every year. Over time, fewer and fewer people will be allowed to buy cigarettes until eventually, one glorious day, everybody will be treated like a child. As a policy it leaves a lot to be desired but as a metaphor for our times, it is unimprovable.

A government insider recently told me that Mr Sunak decided to embark on this crusade, which he had never previously mentioned, because “it polls really well, especially with Conservative voters”. This is arguably not the mark of a man of high principle, but it is true. According to the only poll I have seen, 64 per cent of Britons think no one born after 2008 should ever be able to buy tobacco, rising to 71 per cent among Tory voters. The figure is lowest among those who don’t vote, but those people don’t matter. 

The other people who don’t matter are those will be impacted by the ban. None of them are old enough to vote and most of them haven’t even been born yet. The survey might as well have asked “Are you in favour of taking away other people’s freedom?”. In a country where one in four people want nightclubs and casinos to be shut down forever, the answer to that question is increasingly “Yes”.

I doubt the response would be much different if the question was “Are you in favour of taking away other people’s freedom even if it makes no difference to your life?” but Rishi Sunak was eager to play down the hard paternalism and portray smokers as a drain on public services who need to be eradicated for the sake of our precious NHS. He mentioned the NHS 21 times in his speech. He mentioned freedom once.

Sunak claimed that smoking “places huge pressures on the NHS and costs our country £17 billion a year.” The implication is that if smoking disappeared, the NHS would have fewer people to treat and an extra £17 billion to spend, but he has spent enough time at the Treasury to know that this is nonsense. 

British governments have understood the economics of smoking for decades. In 1971, the Department for Health and Social Security modelled what would happen if smoking rates fell by 20 per cent in one scenario and by 40 per cent in another scenario. In both cases, it found that there would be a small reduction in healthcare costs in the short term but that these savings would soon be greatly outweighed by increases in welfare payments — mostly pensions — as the would-be smokers got older. Economic calculations of this sort were amusingly satirised in an episode of Yes, Prime Minister, but there is many a true word spoken in jest and there is masses of evidence to support it.

There are plenty of open questions in economics, but there are some things that economists have firmly established which the general public gets completely wrong. This is one of them. As the Oxford Handbook of Health Economics notes: 

Although it is frequently argued (though not by economists) that prevention will save expenditure on future treatment, the current body of evidence demonstrates that it is more likely to generate additional health care costs.

This is true of preventive health measures in general but is particularly true of anti-smoking measures because the government rakes in a lot of money from smokers. If the sale of tobacco were prohibited tomorrow, the government would lose the £12 billion a year it currently gets in tobacco duty and would have to spend more on health and welfare, in addition to dealing with a rampant black market. The upshot is that nonsmokers would have to be taxed more.

Numerous studies have shown that smokers not only require lower welfare payments but require less healthcare spending

Numerous studies have shown that smokers not only require lower welfare payments but require less healthcare spending too. A study in the New England Journal of Medicine concluded that “smoking cessation would lead to increased health care costs”. A study from Finland found that smokers’ lifetime healthcare costs were €4,700 lower than those of nonsmokers. A study from the USA concluded that “quitters incur added costs over their extra years of life”. A study from the Netherlands found that “lifetime health expenditure was highest among healthy-living people and lowest for smokers”. I could go on. So why is Sunak claiming the opposite?

The £17 billion figure he mentioned comes from the pressure group Action on Smoking and Health (ASH). It makes no attempt to look at the net costs, i.e. the costs minus the savings. ASH reckon that NHS England spends £2.4 billion a year treating smoking-related diseases. This may be true but ASH, unlike the economists who have studied this issue, do not ask how much healthcare these people would have needed if they hadn’t smoked. The answer is obviously not zero.

The overwhelming bulk of the £17 billion estimate is made up of £13.2 billion of “lost productivity”, most of which comprises lost earnings as a result of premature death. While it is unquestionably true that you cannot make any money when you’re dead, this is not a cost to the government or to society. It is not even a cost to you in any meaningful sense. If you die before you retire, someone else takes your job. The impact on the Treasury is, at worst, zero.

ASH also claim that smoking results in smokers having lower salaries, thereby creating “costs” worth another several billion pounds. This is a highly debatable interpretation of the simple fact that people on low incomes are more likely to smoke than rich people. But whatever the reason for smokers earning less money, on average, than nonsmokers, it is a cost to them as individuals, not to the nonsmoking majority or to the government.

It is absurd to include these kind of “costs” in an analysis of this sort. ASH have resorted to it for one reason and one reason only. They have to pretend that the costs of smoking exceed tobacco duty revenues. In reality, they don’t. It’s not even close. Any nonsmoker who supports the Sunak prohibition because they expect to benefit financially has been conned.

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