The Autumn Statement appears to indicate cross-party agreement that Big Tobacco should pay more / PA

Osborne commits to consultation on how tobacco companies could make bigger contributions

The tobacco industry should pay for the costs it imposes on British society, the Chancellor has said, signalling that the Government will back a levy on tobacco manufacturers and importers.

In a low-key Autumn Statement announcement, George Osborne committed the Government to a consultation on how tobacco companies could make bigger contributions to the public purse.

A tobacco levy has already been proposed by Labour, with the proceeds earmarked to improve NHS cancer treatment and bring the UK’s low cancer survival rates into line with other European countries.

However, the Chancellor’s statement appears to indicate cross-party agreement that Big Tobacco, as a major contributor to ill health, should pay more.

“Smoking imposes costs on society, and the Government believes it is therefore fair to ask the tobacco industry to make a greater contribution,” the Chancellor said. “The Government will shortly launch a consultation on introducing a levy on tobacco manufacturers and importers.”

It is not yet clear how much could be earned through a levy, but the anti-smoking charity ASH estimates that a charge of just one per cent per cigarette could bring in £354m.


The charity’s chief executive, Deborah Arnott, said that the Chancellor’s announcement was “like Christmas come early”, adding that any income from a levy should be used to prevent children from taking up smoking and helping smokers to quit. 

Mr Osborne also outlined further details on the Government’s plan to increase NHS funding with a £2bn boost for frontline services next year – funded in part by a £700m reallocation of Department of Health funds – and a four-year, £1bn fund to upgrade GP services in England that will be paid for by fines collected from five banks.

£200m of the new funding will go towards “new ways of caring for patients”, likely to include greater investment in out-of-hospital care and prevention, as outlined in an influential report delivered by NHS England’s chief executive Simon Stevens earlier in the autumn.

Another £150m will be invested to support young people with eating disorders, as part of a reinvestment in children’s mental services spearheaded by Mr Osborne’s Liberal Democrat Coalition partners. A further £15m will go to research into dementia treatments.

However, despite further investment in the NHS, the Chancellor indicated continued restraint on pay for nurses and other public sector workers.

Dr Peter Carter, general secretary of the Royal College of Nursing called the decision “an insult”.

“Without paying nurses a fair wage for the work they do, the Government is devaluing their work. Any prospect of creating an NHS that trains and recruits staff sensibly for the long term is badly damaged by this, and we will see hospitals recruiting expensively from overseas for years to come,” he said.  

Further bank fines, imposed on firms found to have fixed the Libor rate, will be used to fund the Great Western Air Ambulance charity and Kent Surrey and Sussex Air Ambulance services.

Meanwhile, 20,000 families that employ a carer will also be newly eligible for cuts to their national insurance contributions on their carer’s salary, the Chancellor announced.