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Title    : Scottish Parliament: Committees: Enterprise and Lifelong
Learning: Official Reports: Meeting 7, 2002
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Text

Session 1 (2002) 
Scottish Parliament
Enterprise and Lifelong Learning Committee
Official Report 
Meeting No 7, 2002 

--------------------------------------------------------------------------------
 
15 February 2002 
CONTENTS

Wednesday 13 February 2002


ENTERPRISE AND LIFELONG LEARNING COMMITTEE † 7TH MEETING 2002, SESSION 1
   

TOBACCO ADVERTISING AND PROMOTION (SCOTLAND) BILL 

Enterprise and Lifelong Learning Committee
† 7th Meeting 2002, Session 1

CONVENER

*Alex Neil (Central Scotland) (SNP)

DEPUTY CONVENER

*Miss Annabel Goldie (West of Scotland) (Con)

COMMITTEE MEMBERS

*Rhona Brankin (Midlothian) (Lab)
*Brian Fitzpatrick (Strathkelvin and Bearsden) (Lab)
*Marilyn Livingstone (Kirkcaldy) (Lab)
Mr Kenny MacAskill (Lothians) (SNP)
*Mr Kenneth Macintosh (Eastwood) (Lab)
David Mundell (South of Scotland) (Con)
*Tavish Scott (Shetland) (LD)
*Elaine Thomson (Aberdeen North) (Lab)
*Andrew Wilson (Central Scotland) (SNP)

*attended

THE FOLLOWING ALSO ATTENDED:

Dorothy-Grace Elder (Glasgow) (SNP)
Mrs Margaret Smith (Edinburgh West) (LD)
Nicola Sturgeon (Glasgow) (SNP)

WITNESSES

Patrick Browne (Scottish Retail Consortium)
Des Hudson (Scottish Daily Newspaper Society)
James Lowman (Association of Convenience Stores)
Maureen Moore (ASH Scotland)
Tanith Muller (ASH Scotland)
Jim Raeburn (Scottish Daily Newspaper Society)
Mrs Brenda Warrington (Tobacco Workers Alliance)

CLERK TO THE COMMITTEE

Simon Watkins

SENIOR ASSISTANT CLERK

Judith Evans

ASSISTANT CLERK

Jane Sutherland

LOCATION

Committee Room 1

† 6th Meeting 2002, Session 1—held in private.
 
--------------------------------------------------------------------------------

15 February 2002 
Scottish Parliament

Enterprise and Lifelong Learning Committee

Wednesday 13 February 2002

(Morning)

[THE CONVENER opened the meeting at 09:33]

The Convener (Alex Neil): Good morning. We now have a quorum, so we will
start the meeting. We are up against the clock this morning. The meeting
has to finish by about 10 minutes to 12 at the latest because proceedings
in the chamber start at 12. I therefore apologise to our witnesses, as we
must restrict each part of today's evidence taking to a maximum of half an
hour. If we can save any time within that, I intend to do so.

Apologies have been received from David Mundell, and Ken Macintosh is to
attend the Standards Committee's meeting, but will join us shortly. I
welcome Nicola Sturgeon, the proposer of the Tobacco Advertising and
Promotion (Scotland) Bill.

Tobacco Advertising and Promotion (Scotland) Bill

The Convener: I introduce Maureen Moore, who is the chief executive of ASH
Scotland, and Tanith Muller, who is its parliamentary, press and public
relations manager. I invite you to say a few words by way of introduction.
We have received your written evidence, for which I thank you. After your
introduction, I will invite questions.

Maureen Moore (ASH Scotland): Good morning. ASH Scotland thanks the
Enterprise and Lifelong Learning Committee for inviting us to give evidence
today. We are delighted to have the opportunity to outline our views on the
bill and to answer your questions.

There is strong evidence that a ban on tobacco advertising will, overall,
have a positive impact on the Scottish economy, and we are glad to be able
to present that evidence to you. The big picture must not be forgotten,
however. The economic aspects of the legislation are important and must be
considered, but the reason why the bill is vital is because of its effect
on Scotland's health if it is passed.

Scotland has the highest rate of tobacco deaths in the United Kingdom and
one of the highest rates in the world. Tobacco kills at least 13,000 people
in Scotland each year, which is more than 100 times the number of Scots
killed by illegal drugs. We urge the Scottish Parliament to send a message
that Scotland will not tolerate the promotion of this devastating product.
Since 1992, successive Governments—Conservative, Labour and
coalition—have prioritised the reduction of tobacco consumption. Banning
tobacco advertising is a logical part of that agenda. The evidence that
tobacco advertising bans reduce tobacco consumption is clear, especially
where additional tobacco control policies are in place, as they are in
Scotland.

The tobacco industry has a long track record of using scare tactics in a
bid to dissuade legislators from introducing tobacco control policies.
Independent studies show that reducing tobacco consumption in countries
like Scotland actually increases employment overall and benefits the
economy as a whole. We should remember that there are no tobacco
manufacturing jobs in Scotland and that there are alternatives for
industries that currently do a lot of business with the tobacco industry.
In other countries where advertising bans have been introduced, the tobacco
industry's claims about cataclysmic job losses have not been realised.

It is important to put the bill in context. Tobacco consumption is in
decline in Scotland and elsewhere in the UK. Banning tobacco advertising
will not impact on smoking rates overnight, but it will help accelerate
that downward trend.

More Scots smoke than people in any other part of the UK. Reducing tobacco
consumption in Scotland will, in the short term, bring Scotland in line
with the rest of the UK. ASH Scotland believes that Scottish legislation
must be considered in the absence of a UK-wide ban from Westminster. We
strongly believe that, both in economic terms and—more important—in
terms of the future health of the nation, the benefits of such a measure
outweigh any disadvantages.

The Convener: As you will have seen, the written evidence submitted by the
other three sets of witnesses from whom we are to take evidence this
morning varies. There are those who are relaxed about a UK ban on tobacco
advertising and those who are against any ban on tobacco advertising, but
they all seem to be saying it is unworkable to ban it just in Scotland.
What do you say to that?

Maureen Moore: I do not accept that. As the World Bank would say, the
economic questions are not the only questions that should be asked; health
has to be taken into account. Tobacco advertising makes it seem normal to
people to smoke. Young people think that smoking is not really dangerous,
because the Government would not allow tobacco smoking to be advertised if
it were. It is vital that Scotland puts out a message about de-normalising
tobacco, introducing ad bans and removing advertising at the point of sale.
This is an opportunity to show leadership.

Miss Annabel Goldie (West of Scotland) (Con): I was struck by the sentence
of your submission that reads:

"Tobacco advertising bans are more effective if introduced as part of a
tobacco control strategy."

Your submission also points out that there are health risks from smoking,
which nobody would deny. Is it realistic to think that attacking
advertising is the appropriate way to deal with what may be—or rather
with what is, as probably no one would argue against this—a potential
cause of very serious ill health?

Maureen Moore: We know that in countries that have introduced tobacco
advertising, such as Norway, Belgium, France and Ireland, the ban supports
a reduction in tobacco consumption. Norway has a tobacco advertising ban,
but the real price of cigarettes came down there. The ban there was not
comprehensive, and the other measures to support the ban were not in place.
To have a proper tobacco control strategy in place requires a tobacco
advertising ban and increases in taxation in real terms as well as an
effective cessation service, multimedia information on the health aspects
of tobacco and passive smoking and community work. An integrated approach
is required, of which a tobacco advertising ban has to be part.

Areas of current deprivation have the highest rates of smoking in Scotland,
and we need only take a walk in such areas to see all the tobacco
advertising on the big hoardings there. If we are putting in so much money
to support people stopping smoking—which we are doing—it is
counterproductive to let this big industry continue to target new
customers. That is what the industry is doing.

Miss Goldie: You used the word "cessation". Is that not at the nub of this?
I must confess that one of my concerns is the apparent likelihood that a
ban on advertising in Scotland would not stop the import of cheap tobacco
products from other countries.

Maureen Moore: That is happening now. I will give examples of what is
smuggling, a law and order issue, which should get mixed up—

Miss Goldie: I do not necessarily refer to smuggling. There are legitimate
imports from China, for example.

Maureen Moore: Yes, cigarettes are imported, but let me first address the
question of smuggling, because that is the issue here. One of the
submissions refers to market disorder, and it has been suggested that a ban
on tobacco advertising will lead to our getting lots of cheap cigarettes.
That argument has not stood up in the countries where tobacco advertising
bans have been introduced.

Currently, cheap cigarettes are arriving in this country because of
smuggling. Members will know that the Department of Trade and Industry is
investigating the tobacco industry, which wants to keep its customers
smoking. One in five cigarettes smoked in the UK is smuggled. Smuggling
stimulates consumption directly, and the sale of cheap cigarettes is used
as a political lobbying tool by the tobacco industry.

I will give a striking example of the export of cigarettes to countries
where the brands in question are not smoked. In Andorra, which has a
population of 70,000, exports of cigarettes from the UK rose to 1.52
billion in 1997. That meant either that each Andorran, including children
and non-smokers, was smoking 60 British cigarettes per day that year or
that those cigarettes were being smuggled back into the UK from Andorra.
The tobacco industry could not fail to be aware of what was happening to
its cigarettes.

We are getting cheap cigarettes on the market now, when there is tobacco
advertising. I therefore do not accept the argument put forward.

Tanith Muller (ASH Scotland): We have to be aware of the fact that the
tobacco industry uses the threat of smuggling as a major tool with which to
lobby Governments. We should be particularly aware of that when bodies that
are backed by the tobacco industry are including that argument in their
submissions. The evidence from Canada is that the reduction in tobacco tax
that resulted from lobbying by the tobacco industry did not solve the
smuggling problem but increased smoking, particularly among young people.
Since then, the Canadian Government has started to consider legal action
against the tobacco companies for their role in facilitating that crisis.

In response to Miss Goldie's point about the legitimate cigarette market in
Scotland, I reiterate that we are not aware of any evidence of a problem in
that regard in any of the countries where there is an ad ban. We think it
incredibly unlikely that tobacco companies would create differential prices
within the UK. The argument about cigarettes getting smuggled across the
border does not stand. It would be a disaster for the tobacco companies
were it suggested that they were artificially holding their prices up in
England and Wales.

The other thing is—

Miss Goldie: May I intervene for a moment? I am grateful to you—what you
have said explains fully where you stand on that issue. However, I am
anxious to get at the kernel of what your organisation has as its ultimate
aim. I presume that the ultimate objective of ASH is the cessation of
tobacco usage.

Maureen Moore: Given that we are dealing with a legal product, the aim of
ASH is to see effective tobacco control policies put in place. If you were
to ask what ASH Scotland was against, I would tell you that we are not
against smokers, but we are against the tobacco industry. We want effective
tobacco control policies to be put in place in Scotland. We know from the
experience of other countries that for a tobacco control strategy to be
effective, there must be a ban on tobacco advertising.

09:45

Miss Goldie: If the bill were to succeed, would ASH wind up?

Maureen Moore: That would be nice. I would consider it a great success if
ASH did not need to exist any more or if it did not need to be up against a
great, big—

Miss Goldie: If this measure succeeds, will ASH wind up?

Maureen Moore: No, because we will still have a tobacco industry that will
continually look for loopholes, as it has done in the past. We can see
clearly where it moves—when we brought in a television tobacco
advertising ban, in 1967, the industry simply moved its market. I am always
amazed that rational, intelligent people believe that the tobacco industry
advertises only to get current smokers to switch brands. That is an insult
to—

Miss Goldie: That is another issue, convener. I thank Maureen Moore for
answering my question.

The Convener: I welcome committee members Marilyn Livingstone and Elaine
Thomson. I also welcome Dorothy-Grace Elder, who is a member of the Health
and Community Care Committee.

Brian Fitzpatrick (Strathkelvin and Bearsden) (Lab): I refer the witnesses
to the gloss that our convener put on the suggestions made in other
submissions that implementing a ban only in Scotland would be unworkable. I
am particularly concerned about that area.

The ASH submission says that you are looking for a UK-wide ban, which you
believe would be the most effective way of controlling tobacco advertising.
I was struck by what you said about the evidence that shows that tobacco
advertising bans reduce tobacco consumption. Although your submission
contains footnotes on the source of that evidence, there is no footnote to
suggest that there is any evidence on the effectiveness, or otherwise, of a
partial ban in a unified media market. Does such evidence exist?

Maureen Moore: It is important that we are clear about what we mean when we
talk about partial bans and comprehensive bans. A partial ban is one that
covers one medium, while a comprehensive ban covers different areas. There
is no such thing as a comprehensive tobacco advertising ban, because the
tobacco industry will continue to look for loopholes.

Brian Fitzpatrick: Perhaps I was not clear—

Maureen Moore: We are very concerned about brand stretching—the companies
stretch their brands into other areas. We want to put across a big message
about the danger of the product—that is what we are trying to achieve in
Scotland with the bill. This is the only—

Brian Fitzpatrick: I am asking about the effectiveness of a partial ban. I
do not necessarily disagree with you about sending out messages, but I am
not sure that legislation is an appropriate vehicle for that. I would like
to tease out a bit more information on the effectiveness of a partial ban.
Have you looked at disparities in the legislation of other devolved or
federal Administrations? What effect have those disparities had in the
circumstances of a single media market? Has ASH undertaken that work?

Tanith Muller: ASH has not done that work and, as far as I am aware, such a
study has not been undertaken. Scotland is in an unusual situation that is
not replicated in many of the countries that have introduced advertising
bans. We could conduct another search of the literature and come back to
you—

Brian Fitzpatrick: You mentioned Canada. Have you looked at the situation
in Canada?

Tanith Muller: As I understand the position, the tobacco advertising ban in
Canada was introduced at a national level and therefore that example does
not apply to Scotland. We have looked at Canada, but there was no
difference between one part of Canada and another. Although there are
constitutional problems in comparing the situation in Scotland with the
situation in Ireland, Irish editions of UK newspapers have a reasonable
circulation in the Irish market, and there are no reports of those
publications having problems filling advertising space even if the UK
editions contain tobacco advertising.

Brian Fitzpatrick: I am not really concerned with the interests of the
media and whether they manage to fill up the advertising space. I am more
interested in whether that sort of ban is thought to be effective. For
example in Ireland—where the largest circulation is perhaps 100,000
newspapers—most of the Sunday newspapers come from the UK. Is there any
evidence on the situation there?

Tanith Muller: The problem with Ireland as an example is that incremental
bans over time have been introduced relatively recently. Ireland is just
putting in place the last stand by considering legislation to ban
advertising at the point of sale as part of the Public Health (Tobacco)
Bill. It is difficult to measure the effectiveness of a comprehensive ban
of the type that this bill would bring about, because Ireland does not have
that yet.

Maureen Moore: The international evidence suggests that tobacco advertising
bans lead to significant reductions in tobacco consumption. We know that.

Brian Fitzpatrick: Can I just tease out—

Maureen Moore: I would like to finish what I am saying. Taking away
point-of-sale and billboard advertising will have an effect on sales of
cigarettes; it will bring down consumption.

One of the things that the tobacco industry does—which amazes me—is to
reassure current smokers. I am making important points. We are not just
talking about the effectiveness of a ban in economic terms. We are talking
about sending a message in this country about how dangerous tobacco
products are. People say that cigarettes cannot be dangerous because the
Government allows them to be advertised.

Brian Fitzpatrick: You said that we know from experiences in other
countries that a ban on advertising leads to a reduction in tobacco use and
consumption. You mentioned Norway and gave the explanation that the ban by
the Norwegian Government had been followed by a reduction in the real price
of cigarettes. Is that correct?

Maureen Moore: Yes. When the ban was introduced, the real price of
cigarettes came down and that had an effect on consumption. Norway is often
used as an example of where cigarette consumption did not come down
following a ban on tobacco advertising.

Brian Fitzpatrick: Is it your position that evidence that a ban on tobacco
advertising had not reduced tobacco use is not correct?

Tanith Muller: That evidence is not correct, because there is evidence that
tobacco consumption in Norway has come down. The issue is that some people
say that it has not come down very quickly. We argue that one reason for
that is that the rest of the tobacco control strategy was not in place.
Incomes in Norway went up, but tobacco taxation did not keep pace with
that, so the real price of tobacco dropped.

Brian Fitzpatrick: I would be interested in that evidence and it would be
useful if ASH Scotland produced it.

Could I make one final point?

The Convener: If you make it very tight. We are running out of time and two
other members want to come in.

Brian Fitzpatrick: I have one final point in relation to the questions that
Annabel Goldie asked. I leave issues of smuggling aside; I do not want to
go there with this question. We have evidence of concerns, particularly
from workers in the tobacco industry, that the legitimate market would be
affected by cheap cigarette products coming in from China, for example, if
Chinese importers did not need to take up advertising costs. I do not know
whether you have seen the submission from the Tobacco Workers Alliance.
Will you take us through your position on that?

The Convener: Please make it tight, because I am trying to get other
members in.

Tanith Muller: The evidence is basically that brand loyalty among adult
smokers is very strong. Peer-reviewed journals have set the instance of
adults switching brands at 10 per cent. We also argue that the evidence
from countries in which new brands are being introduced is that new brands
have to be promoted heavily to convince people to swap brands. Some people
say that 150 per cent of the return over two years must be used for that.
Basically, we have serious doubts about the credibility of the evidence on
cheap imports following an advertising ban, as we have no evidence of the
market being affected in that way elsewhere.

Brian Fitzpatrick: I am obliged, convener. For the avoidance of doubt I
refer to my entry in the register of interests in relation to my membership
of Amicus.

Andrew Wilson (Central Scotland) (SNP): I am mildly frustrated by the first
25 minutes of evidence. Will you clarify whether we are supposed to be
considering the economic impact of a potential ban or whether we are
considering the bill more widely, convener?

The Convener: Our primary focus has to be the economic impact of a
potential ban, but if members want to ask question on wider issues I will
allow them—

Andrew Wilson: Regardless of their relevance.

With the greatest of respect, I cannot see in any of the submissions firm
evidence on the economic impact of a ban. It strikes me that, by
definition, if a ban has an effect on demand and therefore consumption we
are considering who wins and who loses, because people will switch their
consumption demand from one product to another.

We need evidence from you and from others on where that demand will go. Who
will the winners and losers be? There is a contradiction between the
evidence that we have been given by those who argue that a ban will produce
a reduction in demand at retail sites and the evidence that we have been
given by those who say that it will mainly have a brand-switching effect.
Reference has been made to more questionable and unusual impacts that a ban
might have vis-à-vis Chinese imports; I find that very strange.

In the final paragraph of your submission, you state:

"the annual cost of employee smoking in Scotland is in the region of £500
million each year".

I would like to hear where that figure comes from. It is a hard number, but
we do not know about its veracity.

Secondly, how long will it take for the impact of a ban to be felt? The
negative effects of a ban on the media and advertising markets—which are
tangible—will be felt immediately, whereas the economic benefits of a ban
are longer term. We need to have an idea of the time scale.

Maureen Moore: The annual cost of employee smoking in Scotland is £500
million each year: £450 million as a result of lost productivity—smoke
breaks—£40 million because of higher rates of absenteeism among smokers
and £4 million as a result of fire damage. Those figures are taken from a
study by Parrott, Godfrey and Raw published in "Tobacco Control", which we
can supply to members.

Andrew Wilson: I have no idea what status that journal has.

Tanith Muller: "Tobacco Control" is a peer-reviewed journal that is part of
the stable of the "British Medical Journal". It is a specialist magazine
for physicians working in the field of tobacco control.

Andrew Wilson: So the journal is peer reviewed.

Tanith Muller: Yes. The economist who worked on that study also worked on
the study "Tobacco and Jobs—the impact of reducing consumption on
employment in the UK". There are a handful of economists working in the
field—we rang all of them to find out whether they could appear before
the committee, but unfortunately they all had teaching commitments. The
centre for health economics at the University of York specialises in the
impact that tobacco has on the economy in various ways.

The report "Tobacco and Jobs—the impact of reducing consumption on
employment in the UK" suggests very strongly that the winners from a
tobacco advertising ban would be the service industries. Money that is not
spent on tobacco does not disappear from the economy, but is spent on other
goods. The authors of the report examine how former smokers spend their
money.

Andrew Wilson: What do they say?

Tanith Muller: They say that there will be strong gains in the service
sector and in industries such as the leisure and hospitality industries.
There may also be gains for the finance industry, because ex-smokers may
save more money. That is good news for Scotland, because the Scottish
economy is traditionally seen as strong in the sectors to which I have
referred.

Andrew Wilson: That is interesting. I have not yet received evidence about
the margins for tobacco production. Who is making what profits on the
production side, from the primary product right through to the end of the
process? As you said, none of the manufacturing takes place in Scotland, so
the switch from demand for tobacco would not be felt by the domestic
economy. If the extra demand created by a ban on tobacco advertising were
channelled into domestically produced products, such as services, the
impact of a ban on our economy could be quite positive.

Tanith Muller: That is what we argue. The University of York economists
would argue the same on the basis of their report.

Since we were asked to give evidence, we have been trying to work out where
the profits from tobacco manufacture go. Obviously, information of that
sort is regarded as commercially sensitive. We can say that the tobacco
industry in the UK has lost something like 85 per cent of its staff since
1981. At the same time, it has increased its productivity by 3 per cent, by
targeting the export market. Even in a declining domestic market, the UK
tobacco industry is still producing tobacco for export. Despite the fact
that there is no tobacco manufacturing in Scotland, it could be argued that
industries in Scotland still feed into the tobacco factories based in
England.

Andrew Wilson: What are those industries?

Tanith Muller: Companies producing products such as packaging, paper and
the materials that go into cigarettes.

The Convener: As we have two minutes left, I will take questions from Rhona
Brankin and from Dorothy-Grace Elder. I would like you to answer both
questions, as we must stick to our timetable this morning.

Rhona Brankin (Midlothian) (Lab): I am interested in the effects of
introducing a ban on tobacco advertising in Scotland in advance of the rest
of the UK. Some of the written evidence that has been given to us suggests
that introducing a ban in Scotland could have an adverse economic
impact—obviously, there will be further discussion on that point.

I am interested in your comment that the ban in Norway had a limited effect
because the rest of the tobacco control strategy was not in place. You say
in your written evidence that it takes a while for the effect of a ban on
tobacco advertising to kick in. If that is the case, why is it a particular
problem to wait for the ban to be implemented at the UK level?

10:00

Maureen Moore: We are concerned about that because the Labour party said in
its 1997 manifesto that it would bring in a tobacco advertising ban, but
that bill fell. We saw no evidence that the Government's ban was going to
go ahead, and a European bill also fell at the same time as the UK bill was
not pushed forward. We were greatly concerned about that and thought that
Scotland had to take action. That is why we support the Scottish bill. If
we do not get a ban from Westminster, Scotland must act—that is what the
Scottish Parliament is for. This is an extremely important public health
issue for the people of Scotland.

The Convener: I ask Rhona Brankin to keep her supplementary question very
tight.

Rhona Brankin: All right.

You said that it takes a while for the effect of a ban to be felt. What
time scale are you talking about? Would you answer my question about the
limited impact that a ban has had in Norway because of the lack of a
tobacco control strategy?

Maureen Moore: This is a long game—introducing a tobacco advertising ban
is only one part of a long-term strategy that involves other tobacco
control measures. I cannot give you a time scale, but we know from the
experience of other countries that a tobacco advertising ban that is
brought in with a comprehensive tobacco control strategy reduces tobacco
consumption.

Rhona Brankin: Therefore, waiting for a couple of years might not have much
impact.

Maureen Moore: It will have an impact.

The Convener: I will allow Dorothy-Grace to ask a very quick, sharp
question and I ask the witnesses to give us a sharp answer.

Dorothy-Grace Elder (Glasgow) (SNP): The witnesses may have noticed that
the Westminster Government has been advertising recently the recruitment of
as many as 900 extra customs officers to fight the smuggling of cigarettes
into Britain. The Government has not engaged 900 extra customs officers to
fight illegal drugs—it has not engaged even just a handful of extra
customs officers for that work. What does that indicate to you about what
you are up against? You are fighting not only the tobacco lords but the
Government, because it needs £7.5 billion in tobacco tax and it is happy
to use that tobacco tax. Is that not a little hypocritical?

The Convener: I ask for a short, sharp reply, please.

Maureen Moore: I cannot get into whether the Government is hypocritical or
not. I am delighted that it is taking on—

Dorothy-Grace Elder: How much does ASH get from the Government to fight
against tobacco?

Maureen Moore: As I told you at the Health and Community Care Committee, we
receive a core grant of £120,000 a year, plus other money for specific
pieces of work. We do not get money from the Government alone—we get
money from other sources to support our work. We are only a small voluntary
organisation. ASH was set up to make sure that effective information is
given out. We lobby to ensure that proper tobacco control strategies are in
place. However, what we do is only one part of what you—and everyone else
in society—should be doing. Everyone must care about tobacco control, not
just—

Dorothy-Grace Elder: Perhaps you could get the Government to care more and
to give you more of a grant.

Maureen Moore: That is what I want to happen. That is why I am here,
talking to this Parliament.

The Convener: Unfortunately, as I said earlier, we are running a very tight
timetable this morning. I thank the witnesses for their written and oral
evidence, which has been helpful.

While the next set of witnesses is getting prepared, I welcome Margaret
Smith, who is the convener of the Health and Community Care Committee.
Three members of that committee have joined us today. I will explain the
ground rules so that there is no dispute. The proposer of the bill has the
same rights as members of the Enterprise and Lifelong Learning Committee to
ask questions. The other members of the Health and Community Care Committee
who are in attendance will be invited to ask questions at my discretion. I
will adopt my usual practice of giving priority to members of the
Enterprise and Lifelong Learning Committee. If any of the non-Enterprise
and Lifelong Learning Committee members indicate that they want to ask a
question but we run out of time, I am sorry, hard cheese—this is the
Enterprise and Lifelong Learning Committee. However, Nicola Sturgeon has
the same rights as members of the committee.

I welcome Des Hudson, president of the Scottish Daily Newspaper Society,
and Jim Raeburn, director. I invite you to give a short introduction. We
will then move on to questions.

Des Hudson (Scottish Daily Newspaper Society): I would be delighted. I am
grateful for this opportunity to address the committee. I will start by
making three brief points. First, the members whom I represent clearly have
an economic interest in the outcome of the consideration of the bill. I
recognise that, and say it with some hesitation, bearing in mind the public
health interests that affect everyone in our community.

Secondly, we are uncertain of the persuasiveness or availability of clear
empirical evidence as to the efficacy of advertising bans. Our final point,
and our major concern, is about the workability of a partial advertising
ban. In the United Kingdom, we have a unified media market. To introduce a
ban such as that proposed in the bill in some sections of the media within
that single market raises serious concerns about the efficacy and
practicality of such legislation.

If the bill as introduced were passed, the following would be the case in
terms of three types of publication that are available in newsagents
anywhere in Scotland. First, an edition of, say, The Scotsman, The Press
and Journal or The Herald, would clearly be caught by the ban as those
newspapers are printed and published in Scotland. Tobacco advertising in
those publications would be unlawful. Secondly, in the case of newspapers
published in England, questions would arise about whether they are mainly
or especially produced for the Scottish market. The Independent effectively
produces a unified edition structure for the UK, and tobacco advertising
may or may not be unlawful in it. Thirdly, magazines such as FHM also have
a unified edition structure for the UK. According to my reading of the bill
as introduced, tobacco advertising would be lawful in such magazines. Our
concern is that if the bill as drafted became legislation in what, I
suggest to you, is a unified media market, the ban would be ineffective and
partial in its application and would rebound to the economic disadvantage
of the media in Scotland.

Finally, I offer some statistics. Based on returns for the financial year
ending in 2001, we estimate that indigenous Scottish newspapers received
about £600,000 from tobacco advertising. If we were to consider the
advertising for the Scottish market, as opposed to the UK market, that was
carried by all UK newspapers available in Scotland, we think that that
figure would rise to about £1.5 million for that year. We are concerned
about the effectiveness of introducing partial restrictions in a unified UK
media market.

Andrew Wilson: Thank you for that evidence. I had better declare an
interest, as I have an income from a weekly newspaper in Scotland.

I want to explore further the assertion that there is a "unified media
market". What proportion of the Scottish daily newspaper market is taken up
by editioned UK newspapers, in other words, The Guardian, The Independent
and the Financial Times?

Des Hudson: I would guess that about 50 to 60 per cent of daily copies sold
are what I would term indigenous Scottish newspapers.

Andrew Wilson: What percentage?

Des Hudson: Round about 50 per cent.

Andrew Wilson: Fifty per cent? Are you sure?

Des Hudson: I would guess so. I am trying to work it out. The number of
copies of The Guardian sold in Scotland on an average day is about 12,000.
The average daily sale of either The Scotsman or The Herald is greater than
the sum of the sales of all English broadsheets. However, we have to
consider the interplay of tabloid or mass market newspapers such as the
Daily Record.

Andrew Wilson: That is my point. The volume of newspapers sold must be, at
a ballpark figure, 1.5 million a day, of which The Guardian, the FT and The
Independent cannot account for more than 5 per cent.

Des Hudson: Indeed, but if we consider—

Allan Wilson: How can you call it a unified media market when Scottish
editions and domestic Scottish newspapers, ostensibly selling in the
Scottish market, account for more than 90 per cent of the market?

Des Hudson: We can call it a unified media market if we have regard to the
overall income for a newspaper. That is made up of two primary elements:
cover price income and advertising income. I can assure you that we operate
predominantly in a unified media market in the battle both for advertising
revenue and for readers.

Andrew Wilson: With the greatest respect, that is a quite separate
question,. The market for the media is the demand for the product. You are
talking about where you are taking your supply of advertising. Before you
go on to the advertising, on which, incidentally, I agree with you, I would
like to pin down what share of the market you are talking about. It seems
to be absolutely minimal. If anyone can figure it out, you guys can. I can
never figure it out, because no one is honest about their circulation
figures. What is the truth? It would be helpful if you could come back to
us on that figure.

The Convener: I am sure that the Sunday Mail is the exception to that,
Andrew.

Andrew Wilson: Quite.

Des Hudson: We would be happy to come back to you with those figures. We
have real problems with the definition of an indigenous title, a UK edition
and so forth.

Andrew Wilson: My final question is, what share of your members'
advertising revenue comes from cigarette advertising? You said that it was
£600,000. What is the share overall?

Jim Raeburn (Scottish Daily Newspaper Society): I think that it is less
than 1 per cent.

Des Hudson: In the case of my newspapers, 0.75 per cent of our advertising
income last year was from tobacco advertising.

Jim Raeburn: We have to acknowledge that that share varies from title to
title. Some newspapers attract a quite substantial volume of advertising;
others attract less.

Miss Goldie: I gather from your submission that you distinguish between
what may be a health issue and what you consider to be the legitimate
commercial activity of advertising a product that is not proscribed—not
banned by law. Is it your view that if products in the marketplace are
lawful there should be freedom of commercial activity to advertise them?

Des Hudson: Yes, it is.

Jim Raeburn: That is an unqualified yes. We are talking about freedom of
commercial expression. If a product is legal, there should be freedom to
advertise it.

Miss Goldie: I presume that advertising revenue is a significant part of
newspaper income, regardless of how the advertising revenue subdivides into
component advertisers. If we have a legislative regime that is split
between Scotland and the rest of the UK, is it likely that competing
newspapers south of the border could enjoy larger revenue receipts and be
priced more competitively for consumers?

Des Hudson: I agree with the first part of your point. I am not so sure
that the additional revenue that newspapers could obtain would be
sufficient for them to reduce their pricing. We have to acknowledge that
tobacco advertising provides a very small proportion of newspaper revenues.
I accept the point that English titles—if I can refer to them that
way—would have an advantage and might gain that revenue. However, I do
not think that the revenue would be sufficient to enable them to reduce
cover prices.

We already have differential pricing in the UK. A copy of The Sunday Times
bought in Manchester is more expensive than a copy bought in Edinburgh. A
copy of The Times is priced differently in the same way. We already have
that competition in place. I do not think that the change in publishers'
access to income from tobacco advertising would make a real difference in
that regard.

Miss Goldie: Your main concern is that a split legislative regime would be
unmanageable or possibly unenforceable.

Des Hudson: I certainly think that there would be problems with it.

One further factor to which we refer in our written submission to the
committee is that it is already difficult for indigenous Scottish
newspapers to compete in what I argue is a unified media market. It is so
much easier for a London-based decision maker to say, "I can promote this
product simply by laying down a media campaign using UK national titles.
Why do I need to bother about these quaint little papers up there in
Scotland or Wales?" The difficulty of continuing to promote and compete
effectively when there is a mindset of taking the easiest course—carrying
out media planning using national titles—is a matter of concern to SDNS
members.

Nicola Sturgeon (Glasgow) (SNP): I have two quick questions. The first
relates to your previous point. You have expressed concerns about the
effect of introducing a ban on tobacco advertising in Scotland alone, given
the unified newspaper market in the UK. It strikes me that we are not
really operating in the dark. We do not have to make assumptions. We can
look to the experience of Ireland to see whether such concerns have been
realised. A ban on tobacco advertising in newspapers has been in force in
Ireland for a couple of year. News-stands in Dublin display Irish editions
of the Daily Mail, The Mirror and UK editions of The Guardian and The
Independent. Do you have any evidence of the concerns that you have
expressed today being realised in Ireland? I have not heard of that
happening.

10:15

Des Hudson: I do not think that concerns arise from the Irish experience.
However, I contend that the Irish experience argues in favour of the
effectiveness of a UK-wide restriction, rather than a restriction that
applies only to Scotland. As I understand it, under the relevant Irish
legislation, any newspaper that is available for sale in Ireland is caught
by the restrictions. I said earlier that there are certain newspapers that
would without doubt be unlawful under the bill as proposed if they carried
tobacco advertising. There are others on which the position is less clear.
Under the proposed legislation, a single UK edition of FHM magazine would
lawfully be able to carry tobacco advertising on copies sold in Scotland.

Nicola Sturgeon: If an amendment were lodged at stage 2 to bring the bill
more into line with the Irish ban and to ensure that it covered any
newspaper or publication that is distributed in Scotland, would you be more
comfortable with it?

Des Hudson: That would remove many of my concerns. That is the logic of our
argument. Our only remaining concern is that such a provision would further
exacerbate the problem of Scottish titles competing for UK-decision-based
advertising spend against UK national or English titles.

Brian Fitzpatrick: I refer to the second page of your written submission,
in which you refer to the experience of countries such as Norway that
already have tobacco advertising bans in place. You heard the evidence that
we were given by ASH. Do you want to comment on that?

Jim Raeburn: If we chart sales of tobacco in Norway, we see that those
increased quite significantly but have since dipped. However, advertising
cannot be divorced from pricing. It is well known that price, rather than
advertising, is the biggest single influence on tobacco sales. In 1965,
when tobacco advertising on television was banned in the UK, expenditure on
tobacco advertising fell by something like 50 per cent, but over the next
eight or nine years tobacco consumption increased, to reach its peak around
1974.

Since 1974, there has been a steady decline in tobacco consumption of
something like 40 per cent. About 11 million people have given up the
smoking habit. Price is undoubtedly the single biggest influence on tobacco
consumption. If prices are pushed up by high Government taxation, cigarette
consumption is reduced. If prices fall, people smoke more cigarettes. Some
figures have been produced to show that cigarette smuggling is leading to
an increase in smoking.

Brian Fitzpatrick: I want to pursue with you the issue of real price. You
have made an assertion about the experience of countries such as Norway. We
have heard from ASH that there may be evidence to support the claim that
the real price of cigarettes in Norway has gone down and that that explains
the lower rate of decline in tobacco consumption there. That supports what
you have said about price, but suggests that we should not make too much of
the assertion contained in your submission.

Jim Raeburn: The evidence that we have collated shows that there is no real
indication that tobacco advertising bans result in a reduction in smoking.
No hard evidence is coming through from reports such as the Smee report of
1992. Government assessments have been based on illustrations using the
figure of a 2.5 per cent reduction in tobacco consumption resulting from
advertising bans. Those illustrative figures are not based on any hard
evidence.

Rhona Brankin: You said in your written evidence that serious public health
issues are at play here—they clearly are. You obviously accept the link
between tobacco and ill health, as everybody here would do. You have
limited the basis of your evidence to what you think would be the damaging
effect on Scotland. You do not deny that serious public health issues are
at play.

Des Hudson: No, not at all. We sought to make that clear at the outset. Our
primary concern is the introduction of a restriction in only one part of
what we contend is a unified media market. A restriction on the whole
market would be more effective in our view in terms of the mischief at
which the legislation is directed. It would not create the distorting
economic effects that we think would affect Scottish newspapers if the bill
were passed.

Jim Raeburn: The Scottish Executive health department issued a letter in
August 2001 at the time that the Department of Health in England issued a
consultative document on the proposed European Union directive on
advertising and sponsorship of tobacco products. That letter says:

"The Scottish Executive is committed to a ban on tobacco advertising.
However, we recognise that tobacco advertising does not respect national
borders and that comprehensive action must be taken at both UK level and
international level if a ban is to be effective."

We are not arguing against an EU ban. We are challenging any benefit that
might flow from a Scottish ban.

Mrs Margaret Smith (Edinburgh West) (LD): Mr Raeburn made the passing
comment that some newspapers attract a greater amount of tobacco
advertising than do others. Will he give us figures of what that spread of
tobacco advertising would be? Will he make conjectures regarding why
certain newspapers attract greater amounts of tobacco advertising? I
suggest that that might be because certain newspapers are targeted at
certain parts of the market.

The evidence given to the Health and Community Care Committee is that
tobacco advertisements are targeted specifically at the young, because 90
per cent of people who smoke begin in their teenage years. They are also
targeted at those who can least afford the products—those who live in the
poorer and more deprived areas of our country.

Will you tell me what the spread is? You said, for example, that your
newspapers get less than 1 per cent of their advertising revenue from
tobacco advertising. If you do not have figures at the moment, will you
give them to the committee? Will you guess at why certain newspapers
attract a greater amount of tobacco advertising?

Jim Raeburn: It would be improper of me to reveal figures for specific
newspaper titles, because the information has been given to me in
confidence. We have been happy to disclose the total advertising income
this morning.

Certain newspapers attract advertising and any media planner will ask which
newspaper will suit his advertising client. That is still all about how the
advertising can influence particular brands that people smoke—it is
entirely to do with that. Smoking has declined by 40 per cent over the past
25 to 30 years. Advertising is about promotion of brands.

You raised the question of targeting advertising at the young. That is
strictly against the cigarette code that is agreed between the Department
of Health and the tobacco industry. The code says that there should be no
targeting of people younger than 18 and the people used in advertising
should not be younger than 25.

Mrs Smith: The evidence given to us by Professor Hastings and Dr MacFadyen
from the University of Strathclyde, who are experts—

The Convener: I am sorry to interrupt, but by "us" do you mean the Health
and Community Care Committee?

Mrs Smith: Yes, and I am happy for colleagues in the Enterprise and
Lifelong Learning Committee to have access to that evidence, which seems to
suggest that the voluntary code to which you refer is being flouted by
advertising agencies in the targeting of their adverts, whether it is on
billboards or in publications. The work that has been carried out at the
University of Strathclyde would suggest that the voluntary code is not
working in that respect.

While I understand what you are saying about commercial confidentiality,
without going into details would it be fair to say that the bulk of the
tobacco advertising in Scottish newspapers is targeted at the tabloid end
of the market rather than the broadsheet end?

Des Hudson: Yes.

The Convener: Would the loss of tobacco advertising space in newspapers in
Scotland have any impact on whether advertisers from south of the border
continued to use Scottish outlets for advertising?

Des Hudson: We argue that it would have an impact. It would be less to do
with scarcity of space and more to do with whether media planners and media
buyers would continue to take the trouble to plan media campaigns, beyond
the easy approach of saying, "I'm just going to stick this advert in these
two or three mid-market tabloids that cover the entire UK." That is likely
to happen; it is not based on restriction of space.

The Convener: For non-tobacco advertising?

Des Hudson: We think that it could spread beyond tobacco advertising
because it is already difficult to obtain the appropriate share of an
advertising campaign for Scottish indigenous titles. That process is
already under way, and its acceleration would be one of the unfortunate
consequences of the legislation.

Jim Raeburn: If we were to consider a schedule drawn up by a media planner
in a London-based agency to promote something on a UK basis, and if we were
to look at the list of newspapers that the planner is using, we would
think, "How can they justify the figures that they are trying to reach in
Scotland without using the Scottish press?"

The Convener: Presumably, any impact on the Scottish press would be
temporary until Westminster introduced a wide ban. There is a commitment
from Westminster to do that in this Parliament. Presumably, we are talking
about any impact lasting only a short period.

Des Hudson: That is right. If the legislation at Westminster followed, the
impact would be short-lived.

Andrew Wilson: What share of overall revenues for newspapers is taken up by
advertising?

Des Hudson: It depends on the type of newspaper we are talking about. If it
is the red tops, I would guess that their revenue split would be something
like 50 per cent cover price and 50 per cent advertising. If we are talking
about a regional title such as The Scotsman, The Herald or The Press and
Journal—

Andrew Wilson: They will have you for that.

Des Hudson: My apologies. I would guess that about 75 per cent would be
advertising and about 25 per cent would be cover price.

Dorothy-Grace Elder: Having earned my living in the newspaper industry for
30 years, I know very well how delicately the books are balanced. If a
London-based paper wishes to get rid of the Scottish offshoot title, which
might have a much smaller circulation than the main title, does it not
first consider the advertising? In the months leading up to the
announcement of a closure it sometimes does not credit the Scottish share
of the UK advertising. Advertising is extremely important for those
offshoot papers, which, without naming names, have "Scottish" in the
title.

Des Hudson: Advertising is important for all newspapers. I would suspect
that the advertising pages in the offshoot titles to which you
referred—which the London-based papers would regard as the Scottish
pages—are sold far more cheaply than the UK pages. That has a distorting
effect on competition vis-à-vis how indigenous Scottish newspapers might
price their advertising pages.

Jim Raeburn: We have been talking largely about newspapers. Most magazines
are UK magazines. Under the bill, tobacco advertising would not be banned
in most of the magazines that I read. The penetration of that advertising
into the Scottish market would still be quite significant.

10:30

I wear another hat: I am director of the Scottish Print Employers
Federation, which covers a related industry. I made a brief submission in
that capacity. Some of the federation's member companies print magazines.
Those companies might have a defence to argue if they do not know about the
advertising contents of the magazines that they print, but it would be
nonsense to make it an offence to print a magazine that contains one
cigarette advertisement. The printing industry in Scotland is in dire
straits and cannot afford to be penalised in such a way.

The Convener: Thank you very much for your written and oral evidence. I
remind members who have just joined us that we are subject to a very tight
time scale this morning. I will give preference to members who have not yet
asked questions if they indicate early enough during the next evidence that
they wish to speak.

I also draw members' attention to the two sets of written evidence that
relate to the oral evidence that we are about to hear. We will hear from
representatives of two organisations: the Association of Convenience Stores
and the Scottish Retail Consortium.

I remind members, especially those who have arrived late, that three
members of the Health and Community Care Committee are present, one of whom
is Nicola Sturgeon, who is the member in charge of the bill. She has the
same rights as Enterprise and Lifelong Learning Committee members, but
otherwise I will give preference with respect to time allocation to members
of the Enterprise and Lifelong Learning Committee.

I welcome James Lowman, who is from the Association of Convenience Stores,
and Patrick Browne, from the Scottish Retail Consortium. Please make some
brief introductory remarks, after which I will invite members to ask
questions.

James Lowman (Association of Convenience Stores): I thank the committee for
the opportunity to present evidence on a subject that is important to our
members. Our organisation, the Association of Convenience Stores, is
exactly what its name suggests. Our members are convenience store operators
throughout the UK. They might work in small grocers' shops, in forecourt
stores, in more developed modern convenience stores, in off-licences or as
newsagents. We represent about 25,000 outlets in the UK, about 1,000 of
which are in Scotland. Tobacco represents a significant part of our overall
sales mix—25 per cent is a finger-in-the-air average figure. The gross
margin on tobacco sales is very low, at 5 or 6 per cent.

Tobacco sales generate sales of other goods; people come into stores to buy
tobacco and buy newspapers and other products. Therefore, any legislation
concerning tobacco is important to us.

We are neutral on the question whether there should be regulation of
tobacco advertising per se. It is not so much a question of the economic
impact of lost sales as of the impact of regulations on retailers' costs.
We believe that regulation should proceed on a UK-wide basis. We are aware
that that point has been made several times today. It would be a great deal
simpler for retailers to administer their relationships with manufacturers
and their point-of-sale advertising arrangements if regulations were
introduced throughout the UK. On that basis, we encourage members to work
with colleagues in Westminster and Whitehall—we note that Robin Cook MP
has been asked to present evidence.

Section 3(2) would give ministers the power to exclude advertising in
stores from a ban. We think that that proposal should proceed and
assurances have been made that it will. We would welcome the publication of
draft regulations on that as soon as possible.

There is some confusion over the sections that relate to tobacco
advertising in newspapers and magazines, and over the due diligence defence
that retailers could invoke if they inadvertently sold newspapers or
magazines that contain tobacco adverts. That needs to be clarified.

Patrick Browne (Scottish Retail Consortium): I thank the convener and the
committee for giving the Scottish Retail Consortium the opportunity to
address members today. The SRC represents a number of retailers on whom the
bill would impact.

Our members include the National Federation of Retail Newsagents—which
accounts for about 2,500 stores—and the Scottish Grocers Federation,
which covers about 2,000 outlets. Our organisation represents many
off-licence chains, which would also be affected by the bill, and about 85
per cent of the 700-odd multiple food retailers and supermarkets on which
the bill would impact.

I will not go through the SRC's detailed written submission; however, I
will touch on a few of our main concerns. I have discussed the bill's
proposals with our members and I can safely say that they would prefer any
legislation that would ban tobacco advertising to be UK-wide. The Scottish
Parliament clearly has the competence to pass the bill, but a Scotland-only
ban is not a sensible option at this time. It could lead simply to the
revenue from banned advertising being displaced to other parts of the UK.

If the Parliament is minded to proceed with the bill, we ask it not to
prohibit point-of-sale promotion which, in our opinion, is designed to
reinforce brand awareness and availability; it is not intended to encourage
people to take up smoking in the first instance. The SRC is concerned that
up to 7,000 stores that currently sell tobacco products could lose revenue
if the bill were to prohibit point-of-sale promotion. The retail sector
might also lose tobacco companies' payments for such promotion.

Category management agreements between tobacco companies and retailers
typically generate £500 a year in revenue for each outlet that is part of
a multiple chain. Those payments allow brands to be displayed more
prominently on in-store tobacco gantries at the point of sale. Such
agreements are fairly standard in the retail industry. They apply to a
range of products, one of which happens to be tobacco.

Banning point-of-sale promotion could also force retailers to incur
additional costs in that they will have to replace tobacco gantries that
are currently the subject of point-of-sale agreements. The impact of the
additional costs and lost revenue would vary among individual retailers,
but it is likely that they would result in the loss of some jobs in
multiple chains that operate exclusively in Scotland.

We will do our best to answer the committee's questions.

Marilyn Livingstone (Kirkcaldy) (Lab): In Patrick Browne's opening
statement and in the SRC's written submission, mention was made of the
additional costs and operational complications for retailers that operate
in Scotland. It was mentioned that it would be difficult to comply with a
Scotland-only ban without additional costs and upheaval. Will Patrick
Browne expand on that?

Patrick Browne: Many retailers that operate in Scotland are not indigenous
but are based outside Scotland. They also operate in the rest of the UK, so
if the ban were to go ahead, it would make a difference to them.
Inevitably, that would introduce additional costs.

We are especially concerned about the distribution of magazines and
newspapers. Most businesses that have arrangements with wholesalers place
orders specifying the number and type of each product that they want, but
the process is not quite so simple for magazines and newspapers. What tends
to happen is that, after the retailer has placed an order, the magazines
that were ordered will be delivered but perhaps not in the right quantity.
The retailer might also get additional magazines that were not ordered.
That means that every time a retailer receives an order from a wholesaler,
the magazines have to be checked. If any additional magazines had been
sent, the retailer would need to check that they did not include tobacco
advertising.

It seems likely from the defences in the bill that—in the example that I
mentioned—the publisher would, in the first instance, be prosecuted.
However, we are concerned that some retailers will feel obliged to check
any magazines that they receive in-store, but which have not been
legitimately ordered, to ensure that they do not break the law.

Tavish Scott (Shetland) (LD): In your opening remarks, you mentioned that
point-of-sale promotions are

"not intended to encourage people to take up smoking in the first
instance".

Do you have any evidence to support that?

Patrick Browne: I cannot claim to have any research evidence that proves
that point-of-sale promotion does not lead people to take up smoking.
Walking up to a tobacco kiosk in a supermarket to look at the fascia on a
tobacco gantry is unlikely to make someone decide to start smoking. I do
not think that it happens like that. Other factors influence the decision
to take up smoking in the first instance.

Point-of-sale promotion is about making people aware of other brands and
aware that a particular brand is available at a particular outlet. I do not
believe point-of-sale promotion is about encouraging people to smoke.

Tavish Scott: I have heard marketing people make the opposite case.

James Lowman: The situation is similar in other product categories.
Chillers are sponsored by Irn-Bru. Such sponsorship is designed not to grow
the soft drinks market, but to make people aware that the brand is on sale
in that outlet. The same applies to tobacco advertising, particularly with
lit signs above gantries. Those signs are not adverts and are not trying to
communicate messages about brands, but say simply that a brand is available
at that point of sale. The signs are not developed advertisements. That is
valuable to marketing, but that is as far as it goes.

Tavish Scott: I take it that the point-of-sale agreements that Patrick
Browne mentioned are financial arrangements between either a group of
retailers or an individual retailer and a tobacco company. Will you go into
any more detail on that? If, as you suggested, those point-of-sale
agreements would end under the proposed legislation, what would be the
commercial impact on the sector or on individual retailers?

Patrick Browne: I have spoken to a range of retailers, so I think that the
impact would vary. There are stand-alone outlets that have agreements with
tobacco companies to supply and regularly update gantries. Multiple
retailers that operate a number of stores also have agreements that cover
their gantries and there is a financial aspect to those agreements. The
figure that has been quoted to me is £500 per year for an outlet that is
part of a multiple chain. Four hundred Scottish outlets are part of
multiple chains that are based in Scotland, so that amounts to
£200,000—a fairly significant amount. If we consider that those
agreements are repeated in the newsagent and off-licence sectors, we are
talking about considerable sums of money. That will have an impact on those
retailers' bottom lines. I suggest that the figure is about £300,000 in
relation to only 600 convenience store outlets. That is a significant sum.

James Lowman: There are two sides to the issue. Organised multiple
retailers can reach financial agreements with tobacco companies to display
brands. For independent outlets, tobacco companies usually square off that
bit of investment in the store. Gantries are supplied to those retailers.
Clearly, a gantry is not rocket science—it is not an enormously technical
bit of kit—but it is spring-loaded and attractive display units have to
be made bespoke for each store. If point-of-sale promotion and gantries
were not allowed, there would be significant additional costs for
independent retailers because they would have to make that investment
themselves. They would also lose the revenue that Patrick Browne talked
about.

Tavish Scott: For the avoidance of doubt, do both your organisations
believe that there should be UK-wide legislation rather than the proposed
Scottish legislation?

James Lowman: Yes.

Andrew Wilson: We have heard good quality evidence, although the witnesses
are going slightly beyond their remit on to the wider question of the bill
itself, where the evidence is weakest.

I have a question about tobacco margins. Each organisation's answer will
probably be different. What is the contribution of tobacco products to
profit in your outlets?

James Lowman: The gross margin is about 5 per cent to 6 per cent.

Andrew Wilson: Is that gross?

James Lowman: It is a very low-margin product because it is heavily taxed.

Andrew Wilson: What about Patrick Browne's organisation?

Patrick Browne: I agree with James Lowman that 5 or 6 per cent is the gross
margin. The net margin would probably be about one third of that: about 2
per cent once the costs of operating the business have been taken into
account. The figure might be slightly higher for a supermarket—perhaps 6
or 7 per cent—because of higher volume sales.

James Lowman: The product is seen as a footfall driver. Regular smokers go
into stores to make planned purchases and often buy the same products from
the same place every day.

Andrew Wilson: I understand that. However, it is not clear from your
evidence what your position would be if a ban—UK or Scottish—were put
in place. Would it have an impact on volume demand?

James Lowman: I do not know. Evidence from other organisations could tell
you what the effect might be. Our concern is the costs that will accrue and
the loss of revenue to our members.

Andrew Wilson: What you argue about points of sale is sensible. There will
be transition costs of getting equipment in and out of shops. You say that
there are cost implications whether or not people switch brands. That is
clear and can be agreed.

However, what evidence do you have about the change in demand among people
who no longer put a portion of their income into tobacco products as a
result of bans? Would that money be spent on other products in your
stores?

James Lowman: That question can be considered in two ways. On the one hand,
tobacco is a low-margin product, so if people spent on other products the
money that they would have spent on tobacco, margins would be greater. On
the other hand, tobacco is often purchased from local stores—it is a
regular, planned purchase that drives footfall. The proof of the pudding
will be in the eating.

Andrew Wilson: Broadly speaking, you oppose an advertising ban because
tobacco is important to your business.

James Lowman: We are against a ban on advertising at the point of sale.

Andrew Wilson: The evidence that has been submitted deals with a ban in
Scotland rather than a UK-wide ban. I am open-minded about the issue, but
it strikes me that that evidence is relatively weak, because its motivation
is to delay a ban. What does Patrick Browne mean by advertising revenue
being displaced?

10:45

Patrick Browne: I referred to UK magazines that are sold in the Scottish
market. I think that advertising revenue would simply move from
Scotland-based magazines to UK magazines that would then be sold on the
Scottish market.

I would like to return to some points that were made earlier. The issue of
a tobacco ban is difficult—I apologise, convener, but I have lost the
thread of what I was going to say.

Andrew Wilson: Are you saying that the effect of a ban on advertising is
irrelevant to your members?

Patrick Browne: A ban would not be irrelevant. A complication is that if a
tobacco ban were introduced in Scotland overnight, there would be an
overnight impact on our members. We would lose agreements unless there were
provisions in the bill to extend a transitional period for change. Our
members would have to bear immediate costs. The health benefits and
possible impact of substitution would perhaps occur over 20 years, but I
argue that the economic impacts on our sector in the short term and medium
term would be fairly significant.

James Lowman: There are two ways of looking at the economic impact of a
Scotland-only ban. First, Scottish companies might be at a competitive
disadvantage in respect of the revenue that gantries bring in. Secondly,
such a ban would make things more difficult for UK-wide companies. They
would have to renegotiate UK-wide contracts for England and Wales only. If
there were a UK ban, they would have to negotiate the contracts again.

Andrew Wilson: Who are the Scottish companies competing against? You said
that Scottish companies could be at a competitive disadvantage.

James Lowman: They would lose revenue that other companies would not.

Brian Fitzpatrick: I would like Mr Lowman to deal with a point in the
evidence that caused me concern. On page 2, his submission states:

"The Bill would make it an offence for anyone to publish or cause to be
displayed a tobacco advert in a Scottish publication."

You seem to say that a retailer might unwittingly stock publications and
have to go through not only his top shelf, but his middle shelf and his
bottom shelf to check whether he has magazines or products that offend
against the ban. Are you concerned that a retailer will have to do that to
meet the test of due diligence?

James Lowman: The bill can be read in a way in which the defences for the
retailer are adequate and the primary offence would be by the publisher if
the retailer had no reason to suspect that a publication contained a
tobacco advert. However, there should be clarification by guidance
alongside or in the bill on due diligence and the process that a retailer
needs to go through to conclude that he has no reason to suspect that a
publication has tobacco adverts. The ultimate nightmare is that products
arrive at 5.30 am and a retailer has to go through them to check whether
they contain tobacco adverts. The bill can make the process much easier,
but there is a potential nightmare scenario that we must flag up.

Brian Fitzpatrick: So the onus should not rest on the hard-pressed
retailer. If anybody is to pick up the legislative burden, the publisher
should—

James Lowman: Or the wholesaler. That makes more sense when one looks
further up the chain. Wholesalers stock fewer products. A retailer might
stock well in excess of 200 magazines. I do not need to describe the
nightmare of having to go through each publication, even in a fairly narrow
range.

Miss Goldie: I notice that your submission does not mention points that
appear in the Scottish Retail Consortium's submission—in particular, the
SRC submission expresses concern about delegated legislation being a
feature of the bill. In other words, point-of-sale regulations would not be
in the bill. Does that concern you?

James Lowman: It does. We have interpreted what are now historical
commitments that were made in the Scottish Parliament as meaning that
section 3(2) would be used and that regulations would be drafted. We are
concerned, however, that we have not seen those regulations and that we
have not recently received such a commitment. A renewal of the commitment
to use that section to exempt points of sale, and sight of draft
regulations on the issue would allay our fears.

Nicola Sturgeon: I would like to clear up the rather bizarre point about
retailers being under some obligation to check every magazine that comes
into their shop. The bill contains a number of defences for anybody who is
charged with an offence under the bill that any retailer could take
advantage of. Those defences include such things as not knowing, or having
"no reason to suspect", that a publication contains an advert. I am trying
to put it as politely as possible, but your point is rather bogus.

I would like to pick up on what has been said about a Scotland-only ban
versus a UK ban. I did not agree in every respect with the evidence that we
heard from the Scottish Daily Newspaper Society, but I could follow its
logic. Its submission was that a UK ban would be okay but that a
Scotland-only ban would cause problems. I cannot follow the logic in your
case. Perhaps you could explain it further.

It strikes me that any economic impact that retailers would
suffer—whether loss of retail sales, loss of advertising revenue or a
transitional impact caused by having to change displays in shops—would be
suffered regardless of whether the ban was effective only in Scotland or
throughout the UK.

The witnesses have mentioned competitive disadvantage. Scottish shops do
not compete directly with shops south of the border. Even if advertising
revenue were displaced, that would not put Scottish retailers at a
competitive disadvantage. What you are actually doing today is arguing
against a ban, because you believe that it would reduce your retail sales
and profitability, but your point about competitive disadvantage, like the
other point that I remarked on, is rather bogus. Will you clarify what you
mean?

Patrick Browne: There is an issue about competitive disadvantage. If the
bill is enacted, we would in effect have two categories of retailer in
Scotland. Scotland-based retailers would have to accept the consequences of
the bill, and their scope for doing anything about that would be pretty
limited. Retailers operating in other parts of the UK would be in a
position to go back to the tobacco companies and say, "We operate
throughout the UK, but we have a problem in Scotland. Any chance of
renegotiating a category management agreement for other parts of the UK?"
That way, they could make up their lost revenue. Retailers operating in
Scotland would have to try to make up the revenue that was lost from their
bottom lines because they had lost those agreements. They would do that
either by cutting jobs or by putting up prices, which would be difficult
for them, because food retailing is a very competitive market. There is a
problem for indigenous Scottish retailers, because their room for manoeuvre
is limited.

Nicola Sturgeon: That strikes me as a triumph of imagination over reality;
it seems that you are clutching at straws.

Patrick Browne: I do not accept that at all. I think that a ban would work
as I have described. Retailers who operate throughout the UK market would
try to renegotiate their category management agreements in other parts of
the UK to compensate for any losses resulting from a tobacco ban in
Scotland.

James Lowman: Our members operate on net margins of 1 per cent to 2 per
cent. They would have very little scope for manoeuvre if such additional
costs were imposed on their businesses. They would have to take decisions
on increasing prices or on cost-cutting measures. Another argument is that
it is simply more efficient, especially for UK-wide companies, to negotiate
once with tobacco manufacturers on a UK basis, rather than three or four
times as legislation comes into place in Scotland and then UK-wide, to
ensure that they comply with regulations and get maximum commercial
advantage from that relationship.

Brian Fitzpatrick: The committee, and eventually the Parliament, will
determine whether your concerns are bogus. I would like to ask about your
members' concerns. I take it that you seek removal of retailers' obligation
to go to the expense, inconvenience and worry of setting up a due diligence
procedure, because it would be quite simple to exclude retailers from that
obligation, and to put that obligation elsewhere. Is that right?

James Lowman: As I said in answer to the first question, the defences in
the bill appear adequate. Clarification of the exact due diligence
procedures that retailers must carry out would allay some of the fears that
some of our members have communicated to me.

Brian Fitzpatrick: Your members will have experience of other due diligence
offences and of the extensive investigation and expense that are involved
in setting up due diligence procedures.

James Lowman: Our members have such experience in many other areas.

The Convener: I thank the witnesses for their written and oral evidence,
which has been helpful.

The final witnesses are from the Tobacco Workers Alliance. The agenda
states that there is only one representative, but we have two—I assume
that the committee has no objection to that. The witnesses are the chair of
the TWA, Mrs Brenda Warrington, and the co-ordinator, Gary Follis. I ask
Brenda Warrington to make her introductory remarks.

Mrs Brenda Warrington (Tobacco Workers Alliance): I will just have some
water before I begin.

The Convener: I am sorry that we do not have gin and tonic.

Mrs Warrington: I thank the committee for inviting me to give evidence on
behalf of the Tobacco Workers Alliance, of which I am the chair. I have
worked in the tobacco industry for 30 years, during which time I have held
various elected positions in trade unions and have represented tobacco
workers of all job groups and skills, at local, national and international
levels. I am currently a national executive member of my trade union,
Amicus MSF.

Workers in the UK tobacco industry have a proud history of trade union
organisation. For more than 100 years, almost 100 per cent of workers have
been trade union members. As a result of our negotiations with tobacco
industry employers, the unions have secured for their members excellent
terms and conditions of employment. Jobs in the industry are highly sought
after; we do not believe that those jobs should be sacrificed for ideals.

According to studies, the proposals are unlikely to reduce or eliminate the
consumption of tobacco in Scotland. The TWA recognises that risks are
associated with the consumption of tobacco products and we fully support
reasonable and responsible regulation. People should be properly informed
and allowed to make an informed choice. We do not believe that the bill,
which would ban tobacco advertising in Scotland, would achieve its intended
outcome. However, it would, most definitely, put our members' jobs at risk,
not only in Scotland, but in the rest of the UK.

Although there are no longer any tobacco manufacturing bases in Scotland,
the industry employs—directly and indirectly—a number of people in
Scotland. For example, 135 people work for Imperial Tobacco Group plc in
sales, marketing and distribution in Scotland; 120 people work for the
suppliers Interbobbin (UK) Ltd at a site in Alva in Clackmannanshire; and
214 people work at the Alcan site in Glasgow. Just south of the border, at
Wigton in Cumbria, 1,000 people work for a company that makes cellophane
for cigarette packaging. The company is not in Scotland, but a considerable
number of the employees live in Scotland and commute to their place of
work.

We do not consider the proposed legislation to be reasonable. It would put
our members' jobs at risk by banning virtually all forms of tobacco
advertising, thereby removing a major barrier to entry to the Scottish
market by foreign competitors with more competitive prices. UK tobacco
manufacturers control 93 per cent of the Scottish tobacco market; our
members work in that manufacturing base. If the ban is put in place, that
base would be greatly eroded and our members' jobs would be at risk.

We do not consider the proposed legislation to be responsible, because
manufacturers would compete on price. Foreign-based manufacturing plants
would have an advantage over their UK counterparts and would definitely be
able to sell at a much lower price, thereby jeopardising our UK factory
bases.

A reduction in price would probably lead to an increase in consumption.
That point is demonstrated by the current high incidence of smuggling into
the United Kingdom, which considerably undercuts legal prices and has led
to a marked increase in the consumption of tobacco products in the UK for
only the second consecutive year in the past 20 years.

A price reduction would not be responsible. Consumers would be totally
uninformed about the origin, quality and legality of the product that they
were purchasing. It would be difficult for the consumer to differentiate
between products licensed for sale in the UK and unregulated counterfeit
products. Counterfeit products are available at Sunday markets in Scotland
and in the rest of the United Kingdom. Many such products are sold in
packaging that is similar to branded products' packaging, but without the
brand name and at a much-reduced price. A ban on advertising would remove
brand name recognition in the longer term and lead to a sales structure
that would be determined only by price.

11:00

We maintain our conviction that we work in an industry that is providing a
legal product and that, as long as people are properly informed of the
risks associated with tobacco products and choose to consume them, there
should be a British industry that provides jobs for British people,
manufacturing goods for British consumers. If, because of legislation in
Scotland and the rest of the UK, the industry was, in effect, driven out of
Britain, that would not have any effect in persuading even one person to
stop smoking. Tobacco products would simply be wholly imported into the UK,
while our jobs would be exported elsewhere. Can legislators really afford
to disregard the legitimate concerns of ordinary workers, especially in the
current climate of job losses in many of our industries?

The Tobacco Workers Alliance is concerned that high-quality tobacco
manufacturing and related jobs would be under threat if Scotland introduces
a ban on all forms of tobacco advertising.

Elaine Thomson (Aberdeen North) (Lab): I declare that I am a member of
Amicus MSF.

I want to ask about penetration of the Scottish market by smuggled
products. You say that around 93 per cent of the Scottish market is
controlled by UK manufacturers. Do you have any evidence that that figure
is changing due to the influx of smuggled tobacco products? What is the
impact of smuggled products on the tobacco market in Scotland?

Mrs Warrington: Those are not easy questions for me to answer. We have not
been directly responsible for such a study. Of course, we are aware that HM
Customs and Excise is trying to put a figure on the amount of smuggled
products. No doubt members have received submissions on what the level is
said to be, but we believe that it is probably far higher. I understand
that smuggling cigarettes is quite lucrative and is big business in the
underworld. The number of smuggled cigarettes that are seized and
confiscated is the tip of the iceberg; a lot more get through. My evidence
is gained from living life as a normal individual. I know from the
cigarettes sold in most pubs, in many clubs, at school gates—which really
offends me—on street corners and out of white vans in marketplaces that
people have gone into the business of smuggling tobacco products. Whatever
the official figures are, they are just the tip of the iceberg.

I would not be comfortable offering a figure for the amount of smuggled
products. We understand that studies have been done in Scotland. An
employer at a football ground in conjunction with HM Customs and Excise
went round after a football game and picked up discarded cigarette packets
to determine the amount of legal and illegal cigarettes. The level of
illegal products was alarming. It was as high as about 25 per cent—my
colleague Gary Follis has just told me that it was 22 per cent. A quarter
of the product is declared as having been smuggled, but I think that that
figure is low.

The Convener: Five members want to ask you a question; you are very popular
this morning. However, we are running out of time, so I ask you to keep
your answers a wee bit shorter so that we can get through all the
questions.

Miss Goldie: Point two in paragraph three of your submission states:

"The Government admits that a fall in the consumption of tobacco does not
necessarily lead to a reduction in the number of smokers."

Will you expand on that?

Mrs Warrington: We get rather confused when we listen to Government
statements on tobacco. The statement that a fall in consumption may not
lead to a reduction in the number of smokers seems to be in conflict with
itself. The Government possibly believes that, rather than giving up
smoking, some people might reduce their consumption. We must also consider
whether we are considering the legal figures—what is perceived to be
consumed—or the greatly expanded figures that take into account the
smuggled product syndrome. I do not think that the Government really knows.
I do not say that with any disrespect; it is all a bit of a shot in the
dark, because so much is not known about the effect of smuggled products.
We do not know how many people smoke; we know only the level of legal
sales. We can get that information, as workers, and we ask for it quite
regularly, because we are interested in how our product is doing in the
marketplace.

Miss Goldie: Is it your belief that even if there were a ban on advertising
the net effect on consumption might not be dramatic?

Mrs Warrington: We believe that a ban on advertising would have the reverse
effect; it could allow a rise in consumption.

Miss Goldie: The underground market would thrive.

Mrs Warrington: Exactly. That belief is based on what I said before.

Marilyn Livingstone: Earlier, we heard in evidence that price is one of the
major factors in determining whether people choose to smoke. In the
submission you talk about a price war. Such a war would reduce the price of
smoking, which is a concern. Your submission also states:

"We believe that the Bill will remove a major barrier to entry into the
Scottish market by overseas manufacturers."

Will you comment on both those points?

Mrs Warrington: The popular brand names are what we term a barrier. There
are best seller leagues, which show where each brand for each company fits
into the league table. Although there is loyalty—let us call it
that—among consumers towards particular brands, that is very much
determined by price. A lot of foreign imports entering the Scottish market
would have an effect. Even now there are brands that people have never seen
before and people will sometimes say, "How much is that compared with my
normal brand?" If it is considerably cheaper, it is highly probable that
the person will switch to that brand. In the UK, the market is made up
mostly of what we, in the industry, term premium brands. Our consumer base
has not tended to be in the cheap import market. We feel that because we
seek to sell premium brands, we would be disadvantaged from a price point
of view. If the consumer is not able to differentiate between brands, they
will go for the cheapest.

It is fair to say that the previous Government's policy of a continuing
steady increase in tobacco taxation, which made price a determining factor,
had the effect of reducing consumption in the United Kingdom. That was
evident in our workplaces, because it affected the amounts that we were
required to produce. There was a steady decline—one might even say a
manageable decline.

Since different principles have come into being, the change has been great.
Whereas before it was possible to manage the decline, which was controlled
by prices, the situation is now all over the place. In effect, the price
has come down as a result of imports with which we cannot compete and the
smuggling scenario. We find that people are smoking more, not less. Price
definitely has an impact in controlling the level of smoking.

Andrew Wilson: I congratulate you on the statement that advertising keeps
demand in check, which will go with me to my grave. That is one of the most
amusing pieces of evidence that I have ever heard.

More seriously, it seems that your basic case is that a ban on advertising
will not affect the volume market—obviously, you cannot argue that—but
will have an effect on brand switching. A concomitant impact of that will
be a switch to imported tobacco. I want to focus on that. What share of the
price of a cigarette is taken up by advertising costs?

Mrs Warrington: You would need to raise that with the tobacco employers. I
am not privy to that information.

Andrew Wilson: That is fair enough. However, you have just outlined your
belief that there will be a switch because of the loss of advertising. You
also said that demand is heavily price sensitive, which is self-evident. A
producer in China has to transport the product into the UK market—the
transport costs for UK producers are zero—and pay the tax, which must
account for the vast bulk of the cost of a cigarette. I do not know whether
there are European Union tariffs on tobacco—I would be interested to hear
about that.

It strikes me as curious to assert that, as a result of the lack of a need
to advertise, a producer in China would be able to undercut the price of a
UK firm, which would need to obtain brand loyalty and secure demand through
advertising. To prove that, you need to prove that advertising makes up a
huge chunk of the costs, which outweighs transport costs from China and any
potential tariffs.

Mrs Warrington: We are not suggesting for one minute that advertising makes
people smoke or not smoke. We do not believe that. Advertising allows the
consumer to choose in a market situation. The cost of advertising is not
something that we would get involved in.

I will comment on the cost of production within the UK, although I would
not like what I say to go outside the room, because I do not want our
employers to think that we are terribly happy with our terms and
conditions—

The Convener: Before you say anything, I must warn you that the meeting is
being broadcast live. You should be careful of what you say, because it
will also go in the Official Report.

Mrs Warrington: I take the point. In the industry, we enjoy very good terms
and conditions of employment relative to comparable jobs in other
industries. Nevertheless, there is always room for improvement. That cost
is transposed on to the cost of the product. Between 75 and 80 per cent of
the cost of a cigarette is tax—pure tax. The cost of production and
materials is, let us say, just over 20 per cent. Labour costs make up by
far the biggest slice of that cake.

We are trying to compete with the far east, where labour costs are minimal.
I do not need to quote figures. Producers in the far east can compete on
labour costs. They might pay a similar amount for materials, but the labour
costs are so much lower that, even taking on board the cost of
transportation and other costs, they can export cigarettes or tobacco
products that are significantly cheaper than the products that we make in
the UK.

Andrew Wilson: Numbers on the relative costs would be helpful.

Mrs Warrington: I am sure that we could provide those.

Andrew Wilson: I want to extend your logic to its conclusion. You have said
that advertising affects only the demand for specific products. Given that
you are talking about brand switching, are you in favour of a ban on
advertising high-tar products as opposed to low-tar ones?

Mrs Warrington: No. My off-the-cuff answer would be that consumers are
entitled to be properly informed of the products available to them.

11:15

Tavish Scott: It seems that Andrew Wilson has met his match.

You made two interesting points about price, Mrs Warrington. I take your
point about tax. If I understood your comments about the black market, they
say some profound things about HM Customs and Excise. However, those are
matters for colleagues doon the road.

You said that you accept that there are risks associated with tobacco
consumption, but that you would support a different approach to regulation.
I presume that you mean health promotion and preventive work, organised by
health authorities. Has your union done any work on that?

Mrs Warrington: Yes. My trade union represents members working in the
tobacco industry—we represent a density of workers in that industry—but
we also have a large membership who work in the national health service.
One might consider that their interests conflict, but we—the workers in
the industry—have always accepted that there are risks associated with
tobacco use and we agree that promotion and education about those risks
must be made available to the British population. We would actively
encourage that work. We would try to influence our employers to ensure that
they conform to that requirement.

I simply say that while people choose to smoke tobacco products, workers in
the UK should provide that legitimate product.

Tavish Scott: Has your union—or group of unions—set up programmes with
the employers to promote health information on that topic?

Mrs Warrington: At this stage, we have not embarked on specific programmes.
That is not our immediate focus. Our immediate focus is to protect the jobs
that are already under threat. However, given an opportunity, we would be
prepared to participate in such programmes.

Mr Kenneth Macintosh (Eastwood) (Lab): You are taking a position against a
UK-wide ban. I want to focus on the Scottish context specifically. You said
that, UK-wide, there are more than 9,000 jobs in the industry and 136,000
people who are employed indirectly. I assume that we could take a
percentage of the whole and work out how many jobs in Scotland would be
affected. I am not clear about the way in which the market is divided and
how many Scottish jobs would be affected by a Scottish ban.

Mrs Warrington: Sadly, we have lost our major factories in Scotland over
the years. Throughout Scotland, Imperial Tobacco employs 135 people in
sales, marketing and distribution. They are not based in one specific area
of Scotland. There are factories in Alva and Glasgow producing packaging
material; one employs 120 people and the other employs 214 people.

Mr Macintosh: Are they producing the material specifically for the Scottish
market or is it for the British and worldwide markets?

Mrs Warrington: They would not be producing material for the Scottish
market because there is no tobacco manufacturing in Scotland. What is
produced in those factories is being used in the rest of the UK.

Rhona Brankin: Do you accept that there is a link between tobacco
consumption and ill health?

Mrs Warrington: I accept that health risks are associated with the
consumption of tobacco.

Rhona Brankin: Do you dispute the Department of Health statistics that a UK
advertising ban would reduce consumption by 2.5 per cent, or the World
Bank's estimation of a 7 per cent reduction in consumption?

Mrs Warrington: Yes. I dispute that advertising has an effect on whether a
person chooses to smoke in the first instance or, in the second instance,
decides to stop smoking if they do not see an advertisement for tobacco.
Advertising does not have an impact on encouraging someone to smoke; it
informs the consumer of the products that are available.

Rhona Brankin: Right. Does that mean that you disagree with the Department
of Health statistics?

Mrs Warrington: Yes.

Rhona Brankin: Do you accept that politicians are faced with the difficult
decision of how to balance the benefits that accrue to tobacco workers with
saving 330 lives on a daily basis throughout the UK?

Mrs Warrington: Politicians take many difficult decisions every day on many
different subjects. In representing my members—the people who work in the
industry and who rely on the industry for their livelihood day in, day out
and week in, week out—I would say that they have every right for their
concerns to be heard, considered and, I hope, taken on board. I accept that
politicians have to balance difficult considerations.

Mrs Smith: The previous two questioners have asked my questions. However, I
will take the issues a bit further. Kenneth Macintosh asked about Scottish
jobs. You replied that workers at Imperial Tobacco are involved in many
different aspects of the business. Are you saying that if a ban on tobacco
advertising were to come into effect, all 135 jobs at Imperial Tobacco
would be lost?

You mentioned two factories and then went on to talk about packaging. We
are not debating a ban on the product, but a ban on advertising. Perhaps
you will say how many jobs are at risk.

Mrs Warrington: The initial proportion of job losses at Imperial Tobacco
would fall on the people in sales and marketing. A ban on advertising would
have an effect on whether those people would continue to be needed. I
cannot give you a breakdown of how many of the 135 jobs would be lost. Some
of the jobs are on the distribution side, and one would assume that those
people would continue to be required. I can get the figures for the
committee—we will provide them.

I have forgotten the second part of the question.

Mrs Smith: I may have also. I asked whether, as the product would continue
to be required, the packaging jobs would remain.

Mrs Warrington: The packaging jobs are dependent on the rest of the UK
continuing to produce product that requires packaging. If we no longer
produce anything in the UK, packaging jobs will no longer be
required—those jobs would be done elsewhere in the world.

Mrs Smith: My point is that we are not talking about a ban on a product.
The product will continue to be produced and consumed. That means that
there will continue to be a requirement for packaging.

Mrs Warrington: Yes, but with respect—

Mrs Smith: With respect—if the impact will be as significant as you are
saying, that contradicts what you said about the Department of Health
figures. Every other group of people who want to see controls on tobacco
advertising has challenged those figures as being too low. Those groups of
people say that the impact on consumption would be greater than 2.5 per
cent. What you said about the impact on jobs suggests that you believe the
cut in consumption could be greater than 2.5 per cent. However, a 2.5 per
cent cut in consumption would not have the devastating effect on jobs that
you have suggested would take place.

Mrs Warrington: Workers in the industry are well aware of the decisions
that are made by our employers, who have a five or 10-year rolling
programme of what they are going to do next.

Our employers have to take into account what is happening in the country
where their manufacturing is based. We are extremely concerned. There is
already evidence of what happens in our industry—factories have been
closed and our employers have chosen to take production out of the UK and,
in some cases, outside Europe. They have set up production units elsewhere
in the world. They continue to make the product and it continues to be
brought into the UK for sale and consumption, but it is not made by UK
workers—we lose our jobs. As I said, our jobs are what are exported—the
product is still available. We fully accept that there is no suggestion at
this stage that the product is made illegal or not available, but the
impact on the decision that our employers may make in relation to whether
they continue to operate in the UK is something that frightens us. We want
to be sure that we are still able to operate on a manufacturing basis in
the UK.

Mrs Smith: The point that Rhona Brankin made was that we must strike a
balance between livelihoods and lives. You are saying that you disagree
that advertising has an impact. That means that you disagree with the
British Medical Association, the royal colleges, the directors of every
public health group in Scotland, the University of Strathclyde, the Royal
Pharmaceutical Society, the World Health Organisation—

The Convener: Et cetera.

Mrs Warrington: I have read the list. I disagree in principle with the
simple suggestion that advertising will persuade someone who does not
already smoke to start smoking and that if people do not see any adverts
they will be persuaded not to smoke. That is the point with which I
disagree. I accept that there are risks associated with the consumption of
tobacco.

Brian Fitzpatrick: When you give us the figures on the workers who you are
concerned might be affected, could you also provide us with information on
locations and the percentages of women affected?

Mrs Warrington: Of course. Do you want specific figures for Scotland?

Brian Fitzpatrick: Yes. I am also interested in the implications for jobs
immediately to our south.

Mrs Warrington: In Cumbria.

Brian Fitzpatrick: I was interested in the point about union involvement in
health promotion. You will be aware of the Trades Union Congress's work on
the promotion of healthy living. I am sure that you will be aware of the
excellent brochure on healthy living produced by our union—Amicus.

Mrs Warrington: Yes. I am involved in that work.

The Convener: Thank you. That was extremely helpful.

We are about to move into private to consider our report to the Health and
Community Care Committee, but before we do that I invite Nicola Sturgeon to
make any comments.

Nicola Sturgeon: I will not take up too much more of the committee's time.
Thank you for the opportunity to be here today and for the work that the
committee has done on the bill. My principal motive in introducing the bill
is health improvement. The evidence that a ban on tobacco advertising will
reduce tobacco consumption is overwhelming. A brief glance at the evidence
submitted to the Health and Community Care Committee backs that up. The
assertions that have been made by the tobacco industry—that advertising
is designed to encourage brand switching, rather than to increase
consumption—do not bear scrutiny. That idea is not credible, even at an
intuitive level.

An industry that is losing 13,000 customers a year through death alone has
difficulty arguing that it is prepared to fight over a shrinking market.
The evidence does not bear out that assertion. Before the committee agrees
its report, I urge members to read a publication called "Keep Smiling: No
one's going to die", which is an analysis of confidential papers from the
tobacco companies about their marketing strategies. The papers show that
the tobacco companies target what they see as growth markets—young people
and those living in deprived communities.

There has been much discussion about the effectiveness of a Scottish ban
compared with a UK ban. I have said all along that my preference is for a
UK ban. In fact, my preference is for a Europe-wide ban, but in the absence
of either of those two, Scotland has an obligation to take the lead. The
worst thing that can be said about a Scotland-only ban is that it would be
less effective. But it would not be ineffective. There is a clear and
recognised dose-response effect associated with tobacco advertising. In
other words, the removal of some aspects of advertising has a beneficial
effect, even if other forms of advertising remain in place. If we get rid
of billboards, point of sale advertising and some advertising in
publications, it will have a good effect, even if some publications
continue to allow tobacco advertising. It would also de-normalise smoking,
which is an important step.

My final point is about the economic impact, which is what the Enterprise
and Lifelong Learning Committee must consider carefully. Andrew Wilson
said, rightly, that if we ban the advertising of a particular product and
thereby reduce consumption, there will be an economic impact. I have not
heard much evidence this morning to suggest that that impact would be huge.
The figure that struck me most forcibly was that less than 1 per cent of
the advertising revenue for newspapers comes from tobacco advertising.

There are several questions for the Enterprise and Lifelong Learning
Committee to consider. First, the committee must decide whether any
short-term economic disadvantages would be outweighed by the long-term
benefits in the form of demand switching and the reduced burden of
smoking-related illnesses on the health service and employers. I urge the
committee to read some of the background research referred to by ASH, which
provides more information on all those things. Finally, the committee
should consider whether the long-term health benefits make any short-term
economic impact a price worth paying. I am convinced that they do and I
hope that the committee will consider those arguments constructively.

The Convener: I thank Nicola Sturgeon and Margaret Smith for attending our
meeting.

11:30

Meeting continued in private until 11:50.


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