§ 8.25 p.m.
§ Lord Astor of Hever rose to ask Her Majesty's Government what effects a ban on tobacco advertising and sponsorship would have on the British motorsport industry.
§ The noble Lord said: My Lords, first, let me declare an interest as president, unpaid, of the Motorsport Industry Association. My only interest tonight is British motorsport. As a lifelong non-smoker, I must make it clear that I do not stand here to defend the tobacco industry. I understand the concern of the Government to encourage a significant reduction in the number of people smoking, especially—I speak as the father of six children—among the young.
§ The objective of the MIA is to promote and protect our motorsport industry, which is a real British success story. The world's leading motorsport firms choose to be located in this country. They provide 50,000 high-skill, high-tech, high-pay jobs and another 150,000 part-time jobs across 633 businesses, with a combined turnover in excess of £1.5 billion. Flavio Briatore of Benetton said: "If you like prosciutto, you come to Italy. If you like champagne, you come to France. For Formula 1, you come to England. I don't like the weather, but the best engineering is here."
§ The motorsport industry in the United Kingdom creates exports worth up to £900 million every year. More than 14 per cent. of turnover is in R&D. That enables the United Kingdom to work at the leading edge of technology and helps advance our engineering capabilities. Developments within electronics, metallurgy, petrochemicals and so on are all maximised in an attempt to win races.
§ The motorsport industry needs big money and draws 40 per cent. of its sponsorship from the tobacco industry compared with 3 per cent. for other sports. All the teams standing in the first six positions in the Formula 1 Constructors' Championship have tobacco companies as their biggest sponsor. The World Rally Championship UK-based team either are dependent on tobacco 698 sponsorship or have drivers whose income is supported through tobacco sponsorship. This highly successful industry—the envy of the world—flourishes in partnership with the tobacco industry. Its premium will always offer amounts over and above any other potential sponsor.
§ There are few industrial sectors that are dominated by any one country to the extent that Britain does the motorsport world. However, that dominance is seriously at risk. There has been press speculation that the Government are close to accepting an amended Luxembourg draft directive which includes a ban on sponsorship, with a five-year grace period. The directive having been approved by the European Parliament, the Government would implement a ban through secondary legislation without the need for a full Bill to go through Parliament next year.
§ Is the future of such a successful British industry to be decided in that way? Will Parliament be able to scrutinise the Government's plans in detail? I am very sceptical of the draft directive, not least because there has been no clear evidence to suggest that tobacco sponsorship of sport, and motorsport in particular, increases consumption of cigarettes. In the absence of clear evidence, it is reasonable to question the effects of an ill considered ban, which could do enormous damage to the British motorsport industry. The tobacco industry will remain involved in motorsport, the difference will be that its funds will maintain jobs and profits not in this country but abroad. The proposals will encourage the tobacco industry to sponsor the widest possible range of international sporting activities outside the European Union where there are less demands. New countries want to be associated with the most glamorous sport in the world.
§ There is already enormous pressure to increase the number of events in the Asia/Pacific region, with 70 per cent. of the worldwide television audience. Events will soon be held in China, South Korea, Malaysia, and possibly Indonesia and India. In those regions most governments exempt races from any restriction on tobacco advertising and they are growth markets for the tobacco industry.
Before the Government agree to this directive they must ask themselves the following questions, which I hope the Minister will address in his reply. I have given him notice, but I understand that he may need to write to me on some of the points. First, can the Minister be more specific about the "time and help" promised to sport by the Health Secretary to,
wean themselves off tobacco cash"?
Do the Government have any plans to help find other sponsors from British industry? Jackie Stewart has had to go to the Far East for most of his sponsorship. By contrast, most of the sponsorship for the Prost team comes from his own country, France.
§ Secondly, are the Government concerned at the probable disappearance of the British Grand Prix, the Superbike Grand Prix and the RAC Rally to non-ban countries if the legislation goes through? Contracts between the governing body, the FIA, circuit promoters and organisers world wide already contain get-out 699 clauses in the event that the appearance—in other words, the liveries—of the cars, have to be fundamentally changed. I foresee British public opinion being deeply unhappy if we lose those prestigious events. Last year's British Grand Prix brought 170,000 to Silverstone, pumping £30 million into the local economy in one week, benefiting 5,420 businesses and 44,700 local jobs.
§ Thirdly, are the Government concerned at the enormous investment potential of tobacco money moving away from Britain, followed by an exodus of manufacturers? It is certain that, in the long term, the industry would move from Britain to where the racing is—that is simple economics. Already Asian companies, anticipating the problem, are approaching UK companies with a view to resettling in Asia.
§ Fourthly, are the Government proposing to attempt to ban the broadcasting into the UK of international sporting events held outside the European Union if tobacco sponsorship is involved? Formula 1, the most-watched sport in the world, is regularly broadcast into people's homes from around the world, making an effective ban almost impossible. This legislation will not alter the viewing public in Europe being able to watch those races and the total amount of tobacco sponsorship on our television screens will remain the same.
§ I cannot believe that the Government would put our dominance in so important an industry at risk, particularly as they have been so supportive publicly of their determination that sporting activity will not suffer. Furthermore, Margaret Beckett indicated that the DTI is keen to support and promote the smaller innovative firms that make up the motor sport industry. The DTI is working very constructively with the MIA to produce an industry-wide database.
§ Ill-conceived legislation will certainly have serious employment and fiscal repercussions for the motorsport industry. I believe the Luxembourg proposal is misguided and should be rejected. I am much looking forward to the maiden speech of the noble Lord, Lord Davies, and thank other noble Lords speaking tonight for staying rather later than they expected.
§ 8.35 p.m.
§ Lord Davies of Oldham
My Lords, I am grateful for this opportunity to make this maiden speech. I recall that on the occasion on which I made my maiden speech in the other place in 1974 I sought guidance from the Whips' Office. I was told one thing: "Keep it short". On a subsequent occasion, after I lost my seat and was returned to another constituency, I went again to the Whips and they produced exactly the same phrase. Believe it or not, when I went to my noble friends in this House to ask them what I should do with my maiden speech, they said likewise, "Keep it short". I intend to follow that excellent advice.
This debate raises some general issues of importance to the nation. I very much agree with the noble Lord, Lord Astor, that the industry is not to be underestimated in terms of its importance. In the latter part of my speech I intend to indicate how important I believe it to be. But 700 I also regard the issues which confront the Government in relation to the health of the nation as being of significant importance too. There is no doubt that the relationship between tobacco and ill health in terms of cancer and various respiratory diseases is now well attested, sufficient for most thinking people to recognise that if Sir Walter Raleigh had been bringing the dreaded weed into this country in this year of grace at this time, it would be a proscribed drug on the same level as others which we, in our wisdom, sought to ban. However, we are faced with circumstances in which many people enjoy the consumption of tobacco.
We must recognise that there has been a substantial reduction in the amount of tobacco consumed in this country, but progress has not been as great as many would hope, particularly among young people. It is disturbing that one-third of young people at the age of 16 have already been smoking, there being an even greater incidence among girls than boys. It may be thought that the last government were somewhat over indulgent towards the tobacco industry against a background where it has not gone unnoticed that prominent members of the last administration have since had interesting relationships with tobacco companies in terms of lucrative contracts and consultancies.
I know that this Government will approach this issue with greater assertiveness against a background where it will be necessary to increase restriction, as depicted in our manifesto. Other countries have shown the way. It is clear that countries that have a ban on the advertising of tobacco have greatly reduced the consumption of tobacco more rapidly and more intensively than we have. That is why it is important that we should learn from that.
As a sportsman I have a high regard for the sporting competence of not only the Grand Prix but the whole range of motor sport drivers. But as a sportsman I must attest to the fact that tobacco and sport are ill bedfellows and there are many reasons why we should seek to separate off the relationships between them. However, I agree that the noble Lord made an important case in regard to an industry that we should regard with considerable concern. That is why, when my noble friend the Minister replies, I hope that he will indicate that proposals being advanced will be carried out with great care and consultation with the industry. It is certainly the case that we would not wish to introduce changes that damage such a valuable industry.
As the noble Lord indicated, it is an industry of which our nation ought justifiably to be proud, not only because from time to time it produces such glamorous figures as Damon Hill winning the world championship—one recognises the way in which the whole nation responded to that achievement last year. The country also needs to appreciate the achievements of British engineers and entrepreneurs in dominating this industry and creating such a success story. It is in somewhat sharp contrast, for example, with British volume car production which we all know has had a sad history over the past three decades.
It is clear that the motorsport industry benefits from engineering which is relatively small scale. It is carried on in small-scale units which have high skill levels and 701 there is a crucially high investment in R&D, as the noble Lord, Lord Astor, mentioned. At this level it is only surpassed by the pharmaceutical industry, another highly successful industry which illustrates the importance of investment in research and development in our industries. It is certainly the case that this industry is probably the closest British parallel to Silicon Valley and the development of the computer industry in the United States.
Therefore I say that we need to look upon the motorsport industry as one which develops and cherishes high-level engineering. It is perhaps about time that we in this country recognise the importance of engineering. It seems to me that so often we look upon the achievements in art and literature, television presentations and documentaries as worthy of prizes and yet in the world of engineering we continually have no recognition of the real achievements of British engineers. Perhaps it is about time we did, as part of a general drive within our nation, to give much greater emphasis to the engineering and practical skills of our nation and introduce some awards which recognise that aspect.
Of course the industry also developed another dimension which is close to my heart. I refer to the extent to which it benefited from university links and from creating relationships with higher education institutions in the development of high level technical achievements. That was based also on a skill level which in the 1950s and 1960s gave us our lead in the industry and it helps to explain why we are in the advanced position that we are today. The country had developed engineering and technical skills which we appear to be losing at the present time. There is now less emphasis in higher education and further education in terms of practical skills. I hope therefore we also recognise that this industry could not have got where it did without the development of the education system in those terms. We should recognise too why it might be necessary for us to look at a more balanced curriculum for our able school children in order that engineering resumes its rightful place.
I recognise that the industry will be faced by difficult adjustments, but other sports have also faced difficult adjustments. At one time the world of golf was very dependent on tobacco advertising for its major events but it has made a successful transition. That is also true with regard to a number of other sports where for a period of time tobacco companies were key sponsors. If sufficient time is given and if we have a sensitive approach to this issue we shall see both the continued predominance of the industry and at the same time the eminently desirable goal of separating sport from tobacco promotion.
I conclude by saying to my noble friend the Minister that of course I wish the Government well in their determination to make greater strides in improving the health of the nation by restrictions on tobacco advertising and on forms of sponsorship which give support to that. However, we are discussing a unique industry, an industry of great success and achievement, and it is right that the Minister should recognise the 702 concerns on both sides of the House that the matter needs careful handling and that there should be consultation before the measures are introduced.
§ 8.44 p.m.
§ The Earl of Liverpool
My Lords, I am delighted to follow the noble Lord, Lord Davies of Oldham, because it gives me the opportunity to congratulate him on an excellent maiden speech from which, I am happy to say, I drew a few crumbs of comfort. He has demonstrated a great enthusiasm to get off the mark in your Lordships' House, having been introduced only last Tuesday; but then I see he lists the word "sport" among his recreations. This no doubt accounts for his impressive speed off the starting blocks.
I see that the noble Lord was an assistant Government Whip in another place during the last Labour administration—I should perhaps say "Old Labour administration". I congratulate him on wearing so well. He has acquitted himself with distinction on the New Labour Government Benches today. I am sure other noble Lords will agree with me when I say how much we hope we shall have the pleasure of hearing from him on many future occasions.
I should like to thank my noble friend Lord Astor for enabling us to debate the question of tobacco sponsorship and advertising and the effect a ban would have on the motorsport industry. It is timely because the continued tobacco company sponsorship of sport in general and motor racing in particular is under threat from both the EU and our own Government. My principal concern is that we must resist the ever-onward rush of the nanny state or the "Don't worry, nanny knows best" philosophy.
The fact is that tobacco is a perfectly legal substance and although it may not be good for your health to smoke, I shall always maintain that it is our inalienable right, living as we do in a free, democratic society, to make our own choices about our lives provided we do so within the law.
The reason I feel moved to say this is that there seem to be quite strenuous efforts at the moment to cast not only smokers but also the tobacco companies as anti-social and even worse. For example, it was reported in the newspapers that at an anti-smoking summit, organised by Her Majesty's Government and attended by the Minister for Public Health, one of the speakers, Dr. Sandy Macara, chairman of the British Medical Association, was reported as saying that all those opposed to the tobacco industry should "join forces against the corporate criminals". Whatever your views, I hope your Lordships will agree that those are strong words to use against a perfectly legal industry and that this kind of comment does nothing to raise the level of debate. I want to play a part in raising the level of debate and I realise there are strongly held views on both sides.
As I understand it, the main purpose of a ban is to reduce tobacco consumption. That being the case, I believe it is necessary to look at countries which have already enacted similar legislation. In Norway, which banned tobacco advertising in 1975, the level of smoking increased by 3 per cent. between 1975 and 703 1992. In Iceland, which banned advertising in 1987, the level of smoking increased by 21.5 per cent. between 1987 and 1992. In Finland, which banned advertising in 1978, the level of smoking increased by 4.5 per cent. between 1978 and 1992. Even in Australia, which banned advertising and sponsorship in 1992, the Victoria Cancer Society gathered figures which indicate that the percentage of 12 to 15 year-old smokers increased by nearly 5 per cent. in boys and 3.5 per cent. in girls between 1990 and 1993. Conversely, tobacco consumption is falling here in Britain where sponsorship and some advertising are still permitted. Does this add up to conclusive evidence that a ban should be imposed on us and possibly all European countries? I submit that it does not.
The Formula 1 motorsport circus is now a truly global business with world-wide television audiences, as my noble friend Lord Astor said, in the region of 900 million. If tobacco sponsorship is stopped there is a very real danger that the FIA will be forced to take a difficult business decision and concentrate the races in non-European countries. And we should not be lulled into thinking that this is impractical and could never happen. My information is that there are already a number of countries knocking on the door to hold a Formula 1 Grand Prix. My noble friend Lord Astor mentioned that point. It is one of the most prestigious sporting events in the annual calendar with the promise of thousands of jobs and a massive inflow of funds. So no wonder it is so keenly sought by Asian, Middle Eastern and other countries.
In any case, let us assume that the Grand Prix races are moved largely outside Europe and that tobacco sponsorship is maintained. How will it be possible to blank out that tobacco sponsorship when the Grand Prix takes place outside an EU country and is viewed on television by the worldwide audience of almost 1 billion, with many millions residing in this country? I hope that the Minister will touch on that point in his reply.
I am sorry that my noble friend Lord Hesketh is not in his place this evening. In a debate on the motor racing industry on 24th January last year he spoke with great authority on our remarkable success in that industry. With your Lordships' indulgence and with, I hope, my noble friend's approval, I should like to quote briefly from what he said in that debate:Out of a tiny beginning, where we are talking not even about hundreds of employees in 1946–47 but tens, came an industry which today has more than £1 billion of turnover, more than £700 million of exports, more than 40,000 employees and is a world leader. There is no question about that".—[Official Report, 24/1/96; col.1088]I believe that those figures have now increased, as was mentioned by my noble friend Lord Astor. It is no mean achievement for any industry and this is an industry of which we can be justly proud.
But what would be the effect on the industry and the teams which are based here if a ban were imposed? Bernie Ecclestone said in the Mail on Sunday on 29th June 1997 that,if there is a total ban on advertising, the British Grand Prix would he under threat … teams might then start to move away from Britain and we would lose our position as industry leaders".704 Eddie Jordan of the Jordan race team said that,it would be catastrophic for England and Europe if there was a total ban on tobacco advertising. The motor racing industry is a jewel in Britain's crown".Perhaps even worse, we are told that we need not worry because Virgin would introduce and sponsor Indy car racing in Britain as a substitute for the Grand Prix. That really is no substitute for F1 Grand Prix as it requires a steeply banked oval track with drivers locked in a permanently left-hand down configuration with few of the driver skills required on a conventional race track. However, I have the deepest admiration for the business and political acumen of Mr. Richard Branson—and he surely knows something I do not!
In any event, I agree with those who believe that our present motor racing industry is a jewel in Britain's crown. We are the acknowledged world leaders in design, construction and engine technology. The noble Lord, Lord Davies of Oldham, touched on the engineering aspect in his maiden speech. In addition, we have an impressive list of world-class drivers.
Whatever decisions are taken by Her Majesty's Government and, perhaps more importantly, by the European Union, it is essential that our enviable reputation in this sport is not undermined in any way. Until now we have formed a blocking minority in the European Union to the EU draft directive on advertising and sponsorship, the other countries being the Netherlands, Germany, Denmark and Greece. In the event that the UK and one other country removed their objections—I believe that it is possible that the Netherlands may do so—the Commission's proposals would be passed on 4th December this year. I find this a matter of grave concern and I hope that we may resist going down that route.
With the indulgence of the House, I should like to conclude with one more brief quote. This is from Mr. Denys Rohan, the chief executive of the Silverstone circuit which hosts the British Grand Prix. He said:We threw away the best motorcycle industry in the world and we did the same with our motor industry. We cannot just look at our feet and let it happen again; it would be sad if we lost the Grand Prix but the future of the industry is my main concern".I entirely echo those sentiments and I look forward to receiving an assurance from the Minister that the Government will keep at the forefront of their mind the need to ensure that nothing should be done to undermine our pre-eminent position in the world of motorsport.
§ 8.55 p.m.
§ Lord Chesham
My Lords, I should like to join in the tributes that have been paid to the maiden speaker, the noble Lord, Lord Davies of Oldham. I am sure that we shall hear from him frequently and I look forward to that. With regard to the tobacco industry and golf, perhaps I may mention to the noble Lord that last week the international Alfred Dunhill Cup was played at St. Andrew's.
I should perhaps declare an interest in the topic of this debate, having been brought up by my father with motor racing as a participatory sport and having in the 1960s been a marshall at many of the motor racing circuits in the UK.
705 My noble friend Lord Astor of Hever is to be congratulated not only on tabling this Unstarred Question, but also on the way in which he has presented his case.
I also do not agree with the "nanny" state and with the attitude, "We know what is good for you. Indeed, we know better than you what is good for you and therefore we will ban you from doing something because we know better". I take objection to the effects of bans on freedom of choice, on the freedom of the individual and on the freedom of competitive market forces.
Over the past 50 years, Britain has developed as the world's leading centre of the motorsport industry. That has been due to a number of factors, but primarily dates back to the post-war years when Britain was perhaps better placed to return to motor racing than those countries which had been pre-eminent in the run-up to hostilities; namely, Germany and Italy. As that advantage emerged, so was it capitalised on by a number of brilliant young engineers and commercially astute individuals, the most famous of whom was probably Colin Chapman. Not only was he a ground-breaking designer, but he was also the first person to bring full-scale commercial sponsorship into the world of Grand Prix racing with Gold Leaf Team Lotus. However, I do not think that other famous names such as ERA; Vanwall; BRM; Cooper Climax; Connaught and HWM, to name but a few, should go unrecognised in this context.
As the British motor racing industry prospered, it built up a pool of talent over the years which in turn attracted more companies and investment. The result today is a multi-million pound industry. Figures have been bandied around, but I understand that it is worth approximately £2 billion, with a significant proportion earned in exports, and employs an estimated 50,000 people.
The links between motor racing and the tobacco industry have continued non-stop over the past 30 years, providing a mutually beneficial relationship. The tobacco industry has invested considerable funds in racing as a vehicle which can add excitement and brand imagery. One could expect no less. The industry has benefited substantially in terms of investment in infrastructure and has grown into a world-beating force. That goes all the way from the teams, through to the tracks and the entire support industry, including the media.
A recent analysis of the economic impact of the British Grand Prix on the South Midlands produced the following major findings for 1996. The British Grand Prix injects £28 million into the local economy, including £25 million from outside spending. The race week draws 170,000 spectators, 80 per cent. of whom come from outside the local area, which is defined as a radius of 25 miles. The Grand Prix impacts on 44,960 permanent local jobs. Those figures have been increased in the study by nearly 10 per cent. for 1997. These are not trifling figures. The banning of tobacco sponsorship of the British Grand Prix would seriously jeopardise its existence. I understand that 44 countries have declared an interest in running up to 18 grand prix per annum.
706 Let us not believe that Nanny knows best, my Lords. No thank you, not for me.
§ 9 p.m.
§ Lord Rowallan
My Lords, as the noble Lord, Lord Davies of Oldham, pointed out in his maiden speech, it is ironic that the tobacco industry chooses sport as one of its major outlets for advertising. I am not a smoker, but I now understand that passive smoking is extremely bad for me. I watched my father steadily die from smoking cigarettes. I have no reason for supporting cigarettes, but I love sport. Sport can flourish only with sponsorship. The tobacco industry as a whole every year provides £10 billion to the Exchequer. Further, it advertises to the tune of £50 million and provides sponsorship to the tune of £100 million in this country, but only £9 million to £10 million of that goes to sport.
Who smokes? This was another interesting point referred to by the noble Lord, Lord Davies of Oldham. I understand that those over 55 and those under 30 tend to smoke a good deal, but that those in the 30 to 55 age group smoke less than any other group. Is that the result of watching parents who are very heavy smokers and living in a smoky, fume-filled atmosphere, or the result of health warnings? There must be a very distinct reason for it. But it is older and, much more frighteningly, younger people who smoke. Despite the £1 million that is spent each year on the campaign to stop children and teenagers smoking and the £13.5 million spent since December 1994 on the campaign to stop adults from smoking more and more are doing it.
One must understand the difference between advertising and sponsorship. Advertising is designed purely to try to persuade people to buy a particular brand of cigarette. A 1 per cent. switch can mean a £110 million loss or increase in the sale of a particular brand of cigarette. On the other hand, sponsorship enhances the corporate identity and reputation of the sponsor. It provides an opportunity to reinvest socially in the community and it does not specifically encourage people to start smoking or make smokers smoke more. Smoking will not go away if sponsorship or advertising is stopped, but unfortunately many sports will.
I take this opportunity to thank my noble friend Lord Astor of Hever for initiating the debate this evening in which a number of very interesting points have been raised. This debate is concerned mainly with motorsport, and I can see why. There are eight teams: Ferrari is sponsored by Marlboro; Williams by Rothmans; Benetton by Mild 7; Jordan by Benson & Hedges; McLaren by West; Prost by Gauloise; Minardi by BAT; and Sauber by Red Bull. All of those are sponsored by the cigarette industry.
I should like to extend the debate a little further because so many other sports will be affected by a potential ban. During the past year a further 14 sports have received money from the tobacco industry: golf, show jumping, snooker, ice hockey, darts, 10-pin bowling, clay pigeon shooting, rugby league, motor cycling, fly-fishing, amateur tennis, yachting, horse-racing and greyhound-racing. That is a fair variety of sports which take place in this country today. Can 707 this country afford financially to give up the income that is received by the Exchequer in taxation and the employment that it provides through retailing and advertising and, at the same time, destroy sports that provide so much to so many? Remember that these sports nearly always take place in parts of the country that are less affluent where we should concentrate on giving people some hope for the future.
Sponsorship also provides money for new grandstands to comply with the Taylor report and for youth development in different areas. John Lord, chief executive of the Ice Hockey Superleague, stated in a letter to Tony Banks, the Minister of Sport:It remains unclear and questionable who gains but very clear who loses if the Government ban tobacco sponsorship".If all advertising and sponsorship is banned, what then? Will the money simply go elsewhere? That certainly seems to have been the case in France. For instance, much to the relief of the racing industry, Martell has sponsored the Grand National. Without television coverage some of the smaller sports will surely struggle as a result of the banning of advertising.
My noble friend Lord Liverpool said that several countries had already banned tobacco advertising: Norway in 1975, Finland in 1977, Canada in 1989, New Zealand in 1990 and Australia in 1992. I understand that even the tobacco industry admits that there may be a resultant fall of about 4 per cent. That does not appear to me to be an enormous figure. Any fall must promote health, but is it sufficient to ruin so much to provide so little?
The tobacco industry has been self-regulated since 1977. This is monitored by COMATAS which has representatives from the Departments of National Heritage and Health and UK tobacco companies and importers. That reports to the Secretary of State for Health and the Minister of Sport.
We live in a free market economy. Please, let us not throw all of that away for individualistic, politically correct or green reasons. I agree that smoking is a dirty habit. I also agree that it costs the National Health Service dearly. It must deal with cancer and all of the other diseases that smoking creates. I know that first hand because of the effect on my father. However, if one takes away advertising and sponsorship, smoking will not go away. People, especially the young, need it when in company. It is rather like drinking. If you have something in your hand it makes conversation a good deal easier. That is one of the main reasons why people smoke and drink.
Stopping advertising might make the smoker stick with the brand that he is already smoking, because he is not persuaded that there is another brand to which he would prefer to go. Stopping sponsorship will hurt many sports. "Find another sponsor", will, I am sure, be the Government's reply, but it is not easy.
I run a small equestrian centre. Finding sponsorship is extraordinarily hard unless one has TV coverage. A sponsor is not interested unless one has TV, because he does not benefit from it. Sport is our nation's lifeblood. When there is sport in a neighbourhood, there is little 708 trouble. It keeps people away from the street corner. It keeps them away from drugs. It keeps them away from troublemakers and from potential trouble. We must be seen to support sport. We must support sponsorship, from whatever source, providing that it is legal—tobacco or other sponsorship.
I cannot believe that seeing a car going around in a particular livery makes millions of people jump up and say, "I want to smoke, and it must be such and such a brand". I do not smoke, as I said, because I saw what happened to my father, but I do not want to see my views imposed upon anyone else. We live in a democracy, or we are supposed to. Let individuals decide whether they want to smoke. Carry on telling them—goodness me, we should! —that it can damage their health, because it can and it does, but let sports obtain money from any legal source they want to keep this country's sport alive and kicking. The benefits far outweigh the costs. I want to see sport continue to thrive in this country. I hope that the Minister will be able to give us the assurance that he, too, wants to see that.
§ 9.10 p.m.
§ Lord Sempill
My Lords, I wish to apologise for intervening in the gap. I am afraid that I arrived somewhat late today and did not realise that the noble Lord, Lord Astor, was bringing forward this interesting Question. Perhaps I may congratulate the noble Lord, Lord Davies, on his maiden speech. It was interesting, and I feel close to the issue of smoking. I am on my feet because, unlike many noble Lords, I have spent eight years in the tobacco industry. I spent the best part of that eight years in the marketing of cigarettes and the seeking of sponsorship for tobacco companies.
It was interesting to hear noble Lords' comments. I shall not repeat any facts or data, because all the major relevant points have been covered. I believe that I have some experience of advertising, and I should like to draw the Minister's attention to a key issue. It is interesting to note that the Question mentions both advertising and sponsorship in the same breath. We should be clear that they are not quite the same thing. They both belong to the discipline of marketing. Advertising's primary remit, by and large, is to persuade people to try a product or to switch from a product.
To a large extent, sponsorship rides on the back of that issue. However, we must be well aware of the role played by tobacco companies themselves. We are talking about global giants. The point has been made by many noble Lords that they will not go away. These global giants have substantial cash reserves from which most governments benefit either in terms of excise or corporate taxation. They are actively in the business of trying to sponsor sports. We in this country are one of the major beneficiaries of that.
There is an advertisement in the Spectator, albeit by the well known Mr. John Carlisle, which clearly outlines that in this country specifically the tobacco industry is self-regulating and is not under what I would call the adverse influence of harsh government legislation. As I said, I was in that environment for eight years, and I know that many of the decisions taken around the tables were taken with self-regulation in mind.
709 British tobacco companies are well aware of the sensitivities of those on the medical side of the fence, but they are also in the business of making profits. They are in a business which is legal. It is a key industry, not just in our country but in many countries world wide. I have just one message to put across. It is that sponsorship may have within it the tool of brand awareness, but that is all it has. Finding sponsorship is very difficult. Few companies in this country, let alone America, are prepared to write out cheques running into six figures to sponsor sport. There is a big questionmark in many marketing organisations as to whether sponsorship is returning the goods. We are not just looking at sponsorship in terms of investment; there is a large degree of philanthropy in it. I believe that the tobacco companies are some of the biggest philanthropists we witness; not dissimilar to the brewers of the late 19th century. I caution the Minister and his colleagues not to destroy the goose which is currently laying the golden egg.
§ 9.14 p.m.
§ Lord Moynihan
My Lords, I offer my sincere congratulations to the noble Lord, Lord Davies, on an excellent maiden speech. It was short, to the point and, given the subject matter before the House, surprisingly uncontroversial. It was effectively argued and sensitive. The noble Lord shares with the Prime Minister strong support for the interests of British sportsmen and women. His is a deep personal commitment to see sport flourish. As a former Minister for Sport and an enthusiastic sportsman, I share his aspirations.
However, it will come as no surprise to your Lordships that I entertain serious doubts as to the effectiveness of this Government's strategy for sport and recreation. Perhaps, in common with my noble friend Lord Rowallan, I may focus on that strategy. The Government's rhetoric in favour of sport has not been matched by vitally important, substantive policy initiatives to support sport and recreation. On the contrary, I regret that the Government have done much harm to the position not only through this measure on support for sport, but damaging blows to the interests of sportsmen and women.
Perhaps I may draw your Lordships' attention to the defeat of the Government on the issue, for example, of allowing disabled sportsmen and women the right to participate in competitive pistol shooting. In the debate last week, we heard from many noble Lords who were anxious that the Government's policy was merely a knee-jerk reaction to events. The noble Lord, Lord Howell, raised anxieties that the Government's policy had gone further than was necessary in that it was unlikely that wheelchair-bound sportsmen and women would pose any threat to public safety. That is not a small sporting community; at least 100 sports clubs are affiliated to the British Sports Association for the Disabled, which offers shooting as an activity. I believe that the Government's proposals on that will have a seriously detrimental effect on the lives of many disabled men and women quite unnecessarily.
710 There are other examples of the Government bowing to popular clamour without giving full consideration to their actions in the realm of sports policy. The fervour with which the Government have pursued their firearms policy has ignored the wider implications. I believe that irreparable harm has been done to the chance of any British city to host an Olympic Games in the foreseeable future. Present government policy is responsible for that in that it would be unimaginable to hold an Olympics without the current National Olympic Committee's discipline of shooting being involved. By banning Olympic sport, the IOC will react negatively to any bid from a British city in what is already one of the most competitive selection races in world sport. Why start Britain's bid 10 metres behind its competitors?
There are other examples of ways in which the Government's policy on sport has lost focus; for example, the idea of the Minister for Sport to ban the national anthem and the Union flag at football matches totally undermines the spirit which such sporting occasions arouse. It would also be true to say that as a great footballing nation we should be proud that we have four national teams able to compete around the world, two of which have already gained places in the World Cup Finals next year. Why, then, do the Government suggest the need to amalgamate the four into one, as put forward for discussion this summer by the Minister for Sport?
It is vital that decisions are made carefully, rationally and in full appreciation of the consequences. The recent disturbances in Rome served to highlight that, however well intentioned the Government might be—and I believe that they are—it is not good intentions and siren voices which create effective policy, but sensible, comprehensive and pragmatic attention in advance to each and every detail, all executed in co-operation with our international counterparts. In that context, I support the statement made today by the Home Secretary.
I believe that it was right to place the comments that I am about to make in the context that I have, for Britain is the capital of the motor-racing industry. Any racing enthusiast will be aware of the very successful British teams which regularly lead the field. We should be proud to support them. But the industry is more than names and drivers; it is, as my noble friend pointed out, a global business. It is one which centres around Silverstone in the United Kingdom, with an estimated 80 per cent. of business activity based in that area. That brings to the United Kingdom many highly skilled and highly paid jobs. It has been estimated that 25,000 people work in this sector, helping to bring Britain more than £1.3 billion in turnover a year. They also create more than £900 million in exports alone.
The Government's proposal to ban sponsorship of motorsports events by the tobacco industry threatens to damage that success story, for I have no doubt that a ban will have serious repercussions on the motorsport industry. Nor am I alone in my thoughts. I shall quote Bernie Ecclestone, vice-president of motorsport's ruling body, the FIA. He commented in the following manner on the announcement of the proposed ban. He said:I cannot believe that when people look at this proposed legislation. that they will do anything to endanger what has become 711 a successful, largely British-based business. It just seems silly to me to think of harming something which England has done so well for 45 years or more".I sincerely hope that he is right.
So what are the likely effects of the ban? There is no doubt that, should a ban be imposed, there will be a dramatic and significant decline in the value of sponsorship given to the various motorsport teams. As it is, in Formula 1 there are only three teams which, as has been rightly pointed out, are not supported in any way by the tobacco industry. A decline in revenue of that magnitude will have a serious effect on the industry. The technical advantages which we have now come to expect as standard will not be made. Apart from the knock-on damage that that may have on the car manufacturing industry, which has relied on the sport's engineering advances to further its own manufacturing techniques, the damage to motorsport as a whole could be disastrous. Without the high-tech engineering which makes this sport so exciting, the audiences would drop.
However, the ramifications of the decline are more far-reaching than that scenario would suggest. There has been a developing school of thought among those involved in the industry that as Europe shies away increasingly from tobacco advertising so the industry will set its sights on the lucrative American and Asian markets. That would automatically move the motor racing epicentre away from Britain. Such a move would have a dramatic effect on the United Kingdom as a whole, for as my noble friend Lord Astor effectively made clear this evening, last year's Grand Prix brought 170,000 spectators and visitors to Silverstone, injecting £30 million into the local economy. The British Grand Prix generates more spending than any other of the European Grand Prix meetings and has an important economic impact throughout the south-east Midlands.
However, our duty this evening is to look in some detail at the Government's proposals. They have made it clear that they will support the new European Union draft directive to ban tobacco advertising, thus lifting the stalemate which has prevented the proposed legislation being enacted for the past seven years. The Government have promised also to publish a White Paper on tobacco advertising later this year prior to a draft Bill coming forward in the Queen's Speech of 1998.
I understand the intentions behind that timetable of action. Everybody in this House wants to bring down levels of smoking. Everybody in your Lordships' House recognises the health risks associated with smoking, but will the Government's actions achieve their goals? The last government maintained that the right way to bring down levels of smoking was to increase taxation on tobacco products. Moreover, the Government negotiated a highly effective voluntary agreement with the motorsport industry which set clear parameters. The tobacco manufacturers agreed not to display their motifs on cars and bikes or to advertise alongside the track. Therefore, there have been no official tobacco advertisements on British circuits for a decade.
Voluntary agreements have advantages over bans. For example, they offer the Government and the industry flexibility. Changes to codes of conduct can be made in 712 a matter of days. Equally, a voluntary agreement with the motorsport organisations has helped to foster important and excellent relations between governments and the industry. A ban may well have the opposite effect for it is also true to say that the industry remains concerned that their largest sponsors will be driven away by a ban. In contrast, the voluntary agreement has enabled the motorsport teams to maintain levels of technical expertise, retain their manufacturing base in the United Kingdom and at the same time to satisfy Government demands for a curb on television advertising.
I maintain that developing voluntary agreements is the right way to tackle those sensitive issues. A ban has a number of disadvantages. For example, under a ban, it would be possible for motor racing teams to make their sponsorship clear. If a red and white chevron appeared on a Ferrari, there are few who would be unable to recognise Marlboro as a sponsor, despite the fact that the name does not appear.
In contrast to a ban, a voluntary agreement would be flexible enough to curb those advertising loopholes through negotiations and, as indicated by the noble Lord, Lord Sempill, in his telling intervention in the gap, there are many other advertising options available to firms. For example, they could develop non-tobacco brand extensions like Marlboro's clothing line (Marlboro Classics) and Dunhill's stationery and leather goods.
In response to the Government's argument that banning advertising and sponsorship would decrease the consumption of cigarettes, the tobacco firms could find other ways of marketing their cigarettes. For example, they could slash their prices to win the brand monopoly from rival firms; they could spend the money that they would have invested in advertising and sponsorship on other advertising techniques, such as loyalty cards with prizes and coupons or customer magazines.
Further—and this is one of the most important points that has been made this evening—the Grand Prix could be moved to countries where advertising is allowed. British television viewers would then see the Grand Prix with tobacco advertisements, but beamed in from another country. It therefore seems excessive and unnecessary to implement a ban which will destroy British motorsport and threaten thousands of jobs for no apparent benefit being gained, not least because recent studies (including the one by Michael J. Stewart entitled The Effect on Tobacco Consumption of. Advertising Bans in OECD Countries) have provided evidence to the contrary of what is currently argued by the Minister for Sport. In that important study, 22 countries were analysed over 27 years and the six countries with advertising bans were found to have increased consumption. There is little evidence to suggest that a ban will have any impact on motor enthusiasts' smoking habits.
I therefore believe that the Government's ban will severely damage one of our key UK industries and thus threaten many thousands of well-paid, highly-skilled jobs. It will damage British motor racing with no hard evidence that a ban will deter those sports fans who 713 smoke from continuing to do so. A tough voluntary agreement in our society is the way forward. A combined approach to attack the causes of smoking—the reasons why young people smoke—is the approach that we should all be taking together so as to implement measures that will achieve a diminution in the incidence of smoking in our country. The proposal before your Lordships' House this evening will not achieve that objective and will do serious damage, as have the other initiatives on sport and recreation that I have mentioned this evening. Indeed, it will do serious damage to the interests of sport and recreation in the United Kingdom.
§ 9.26 p.m.
§ Lord McIntosh of Haringey
My Lords, the whole House will be grateful to the noble Lord, Lord Astor of Hever, for introducing tonight's debate for two principal reasons. First, the noble Lord succeeded in attracting a number of speakers whose expertise, including his own, is well evident by the contributions that they made this evening. In addition, he succeeded in tempting my noble friend Lord Davies of Oldham to speak and thereby gave him an opportunity to make what was clearly an excellent and well-informed speech which was provocative without being controversial, even though it was made shortly after his introduction—and I see no harm in that. I know that we shall hear from my noble friend again. I warn noble Lords that they should wait to see my noble friend when he is being controversial.
I believe that we begin from a common starting point; namely, that tobacco is uniquely dangerous. It is the only thing on sale in this country which regularly kills even when it is used as the manufacturers intended it should be. My noble friend Lord Davies was right to say that if Sir Walter Raleigh attempted to introduce tobacco now it is very unlikely that it would be made legal at a time when many drugs are illegal. It is also dangerous in the sense that we all recognise that it cannot be banned. The level of addiction of the 25 per cent. of the people in this country who smoke is such that to try to impose a total ban would have much the same result as the attempt to impose prohibition in the United States in the 1920s.
A number of noble Lords, including the noble Lord, Lord Chesham, referred to the dangers of a nanny state. I agree with much of what he said. An attempt to impose prohibition on smoking would certainly be a clear example of the workings of a nanny state. There is no safe level of smoking. Indeed the lack of a safe level is evidenced by the recent statistics on the dangers of passive smoking, to which the noble Lord, Lord Rowallan, referred. However, this nasty, dirty habit—I hope noble Lords will forgive me if I call it that—causes preventable disease and premature death of the order of something like 120,000 people per year in this country. That is not all. Smoking is particularly dangerous for children. The incidence of smoking among 11 to 15 year-olds is not falling.
Noble Lords have mentioned a number of statistics about the effect of advertising on smoking. My evidence comes from the Smee Report published by the Department of Health in 1992. I am sure that if that report is not available in the Library, it can be made 714 available. My evidence is that in a number of countries—particularly New Zealand, France and Norway—there is statistical evidence of a decline in smoking, particularly among young people, after the imposition of advertising bans. I heard with interest the statistics given by the noble Earl, Lord Liverpool, and by the noble Lord, Lord Rowallan. However, my evidence is not the same as theirs. The evidence that I have suggests that children who smoke use the most advertised brands. There are research links between advertising and both starting the smoking habit and reinforcing it.
I refer specifically to the subject of this evening's debate. We know that 38 per cent. of teenagers link motor racing with tobacco sponsorship. A ban on tobacco advertising would also be popular in this country. In a recent opinion poll 61 per cent. of the population thought that there should be no tobacco advertising at all, and 55 per cent. thought that there should be no such advertising and sponsorship of sport. As the noble Lord, Lord Sempill, and other noble Lords said, sponsorship is not quite the same thing as advertising. I even reluctantly recognise that some of it is philanthropic. But surely tobacco sponsorship of motor racing in particular is done because the viewer sees the name of the tobacco brand on the clothes of the driver, on his car and on the barriers of the track. Tobacco advertising of motor racing occurs largely because of that exposure of the tobacco brand. I am not inclined to speak of bad motives in this respect but I believe that the motives of those who sponsor motor racing are fairly clear.
I turn from the health issue to what the Government propose to do about it. I say straight away that the Government are not concentrating on a ban on this kind of advertising. Our approach to smoking control applies to a much wider area than that. The noble Earl, Lord Liverpool, referred to the anti-smoking summit which was held on the 14th July. There were at that summit representatives of the media, business, the arts, sport, medicine and representatives of health charities. The noble Earl referred to Dr. Sandy Macara of the British Medical Association. The working groups at that meeting discussed a ban on advertising, but they also discussed consumer protection, tax and price issues, public education to which my noble friend Lord Davies referred, and indeed the scope for further bans on smoking in public places. As a result of that summit, and of frequent meetings between the Minister for Sport and the Minister for Public Health, and with all manner of sporting and artistic organisations, towards the end of this year we shall be producing a White Paper on smoking control. Naturally, I cannot be expected to anticipate what that White Paper will say.
A number of noble Lords have referred to the draft Council directive of the European Union which is more specifically related to tobacco advertising. It is certainly true that, as we understand it, the Luxembourg presidency is pushing for this draft directive to be agreed at the health Council on 4th December. I do not know whether that will be possible because negotiations are still continuing on a number of aspects of the draft directive as regards legal questions about its scope and 715 practical issues—I think that this is of more importance to your Lordships—about its impact on the sport and on the arts. I am sorry that there was not more reference to artistic sponsorship in the debate.
However, even if the directive were to be agreed, I suspect that there are still considerable difficulties in its way. It would take at least a year to implement, and that year would be on top of any phasing-in period which is highly likely—I would say virtually certain—to be included in any directive. Therefore we are not talking about any very rapid change in the tobacco advertising and motorsport regime.
I agree very largely with what noble Lords said about the importance of the motorsport industry. The noble Lord, Lord Moynihan, will forgive me if I do not follow him in his more generalised attack on government policy in relation to sport. I am sure we can find a more appropriate occasion to discuss that. But I accept many of the figures which the noble Lord, Lord Astor of Hever, quoted, even though they are different from those given by his own Front Bench. Incidentally, Dunhill—it was cited by more than one noble Lord—is not a tobacco company. It sold its tobacco interests to Rothmans at least five years ago and is involved in other leisure services. I do not need to repeat the figures which have been given so authoritatively. I agree that the motorsport industry is enormously important to this country, both the engineering aspects, which have been referred to, and the economic aspects; the numbers of jobs, and the amount of money. It is not just the turnover, but the foreign earnings in particular. I accept, as noble Lords have said, that in many ways the sport is the jewel in the crown of our sporting activity. We have lost command in so many sports, but motorsport is certainly not one of them.
I also accept that tobacco advertising is hugely important to the motorsport industry. It is quite different from other sports. I shall not dwell on that, but tobacco advertising as a proportion of sponsorship in other sports is only about 3 per cent. The noble Lord, Lord Astor, tells us that the figure is more like 40 per cent. for motorsport. I can believe that, but I assume that he refers to the worldwide figures. He and noble Lords will know that the Minister for Sport and the Minister for Public Health have had many meetings with representatives of sporting interests and with Max Mosley of the Fédération Internationale de l'Automobile. Mr. Banks has also had meetings with the RAC Motor Sports Association Ltd; and no doubt there will be many more meetings with the Formula 1 constructors and others. Those meetings will be used to frame government policy and to inform debate before we come to the publication of the White Paper later this year.
We must recognise the limit to government policy. Perhaps this comes back to the "nanny state" arguments of the noble Lord, Lord Chesham. We must accept that motor racing events could move outside the United 716 Kingdom and the European Union to other parts of the world. That is a matter of plain fact. There are other countries willing to take them. We must accept, as we have been told, that the Asia-Pacific region has 70 per cent. of the world TV audience. We must accept that that region is a growth market for tobacco, although in many ways it is deplorable that developed countries should use their commercial clout to encourage tobacco smoking among poorer people, damaging their health and their pockets. The result of all of this must be that we should recognise that compromise will be necessary in order to get through any policy, either in this country or in the European Union, in such a way that it works effectively.
Perhaps I may briefly respond to the specific questions posed by the noble Lord, Lord Astor. He asked what we meant by "time and help". I indicated that there would be a significant phasing-in period for any changes that are proposed. The noble Lord asked whether we would help to find other sponsors. I can certainly reply that we will. The matter of financial help is much more difficult. We cannot favour those sports that have relied on tobacco advertising as against those that have abstained from tobacco advertising. We should be in danger of encouraging a dependency culture.
The noble Lord asked about the move to other countries of the British Grand Prix, the superbike Grand Prix, and the RAC rally. He will know from my remarks that we are concerned—I referred to the limits of public policy in this area. The noble Lord asked about the resettlement of the manufacturing industry in Asia as a result. I am not so certain as he is that the removal of grand prix events would bring about a move in manufacturing industry. That is a debatable point. However, again I acknowledge his concerns and confirm that we are paying attention to them.
On the question of whether we can ban broadcasting into the United Kingdom of international events, also referred to by the noble Earl, Lord Liverpool, I believe everybody knows that we cannot. It may be that with digital television there will be clever ways of blocking out brand names; but we are a long way from that.
The noble Lord, Lord Moynihan, referred to the voluntary agreement that the Department of National Heritage brokered in 1995. Voluntary agreements are valuable; but they refer only to direct advertising and can only apply to this country. We are looking to something more effective than that.
Finally, I respond to the challenge of my noble friend Lord Davies of Oldham. He asked the Government to display both greater assertiveness and care and consultation with the industry. If he will forgive my saying so, it is rather difficult to do both of those things. I hope I have shown in my response to this important and valuable debate that our concern is, above all, not with assertiveness but with care and consultation with the industry.
§ House adjourned at sixteen minutes before ten o'clock.