In denial about the black market

Action on Smoking and Health’s CEO Hazel Cheeseman was in front of the Treasury Select Committee last week to discuss Britain’s rapidly escalating illicit tobacco problem. She stuck to the usual script of denying that anything was happening and even insisted that the illicit trade had shrunk.

“The way that we tax tobacco, and have done for a number of years, is to have a tax escalator. We predictably increase the rate of taxation above the level of inflation for cigarettes, hand-rolled tobacco and other tobacco products each year.

That approach has broadly been correct and we have managed to decrease the affordability and increase the tax on tobacco at a time when we have brought down the size of the illegal market for tobacco products. The illegal market for tobacco is 90% smaller now than it was in 2000.”

She’s playing a familiar trick here and no one ever calls her out on it. She’s focusing on the volume of tobacco sold at a time when the smoking rate was nearly three times higher and uses a start date that was near the peak of the Booze Cruise mania that began in 1999 when the EU removed limits on personal allowances for cross-border sales of tobacco and alcohol (legal cigarette sales halved in 1999!). She is then comparing those figures to the demonstrably worthless estimates from HMRC for 2024/25 which simply cannot be reconciled with what we know about the number of people who smoke and how much legal tobacco is sold.

ASH are fond of using The Big Lie, but the idea that the illicit tobacco market has shrunk by 90% is so implausible that it made some of the MPs on the committee suspicious of Cheeseman and so they kept pressing. After all, the reason she had been asked to attend was because the illicit trade has manifestly exploded in scale.

But she continued to brazen it out…

“Several billion cigarettes each year that are smoked are not legal. There is a sizable proportion of the market that is illegal. The point that I want to make is that we have come a long way from where we were. It is something that we have a relatively effective strategy in place to control. It is not suddenly exploding.”

This Pinocchio approach did not cut the mustard with MPs like John Glen who responded by saying:

“We surely have to come to terms with the fact that, while the public health outcomes are desirable, we now have a much bigger problem with this illicit tobacco. Would you agree with that, even if you dispute the numbers? What do you think should be done? Let us face it: we all know that trading standards is pretty hollowed out. There are a very small number of people in different local authorities. I think that there are two in Wiltshire and maybe there are some agencies, in my constituency. Are we being honest about the nature of the problem and what we are going to do to tackle it?”

But Cheeseman continue to stonewall…

“I would dispute whether this is a growing problem, because I do not think that the evidence that we currently have supports that it is a rapidly growing concern.”

Who are you going to believe, ASH or your lying eyes?

Julie Minns looked at some figures…

Julie Minns: “Thank you very much, Ms Cheeseman. I understand that, in 2024, Cancer Research UK estimated that 28 billion cigarettes were smoked in the UK. HMRC in the same year only cleared 14 billion for tax purposes. That suggests that half of the cigarettes being smoked are illicit. Do you recognise that 28 billion figure?”

Hazel Cheeseman: “I would have to go and look at the particular study. I wonder whether there is a difference there between Cancer Research UK also including the hand-rolled tobacco cigarettes that were being smoked in that calculation. I would have to go and have a look at it because I am not immediately familiar with it.”

I am immediately familiar with it. The study is here. It uses estimates of how many smokers there were in 2022-24 - based on the Smoking Toolkit Study - and how many cigarettes they smoked on average. The authors found that 78 million cigarettes were smoked every day, amounting to 28.6 billion per year. As big a number as this is, it is an underestimate since their figure for daily cigarette consumption (10.4) is lower than the ONS’s estimate (11.2) and they don’t adjust either the smoking prevalence or cigarette consumption figures for under-reporting, although it is certain that both are under-reported. Moreover, they didn’t include Northern Ireland which is responsible for another 600 million cigarettes or so. The UK total is therefore 29.2 billion using their methodology.

Cheeseman was right to ask about hand-rolling tobacco. The figures Minns cites do not include this. Assuming that two cigarettes are made from each gram of tobacco, total legal sales in 2024 amounted to just under 23 billion sticks. This implies that the illicit share was 21%, more than HMRC claims but less than empty pack surveys and simple maths suggest.

I’m focusing on 2024, but the study uses the period 2022-24, for some reason. This doesn’t matter enormously from the authors’ perspective as the smoking rate only fell slightly in this period according to the Smoking Toolkit Study, but if we look at 2022 there were 36.6 billion cigarettes sold legally (including hand-rolled). This implies that the illicit share was not only zero but that 7.4 billion cigarettes went unsmoked!

Obviously that can’t be right, so let’s go back to the drawing board. Smoking prevalence figures from the Smoking Toolkit Study are a lot higher than the Office for National Statistics’ figures. It’s possible that they are wrong so let’s make our own calculation for the whole UK in 2024 based on ONS figures:

5.3 million (number of smokers in 2024 according to the ONS) x 11.1 (cigarettes per day according to the ONS) = 58,830,000 x 366 (2024 was a leap year) = 21.5 billion cigarettes smoked.

Since there were just under 23 billion cigarettes sold legally in 2024, this implies that 1.5 billion cigarettes went unsmoked. That doesn’t seem likely and if we do the same calculation for 2022, things become even less plausible…

6.4 million (number of smokers in 2022 according to the ONS) x 10.5 (cigarettes per day according to the ONS) = 67,200,000 x 365 (days in year) = 24.5 billion cigarettes smoked.

But we know that 36.6 billion cigarettes were sold legally in 2022, leaving us with a massive shortfall of 12.1 billion cigarettes!

What’s going on? Well, we’re not adjusting the figures to account for secret smokers who claim not to smoke and for smokers under-reporting how much they smoke. The authors of the Cancer Research study didn’t make these adjustments either. It is an inherently difficult thing to do, but we know that under-reporting is a big problem and my figures for 2022 prove it. A study from the USA found that smokers underestimate how many cigarettes they smoke by around 40%. A study from Italy found that smokers under-reported their consumption by 35% in 2008 and that this number had grown over time.

I’m not claiming to have the answer to this. I’m just showing how sensitive these estimates are to assumptions and adjustments. HMRC say that they adjust for under-reporting, but can we be confident in their methodology? Something has clearly gone wrong with the HMRC estimates. At the end of the day, all we really know is how much tobacco is being sold legally, and those figures speak for themselves.

It is glaringly obvious that cigarette consumption has not fallen by more than half in five years. But legal cigarette sales have. It is true that sales of hand-rolling tobacco were unusually high in 2021 (and 2020), but this only serves to prove the point. They were unusually high because lockdowns and travel restrictions made it more difficult to buy illicit tobacco! The figure for 2021 is closer to a ‘real’ figure than any we have seen this century. Since then, legal sales have collapsed. The smoking rate has not. The black market has taken up the slack. It is undeniable, and the only people still denying it work for ASH.