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Emily McManus Dining Room,

Guy's Campus,

King's College,

London SE1 1UL

Monday, 27 January 2014

SmokeFree Action Coalition

In attendance:

For the Chantler Review:

Sir Cyril Chantler (Chairman)

Tabitha Jay

Christopher Cox

Dr. Yanzhong Wang (Lecturer at King's College)

For ASH:

Deborah Arnott (Action on Smoking and Health)

Luk Joossens (Association of European Cancer Leagues)

Simon Gillespie (British Heart Foundation)

Sarah Woolnough (Cancer Research UK)

Fiona Andrews (Smokefree South West)

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Monday 27 January 2014

(10.00 am)

SIR CYRIL CHANTLER: Now, we'll just introduce ourselves. That will be a good

thing to do. We'll do it on our side first. So I'm Cyril Chantler. I'm the chairman

of this review.

DR WANG: I'm Yanzhong Wang. I'm a lecturer in medical statistics from King's.

TABITHA JAY: Tabitha Jay. I am working for Sir Cyril as part of the Secretariat to the

Chantler review.

CHRISTOPHER COX: And Christopher Cox, also seconded to the Chantler review for

its duration.

TABITHA JAY: Otherwise civil servants in DH, but not now.

LUK JOOSSENS: My name is Luk Joossens. I work for Association of European

Cancer Leagues and I'm also an expert on illicit trade.

DEBORAH ARNOTT: Deborah Arnott, chief executive of ASH, and here on behalf of

the Smokefree Action Coalition, which is the alliance of around 250 health

organisations working to reduce the harm caused by tobacco and ASH coordinates

the coalition.

SIMON GILLESPIE: I'm Simon Gillespie. I'm the chief executive of the British Heart

Foundation and also a director of the European Heart Network.

SARAH WOOLNOUGH: Sarah Woolnough, Executive Director of Policy and

Information at Cancer Research UK, also a trustee of ASH.

FIONA ANDREWS: I'm Fiona Andrews. I'm a director of Smokefree South West based

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in Bristol and I'm also a member of the Smokefree Action Coalition.

SIR CYRIL CHANTLER: Well good. Thank you very much.

I think it's important for me to emphasise my terms of reference. This is a review of

evidence concerning the likelihood on the public health of the introduction of plain

or standardised packaging, particularly in relation to children. We're not a

consultation, we're not an inquiry and my task is to report my view of the evidence

to the Department of Health, to the government. What happens after that up to

them. Any decision on public policy will be a matter for the Government and

Parliament.

The next thing to say is that I have an open mind on this subject. I haven't formed any

conclusions and I have read a great deal and thought a lot and today's discussion are

part of the process and this is a genuine inquiry today to aid the review.

It will be necessary for us, in order to understand things we need to understand, to maybe

test and challenge some of the things you say and maybe put alternative

propositions to you. Should we do that, you shouldn't in any way assume that we

have a view. We're not endorsing a particular point, we're just trying to explore it,

and we'll be taking exactly the same approach at the other meeting we're having

with the tobacco industry.

We've sent you some questions in advance which will guide us. Most of the questioning

will be done by Tabitha and Chris. I am mainly here to listen and I can usually

only do one thing at a time.

We are keeping a transcript and we'll check this back with you for accuracy before we

publish it.

We are asking everyone we meet or have discussions with as part of the review to fill in a

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conflict of interest statement. It's modelled on the Lancet forms. It's not

particularly onerous. I think we've sent you those already, but if not, we've got

spare copies available. You don't need to do them now.

Right, Deborah, I think we would like you to talk to us about what impact you believe a

policy of standardised or plain packaging would have on the public health and if

you can cite any relevant evidence as you go through, that's helpful.

DEBORAH ARNOTT: Well, we've provided you with a two page brief setting out our

key points, so I'm not going to go into too much detail here. I want to allow for our

members of the Alliance who are with me today and Luk Joossens, who is a

consultant to ASH and an expert on illicit trade, would have a chance to speak too.

But I want to set out some overarching sort of principles.

Cigarettes are an uniquely damaging product and a legal product. They're highly

addictive and they kill over half of all long term smokers prematurely when used as

intended.

Given the overwhelming evidence of the harm they cause, stringent controls on

marketing are both justified and proportionate. These can and should go beyond

the controls applied in relation to other products and have already. That's why we

have a comprehensive ban on advertising, promotion and sponsorship of tobacco

which doesn't exist for other products. But such controls need to be seen as part of

an integrated suite of tobacco control polices, which are designed to produce a long

term and irreversible decline in smoking prevalence and uptake.

Therefore we believe that the review needs to apply two key tests when assessing the

impact of standardised packaging on public health. First, is it consistent with

tobacco control policy more generally and, second, is it likely as part of a

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comprehensive strategy to reduce the appeal of tobacco products and contribute to

a long term decline in smoking prevalence in tobacco consumption.

Now it's our belief that there's sufficient evidence that both these tests have been passed

and that the introduction of standardised packaging as part of a comprehensive

tobacco control strategy would lead to a decline over time in prevalence and youth

uptake.

The questions, the more detailed questions, that you've provided to us of background,

will enable us to go into more detail about all of that, but the two pager does set out

some of that.

I'd like to finish with a quote that's in the US Surgeon General's report in 2012, and, as

I'm sure you'll know, the Surgeon General's reports a very comprehensive, well

evidenced document which reached conclusions on the basis of that evidence and

in 2012 the Surgeon General concluded that considerable evidence has

accumulated that supports a causal association between the marketing efforts of

tobacco companies and the initiation and progression of tobacco use among young

people and I think that's a really important conclusion.

I'd now like to hand over to Luk, who will talk about illicit, because illicit I think is a

really important issue, because the tobacco industry can no longer argue that

smoking is a good thing. Therefore, when they're fighting against the introduction

of new measures or existing measures for that matter, they have to make arguments

which say that at one and the same time these measures won't affect public health

but they will cause problems to industry and illicit trade is the only way they can

square that circle, because the only way that the measures cannot affect public

health but harm business is if the illicit business increases, and that way

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consumption won't be going down, but people will be buying more illicit tobacco.

LUK JOOSSENS: Well, the industry uses more and more the argument that plain

packaging will increase illicit trade and the way they put forward this idea is that

plain packs will be easier to counterfeit. I would have three comments in relation

to that.

First of all, this is a plain pack from Australia; this is not a plain pack, but 75 per cent

health warning in Canada; and this one is from Uruguay, 80 per cent health

warnings, pictures both sides.

If you look at these packs -- and this is almost what the EU has decided. This is 75

per cent but that will be 65 per cent. If you look at these packs, these are not much

easier to counterfeit. They contain pictorial health warnings. In addition, with the

new directive will be a security marking, visible and invisible, so that's the second

point, and the third point is there will be also a traceability markings which will

facilitate investigation.

So, on the first thing, if you look at these packs, they are not easier to counterfeit, they

will have in addition a security marketing, so we don't understand their reasoning.

The second point is they say it's easier to counterfeit, but they use double standards and in

fact the reality, if you talk to Customs people, they will say that everything is easy

to counterfeit, you can counterfeit everything, and they will do that very easily. I

have here a leaflet which I printed out yesterday evening from Codentify.

Codentify is the marking, the traceability marking from the four major tobacco

companies, and they are against tax stamps and fiscal markers and there they say

very clearly what we say in fact:

"Paper based tax stamps and fiscal markers are easily counterfeited, despite the inclusion

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of innovative holograms, special inks and elaborate design details. Evidence shows

that the counterfeiters can make copies of even the most sophisticated paper stamps

in as little as three weeks."

So when they want to promote their marking, they say everything is easy to counterfeit.

When they attack plain packaging, they say with plain packaging will make

counterfeiting easier. So there is not a very consistent way of explaining things.

If you look now, what's the evidence about illicit trade, in this country smuggling went

down from 21 per cent to nine per cent last year. This was as a result of

a comprehensive policy to combat smuggling and higher penalties, more customs

people, supply chain legislation, more officers around the world to provide

intelligence. This has nothing to do with the packaging, because illicit trade is a

question of demand and supply and with Crawford Moodie, we did some research

in Scotland and we asked young smokers what is the most important reason why

you buy illicit cigarettes and they say the price and the availability. So the main

reason why people -- and then they showed some plain packs and would you be

more tempted with the plain packs. Packaging is not the criteria for illicit trade

from the demand side.

What about the supply side? And the supply side price is only one element and in fact

illicit traders on the supply side will look at the gains, the financial gains that they

get in the easiest way. They will go to move to a market if they can gain a lot of

money without many difficulties, without seizures, without penalties. This is the

reason why this country, with amongst the highest taxes in the world, has still low

levels, because we put some obstacles to the illicit traders. So it has nothing to do

with packaging.

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On all what they say, there is no logic behind that.

DEBORAH ARNOTT: Thanks, Luk. I'll now hand over to Simon Gillespie from the

British Heart Foundation.

SIMON GILLESPIE: Yes, good morning. Thank you very much.

Some background on the British Heart Foundation first off. We are the nation's leading

charity for cardiovascular disease. We are the majority funder of academic

research into cardiovascular disease in the UK and we believe the largest charitable

funder of academic cardiovascular research in the world.

We're working to achieve a vision of a world in which people don't die prematurely of or

suffer from cardiovascular disease.

We're a research lead organisation, but, having said that, we have strong themes, other

themes in our work around prevention, survival and support and clearly this part of

the work falls within our trustee's established aims of prevention.

So that has led us to become actively involved in tobacco control issues for a number of

years and clearly we're a member of the Smokefree Action Coalition. The reason

for that is that there is the very strong association between smoke, tobacco and ill

health, which includes in this case coronary heart disease, hence our interest, and,

as things stand at the moment, coronary heart disease is the UK's single biggest

killer. It kills more people than any individual cancer at the moment, although

obviously the overall cancer numbers are higher.

The risk factors are such that smokers are almost twice as likely to have a fatal heart

attack as non-smokers and we see it as essential therefore to reduce the number of

people that smoke and part of that is to reduce the number of people that take up

smoking at an early age and that's we're strongly supporting the introduction of

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standardised packaging for tobacco products.

So we have recently submitted additional evidence based on research carried out amongst

teenagers. These are all attitudinal surveys in Australia and the UK and, as you're

aware, Australia has introduced standardised packaging. So I'm not going to go

into too much detail here, but the key points of that were that Australian teenagers

were less likely to view the standardised packs as attractive, underlining the wealth

of evidence that's already been submitted from more academic circles and in the

Public Health Research Consortium systematic review, that standardised packaging

will make tobacco products less attractive to young people; and, the other side of

that, that Australian teenagers were less likely to view cigarette brands or some

cigarette brands as healthier than others as a result of packaging, and that again,

I think, highlights some the issues coming through from the systematic review.

So packaging, as we know from the review, can influence both the appeal of tobacco and

the perceptions of product harm, all relative product harm in those cases, and we

see both of those as being very important drivers for the introduction of standardise

packaging in the UK and we're pleased to note developments in Scotland, Wales

and Northern Ireland which look as if they will be seeking to introduce measures to

bring the UK policy on standardised packaging to a standard one.

I would also point out at this stage that we fund, as I've made clear, medical research and

we provide support and care for people. As part of our research funding, we fund

the UK Centre for Tobacco Control and Alcohol Studies through the UK Clinical

Research Collaborative and we do things that are based on evidence, and so

therefore our support for standardised packaging over the years has been based on

that strong body of academic evidence and academic research that we believe

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shows that standardised packaging will reduce the attractiveness and appeal of

tobacco products, particularly for young people, increasing the prominence and

effectiveness of health warning in the general case and reduce the ability of

packaging to mislead smokers about the harms or relative harms between brands of

smoking.

So, I think to cut a long story quite short, we believe standardised packaging will have a

positive impact on public health. Thank you.

DEBORAH ARNOTT: And Sarah Woolnough from Cancer Research UK.

SARAH WOOLNOUGH: Thank you, and thanks for the opportunity to be here. I will

keep this quite short, otherwise there will be a little bit of repetition.

Cancer Research UK is the largest fund raising charity in the UK, has a long history, 100

year history, of scientific research and we fund research throughout the patient

pathway, so quite a large body of activity to understand the basic biology of cancer,

how it starts and develops, translation research, drug development research and a

large body of prevention research. We've had a long term interest in tobacco

control research, funding for example some of studies of Doll and Peto that

established the association between smoking and lung cancer.

Why are we interested in tobacco control research? Well, because of the huge burden

linking smoking tobacco with cancer. A quarter of all cancer deaths are still linked

to tobacco and our latest analysis of the potential to prevent cancers suggest that

around 42 per cent of cancers could be prevented by a lifestyle change. There are

other lifestyle risk factors, I'm sure you're aware, but tobacco smoking remains by

far the biggest single lifestyle risk factor, linking smoking to cancer.

We're about to publish a new research strategy, new long term research strategy, and one

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of the things we're particularly keen to tackle is cancers with poor outcomes. So, if

you look at cancer survival over the last 40 years, it's doubled, but there are still a

number of cancers that are particularly difficult to treat with very poor outcomes,

lung cancer being one of them, and of course the very strong link particularly

between tobacco smoking and lung cancer, although there are a wide range of

cancers that are linked to tobacco smoking.

Similarly to the British Heart Foundation, we're a major funder of tobacco control

research. We also fund the UK Centre for Tobacco and Alcohol Studies to the tune

of about 5 million in recent years and we also are major funders of the UK Centre

of Tobacco Control at the University of Stirling, and that's Professor Gerard

Hastings' group.

In addition we fund about a million pounds a year worth of policy relevant tobacco

research through our tobacco advisory groups. So, as well as funding more basic

behavioural tobacco research, we're also very interested in the translation of

behavioural research into policy. So our tobacco advisory group, for example may

look at tobacco control measures that have been introduced elsewhere in the world

and we'll see how applicable they may be to the UK environment.

We have funded a number of studies that have been submitted and analysed as part of this

systematic review, in particular Crawford Moodie's work that has come out of the

University of Stirling.

Similarly to the British Heart Foundation, we seek to be an organisation that is led by the

best evidence, so very much evidence based policy is our mantra, and, like others,

have assessed internally with the board of trustees and executive board the

evidence on standardised packaging and have concluded that the evidence is strong

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enough and, for the same reasons listed, that we believe that standardised

packaging will reduce the appeal of cigarettes to young people, increase the

prominence of health warnings and reduce the ability of pack to mislead.

It's included in many of the papers, but we're also viewing standardised packaging as in a

sense closing the last loophole, the last ability of the industry to market and use the

pack to advertise.

Finally, we believe that standardised packaging is critical as part of our comprehensive

tobacco control strategy. So very much over the years we've advocated for a whole

range of effective tobacco control measures and believe that you get the best

outcome and the fastest reduction in prevalence by introducing a comprehensive

package of measures.

SIR CYRIL CHANTLER: Thank you.

DEBORAH ARNOTT: I want to hand over to Fiona Andrews, who's director of

Smokefree South West, the regional office of tobacco control in the South West.

I'm sorry, Fiona, you've been left to last --

FIONA ANDREWS: Oh, not at all.

DEBORAH ARNOTT: -- but I think it's really important to get the regional and local

perspective as well.

FIONA ANDREWS: Yes, as Deborah said, we're Smokefree South West. We're an

organisation that's funded at local level, so all the funding we receive is through the

south west directors of public health, who, as you know, have recently moved to

local authorities. So we work very closely with our south west local authorities,

Cornwall, Devon, right up to Bristol and Gloucestershire.

So our fund is on that basis and we work very much to try and amplify, accelerate,

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provide the glue, if you like, to make sure that the policies, these comprehensive

policies we've been hearing about, work right down to the local level.

We're one of three of the regions in the country that have a team or an office of our like.

The first was set up in the north east, called Fresh, and there is another organisation

in the north west called Tobacco Free Futures, and I mentioned them because one

of the things that I wanted to bring in, I think what I'm able to bring into this, is not

to repeat what we've been hearing, but to just talk about how this works in practice

with real concerns down to local level, and one of those is around tackling illegal

tobacco which has been picked up as a major priority by our directors of public

health in each of our areas.

I would like to touch on, though not possibly in this starting session, handrolled tobacco

and the branding and packaging of that, and, if there is time in this review, I would

like to show some of the packs and some of the qualitative research we've done in

the south west specifically around those packs.

But moving back to legal and licit tobacco, I think all the major points are being put very

well by Luk Joossens and also in the summary papers, but there has been in the

three regions considerable partnership work and I think that's the power of it to

engage with the HMRC and with trading standards based in local authorities with

our smoking services, who talk to smokers and pick up anecdotally the use of these

products and real concerns about illegal tobacco getting into communities, getting

to children as a cheap way to access and start the habit. The one thing I would say

in each of our regions we've run properly constituted tracking surveys to measure

attitudes to illegal tobacco and to look at the likelihood of buying, to look at how

receptive people are to see something that's okay or not okay to do and to report.

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In each of the regions we've ran baseline surveys. In the north they started earlier than

us, so their baseline surveys go back to 2009. We did a baseline survey in 2010

and we followed it up with tracking, which has shown you can do perfectly good

things at regional level to drive down illegal tobacco use and work very effectively

in that way, and I offer that really as an example of how this comprehensive

approach that we've described needs to underpin and is the key part of driving

down illegal use and that you can show results as well, regardless of whether the

packs are there or not. There are still very effective ways of tackling illegal

tobacco which I don't believe, as Luk's point has been made, would be affected in

any way by the standard packs since, as we've heard, the covert markings, the

numbering system, all of these things, any intelligent government would keep in

place and I know there are quotes in the report that would show that's the intention

of the government.

So I think there's good local qualitative research and survey work that supports the points

that have been well made elsewhere.

SIR CYRIL CHANTLER: Thank you.

CHRISTOPER COX: So I think over to me. Thank you. Yes.

We intend to work our way through the prepared questions that you've obviously had

notice of. I'll pose them out loud, mainly for the purposes of the transcript, so that

that's all on record, and then we may wish to ask you some follow up questions,

depending the answers, and I guess it will be really helpful, Deborah, if you could

pass them to colleagues as is most appropriate.

DEBORAH ARNOTT: Yes.

CHRISTOPER COX: So the first question is really a contextual one and then followed

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by one which is really about the place of packaging within that context. But

question one that we notified you of:

"Which, if any, tobacco control measures in the UK or internationally do you believe

have succeeded in their public health objectives?"

DEBORAH ARNOTT: I'd like to start in answering that by quoting the 2014 US

Surgeon General's report, not because the Surgeon General has a monopoly on

knowledge, but because it is very useful in pulling together all the most up-to-date

research, and the conclusion was that the evidence is sufficient to conclude that

there are diverse tobacco control measures of proven efficacy at the population and

individual levels, and we've seen those measures work in the UK. The first

comprehensive strategy --

SIR CYRIL CHANTLER: Sorry, which report was this?

DEBORAH ARNOTT: Sorry, it's the 2014 US Surgeon General's report.

SIR CYRIL CHANTLER: 2014. And when was that published?

DEBORAH ARNOTT: It was published recently, within the last few weeks.

SIR CYRIL CHANTLER: Okay.

DEBORAH ARNOTT: And in the UK we've had a comprehensive strategy in place

since 1998, when Smoking Kills was published, and we've seen significant impact

in terms of reductions in adult smoking and child smoking. In adults, between

1998 and 2012, smoking, and this is 16 and above, fell from 28 per cent to 20 per

cent, which is a significant fall of more than a quarter, and amongst children an

even more substantial fall, children 11 to 15. In 1998, 11 per cent of children

smoked and it remained fairly constant at that level through the 1990s and into the

early part of this decade and began to fall really after the ban on advertising

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promotion and sponsorship came into place in 2003, and is now at four per cent,

which is fall of about two thirds, I would say.

That's been as a result of a strategy that includes trying to reduce affordability by putting

up taxes and tackling the illicit, because the illicit provides access to cheap tobacco,

and we know that affordability is a major lever, it's probably the lever that's got

best evidence on, and we've got best evidence for, in reducing smoking prevalence,

but also a range of other things: as I say, the ban on advertising, promotion and

sponsorship; increasing the size of health warnings; increasing the age of sale to 18

from 16; smoke free places -- although it wasn't designed to reduce smoking

prevalence, it did actually help, and it was interesting in that it was one of the few

measures that seemed to have equal impact across the classes, because there is a

serious issue of health inequalities when it comes to smoking -- and a range of

other measures, and these measures weren't just plucked out of the air. In fact they

were first itemised, most of them, in the Royal College of Physicians report in

1992, which was a seminal report on smoking, on the harm caused by smoking and

what needed to be done, but also underpinning the World Health Organisation

Framework Convention on Tobacco Control, which entered into force in 2005.

The one measure I haven't really mentioned is the UK has the most comprehensive

smoking cessation services probably in the world with access in primary care, so all

smokers have access to free at the point of delivery advice and support to quit.

TABITHA JAY: Is there any evidence yet on point of sale displays in supermarkets and

whether that's had any impact?

DEBORAH ARNOTT: It's a bit soon to say in the UK because it's not been implemented

in all shops, only in large shops. But what we know from Ireland is that, following

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the implementation of the display ban, the industry was saying, oh well, the illicit

market will go up and they say that here as well. An analysis of Nielsen data on

sales in Ireland showed that actually basically all that happened was that the trends

which were already there, and which is a shifting from purchase from small shops

to larger shops, continued, but there was no sort of sudden change in sales harming

retailers.

On the impact on young people, I think the most interesting thing was that it affected

young people's perceptions of how common smoking is, and that's a really

important factor. We know from behavioural research that, if you think that

something is something that everyone else is doing, you're more likely to do it

yourself, and what happened in Ireland was that young people, their attitude to that

changed significantly, and in a way it's not a surprise, because large shops have the

displays hidden now, but you can see how large they are, but if you go into any

corner shop, the biggest display you'll see is the display of tobacco products, and

these are a power wall of promotion of the products themselves, but they also say

smoking is something that everyone does, whereas actually in fact that's not the

case, and those gantries are paid for by the tobacco industry and they support and

encourage the display of the largest possible area of tobacco products in small

shops.

SIR CYRIL CHANTLER: So doesn't that exist in Ireland now?

DEBORAH ARNOTT: No, in Ireland there are no displays any more and, if you go into

shops, you'll see the displays are all behind, they are all hidden, and they will have

a sign saying tobacco can be bought here and, you know, you can't buy it if you're

under 18, but you can't see the packs any more and you can't see the signs of the

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display.

SIR CYRIL CHANTLER: Is there a recent report that evidences what you've just said?

DEBORAH ARNOTT: Yes, and I can provide you with that research.

SIR CYRIL CHANTLER: Thank you very much.

CHRISTOPER COX: Okay. If no more questions on that first question, I'll move onto

the next possibly related issue of what do you consider to be the particular and

distinct advantages of standardised packaging, if any, in achieving effective

tobacco control?

DEBORAH ARNOTT: Well, I think Sarah made the point earlier that basically the pack

remains the only remaining means of promoting brand identity, and that's why the

displays were so important, because you have all the packs up there. They were in

effect an advertisement of cigarette packs and packs are terribly important. If you

compare cigarettes to other products, like washing powder, you get it out maybe, I

don't know, at most once a day if you've got a large family, but probably once a

week, and you put it in the machine and then you put it away again. Even with

consumer product, the average smoker smokes 12 cigarettes a day, that's 12 times

they get their pack out and they often leave it lying on the table, it says something

about them. The smokers themselves, research shows they choose their brand

because it says something about them.

I think it's interesting, if you look at the most recent research from Australia by Melanie

Wakefield, what it seems to show is that fewer smokers are lighting up in public,

and, when they do, they're more likely to keep the packs hidden. The packs are no

longer something which smokers think says something positive about them, so

they don't really want to display them in the way they used to.

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So I think all of those sort of things are very important. I mean, I could go on to talk

about why I think standardised packaging is particularly important and what

sections of population, because it sort of seems to follow on really from that. Are

you happy for me to do that?

TABITHA JAY: Just one follow up question. Given that the tobacco industry has

repeatedly said that there is no evidence for the benefits of standardised packaging,

what would you see as the sort of single piece of evidence that best refuted that?

FIONA ANDREWS: Well, the industry says this shouldn't be introduced without real

world experience, but that's a non sequitur, because actually, if you don't introduce

it, you don't have real world experience. It's a bit early to say in Australia. I don't

think there is one piece of evidence, I think it's a jigsaw, and actually what Sarah

was talking about, about the impact that we know that packaging has on attitudes

towards the pack and the appeal of the pack, the misleading nature of current

branding and the fact that, by putting packs in standardised packaging you can

reduce that, and the impact on noticeability of the health warnings, all of that is

important, and if we're thinking about evidence which sort of, rather than just

reporting what people say, says a bit more than that.

I do think the eye tracking research done by Marcus Munafo's very interesting, because

that actually shows you in objective behaviour what people were saying, which is

that, you know, the health warnings hit harder and in particular hit harder if you're

not a smoker. If you're a smoker, if you look at the pack, whether it's a stand up

pack or one of these ones or one of the current branded ones, you're looking for

information about is this your brand, is it a cigarette you want to buy or you want

smoke. But for non-smokers, and in particular for you, they're less interested in

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that and, once you get rid of the other colourful branding which can attract their

eyes elsewhere, they spend more time looking at the health warnings and I think

that's really important.

SIR CYRIL CHANTLER: Just before you go on, you mentioned research by Melanie

Wakefield. Is that the same as you were referring to, when you said that in

Australia plain packaging is less attractive?

SIMON GILLESPIE: No, there's two slightly different things. So do you want to sort of

give the detail of the Wakefield bit, and then I'll --

DEBORAH ARNOTT: Yes, the Wakefield that was published very recently, and is an

observational study of smokers sitting outside in cafes and places like that, and I

can send you that and Melanie may have already sent it to you.

SIMON GILLESPIE: And that's peer reviewed, isn't it?

DEBORAH ARNOTT: And that's a peer reviewed piece of research, yes.

SIR CYRIL CHANTLER: Yes.

SIMON GILLESPIE: Now, the BHF work was essentially market research, so it was

attitudinal survey, not a peer review, but certainly fits absolutely within that --

SIR CYRIL CHANTLER: And have we got a copy of that?

SIMON GILLESPIE: I think you have a copy already. I can certainly make sure that

you do have. Right. That's all right --

TABITHA JAY: Well, let's make sure.

SIMON GILLESPIE: If you haven't, it would be obviously very easy to provide one.

But, just for clarity, I wasn't putting that forward as a research that has been peer

reviewed. It was essentially market and attitudinal research undertaken by BHF,

but absolutely fits.

21

SIR CYRIL CHANTLER: But undertaken in Australia.

SIMON GILLESPIE: Undertaken in Australia and in the UK, so we pick out the

differences between attitudes of teenagers towards packaging.

SIR CYRIL CHANTLER: Yes, thank you.

DEBORAH ARNOTT: I think the other point to make is about the tobacco industry's

own words about packaging and the importance of packaging, and there's a famous

presentation made by someone called Geoff Good from Imperial in 2006 about a

pack called the Lambert & Butler Celebration Pack, and what he said was:

"Often in marketing it's difficult to isolate the effects of individual parts of the mix. But

in this case, because the UK had become a dark market, the pack design was the

only part of the mix that was changed, and therefore we knew the cause and effect.

Already the number one brand, our share grew by over 0.4 percentage points during this

period. That might not sound a lot, but it was worth over 60 million in additional

turnover and a significant profit improvement."

Now, the industry says that the pack only has an effect on switching and not on uptake,

but there's no logical reason why appealing packaging would only have a

significant effect on switching but no impact on relapse of smokers who'd quit or

uptake, and does anyone else want to add in on that?

SARAH WOOLNOUGH: I was going to make a very similar point, Deborah, about the

behaviour of the industry. So something that we have seen since other avenues of

advertising or marketing have been closed down over the years is a proliferation of

different pack designs, and it's been fascinating, and this doesn't quite play to the

peer reviewed evidence, but, when we have been out there talking to, for example,

politicians about the issue, the ignorance of the different pack designs that now

22

exist, Super Slims, I'm sure we've got examples to show you, that are particularly

targeted at youth, particularly targeted at teenage girls, and of course there has been

a huge shift in say the last ten years in the way that the industry has gone about

using the pack as a vehicle to market to particularly younger people.

SIR CYRIL CHANTLER: Could you give us the origin of that quote --

DEBORAH ARNOTT: The Geoff Good quote.

SIR CYRIL CHANTLER: Yes. Was it 2006?

DEBORAH ARNOTT: It was a presentation in 2006 and it's up on the internet, but I can

give you the full reference and send you the link.

SIR CYRIL CHANTLER: Thank you.

FIONA ANDREWS: I just wondered whether this was a point just to show you. This

isn't peer reviewed, but this is qualitative research in four places in the south west

with groups of smokers and this goes back to 2011. I've just done it big to show

you and this just shows that smokers do have a perception of the packs and these

are set out according to masculine, feminine, so these were the sort of attributes

that they were ascribing to the packs, and at that time the silver pack was brand

new on the market. The colours that had previously been used for handrolled packs

were the sort of blue Drum quite traditional kind of packs, like this one here, was

more the sort of kind, and Cutter's Choice, I think. I mean, it sounds old fashioned

by its name, but it was quite commonly used in Plymouth and places like that, and

so we were looking at how might you raise with smokers the fact that handrolled

was perceived by them to be less harmful, the perceptions that came back were that

it was like organic, it was freshly picked tobacco that would be less harmful to you.

We had a high prevalence in the south west and we developed from this a campaign

23

to try and get across the real risks to individuals so they could change and make

choices to change.

But I just wanted -- we just took some pictures of recent packs -- I don't know if I could

just pass that over -- and these are ones like this Urban and Golden Virginia pack,

that have now come on the market subsequent to our research in 2011 and this,

particularly the Urban one, it's very streetwise and, you know, it has -- I'll just pass

it over -- has I would say a very edgy youth facing type of packaging. Golden

Virginia have just been repackaged as GV to give it a new name and increasingly

the packs, as particularly the Cancer Research UK done by Gerard Hastings, there's

an increasing use of slashes across the corner to also use the packaging to denote

value, cheapness, that it's cheap, that it's new, and you can see that appearing on

things like these incredibly cheap little packs like Himalayas, which is priced at

£1.49. So I think there's a coupling of packaging being used to make it cheap and

accessible, the affordability point that Deborah was making, but also to take the

packaging into territory that is more appealing to youth.

So we've got a concern about that. We haven't gone back and repeated that research, but

I think it illustrates the speed of pack innovation, the way it's been diversified, the

way it's been coupled with pricing propositions, all of which I think take it into an

area that's unlikely to reduce the uptake by children and is likely, as in some of

these little packs -- look, £2.50, that's a kit, it's got papers in there, looks like a

cigarette box, but in fact it's not, it's handrolled tobacco products, and the pack

innovation I think -- and that's a view of directors of public health and funders in

the south west -- is a real concern in terms of it increasing the breadth of its appeal.

SIR CYRIL CHANTLER: You're not allowed to sell cigarettes in packets of ten any

24

longer, are you?

DEBORAH ARNOTT: That's not come in yet. That will come in as part of the

European Tobacco Products directive, which is going through Parliament at the

moment, and, once it's published in the official journal, which we expect to happen

in April, the majority of the measures in the TPD, including a limitation on the size

of handrolled tobacco pouches and minimum pack size for cigarettes of 20, will

come in two years later, which will be in 2016.

SIR CYRIL CHANTLER: So you won't be allowed to sell five grams of handrolling?

DEBORAH ARNOTT: No. So that would affect that, yes.

SIR CYRIL CHANTLER: Thank you.

TABITHA JAY: So you see the things that you've just shown us as being evidence of

increasing efforts on innovation and on packaging design which, just remind me

again, how that fits into your overall argument.

FIONA ANDREWS: And if I could just add one thing. I think that is within the

Crawford Moodie and the report that Cancer Research UK commissioned through

Stirling, and I think what that does demonstrate, and we could find the page

references, is that the speed of introduction of new packs has increased and the

number of packs. So both the speed of introduction--

DEBORAH ARNOTT: The number of brand variants, yes.

FIONA ANDREWS: -- and the number of varieties of packaging, there's a step change

of increase in that.

DEBORAH ARNOTT: And, to go back to the industry again, I think there was a very

interesting quote in a tobacco industry magazine called World Tobacco which put

it:

25

"If your brand can no longer shout from billboards, it can at least court smokers from

wherever it's placed by those already wedded to it."

So we see the pack becoming the promotional tool, the advertising tool. You know,

increasingly you see price marking like this. This pack is promoting ideas about

identity, but also pricing and pricing strategies. All of those things are advertising

tools and it's a form of advertising. That's why we want to see standardised

packaging.

FIONA ANDREWS: Sorry, I was just going to add that, you know, it's a long time ago,

and I almost don't want to say how many years, but when I did my MBA in the

early 80s, we used Kotler, which was a standard marketing textbook, and even then

they were quoting coffee, they had an example of research quoted there back that

long ago, where it was identical coffee presented in four different coloured packets

from gold, red, blue and yellow, and consumers understood the packaging as

denoting different qualities and the yellow was weak, and you very rarely see

coffee in yellow packaging, it's often gold, which was seen as rich, blue, which had

a sort of stronger connotation. So I think the large companies are very smart.

When I worked in marketing for a large, you know, private sector company, there

was strong awareness of the power of colour and, whether we like to admit it or

not, I think adults and children, there's good evidence that they're influenced, and

why that wouldn't translate into tobacco I don't know. I think logically it does.

SIR CYRIL CHANTLER: Thank you.

CHRISTOPER COX: Okay. We'll have some further questions coming up a bit later in

the order about marketing and switching and also price, but you were just moving

into the question, which was I think our third question:

26

"Which smokers or sections of the population do you expect standardised packaging to

benefit particularly, why and how, and what is the evidence?"

DEBORAH ARNOTT: Well, I think once displays in shops are prohibited, children will

basically be most exposed to tobacco packaging in the home and in homes where

their parents or siblings smoke, and if you look at the differential, the

socioeconomic differential, there's a massive one. So 13 per cent of people in

professional managerial jobs smoke, compared to 28 per cent of routine and

manual, and amongst the most disadvantaged in society it's much higher. You

know, prisoners, it's over 90 per cent, people with mental health problems much

higher rates of smoking.

This is important as well because you're three times as likely to become a smoker if your

parents smoke, and that's for a range of reasons, because you're exposed to the

packs, and you've got access to tobacco and because although people say, "oh,

children don't do what their parents do", well, actually, that's not true when you

look at the evidence, and we therefore think that, now we've got -- and in Australia,

although it was introduced on a state by state level, they introduced prohibition of

displays and then standardised packaging, and it's the next step after getting rid of

the displays, and we feel the same is true here and we think it's got potential if not

to reduce health inequalities, then not to increase them, because what we've seen

over the last 30 years or more is that the rates of smoking have gone down

consistently and very significantly amongst the most well off in society and

amongst the poorest there's been much less of decline or no decline at all over some

periods of time. So that's a really important issue and that's one of the reasons why

we're so supportive of standardised packaging is we think that it has the potential to

27

help with the issue of health inequalities.

TABITHA JAY: What's the role of the state if an informed adult decides to consume

tobacco generally?

DEBORAH ARNOTT: Well, I think standardised packaging is a very good example. I

mean, basically it's not going to interfere with smokers' rights to buy their own

brand, because the brand name will still be on the pack. But the role of the state,

with a product that's legal but highly addictive and very dangerous, is to do all it

can to support smokers who want to quit and prevent uptake amongst children who

are not old enough or mature enough to make an informed choice.

TABITHA JAY: Do you think there should be exceptions to a policy of standardised

packaging, say for specialist tobacconists or cigar smoke?

DEBORAH ARNOTT: I don't understand why you would want an exception.

TABITHA JAY: You might think that children don't consume some of those products,

for instance, or children aren't allowed in those shops.

DEBORAH ARNOTT: But the point about standardised packaging is not just about their

appearance in shops, it's about the message that they send out in the community at

large and the impact they have in the home and to children who are exposed to

packs smoked by those around them.

SARAH WOOLNOUGH: I think we may come on to this later, but just a point to add

around children and how they view tobacco. You know, primarily lots of the

research talks to standardised packaging having a primary focus on reducing the

appeal of tobacco to young people. It's included in many of the submissions, but

the vast, vast majority of smokers start when they are young, before the age of 18,

and of course the tobacco industry's model, half of all long term smokers will die of

28

their addiction, requires that children, young people in large numbers, do continue

to take up smoking and partly therefore this measure is, taken together with a

package of other measures, about shifting culture, denormalising, changing the

perception of a product to young people.

So, if you take that argument, why would you start making exceptions? It's about

changing the nature and the way that people perceive --

SIR CYRIL CHANTLER: Well, the argument put forward by the tobacco retailers, and

particularly the specialist end of the market, is that children and young people don't

smoke pipes any longer and they don't smoke cigars and, as far as the specialist

tobacconist is concerned, it is unlawful for anyone under the age of 18 to enter the

shop. So why would you wish to interfere with what an adult is doing, their own

choice, if the evidence is that it doesn't really affect children directly? So how

would you respond to that?

SARAH WOOLNOUGH: I think I would say, and I would probably draw on some other

work that Cancer Research UK has done across a range of lifestyle risk factors, that

it's quite difficult to sort of legislate or predict youth behaviour and, if the intention

of a policy is to discourage and change the nature of perception, then in an ideal

world you would want that to be as all-encompassing as possible. So, for example,

sunbed use is a known risk factor for skin cancer and Cancer Research UK has

done quite a lot of work looking at availability, accessibility of sunbeds amongst

young people, and, despite it being illegal for now under 18s to use sunbeds, if

young people can access or perceive they can access, or they are using in places

where the sunbeds are unmanned, that we are seeing new research that's yet to be

published but peer reviewed, that they do still access. So I think it's quite difficult

29

to say -- and we may come on to this later, because one of your questions is I

believe around, you know, young people Not re necessarily thinking through the

long term consequences of their behaviour. I think, and others will have a view,

that the best public health evidence would be of a primary objective of your policy

or one of the primary objectives is to decrease youth uptake, and it's about changing

the nature and perception, you would want the policy to be as comprehensive as

possible.

SIR CYRIL CHANTLER: Okay.

FIONA ANDREWS: Could I just add one brief thing to that, because I believe the NICE

evidence, and it's a number of years that reviewed uptake amongst children, did

reference some work, and I'm thinking it might be Professor Amanda Amos, that

looked at key influences on uptakes and recognises its multiple factor, that there

isn't one magic bullet. One of the things it did highlight was the powerful role

modelling played by particularly older siblings, but also parents that smoke, and the

fact that in another place that children often access cigarettes out of the handbags of

parents or elsewhere. So I would say that, if you're talking about exposure, so if we

accept the argument, which obviously we're saying there's evidence for, that the

packs are influential, then being exposed to those packs will continue if the packs

are still in circulation. Even if they're bought in the specialist tobacconist down in

Exeter on the High Street there, they're not going to stay in pockets and be

concealed from the children that would be affected and impacted in our

communities in Devon. So I do think that there are some issues linking it back to

other well evidenced research.

SIMON GILLESPIE: The other way of achieving the public policy goal of tobacco

30

products not being, shall we say, visible and essentially promoted would then be to

say that you can only consume them in a way that's somehow private and, if you

went along the lines of having an exception to the rule, then actually you would

have to put in place other safeguards to make sure that there wasn't a loophole there

essentially generated which indicated there's a bit of the tobacco product spectrum

that was somehow or other acceptable in one way or another.

TABITHA JAY: So I see that argument for specialist tobacconists and why, if branded

packages still came out as specialist tobacconists, then people would still see them.

But cigars?

DEBORAH ARNOTT: Well, cigars, if they're heavily branded and promoted, are still

promoting smoking, and it's the act of smoking that's dangerous, not smoking

cigarettes or, you know, smoking a pipe or whatever, and, pipe tobacco, I mean,

there are always unintended consequences if you allow exemptions. There was an

exemption for Rizla papers -- or, not Rizla papers, sorry, cigarette papers --

SIMON GILLESPIE: Other brands are available.

DEBORAH ARNOTT: Yes, other brands are available -- in the ban on advertising,

promotion and sponsorship, and we've seen a real plethora of advertising around

cigarette papers, which in effect is promoting smoking behaviour and therefore

undermines the ban on advertising, promotion and sponsorship.

FIONA ANDREWS: Just to add one, sorry, very brief thing, and it is anecdotal.

SIR CYRIL CHANTLER: We've got a long way to go.

FIONA ANDREWS: I can't reference it, but there is some evidence of influential

celebrities, female celebrities, smoking cigars, and, although I don't think it's big, I

think, rather like the way that cigarettes were marketed from being a wholly male

31

product in America to being a libertarian -- you know, marketed around woman

taking their independence, there is marketing territory that the industry have

previously occupied around female uptake, where I think to leave cigars excluded

would open the door to that kind of clever segment marketing.

CHRISTOPER COX: Okay, thank you. I think this moves us on quite neatly to our next

question, which I'll just modify slightly, because you've already answered part of it

as you've gone along, but:

"Taking existing tobacco control policies as read, do you expect standardised packaging

to have a effect on public health on its own or only in conjunction with some other

new measures?"

DEBORAH ARNOTT: I think it's part of a comprehensive strategy. It's been introduced

as such in Australia. I think it's hard to know what impact something like that

might have on its own. But, in a way, one also needs to then take into account what

might happen if you did nothing, and the evidence on tobacco control is quite clear,

that you have to keep on introducing new measures, because basically you've got a

whole industry pushing back and just because we've banned advertising promotion

and sponsorship doesn't actually stop them doing that. In fact, at ex-employee of

Philip Morris came to see me after the advertising ban came into effect and he

decided he'd had enough of it and he said you have realise, after the ad ban came

into effect, the marketing department for Philip Morris in the UK didn't decline,

actually they increased the number of people dramatically by about five times. So

all they're doing is finding different ways to market the product.

To go back to that point about basically it has to be amongst children and young people,

their primary focus, because two thirds of smokers take up smoking before the age

32

of 18, I think it's two fifths before 16, and every year in the UK a hundred thousand

smokers are dying plus hundreds of thousands more are quitting, and, unless they

keep, you know, filling in, as Robert West calls it, you know, pulling people into

the pipe from the bottom, then their business will die, and that's really, really

important.

Now, this measure is part of that comprehensive strategy. In Australia, if you look, at the

same time as they introduced standardised packaging, they brought in a mass media

campaign and they're spending the equivalent of, in UK terms, on a comparator

basis, 34 million a year on mass media, which is much more than we spent, as well

as having standardised packaging. They also are increasing taxes by 12 and a half

per cent above inflation year on year, and that's a commitment for a number of

years going forward into the future. So they've understood that this has to be a part

of a comprehensive strategy.

TABITHA JAY: Sorry, 34 million is what they are spending or that was what it would

be if it was spent per capita?

DEBORAH ARNOTT: No, that's what -- if you transferred the Australia dollar, you

know, because there's only, what, around 20 million people in Australia and we've

got a hell of a lot more in the UK. If you transferred it to UK money and did it on a

per capita basis, that's what the equivalent would be.

TABITHA JAY: Thanks.

DEBORAH ARNOTT: So it's a big investment and we think that's what the UK should

be doing. So we just don't want standardised packaging, we want it as part of a

continuing comprehensive strategy, because a lot of tobacco control measures, once

you introduce them they're in place, but some need funding. The stop smoking

33

services need to continue to be funded, mass media campaigns have to be funded

year on year, because we know the most effective ones are sustained, carried on

over time, and taxes, you know, governments decide on the budget every year,

they're not going to make a very long term commitment, but we need to see tobacco

becoming less affordable.

Tobacco in this country is still more affordable now than it was in the 1960s, on the basis

of income, because, if you think about it, incomes have gone up considerably over

that period of time. So cigarettes are a lot more affordable than they were when

smoking was at it its peak and more needs to be done to stop that.

SIMON GILLESPIE: This might be a opportunity just to sort of step back into the why

we're all here bit, because an addictive product does huge amounts of harm and

damage, both to individuals and therefore as a result to families and communities,

and is a huge drain, if you like, on the national economy as well, but it is legal. So

what we're looking at is actually, from our perspective, the national economy bit

will be the politician's decisions, what we as organisations are looking at is the

damage that it does to individuals and how we can minimise that for the future. So

we're not looking for, you know, making tobacco illegal. It is a legal product, but it

has a severe and significant risk to it and of course it's highly addictive.

So one of the things that we need to look at is very much the spectrum of things that add

up to changing behaviour and giving people the opportunities to change, either by

not taking it up in the first place, and Deborah's comments about the emphasis on

younger people is very apposite and, if it wasn't there, the industry would die -- I

might argue personally that it would be better for the industry to die than as many

people are dying of tobacco related illnesses -- but also then to make sure it's as

34

easy as possible, and it is an addictive substance, for people to give it up. So we

are looking to work with people's free will, if you like, but actually what we're not

looking at at the moment is a product which is so dangerous it's something which is

actually free will for individuals it taking up, and that's a real problem, and we're

going on to some of the issues about risk taking behaviour and all the rest of it later

on. So there are some really specific issues here about why the extent of the

behaviour change is important and how that segments out as well.

SIR CYRIL CHANTLER: I think I understand that, but I am getting a bit concerned

about time.

SIMON GILLESPIE: Yes, sorry.

SIR CYRIL CHANTLER: We've got quite a lot of way to go and I've got quite a lot of

questions. So I want to finish it all with Mr Joossens.

TABITHA JAY: But I've got a quick follow up on that, sorry, which is I understand that

you advocate comprehensive policies, lots of them, but do you think that

standardised packaging would have an effect on tobacco consumption on its own,

not taking away any of the existing things, but assuming -- just the existing

measures, plus standardised packaging, do you think that would have a public

health effect.

SIMON GILLESPIE: And then you add standardised packaging. Yes.

DEBORAH ARNOTT: Yes.

SARAH WOOLNOUGH: And, you know, you follow a logical argument it should do, I

think the danger, and I think the reason the public health community tries not to get

into what would this individual policy do versus' what would this individual policy

do, because the tobacco industry want to often go down that route, is because the

35

best evidence, and you look from comparatively an international example, shows

that, you know, comprehensive approaches and different elements in different

places together lead to a significant decline. I think it's partly a tactic of the

industry to say pick one policy, you know, on its own it won't lead to a significant

decline, therefore it's not worth it, and hence looking at the evidence in the round is

often the better approach.

SIR CYRIL CHANTLER: Okay. Let's move on.

CHRISTOPER COX: Great. So, moving on to our next question, which I think is a bit

more of a challenging question, perhaps:

"It's been argued that the strength of opposition to standardised packaging from the

industry can be taken itself as evidence for the possible effectiveness in terms of

reducing consumption, but how would you respond to the alternative explanation

that standardised packaging could commoditise tobacco and any producer of

branded goods would fear that and act accordingly?"

DEBORAH ARNOTT: Well, and I'll try be concise, the immediate concern of the

industry is price competition, and that's why they're fighting so hard against

standardised packaging, but there is a longer concern about reduction in uptake and

increased success in quitting. The industry's able to charge premium prices for

well-known brands which are incredibly cheap to make and there's no difference in

how much it costs to make Marlboro versus Mayfair.

The UK is oligopolistic. We've got two companies each with around 40 per cent market

share: Imperial and JTI Gallaher. Imperial's profit margins in the UK are higher

than any other consumer product company -- we're talking about 67 per cent, it's

massive -- and the prices before tax are higher in the UK than anywhere else in

36

Europe. Why should they be allowed to make such excess profits? So, if

standardised packaging squeezes their profit margins, then my opinion would be

that's all to the good, because they're making excess profits. If prices go down, one

of their arguments is, oh, that would be really bad, because it would lead to more

people smoking, but any price falls there are can be countered by higher taxes

which would benefit the Exchequer rather than the companies.

TABITHA JAY: So do you think that anything that damages the tobacco industry is a

good idea, or the profitability of tobacco industry, even if it doesn't directly impact

on public health?

DEBORAH ARNOTT: I'm not here to argue that -- you know, I don't think we -- we

don't want to do things just because they harm the industry, we only want to do

things that actually benefit public health. We're public health organisations. That's

our primary interest, not the tobacco industry.

LUK JOOSSENS: I think it explains why there is this campaign against plain packaging.

There is only reason why they are campaigning so heavily against plain packaging:

because they've made their gains with premium brands and they believe there will

be shift to the cheaper brands and they will lose their profits. Based on my

experience of the last 25 years, if there's one thing, if you touch on their profits or

they believe it will touch on their profits, they will do everything, and then they

will say, listen, from a public health point of view it's not very good because you

will go to the cheaper brands. If that's the case, raise the taxes and the problem's

resolved. So, if you look from the public health point of view, it's not really a

problem, raise the taxes and the prices go up. We haven't seen that in Australia,

but, if that would happen, we can fix it very easily.

37

SIMON GILLESPIE: I sort of go back to my earlier point, if you like, we're not here as

anti-capitalist campaigners, we're here as public health campaigners.

TABITHA JAY: Yes. But I the question was whether you could explain the opposition

in terms of the impact on profits without the opposition itself being evidence which

some people have argued as evidence that there is a public health effect, which

I think you're agreeing with.

SARAH WOOLNOUGH: Yes.

CHRISTOPER COX: Okay. So we move into a number of questions now, which are

probably more detailed ones about the evidence base itself. So our question six that

we sent in advance is:

"We've read the systematic review and the subsequent research update from the

University of Sterling and we know from your submissions that you consider

standardised packaging can reduce the appeal, increase the salience of health

warnings, ultimate perception of harm. Is there evidence that those effects will

feed through into changed smoking behaviour?"

DEBORAH ARNOTT: Well, I mentioned the point about Imperial's own words about

the impact of packaging on sales, and there's a lot more evidence around all of that,

and I think it will be worth your while looking at Judge Kessler's findings on the

tobacco industry behaviour. It's an American judgment, but it's a long document

which covers a lot of tobacco industry documents and things they were saying

themselves and the conclusion it reached is that:

"Defendant's marketing is a substantial contributing factor to youth smoking and

initiation, and that includes the packaging."

And I think there's also some evidence from this country and analysing UK industry

38

documents from a Health Select Committee hearing earlier this decade which

Gerard Hastings analysed and there's a link to that, both to the Kessler report and to

the Health Selection Committee report, in the two sider that I've provided you with.

I think also there's some interesting emerging research. I talked about the eye tracking

research. Marcus Munafo, who carried that out, has been doing some initial FMRI

research, which we funded, and that seems to show some interesting stuff in terms

of what actually is happening inside the brain of people when they're looking at

packs.

SIR CYRIL CHANTLER: I've read some of that. When is it going to get published?

DEBORAH ARNOTT: I don't know. It's been written up. I mean, as I'm sure you

understand, analysing FMRI results is complex, so, you know, it's not a large

sample and everything, but I think it's been submitted, and I would hope it would

get early publication, because I think it's very interesting.

SIR CYRIL CHANTLER: Has it been presented in an abstract form?

DEBORAH ARNOTT: If it hasn't been, it's due to be shortly, yes.

SIR CYRIL CHANTLER: If it has, could you let us have a copy?

DEBORAH ARNOTT: Hm-mm.

CHRISTOPER COX: Any follow ups? No. Thank you.

So next question, we're up to question 7 in our written list:

"There is a body of literature supporting the idea that adolescent experimentation with

tobacco is best explained as part of a propensity for risk taking behaviour. Do you

agree that adolescents are extra sensitive to rewards and to the immediate rather

than longer term consequences of decisions and to be more easily swayed by peer

pressure, and, if those factors already explain why teenagers take up smoking, then

39

how does packaging fit in?"

DEBORAH ARNOTT: Yes, I accept that analysis. I'm sure we all do. Teenagers take

up smoking, or young people take up smoking, for a range of reasons. They've

been summarised in the RCP's passive smoking report. But actually, as I said

before, the smoking of those around you, if your parents both smoke, you're three

times as likely to become a smoker as if they don't. Other factors that have an

impact are role modelling, smoking in the media, smoking in films has a significant

impact, so all these things have an impact. But the whole point is this is such a

massive -- and it goes back to my issue about proportionality -- this is such a

massive public health detriment. Once you take up smoking, it's highly addictive,

the chances of quitting are low. So therefore we need to tackle all these different

things, and not just say, oh, saying teenagers are taking up smoking because of their

risk taking behaviour, so we don't have to worry about packaging. If packaging has

a contributory effect, which we believe the evidence shows it does, then we need to

tackle packaging too.

CHRISTOPER COX: Moving to the next question, which to some extent we started to

get into this in some of the earlier answers, but this is just to pose the question

formally:

"What is your view regarding the effect of marketing of tobacco products on overall

consumption and public health as opposed to brand switching and in your view

which evidence is the most pertinent to this issue and why?"

DEBORAH ARNOTT: I think I go back to the sort of first principle, which is the

number of smokers dying, the number of smokers quitting and the need to funnel in

new smokers at the bottom, and marketing of tobacco products is a really important

40

factor in getting uptake and, particularly now that advertising promotion and

sponsorship has gone, the pack has become really sort of the brand essence and

packaging is so important and I think everything we've said so far contributes to

that.

In terms of specific research, I mean, I think there's a whole range of things which point

to this, and I wouldn't say that there's one particular piece of research which is the

killer fact in all of this. I don't know if anyone wants to add to that.

SARAH WOOLNOUGH: Just the point I suppose that smokers, once they have become

smokers, are very brand loyal. So a lot of the activity, as Deborah has alluded to, is

about encouraging new smokers or encouraging young people to start smoking.

SIR CYRIL CHANTLER: Earlier on you referred to Lambert & Butler's Celebration

pack.

DEBORAH ARNOTT: Yes.

SIR CYRIL CHANTLER: In one of the submissions to the consultation, I think it was

from Philip Morris, they use the example of the introduction of the Celebration

pack to demonstrate that, whilst it affected the market share, which, as you said,

went up, it had no effect on prevalence of smoking, particularly in young people. It

was introduced at the end of 2003, I think, and then, according to the graph, overall

prevalence continued to fall, but in 2006 and 2007 prevalence in the younger

people actually went up and then fell down again. I don't understand that. Do you

have any comment to make on that?

DEBORAH ARNOTT: It goes back to my earlier point about the counterfactual. You

know, there is been, since Smoking Kills, and since the ad ban came in particularly

with young people, a genuine trend downwards. Now, if we'd had standardised

41

packaging and they weren't able to introduce the Celebration pack, we don't know

what would have happened and you can't do that sort of research. So I think to say,

oh, it definitely didn't have an impact, well, I don't the evidence they have access to

is sufficient for them to draw that conclusion.

SIR CYRIL CHANTLER: Well, what we don't have access to is data on overall sales.

We know what they say. But I'm going to ask them that actually, because I don't

know the answer to it. I just wondered if you knew anything.

DEBORAH ARNOTT: Yes, and actually, in the FCTC, some of the guidelines

recommend that governments look at requiring the industry to publish more

marketing data, and I think that would be very helpful. You know, sales data and

price data, we've had enormous difficulty and a economist working for ASH

worked with HRMC to look at price elasticity, but the industry refused to allow

him, even within the data lab that HMRC has set up, so it would be information

that was anonymised when it came out, to have access to the pricing data that he

needed to look at to see demand, for example, on HRT, and I don't think that's

useful or helpful. You know, this is a major public health problem. You know,

smoking still kills more than the next six causes of premature preventable death put

together. We need the industry to be providing the data that enables the sort of

analysis we need to do about the impact of public health measures and public

policy measures that are designed to reduce smoking.

TABITHA JAY: One of the tobacco companies sent us their code of conduct, their

marketing code of conduct, which said that they wouldn't market towards children

or towards new smokers. Do you have any comments on that, given that your

argument is that marketing is very much affecting new smokers.

42

DEBORAH ARNOTT: Well, I just go back to the fact that, if that were the case, then the

industry would die, and I've got a quote from one of the industry executives saying

that, you know, basically, if we don't market to children then our industry's dead in

30 years, or something along those lines, and I'll send you that. I think also it's

quite interesting, they got heavily involved, in the States in particular, in youth

smoking prevention campaigns which were supposedly designed to reduce youth

smoking and actually analysis of these campaigns showed that, just in the way that

they were designed and set up, had precisely the opposite effect to the one they said

they were trying to achieve. I mean, it's so simplistic. You look at the images they

show of the cool smokers and the nerdy non-smokers, you mustn't smoke, and,

what a surprise, it didn't discourage young people from smoking. So, just because

they say something, doesn't mean that that's the intention.

SIMON GILLESPIE: I mean, codes of conducts are wonderful things, aren't they? What

goes behind them of course is probably the most important bit of the lot and, if you

take that at face value, of course, there is at the very least an unintended

consequence, or series of unintended consequences here, that, notwithstanding a

code of conduct, that actually the net result is that these products are effectively

heavily marketed to children and young people. But any code of conduct of course

needs all the cultural work and the organisational development work and all those

sorts of things to actually make it live and breathe, if you like, in practice, and it's a

company's code of conduct, so therefore the transparency around this, how it's

enforced, how it's monitored, how you undertake work to see if whether it's

working or not and the impact it's made, I would believe has not been disclosed.

So a form of words is fine. Actually, what we see in all of the evidence is the net

43

result is marketing to children. So there at the very least is a mismatch here

between what the company is saying and what's resulting in practice.

I suppose the other bit about it is of course that, you know, when you've got, in the UK

example, two companies who cover 80 per cent of the market, that marketing of

individual brands within that actually is really extensive, because it's not just about

market area, it's about conditioning and shaping the market, particularly given the

nature of the product. So I think if you play back over it, there are some really

important issues, you know, for a large and monopsonistic type of market place, the

controlling influence about those organisations with their individual brands, this is

not straight competition by any means. So I'm not proposing that there should be

some regulation of the market to open it up for more competition in some sense,

but it does indicate why players in the market behave in the way that they do.

DEBORAH ARNOTT: And they have fought tooth and nail, the tobacco industry,

against any and every measure to reduce smoking prevalence and they only

conform to the law as it operates. So within the UK that's really quite stringent on

advertising promotion and sponsorship, for example, and on many other areas.

But, if those laws all came off, I think you'd see the industry code of conduct

change quite considerably.

SIR CYRIL CHANTLER: Before you go onto the next major item, I just want to go

back to something, Simon, you said during your presentation, and I can't think of

where else to introduce it. You talked about it being twice as likely to have a heart

attack if you smoke. What is the evidence on second-hand smoke in relation to

that, because there is an analysis by Professor Bauld.

DEBORAH ARNOTT: Yes, Linda Bauld.

44

SIR CYRIL CHANTLER: Linda Bauld, and which the industry is very critical of, which

suggests that, after the ban of smoking in public places, second-hand smoke

diminished and heart attacks diminished. Has the British Heart Foundation done its

own independent review of that information?

SIMON GILLESPIE: I don't think we have. As you're aware, I'm relatively new in post,

so that's something I can go back and --

SIR CYRIL CHANTLER: No, let's not --

DEBORAH ARNOTT: I think you might have part funded some of the research that

contributed to that analysis.

SIMON GILLESPIE: Yes, in the first place.

SIR CYRIL CHANTLER: I just would like to know if there there's any other work in

that area. Let us know.

SIMON GILLESPIE: Yes, I'll go back and have a look at that.

SIR CYRIL CHANTLER: Thank you.

SIMON GILLESPIE: And I think the comment was twice as likely to have a fatal heart

attack as well. So the consequences of your heart attack are that much worse as

well if you're a smoker. So you're more likely to have one and more likely to have

very adverse consequences as a result.

SIR CYRIL CHANTLER: I mean, she was using hospital access statistics, which have

their own difficulties. So I'd just like to know if there's any independent.

SIMON GILLESPIE: Of course.

SIR CYRIL CHANTLER: Thank you.

DEBORAH ARNOTT: But also the impact in the UK of the introduction of the

legislation will have been less in some other jurisdictions, because in this country,

45

at the time the legislation was introduced, already over half of all work places were

smoke free on a voluntary basis, and so exposures in this country -- you know, and

you weren't allowed to smoke on the underground or in cinemas and all sorts of

other places. So actually exposure in this country to second-hand smoke was

already lower than in some other jurisdictions, and we've seen reductions in heart

attacks that have been considerably larger in other jurisdictions where the general

exposure was much higher.

SIR CYRIL CHANTLER: Thank you.

LUK JOOSSENS: But also in Scotland you had an article after smoking legislation,

published in the New England Journal of Medicine, giving this evidence on the

effect on heart attacks.

SIR CYRIL CHANTLER: When was that?

LUK JOOSSENS: In the New England Journal of Medicine.

TABITHA JAY: Could you send us the reference?

LUK JOOSSENS: Yes.

TABITHA JAY: Thank you.

LUK JOOSSENS: I think it's the most known --

SIR CYRIL CHANTLER: Yes, I think it's Andrew Morris. But if you send it to us, that

would be helpful. Thank you.

CHRISTOPER COX: Any more follow up questions on that? No.

So our next topic is price, and we've covered that up to a point in general terms, and also

some of the examples you've shown us. But, to pose the question formally:

"What, if any, effect would the introduction of standardised packaging have on the prices

of tobacco products and their buy on consumption on public health and what do

46

you think would happen to the prices of cigarettes currently retailing, particularly at

the cheapest and at the premium ends of the market?"

DEBORAH ARNOTT: I think this a complex area, and a colleague who's working for

us, and I can send you the paper, did an analysis of a paper by Padilla for PMI on

this which concluded that there would be a very significant fall. His conclusions

were that it overstated the extent to which prices would fall, if they did fall, in

particular because of the emphasis on branding as the sole determinant of cigarette

pricing and because of the oligopolistic structure of the current market and the fact

that he ignored other, if not more, then certainly equally important determinants of

market structure, such as economies of scale in production and distribution. So

I can send you that paper.

I think sort of a general view would be that it's likely. At the moment you've got quite a

disparity. You've got four categories of price for cigarettes that are normally

accepted, so premium, mid-price, economy and ultra-low and Professor Gilmore's

analysis of prices, working with our economist and others, show that, while prices

of the first three categories, premium, mid-price and economy, have gone up over

time, ultra-low price cigarettes, the price had been kept at a low and continually

low level as a sort of entry level product and our assumption would be that there's

cross subsidy going on there, basically, between the higher price products and the

ultra-low price products, and, if it hard for them to charge premium prices in

particular and higher prices at the top end, and the margins get squeezed, then

prices at the bottom end may well come up as well.

But I think at the moment it's hard to know and my understanding of what's happened in

Australia, where we've seen this in place for a year, is that pricing packages haven't

47

changed significantly to date. But I know you're going to Australia and I think

that's one of the things you probably want to ask people there about.

SIMON GILLESPIE: Sorry, I mean, Deborah mentioned in her opening comments as

well, one of the other factors in this is taxation policy as well. So ultimately the

final price to the consumer, if you like, has got a large element of government

determination by way of taxation within that, and so actually there is a control

mechanism within this, if you like, because pricing policy is one of that array of

things about tobacco control measures in the first place. So it would seem perverse

to get to a situation, which we don't think will occur, but even if it did, of prices

reduction without any response from government to maintain a level which they

thought was appropriate within the package of measures. Would that make a

sensible --

DEBORAH ARNOTT: Yes. No, I think that's absolutely right, and, to go back to the

situation in Australia, I think in a way analysing why prices -- I don't think you'd

see a sudden change in prices, because actually brand value will be sustained to

some extent, at least amongst existing current smokers and people who, you know,

been exposed to advertising over time and to the packs and all the rest of it. It's not

suddenly going to completely undermine the industry's ability to charge the prices

they've charged, I don't think.

TABITHA JAY: And you believe that the early evidence from Australia is

showing price stability?

DEBORAH ARNOTT: Certainly when I was talking to people in Australia six months

after the legislation came into effect, that's my understanding, but, as I say, that's

something I think Sir Cyril can check out when he goes to Australia.

48

TABITHA JAY: So, to look in particular at ultra low priced cigarettes, could you

explain the typical break down of tax, packaging costs, other costs, from the

sources that you do have available to you. I know you don't have available all

information.

DEBORAH ARNOTT: Well, I don't have it in front of me. I can send you the -- HMRC

provide data on tax as a proportion of the total price. But, no, I mean, the industry

keeps the information about its production costs very quiet. I mean, we know that

producing cigarette packs, they cost a few cents to make and the cigarettes

themselves aren't that expensive. But, I mean, you'll have to ask the industry.

They've got all that data. I think it would be very useful to have it in the public

domain.

TABITHA JAY: And do you know the tax breakdown of -- because I understand the tax

breakdown is a different proportion for different prices of cigarettes. So do

you know the proportion for -- we need to ask HMRC if you don't, but the

proportion for the ultra light cigarette.

DEBORAH ARNOTT: I don't have it in front of me, but my recollection is that HMRC

publish it not just for the weighted average price, but also for different brand

categories. But I'll look for that and send it to you.

FIONA ANDREWS: Can I just say, and I don't know, I think Anna Gilmore did some

work in this territory, didn't she?

DEBORAH ARNOTT: Yes, and I think she's provided papers, but I don't think it

provides --

FIONA ANDREWS: Has she already? Professor Annie Gilmore from Bath.

DEBORAH ARNOTT: I don't think they have all that information. It's not in the public

49

domain.

TABITHA JAY: But it doesn't provide the costs side.

FIONA ANDREWS: But it does make link very well with that point Deborah made

about disclosure of the sales data, which is true in other international companies

that they require that information to be available, and it would be a mitigating

aspect if the government were to look at requiring it to see how --

DEBORAH ARNOTT: Well, I think it's really important, because, even if we get

standardised packaging, the industry's going to carry on marketing its products, and

it will do it different ways, and the more information we have about what they're

doing and how they're doing it, the better prepared Government is for taking action.

We have to remember that most smokers want to quit. Actually, there's lot of cognitive

dissonance involved in that I think quite a lot of smokers who say they don't want

to quit, given the opportunity, will do. There was some very interesting of research

done by Pfizer where they recruited smokers who said they didn't want to quit to

help them cut down. They hoped to be able to prove there was a health benefit

from cutting down, which is very difficult to do, but what did happen was that

smokers who'd been recruited saying they didn't want to quit, who were given some

support and were given help in cutting down, the number needed to treat was very

similar to smokers coming into a smoking cessation programme saying they want

to quit ending up quitting at the end of the period. So I think that shows that, if two

thirds of smokers say they want to quit, actually many more probably do want to

quit, but have failed in the past and feel nervous and anxious about making any sort

of public commitment that this is what they want to do, and they probably may not

even know inside their own head that that's what they'd like to do, given the

50

opportunity.

CHRISTOPER COX: Anything more on price? No.

So our next topic, which, again, we've covered up to a point in your presentations and the

discussion that followed from that, the illicit trade:

"What, if any, effect would the introduction of standardised packaging in this country

have on the trade in illicit tobacco? Would this have an effect on consumption and

public health and, if so, what would that effect be?"

LUK JOOSSENS: Well, we explained previously by saying three things. First of all,

that everything is easy to counterfeit. That's why the industry says at the same time

on Codentify, when they argue on the advantage of Codentify. But I can give you

another quote from Austin Rowan, which is the adviser of OLAF, the antifraud

office, which testified last year in the UK Parliament and he gave the example of

a brand in Ireland, John Player Blues, and it was a new brand with a new Irish tax

stamp and there was a seizure in the Dublin port of a full container of John Players

with the new Irish tax stamps counterfeit coming from China, just one week after

the brand was launched. So they can do whatever they want.

DEBORAH ARNOTT: Which means that it must have been on the seas before the new

tax stamp was launched. So I think that shows you how organised crime can work.

LUK JOOSSENS: And the second thing is look at the packaging. Was it easier to

counterfeit? No. They looked similar, they have pictorial health warnings.

DEBORAH ARNOTT: That's an illicit pack of Mayfair, Lambert & Butler.

LUK JOOSSENS: They will have a security feature visible and invisible.

DEBORAH ARNOTT: Golden Virgina.

LUK JOOSSENS: They will have a traceability marking, so it will not a difference. The

51

third one is the industry is over emphasising the importance of counterfeits, and, if

we look at the historic point of illicit trade, 15 years ago it was only the general

products, Imperial Tobacco, Regal, Superkings, which were very important for

illicit trade. When that then stopped after the investigations, the counterfeit became

important, because they have to be played to this market, and now we have what

they call illicit whites coming from small factories in Kaliningrad, in Ukraine, in

Greece, in Cyprus, Luxembourg, whatever, only distant for the illegal market. But

the industry is saying, and I was last week in a workshop in the European

Parliament, and there is something very, very interesting alleged to the counterfeit.

The four major companies have agreements with the Commission and the 28 EU

countries and, when they seize products and it's their products, they to pay all the

taxes back. Of course, if it's counterfeit, they don't have to pay the taxes, because

it's not them, and Philip Morris has produced a report for KPMG and for 2010/11

they say that 92 of the seizures of their brands is counterfeit. So they don't have

pay the taxes, it's counterfeit, and it's also important that last week it was said

that --

TABITHA JAY: Which year was that, sorry? Which year was that that they said 92 per

cent was counterfeit.

LUK JOOSSENS: 2011.

TABITHA JAY: Thank you. Sorry.

LUK JOOSSENS: And it's also interesting that -- so the industry looks whether it's

counterfeit or not to send the documentation to the authorities and the authorities

never have challenged the fact that they were counterfeit or not. So that was

discovered last week.

52

But then they do also empty pack surveys with KPMG and they collect in 27 countries

and in the same report where they say that 92 per cent of the seizures is counterfeit

for PMI brands, only 16 per cent, 1-6, is counterfeit. So you have the

contradiction: when it's seizures and they have to pay for it, they say it's

counterfeit; when they collect it in the streets, it's only 16 per cent counterfeit and

84 per cent their products coming from Ukraine, coming from the Russians in

St Petersburg. So we have a problem that --

TABITHA JAY: So, in the empty pack surveys, you're saying -- so of the illegal -- so

you're talking of the non-UK duty paid, then you're saying that they would say that

16 per cent --

LUK JOOSSENS: So, of the illegal market, you have a hundred per cent illegal market,

then something like 25 per cent is from PMI brands and 20 per cent is coming from

German product and only four/five per cent from counterfeit. That's --

SIR CYRIL CHANTLER: Say that again, sorry.

LUK JOOSSENS: Okay. I will show you the graphs of -- if you have the data from --

SIR CYRIL CHANTLER: But, from the empty pack survey KPMG do, which you said

that 16 per cent are illicit counterfeit product.

LUK JOOSSENS: Yes. Here.

DEBORAH ARNOTT: And you can send all that information afterwards, so you'll have

the data to back it up.

LUK JOOSSENS: Yes.

TABITHA JAY: Okay. So we understand. So you're saying the reports are inconsistent

for the two purposes.

LUK JOOSSENS: Here we have the data on different years. So --

53

SIR CYRIL CHANTLER: This is difficult. It's not in colour, so I can't sort of see --

LUK JOOSSENS: Yes.

DEBORAH ARNOTT: Illicit is an issue of enforcement. You don't not introduce public

policy measures for fear that it might lead to an increase in smuggling of whatever,

what you do is make sure you've got the enforcement in place. I mean, smuggling

in the 1990s went up as a result of complicity and lack of control of the supply

chain by the manufacturers, and ASH pushed for the Customs & Excise to

introduce an anti-smuggling strategy, which they did in 2000, and it's been very

successful since then.

SIR CYRIL CHANTLER: Yes, I think we've got quite a lot of questions on this. You go

on, Tabitha.

TABITHA JAY: So, if the anti-smuggling strategy was as successful as now, but no

more successful, say they were intercepting the same proportion of illicit imports as

now, would you expect -- would standard packaging increase the amount of illicit

coming in?

LUK JOOSSENS: No, because packaging doesn't play a role, neither on the supply side,

nor on the demand side. When you buy illicit cigarettes, you buy them because

they are cheaper and you can easily access them. That's the reason. You don’t do

it because of the packaging. The smugglers, the organised crime of those interested

in this trade, want to have gains. It doesn't make a difference, the package doesn't

make a difference. It's one cent/two cents out of ten. It doesn't make any

difference at all. If you look at the logic of both those buying and those supplying,

it will make zero difference.

TABITHA JAY: Why does packaging make no difference on the demand side of illicit

54

whereas it does for non-illicit?

DEBORAH ARNOTT: It's not that it makes no difference on the demand side for illicit,

although, I mean, you know, you could say the same about introduction of larger

health warnings in 2003 and introduction of graphic pictorial warnings. But people

mainly buy illicit -- you know, only certain people will buy illicit and they'll buy it

because it's available and it's acceptable and it's cheaper and easy to get hold of.

What the pack looks like is not going to make much difference to that decision.

LUK JOOSSENS: People who start smoking are looking at attractiveness. People who

buy illicit cigarettes are addicted to smoking, find the price too high and looking at

alternatives to buy the product cheaper and they're focusing --

TABITHA JAY: They're particularly price sensitive.

LUK JOOSSENS: Price sensitive.

DEBORAH ARNOTT: Yes.

SIR CYRIL CHANTLER: If it was the case that plain packaging was introduced in this

country but not in the rest of the European Union, would that lead to increased

smuggling of branded packages from other countries into this country?

LUK JOOSSENS: You mean that --

SIR CYRIL CHANTLER: Well, it would be perfectly lawful to manufacture branded

packages in Belgium, for example, and I know there's quite a lot of tobacco moving

from Belgium to other countries. So --

DEBORAH ARNOTT: Would you see more cross border shopping and more

smuggling.

SIR CYRIL CHANTLER: Well, both. More smuggling and more cross border shopping.

DEBORAH ARNOTT: Possibly, although the biggest impact on cross border shopping

55

is likely to be how well off people are, how much travelling they do, all of those

sorts of things, so in a sense you've got to disentangle the different effects, and

actually it's interesting that smuggling into Australia seems to be occurring of

counterfeit standardised packs, because people know that's what it should look like,

and, if it looks branded, then it will expose it to looking more like it may be a

smuggled pack and therefore, from the supplier's side, they want their product to go

under the radar.

SIR CYRIL CHANTLER: Let's leave cross border shopping for a moment. What about

the smuggling of branded packs from the continent of Europe into the UK. It

would be very difficult to detect them, won't it, because they will be legal, they'll

have all the right marks on, duty paid in Belgium.

DEBORAH ARNOTT: No, cross border shopping won't be legal, but the markings

which show whether or not -- I mean, the illicit trade protocol on --

SIR CYRIL CHANTLER: But these aren't illicit, I'm talking about --

DEBORAH ARNOTT: Cross border shop --

SIR CYRIL CHANTLER: No, I'm talking about the smuggling of duty paid in Europe

packages into the United Kingdom.

DEBORAH ARNOTT: But that's still -- if people are bring more in --

SIR CYRIL CHANTLER: It's unlawful.

DEBORAH ARNOTT: -- it's unlawful.

SIR CYRIL CHANTLER: But how would you know?

DEBORAH ARNOTT: Because under the illicit trade protocol, products are produced

for the intended market --

SIR CYRIL CHANTLER: No, I know it's not allowed, but --

56

DEBORAH ARNOTT: -- and you will be able to scan the packs and see where they

should have been sold, and, if they're not being sold where they should have been

sold, then they're not lawful.

SIR CYRIL CHANTLER: All right.

LUK JOOSSENS: But what will happen also in 2016, in all European countries, you will

have the big health warnings on both sides, 65 per cent. So the other European

packs will be less attractive than they are now.

DEBORAH ARNOTT: Yes.

SIMON GILLESPIE: So the differential will narrow. So, just for clarity of our own

mind, we're talking about packs legitimately manufactured in other parts of Europe

coming in --

SIR CYRIL CHANTLER: One of the arguments against the KPMG report, as I've

understood it, is that it goes from picking up package identification -- I forget what

you call it -- an empty pack survey, that's right -- but what it doesn't take account of

is the smuggling of licit, not illicit, product, and therefore it tends to, I understand,

constantly overestimate the size of the market in some way.

SIMON GILLESPIE: I mean, one of the other things, I think it's been touched on

anyway, is that actually a lot of this people will want it to come under the radar.

So, if you have large quantities of branded packaging, even with the new ones,

although the differential is narrowing, but if you have large quantities of branded

packages around the place, they actually do stand out, or the distribution networks

stand out, in the same way --

SIR CYRIL CHANTLER: Well, I was going to go to that, and I particularly want to ask

Mr Joosens, if I may.

57

LUK JOOSSENS: So on the critique, on the KPMG report, there are two main critiques.

One is in this country they you collect 10,000 packs and they say it's over major

cities, but they don't say how they collect these packs. In the city of London, how

do they collect? Around football stadiums when there are visitors. You can choose

in every city, every neighbourhood, where they have more illicit packs than others.

So if you don't explain a great methodology, your results have no scientific value.

That's one thing.

The second critique is that, if you have an empty pack, you don't know whether it's legal

or illegal, because you can bring in a legal amount from other countries and for that

they do surveys about visiting countries and things like that. But what they don't

take account, but it's less a problem for the UK for instance from France and

Germany, that people living, for instance, in Lille, living next to the border of

Belgium, but still the prices are almost two euros less, they cross five kilometres

and they buy as much as they want. They don't consider this as travelling to

another country, they cross the street and they are in Belgium, and there you have a

lot of packs from Belgium which is not part of tourist travelling and for that reason

the figures in France, in Austria, Finland, have been overestimated, because they

don't take into account cross border shopping, which is a little bit more difficult for

this country, because you have to cross the channel and things like that.

SIR CYRIL CHANTLER: We've been told -- you quoted the illicit mark as falling to 9

per cent, but we've been told it fell to 7 per cent and has now gone up to 9 per cent.

LUK JOOSSENS: Yes, but it's still much lower.

SIR CYRIL CHANTLER: I accept that. Why do think it's gone up?

DEBORAH ARNOTT: It's a general trend down, and if you look at the figures --

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SIR CYRIL CHANTLER: No, I know that, but why do you think it's gone up?

LUK JOOSSENS: It's gone up because it the provisory figures. So if you look each time

at the figures, they go up 1 per cent, two per cent, but I'm not sure that it's going up,

because the data from northern England, they have done surveys, independent

surveys they go down until 2013. So I have no proof that they went up in 2012.

SIR CYRIL CHANTLER: Is there any evidence that illicit tobacco is sold through

regular tobacconists as a important part of its distribution?

LUK JOOSSENS: In the shops here?

SIR CYRIL CHANTLER: Yes.

LUK JOOSSENS: Well, I don't know that here in the UK. I don't know.

SIR CYRIL CHANTLER: Because in Scotland tobacconists or people who sell tobacco

are licenced, but they're not the UK.

DEBORAH ARNOTT: Well, there's a retail registration scheme, it's not full licencing

scheme. I mean, I think that's something which we'd like to see here and we think

it would help retailers actually, because at the moment --

SIR CYRIL CHANTLER: But do you have any evidence specifically that retailers are

part of the distribution of illicit --

DEBORAH ARNOTT: Anecdotally, I've heard from trading standards officers that it

appears to be increasing, but we don't have a statistical picture of what's happened

over time, and historically it's not been a significant part of the illicit market in the

UK.

LUK JOOSSENS: But Robert West is doing surveys every month and they have the

impression that there is more illegal cigarettes sold in the shops. So that could be

true, but it's --

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SIR CYRIL CHANTLER: Well, we'll ask.

Do you think it is possible, Mr Joossens, that, if plain packaging came in, it would have a

contrary effect, and that is that, when people saw a branded package, they would be

more likely to question whether it was authentic? In other words, it might improve

the capacity to detect illicit product.

LUK JOOSSENS: And your question is...?

SIR CYRIL CHANTLER: Well, if standardised packaging comes into this country -- we

can ask in Australia -- is it possible that counterfeiters will manufacture illicit

branded product and people will want to smoke those because they like branded

packages?

LUK JOOSSENS: Well, in the past we knew that the smokers 15 years ago wanted to

have genuine products and then the brand loyalty -- then they were the counterfeit

and the smokers knew it was counterfeit, because the quality was less, and now we

have new brands, Jin Lings, all kinds of things --

DEBORAH ARNOTT: Here's an example of Jin Lings.

LUK JOOSSENS: -- and they don't care about the branding, they want just to have the

cigarette cheaper. So I think at the end for them it's more important, not the brand,

but the price which is cheaper.

SIR CYRIL CHANTLER: So specifically, because this is a really important question for

me, in the event of plain packaging coming in, is it possible that counterfeiters

would manufacture branded product and that would have the effect of encouraging

people to smoke counterfeit rather than the plain packaging genuine product? Do

you understand what I'm saying?

DEBORAH ARNOTT: Yes.

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LUK JOOSSENS: The people moved away from counterfeit because the quality is less.

They immediately taste that it's counterfeit, so they moved away, and the reason

why you have this so-called illicit white is because they are produced in factories

with good leaf, good paper, under good conditions, and that's why the illicit buyers

appreciate it.

SIR CYRIL CHANTLER: Illicit white's better quality than --

LUK JOOSSENS: Yes, and it tastes better. So the counterfeit market has gone down as

a result of the poor quality of the smoking.

DEBORAH ARNOTT: But also, when the larger health warnings came in in 2003,

counterfeiters manufactured products with health warnings on. When the picture

warnings came in, they manufactured products with picture warnings on. In

Australia, I'm seeing pictures now of counterfeit packs manufactured with,

you know, the Australian standardised packaging on. So it's possible, but from

previous experience, and from what's currently happening in Australia, it doesn't

look like that's going to a significant problem.

LUK JOOSSENS: And I want to add something. We are focusing that plain package

would have a result on illicit trade. I'm getting the impression that industry is still

very much involved in illicit trade. First of all, we have JTI being accused of

smuggling in Syria. We say that --

SIR CYRIL CHANTLER: Japan -- yes, go on. Japan Tobacco.

LUK JOOSSENS: Japan Tobacco. Secondly, you see that, on the empty pack surveys --

according to their own data, mainly genuine products from Philip Morris which are

on the illicit market and third you see that they are speaking about illicit whites, the

KPMG are talking about illicit white. For me, the most important so called illicit

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white is Classic, produced by Imperial Tobacco, Ukraine. So it's their

responsibility. It was the third most seized cigarette brand in 2008.

DEBORAH ARNOTT: In Europe.

LUK JOOSSENS: In Europe, in the EU, and we questioned about it and the

representative of Imperial Tobacco was saying, yes sir, we know there's a problems

for Imperial Tobacco, now we've stopped all production over there, but still present

on the market in Ukraine and there it's possible, and it says overseas products are

counterfeit. So it's possible that overnight they produce also Classic as counterfeit.

So we don't know what the industry is doing.

We see also that in Belarus there is a factory of Grodno tobacco, and they have an

agreement with the British American Tobacco that produced Pall Mall, Viceroy,

which has also been seized in Poland. So we see a lot of factories in Ukraine,

Russia, Belarus, belonging to the big tobacco companies with brands still present

on the market. So we questioned more their strategy than the introduction of plain

packaging, which at the end will have zero effect.

TABITHA JAY: So, looking at this from the perspective of children and potential

smokers, rather than existing smokers, so, say that standardised packaging was to

work and was to reduce demand for cigarettes and perhaps reduce the risk of new

smokers becoming smokers, but also that, despite the arguments that you make,

that illicit was to go up, then how would children be affected? Are children

recruited on to illicit ever, or is it always something that addicted smokers move to

when they object to the price of legal cigarettes?

DEBORAH ARNOTT: The illicit market isn't homogeneous, it's heterogeneous, and it

works differently in different parts of the country and in different places. It tends

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to be smokers from lower socioeconomic groups that access illicit tobacco and

therefore children from poorer groups who have more access to it, because, you

know, it's sold on housing estates in what's called fag houses, it's sold at markets in

car boot sales, places like that.

The point is it's about access. Controlling illicit is an issue of enforcement and one of the

reasons maybe why the illicit market appeared to bounce up again a tiny bit is

because, although supposedly HMRC had more money to put into its illicit

strategy, if you actually look at what happened, and the Public Accounts

Committee hearing is quite instructive on this, there was a National Audit Office

report on illicit and the HMRC strategy, which then went to the Public Accounts

Committee, and it appeared that money that was meant to be going into enhancing

the strategy went in one door and came out the other, and you can have a look at

that. The HMRC are currently, and they've probably told you about this, updating

their strategy and I understand it will be published later this year. You know,

enforcement against the illicit market is a continuing problem which constantly has

to be tackled.

TABITHA JAY: And illicit potentially affects all categories of smokers and potential

smokers and everybody else.

DEBORAH ARNOTT: Well, no, there's actually quite a complex sort of analysis of who

buys illicit and not everyone will buy illicit, even if they're offered it on the street.

You have to make a decision that I'm going to buy illicit and that tends to be poorer

smokers and more heavily addicted smokers. Young smokers who have difficulty

getting access if they have the opportunity will buy illicit, because it's more

difficult for them to buy it from shops, vending machines have gone, all the rest of

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it.

LUK JOOSSENS: But I have never seen research where your first cigarette is an illicit

one. It's not in the group of 11 to 15.

SIR CYRIL CHANTLER: What about roll your own then? There's a lot of roll your

own consumption in young people.

DEBORAH ARNOTT: But that tends to be something people -- young smokers will

start -- because rolling a cigarette is a complex technical job, you have to learn how

to do it. I speak as someone who used to smoke and was never very good at rolling

cigarettes. But young people do tend to start on manufactured cigarettes and then,

if they become addicted, it's a source of cheaper -- you know, in terms of down

trading, the ultra low price is the cheaper cigarettes, but then there's another big

jump in cost to hand rolled tobacco. So if you're going to be a consistent -- you

know, if you're a regular smoker, then there's a real incentive to move to handrolled

tobacco and we've seen that shift over time.

SIR CYRIL CHANTLER: I'm very conscious we're out of time, but I'm interested,

Fiona, in what you said about the work you've been doing within a locality as a

cooperative venture in tracing illicit tobacco consumption. Is that something which

generalised across the country or is just something that's particular to the south

west?

FIONA ANDREWS: That's an excellent question. It's actually been funded and

developed at regional level, but I think has got demonstrable results which could be

rolled out.

SIR CYRIL CHANTLER: Have you got documentation of those demonstrable results?

FIONA ANDREWS: Yes. This is --

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SIR CYRIL CHANTLER: No. Can you send it us? Is that all right?

FIONA ANDREWS: Yes, I'll summarise it and send it.

SIR CYRIL CHANTLER: Sorry, it's just we -- thank you very much.

The final thing, for me, is, in Australia, and we're moving to Australia, are illicit

manufacturers copying standardised packages? Are they marketing standardised

illicit product?

DEBORAH ARNOTT: I've seen examples -- yes. The illicit market in Australia is very

different to here. It's been largely something called chop chop, which is loose

tobacco sold under the counter by retailers and in other places. But I have seen

more recently, and in fact I think it was in an industry document, but I will look it

up and send it to you, that they are now illicit brands being produced that have the

standardised packaging but are not manufactured by the major manufacturers and

they're being sold in Australia.

SIR CYRIL CHANTLER: Yes, but your general point, Mr Joossens, is that you can find

no reason, and I've written it down, and I've said plain packaging, as far as you're

concerned, will have zero effect on the illicit market one way or the other.

LUK JOOSSENS: Because it's a question of demand and supply and it doesn't fit with

that.

SIR CYRIL CHANTLER: Sorry, I rather took over that one.

TABITHA JAY: That's all right.

CHRISTOPER COX: Okay. I'm conscious that we're pretty much out of time, but just

on Australia, which is our last set of questions, it's really are you aware of any

information or data about what's happening in the Australian market since the

introduction of standardised packaging that you'd like to draw to our attention and

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the related question of what would you predict any such data will show in, say, two

to five years time or indeed over a longer timescale?

DEBORAH ARNOTT: I think you've probably already seen the paper on the impact on

quit line calls.

SIR CYRIL CHANTLER: Yes, we have.

DEBORAH ARNOTT: And more recently Melanie Wakefield has published or has had

published a peer review report on the likelihood that smokers will display their

packs.

SIR CYRIL CHANTLER: You're going to send us that.

DEBORAH ARNOTT: Yes. I think you may already have it, but I will send it to you

again.

There's also been on the industry side a London Economics report for PMI which

purported to show that there was no statistically significant fall in smoking.

SIR CYRIL CHANTLER: I've read that.

DEBORAH ARNOTT: I mean, the key point about that is the sample size wasn't big

enough to show --

SIR CYRIL CHANTLER: No, I've read the criticism.

DEBORAH ARNOTT: Okay. Fine. I haven't seen anything else other than that. I don't

know if anyone else has.

There will be more coming out and, obviously, when you go to Australia, hopefully -- I

mean, the problem is that the Australian government's doing quite a lot of research,

but it's in the middle of a major legal action against the tobacco industry. So a lot

of that research, it's going to be some time before it will published, because it's got

to be in a shape fit for the litigation.

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SIR CYRIL CHANTLER: Have you any particular knowledge, Mr Joossens, of illicit in

Australia?

LUK JOOSSENS: The market has been always very low and has been with leaf tobacco.

KPMG reproduced an empty pack survey similar to the one in Europe and you

have the same warning at page 1 of the report says, we only work to the references

of Philip Morris and nobody else and nobody else should quote the report, because

it's not intended for that. So that's incredible that everybody quotes in Europe a

report by KPMG where they say we only replied to references of Philip Morris and

you should not use it to make estimates. For the rest, I have no information about

illicit trade in Australia, because it's only one year later and we have no valid

studies.

But I can give you the report which was presented last week in the European Parliament.

SIR CYRIL CHANTLER: Thank you.

DEBORAH ARNOTT: And one thing we didn't cover was what can be done, and I

know you've got a print off copy of that, but I thought it would be helpful for you to

have the hard copies.

TABITHA JAY: Thank you, and, given that the only jurisdiction that has adopted the

policy of standardised packaging is only one year in, do you think that to wait to

adopt it in other jurisdictions would be the safest bet?

DEBORAH ARNOTT: Not for the health of the next generation of children who are

about to become smokers. I think it needs to be introduced immediately. There's

no reason to wait. There's quite good evidence.

I mean, it goes back to the tests I pointed you to at the beginning, that basically is it

consistent with tobacco control policy more generally and is it likely, as part of a

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comprehensive tobacco control policy, to reduce the appeal of tobacco products

and help contribute to a long term declining prevalence and uptake.

You know, given the harm that smoking causes, it's a completely proportional strategy,

it's not costly even to the tobacco industry, it doesn't interfere with the rights of

smokers and it's likely to support quitting and a reduction in uptake.

SIR CYRIL CHANTLER: Right.

SARAH WOOLNOUGH: And, not that this is the focus of your review, but of course, as

Deborah's alluded to, the vast majority of smokers want to quit, and these sorts of

measures are very popular amongst the public. So some work Cancer Research

UK's done to ask about public opinion about the introduction of standardised

packaging, well, the vast majority of the public are in favour and don't believe that

waiting is necessary.

SIMON GILLESPIE: There's about eight and a half thousand people a month taking up

smoking.

SIR CYRIL CHANTLER: Any other questions?

SARAH WOOLNOUGH: We did have just a small statement that we wanted to make at

the end of the meeting in relation to article 5.3 of the Framework Convention on

Tobacco Control.

So firstly to thank you very much for meeting with us. Secondly, we have noted the

submissions from the tobacco industry, believe there's some misinformation

included, and we'll write to you separately about that.

Thirdly, article 5.3 of the Framework Convention, as I'm sure you're aware, talks about

the fundamental conflict of interest between the tobacco industry and setting public

health policy and highlights against tobacco industry involvement in setting public

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health policy, and that's because of the terrible track record of the tobacco industry

over the many years. So we wanted to, I suppose, highlight that in relation to this

review, to welcome the transparency, that transcripts will be available.

I suppose one of our concerns is, because in the past the tobacco industry has used

opportunities such as a meeting of the nature it will have with you to highlight that

as a form of engagement and that they are still legitimately involved in policy

discussions, and we are concerned about that because article 5.3 suggests that the

tobacco industry shouldn't be involved in setting public health policy. So we just

wanted to, I suppose, finish by highlighting our concern but welcoming the

transparency and very much hoping that the tobacco industry won't be able to use

the meeting that they have with you to show ongoing engagement and involvement

in setting public health policy.

SIR CYRIL CHANTLER: I don't set public health policy.

DEBORAH ARNOTT: No. I think the fear is that they are likely to say they have been

involved in the decision making process in other jurisdictions to encourage other

governments to discuss with them, and I think it would be very helpful if you could

make clear in your report that's not the case, that you're not making decisions, that

that's not what this is about.

SARAH WOOLNOUGH: And you absolutely identified that upfront at the meeting

today, but we just felt as a group of public health organisations.

SIR CYRIL CHANTLER: Well, thank you for that. Good. Anything else?

DEBORAH ARNOTT: No, thank you very much.

SIR CYRIL CHANTLER: Good. We can turn off the transcript now then.

(12.09 pm)

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(Meeting concluded)