July 12 (Bloomberg) -- The U.K. government postponed plans to introduce plain packaging for cigarettes, saying it needs more time to assess the effect of a similar policy in Australia after a “highly polarized” reaction to the proposal.
“Of those who provided detailed feedback, some 53 percent were in favor of standardized packaging while 43 percent thought the government should do nothing about tobacco packaging,” Health Secretary Jeremy Hunt said in a written statement to Parliament in London today. “Having carefully considered these differing views, the government has decided to wait until the emerging impact of the decision in Australia before we make a final policy on this decision in England.”
Australia became the first country to introduce plain packaging on Dec. 1. All cigarettes in the nation must be sold in uniform packs, with the brand name relegated to the bottom quarter of the package on a brown background. The law is being challenged at the World Trade Organization and at arbitration.
While U.K. Prime Minister David Cameron initially backed plans for plain packs, he has backed away as such a move would damage the packaging industry and cost 3 billion pounds ($4.5 billion) in lost tax revenue, the Sun newspaper reported May 2.
“We haven’t seen what the impact in Australia and New Zealand is, and until that is established it’s pointless to even discuss it,” Chris Wickham, a tobacco analyst at Oriel Securities in London, said by e-mail. “From a cigarette-company point of view, the upcoming European directives are more important.”
European Union officials are debating guidelines to regulate the sale of electronic cigarettes as well as cigarette packaging, covering them with graphic images and health warnings and banning the promotion of flavoring such as menthol.
Shares in British American Tobacco Plc and Imperial Tobacco Group Plc were little changed today. BAT fell 0.2 percent to 3,489.5 pence at 2:17 p.m. in London, while Imperial was down 0.3 percent at 2,266 pence. Both companies were separately named in the Daily Mail and the Guardian newspapers today as being potentially interested in acquiring Swedish Match AB, a maker of smokeless tobacco products.
“The U.K. government has taken a pragmatic approach by deferring its decision regarding plain packaging given that there is still no credible evidence to suggest such a measure will actually reduce the number of people who smoke,” BAT said in an e-mailed statement. “An ill-thought through measure, such as plain packaging, brings with it the very real threat of serious unintended consequences, such as a rise in the number of smokers willing to turn to the black market.”
A spokesman for Imperial also welcomed the government’s move, while the Smokefree Action Coalition, an anti-tobacco lobby group, said in an e-mailed statement that Hunt’s decision was a “tame surrender” to the tobacco industry.
Cameron’s spokesman rejected accusations by the opposition Labour Party that the postponement was linked to the premier’s appointment of Lynton Crosby, the managing director of lobbying company Crosby Textor, as a strategist for his Conservative Party’s 2015 election campaign. Labour said Crosby has links through his company to the tobacco industry and Cameron should declare what role he had in the decision.
“We have to ask what happened,” Labour’s health spokeswoman, Diane Abbott, told lawmakers in the House of Commons. “We suspect that Lynton Crosby happened.”
“Lynton Crosby has never lobbied the prime minister on this issue and has had absolutely no involvement in this issue,” Cameron’s spokesman, Christian Cubitt, told reporters in London. “He’s not employed by government, he’s employed by the Conservative Party as an adviser.”
To contact the reporters on this story: Robert Hutton in London at email@example.com;