Social cost of tobacco estimated at over £49bn in England

The cost of tobacco to the UK economy has been estimated at four times the tax it generates, according to a study by Landman Economics conducted for ASH UK. The costs in lost productivity and social expenditure caused by tobacco are far greater than the medical costs alone.

The costs of tobacco to society and the economy are not limited to medical expenditure affecting health and social welfare organisations. A British study, carried out by Landman Economics on behalf of Action on Smoking and Health (ASH UK), documents the scale of the cost to society and provides figures where there are often only erroneous beliefs.

One such belief is that taxes on tobacco products are a financial windfall for the English state. Studies conducted on the social cost of tobacco show that these taxes – £11.3 billion in 2023 (€13.2 billion) – in fact only cover a part, here a quarter, of the costs accumulated by the community.

Productivity and social benefits costs exceed those of health

The Landman Economics study estimates the total social cost of tobacco in England at £49.2 billion (€57.6 billion) per year.[1].

Productivity costs, borne mainly by businesses and the local economy, are by far the largest, at £32 billion (€37.4 billion). Social welfare costs, largely covered by local authorities, account for £15 billion (€17.5 billion) and also include the cost of home care and hospital accommodation. Pure medical costs are estimated at £1.9 billion (€2.2 billion), a small portion of the total social cost. The costs attributable to fires, here estimated at £328 million (€384 million) have been revised after this study, which would lead to a reassessment of the total social cost of tobacco at £49.3 billion.

In addition to these costs, there would be an additional £25.9 billion (€30.3 billion) in quality-adjusted life years lost due to premature deaths caused by smoking.

Detail of tobacco costs in England

An economy that benefits local players little

The impact on the local economy is particularly evident in the absorption of revenues dedicated to tobacco products, often produced abroad and generating little margin for retailers, whereas this revenue could have been invested in more local products or services. When they are established in a country, the highly automated factories of this industry employ few workers. If no one bought tobacco in England, the total benefit for the English economy would be 13.6 billion pounds (15.9 billion euros).

Moreover, according to Howard Reed of Landman Economics, the economic cost of tobacco is greater for localities where smoking prevalence is high. This cost is all the more difficult to bear when these localities contain disadvantaged populations and have lower incomes. The illnesses and work incapacities generated by tobacco are thus estimated at ten years of life, compared to non-smoking workers.

A calculation of this type has been carried out and updated several times in France to assess the social cost of tobacco. In the 2019 estimate, published in July 2023, this social cost would reach 156 billion euros each year for tobacco, 102 billion euros for alcohol and 7.7 billion euros for illicit drugs.[2]In the same year, taxes collected in France on tobacco products amounted to 13.1 billion euros.

Keywords: England, social cost, productivity, social benefits, local economy

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