The government believe it is right that tobacco manufacturers and importers make a greater contribution to the societal costs of smoking
HM Treasury Tobacco Levy consultation document, December 2014

One of the major arguments used against the tobacco industry and smokers is the “true cost” of smoking to society. According to ASH this cost in England is “approximately £13.9bn a year” and comprises

  • The cost to the NHS of treating smoking related illnesses (approximately £2bn)
  • Loss in productivity due to premature deaths (£4bn)
  • Cost to business of smoking breaks (£5.8bn)
  • Smoking-related sick days (£979m)
  • Social care costs of older smokers (£1.1bn)
  • Costs of fires caused by smokers’ materials (£259m).

In 2013-2014 the Treasury received £9.5bn in revenue from tobacco duties and a further £2.8bn in VAT, a total income of £12.3bn. Given that these figures are for the whole of the UK and the £13.9bn was a cost to England alone, the case looks settled.

Looking at the “costs to society” more closely, however, shows that the vast majority of the costs identified are neither real nor “societal” costs at all, but a variety of estimates and extrapolations of imputed “opportunity costs” and, more importantly, private costs.

The cost of lost productivity is moot on a number of bases. Firstly it seems to assume that we are all here to serve society through our productivity and that, in some Orwellian way, it is our duty to do everything to ensure that we maximise our productive years for the benefit of society. It is also the case that, as we have discussed above, the basis of assumption that “smokers die young” is questionable. In fact smoking related illnesses are generally those of old age and hence the “productivity” of a smoker will largely have been delivered to society if that is the belief set that is held.

The cost to business of smoking breaks is quite clearly a made up number, and most definitely not a social cost. Should colleagues of yours or mine be spending excessive time on smoking breaks that is a problem for our employers and for them, and not society, to address. It also assumes that non-smokers do not waste time at work, which is palpably untrue. If the cost of smoking breaks is £5.8bn, I shudder to think of the “social cost” of the sidebar of shame on a well-known, and improbably well frequented, website of a national newspaper. Those without sin are welcome to cast the first rocks.

The cost of smoking-related sick days is another estimate and, again, absenteeism for any reason is a cost to employers not society. It might be fair to impute some element of costs for public sector workers, but that opens a much bigger box of questions on the efficiency or otherwise of the public over the private sector.

The social care cost of older smokers is somewhat ironic given that we are meant to allowing for the lost productivity of smokers dying younger. It also seems to assume that if these people had not smoked they would not firstly need to be looked after in old age and secondly not need to be looked after for longer than they would as smokers who are, once again, apparently going to die younger.

The rather specific cost of fires caused by smokers’ materials (£259m) is not referenced and so its derivation is unclear. As with the other costs, how this is a “societal” rather than private cost is unclear. Provision of the fire service comes from government funds and there is no “call out” charge. Should a house be damaged by fire presumably the cost of repair would be covered by insurance (from premiums paid by the individual) or not, and if there is no insurance the costs will be borne by the householder. Presumably there will be a subset of costs for fires in social housing, but at that point the numbers are presumably rather small.

Given, therefore, that the only identifiable financial costs are those of the NHS, then the £12bn in tax from smokers very easily covers the direct costs of any smoking-related illnesses.

It has been argued in the past, in litigation in the US and in the Czech Republic, that the analysis should be extended to look at the total cost of smokers by also allowing for reduced pension payments. Such an approach can easily be regarded as deeply cynical, and indeed it has been treated exactly that way over the years. But the point remains any cost:benefit analysis must fully account for all genuine costs and all genuine benefits. Either smokers die younger than non-smokers (which statistically they do) in which case there is a genuine reduction in expected future payments, or they do not in which case the suggestion that “smokers die young” is invalidated. It cannot be both.