Retail Newsagent’s Tom Gockelen-Kozlowski was at the Twelfth Delegated Legislation Committee, where ministers and MPs debated plans for plain packaging. With the move set to now be voted on imminently, he looks at the five key points of interest for the UK’s independent retailers.
1. Display ban? You ain’t seen nothing yet.
Plain packaging is coming, and for retailers who are about to, or have just, put up covers on their gantries, this will be an even greater blow. Planograms, now essential knowledge for store owners and staff looking to navigate a hidden tobacco range, will be even more important, but the risk of both cashier and customer not noticing when the wrong pack is sold or having to turn their backs for extended periods could mean chaos and danger for many store owners.
Yet, more than the challenges to category management and staff training, this is going to be a major financial hit to small businesses. RN reported two weeks ago that the government’s own impact assessment admits that, over a decade, plain packaging will cut tobacco revenue for the average convenience store in the UK by over £550,000. That doesn’t even include revenue from the incremental purchases (newspapers, milk, chewing gum etc) that smokers make.
Critics of plain packaging might argue that it won’t be effective, that these losses will not come to pass because the effect on smoking rates won’t be what’s desired. It is incredible, however, that, so close to an election, a right of centre party such as the Conservatives is willing to push through a law that’s aim is to damage thousands of businessmen and women’s livelihoods in such a significant way.
2. We’re a “far cry” from a delay or any other support.
While most retailers aren’t celebrating the costs accrued by the display ban, the delay of three years for small stores can at least be credited with softening the blow. Labour’s Simon Danczuk had told RN that there was “sympathy” in parliament for some kind of similar measure to help smaller businesses, not just retailers, but those all along the supply chain.
The law as it will be voted on (and certainly passed) later this week demands all branding be removed from tobacco within just 14 months. As Nick de Bois MP told the committee:
“We allowed small shops three years to implement the display ban…
so with the legislation before us today, we are disadvantaging the smaller businesses, because the larger ones will be able to adjust more easily.”
ASH, the Labour frontbench and the Department of Health appear immovable however and despite the concerns across the political spectrum, Nick de Bois told RN yesterday that we were “a far cry” from any supplementary legislation that could help retailers by delaying the law.
3. The illicit trade WILL increase for retailers.
Like the massive hit on revenue coming retailers’ way, the government knows that small retailers will also become more susceptible to the illicit trade and is pressing ahead with the legislation anyway. Nick de Bois MP said: “Even HMRC acknowledges that there is an increase in the likelihood of small-scale local retailers becoming unknowingly involved in the sale of counterfeit tobacco.”
On top of this, as RN reports this week, serious questions are also being asked about the measures that standardised tobacco packs will have to identify themselves as legitimate tobacco. A three year gap before measures from the European Tobacco Directive comes into force in 2019 makes the industry as well as politicians worried about giving criminals an easy ride when it comes to counterfeiting and smuggling.
The vast, vast majority of retailers up and down the UK are working hard with tobacco suppliers, police and trading standards to play their part in reducing counterfeit and smuggled tobacco in communities across the UK. What was not discussed or dealt with by public health minister Jane Ellison, or any other proponent of the measure, was the message that this expected boost to the illicit trade will send to retailers who are already tasked with implementing so much regulation.
4. The sanctimonious hypocrisy of some anti-smoking MPs is breathtaking.
One Labour MP, Kevin Barron, dismissed the small business arguments against plain packaging because of funding for a campaign that the NFRN had received from British American Tobacco.
“I exposed in 2011 exactly what the tobacco company was up to. I have no doubt that many of the missives that we have had screaming about what was going to happen to small retail were close to tobacco, even if they were not funded by it, as that campaign was,” Mr Barron said.
Quite what is wrong for a company like BAT supporting retailers with less time and resources to protect a key category in their store was not explained in the committee. Ghoulish references to so-called “Big Tobacco” seem enough of an argument in themselves.
Indeed, support that independents receive from manufacturers is about the only counteracting force against the might of supermarkets which, as Nick de Bois explained, will be at an advantage due to their deeper pockets and less tobacco-dependent business models.
Plus, as MP Philip Davies asked, isn’t ASH government funded? Is it right that one side gets major financial backing to put forward its views while the other is castigated for it?
While Jane Ellison MP later argued no government funding ASH received was for the purpose of lobbying, Mr Barron said that it would be okay if that was happening, anyway.
Mr Barron MP, like many of his opinion, seem worried about one form of corporate advantage or influence, but naive or blinkered when it comes to all others.
5. The Conservatives’ “party of small business” reputation is under threat.
There is a good chance that when the bill is passed, Conservative frontbenchers will try their best to credit plain packaging as a great final achievement for the Coalition, a truly progressive statement by a modernising Conservative Party. Retailers cannot let this happen.
Committee Room 9 is a fine, grand venue for many things, but it is not the House of Commons. Why was parliament not given the opportunity to debate this measure in full in the house?
With David Cameron, Theresa May, George Osborne, Philip Hammond and many, many other senior Conservatives refusing to publicly back this law, is it possible that the Delegated Legislation Committee was a useful ruse by both the Whips Office and the Department of Health to avoid this huge split becoming embarrassingly obvious?
While avoiding this has been managed successfully, any Conservative too timid to publicly speak against or in favour of plain packaging should be called out whenever they bring it up at a later date as a grand achievement.
What should be brought up – and will be by Retail Newsagent as the general election approaches – is that a Conservative-led government, in its dying days, implemented a law that hits businesses by more than half a million pounds and will affect smaller retailers with fewer resources disproportionately hard.
As one MP asked: “is this the party of small business or the party of small business regulation?”
Ask yourself whether the Conservatives would be willing to hit the revenues of 49,000 hedge funds, international corporations or government contractors by more than £550,000 each over 10 years.
I find it very difficult to imagine, and that could and should become politically toxic for a party that attacks Labour unrelentingly for being anti-business.