Sunak's vow to raise smoking age each year wipes millions off tobacco companies' value

Shares in UK tobacco firms fall as Prime Minister announces major new plan

British Prime Minister Rishi Sunak makes his keynote speech at the Conservative Party Conference in Manchester, Britain, 04 October 2023. EPA

British Prime Minister Rishi Sunak vowed to raise the legal age of smoking “by a year, every year” to protect youths from taking up a habit that was costing the country billions in dealing with illness and early deaths.

The UK leader also used his Conservative Party conference speech on Wednesday to announce a major shake-up of the country's biggest infrastructure project, the HS2 rail line, as he prepared the ruling party for an expected 2024 general election.

Mr Sunak, who took the top job almost a year ago, told the Conservative conference that he was the candidate for change, also announcing he would fold A-Levels into a new restructured school qualification.

Months after New Zealand set out plans to eliminate smoking, Mr Sunak said he wanted to see the first generation to have lived without ever becoming addicted to tobacco. He added that his government would also take action against vaping as concerns grow over its dangers.

“I propose that in future, we raise the smoking age by one year, every year,” he said. “That means a 14-year-old today will never legally be sold a cigarette and that they and their generation can grow up smoke-free.

“Because without a significant change, thousands of children will start smoking in the coming years and have their lives cut short as a result.”

The announcement took investors by surprise and the share prices of tobacco companies were immediately affected.

Dunhill and Lucky Strike owner British American Tobacco saw its shares slide from roughly flat to 1 per cent lower immediately after the announcement, knocking about £600 million ($729m) off its market value.

Fellow London-listed firm Imperial Brands saw shares fall 2.4 per cent lower after the update. Its market value also declined by about £340 million. The company, which owns Gauloises and Rizla, said it would engage with the government but also cautioned against the policy move.

Supreme, which makes disposable vaping products, also saw its shares slip on Wednesday.

“We understand the government’s desire for new tobacco control measures, because of the health risks associated with smoking,” a spokesman for Imperial Brands said.

“But, like any prohibition, the proposal to ban the legal sale of cigarettes over time threatens significant unintended consequences.

“On vaping, we will continue to engage with the government to create effective policies which prevent youth access and build trust in the category as a potentially less risky alternative for existing adult smokers.”

New Zealand was the first country to begin to annually raise the smoking age. People born on or after January 1, 2009, will never be legally allowed to purchase cigarettes as part of a strategy to become a “smoke-free” nation by 2025.

The country is also limiting nicotine content in tobacco products and allowing sales only through speciality tobacco stores. By 2023, the number of outlets permitted to sell cigarettes will be reduced from 6,000 to 600 nationwide.

HS2 hits the buffers

The railway announcement triggered a backlash from politicians across northern England, where the high speed line will no longer reach.

Mr Sunak turned against the project as costs doubled to £100 billion.

Although he said the £36 billion saved would back a new northern rail network, among a series of other projects, leaders across the political spectrum cried betrayal.

“What’s been announced at conference today is not a coherent plan,” said Andy Burnham, Mayor of Greater Manchester.

Mr Sunak also incurred the wrath of David Cameron, the man who won power for the Conservatives in 2010. He regretted the demise of a cross-party consensus behind the “transformative, long-term infrastructure projects”.

“I regret this decision and in years to come I suspect many will look back at today’s announcement and wonder how this once-in-a-generation opportunity was lost,” Mr Cameron tweeted on X.