Tobacco Black Market on the rise

Smoking rates are increasing significantly in some parts of England, even as revenue from legal duty-paid cigarettes decreases, suggesting a massive increase in black market activity.

Official figures from UK Revenue and Customs (HMRC) suggests that the number of cigarettes bought on the legal market fell by 45.5% between 2021 and 2024.  While new research shows that in some parts of England, smoking rates have increased for the first time in 20 years.  Smoking rates fell in some parts of England also, but regardless of how you stack up the increases and decrease, it doesn’t tally with this huge reduction in the sale of legal cigarettes and other tobacco products.

‘The only plausible explanation for the collapse in legal tobacco sales is that there has been rapid growth in tobacco sales on the black market,’ says Christopher Snowdon, Head of Lifestyle Economics at the institute of Economic Affairs.

He explains that there were four significant increases in tobacco duty between October 2021 and October 2024, with the minimum excise tax on cigarettes rising by 39% and duty on hand rolling tobacco (HRT) rising by 76%. ‘These tax hikes have not led to increased revenue. On the contrary, cigarette duty revenue has fallen by 20% and HRT duty revenue has fallen by 19% (as shown in the two graphs below). Overall, tobacco duty revenue fell from £10.4 billion in 2021 to £8.4 billion in 2024,’ he said.

Increasing taxes has long been used in tobacco control to dissuade people from smoking. ‘But if the taxes are too high, cash-strapped smokers can turn to the black market, diminishing any health benefits of tax rises and depriving the government of tax revenue,’ says Dr Marina Murphy, Senior Director of Scientific Affairs at XYZ.  ‘Getting the balance right is essential, as is ensuring that less harmful, alternatives to smoking remain accessible and affordable,’ she said.

The increase in smoking rates was revealed by a study of more than 350,000 adults in England over an 18-year period, which was conducted by scientists from University College London. They found that smoking rates in parts of England have increased for the first time in nearly two decades increasing by 10% in southern England - The south-west saw the biggest jump increasing by 17% to 18.7% between 2020 and 2024. Rates in the south-east and London rose by 9% and 8% respectively.

Extrapolating these figures for the whole population would mean that in England, around 7.5 million adults are smokers. Of these, 3.3 million adults are in London, the south-east and southwest – which equates to nearly 400,000 more than in 2020.

In contrast - rates decreased by 9.7% over the same period in the north. There are 2 million smokers in the north of England – 160,000 fewer than in 2020.