HOLY SMOKES
Spring Statement document confirms whether cigarette prices will rise or not
Scroll down to find out what else was announced by the Chancellor today
THE cost of a pack of cigarettes will not rise after the Spring Statement, it was confirmed today.
Smokers won't have to pay more for cigs as the Chancellor did not announce plans to hike rates in her announcement.
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Rachel reeves said the Spring Statement is about "improving people's lives".
She added: "Working people are still feeling the pinch after a cost of living crisis that saw prices spiral."
Instead of tax rises the Spring Statement focused on cuts to welfare spending.
She said: "If you can work, you should work… More than 1,000 people qualify for PIP every single day.
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"And one in eight young people are not in employment, education or training."
An increase in tobacco duty was not anticipated because the Government confirmed last October it will increase once a year in the Budget, which is usually held in the Autumn.
Prices will rise annually based on the Retail Price Index (RPI) measure of inflation, plus an additional 2%.
The price of a pack of fags is currently £16.78 after rising from £16 in October and £14.39 before then.
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It comes as the Government looks to discourage people from smoking cigarettes and vaping.
Government plans leaked last year and later confirmed by Keir Starmer revealed ministers want to ban smoking in pub gardens and outside football stadiums as part of a wider crackdown.
Disposable vapes could be BANNED under Keir Starmer’s plans to crackdown on their use after smoking axed in pub gardens
The Prime Minister said: "My starting point on this is to remind everybody that over 80,000 people lose their lives every year because of smoking.
"That is a preventable death, it's a huge burden on the NHS and, of course, it is a burden on the taxpayer."
Meanwhile, Ms Reeves confirmed in the Autumn Budget a flat rate duty will be applied to vaping liquid from October 2026.
It will see a new tax on vapes of £2.20 per 10ml of e-cigarette liquid from next Autumn.
A new law to prohibit the sale of disposable vapes to protect kids' health is also taking effect from June 1, 2025.
But refillable vapes will remain available as doctors use them to help people quit smoking.
What is Tobacco Duty?
Tobacco duty is a tax charged to companies making or importing cigarettes in the UK.
The key announcements in the Spring Statement include:
- No new tax rises: The Chancellor ruled out further tax hikes and pledged to crack down on tax avoidance, aiming to raise an extra £1bn.
- Growth downgraded for 2025: The OBR halved its GDP growth forecast for next year from 2% to just 1%.
- Growth boost from planning reforms: New housing policies expected to raise GDP by 0.6 per cent over the next decade.
- Housebuilding surge: 1.3 million homes expected over five years, with construction hitting a 40-year high.
- £2.2bn extra for defence: Additional funding confirmed to help meet the 2.5 per cent of GDP defence target.
£400m Defence Innovation Fund: Backing new tech like drones and AI for the front line. - Welfare shake-up: Targeted employment support and welfare reform to reduce benefit spending.
Civil service cuts: New voluntary exit schemes and AI tools to shrink Government.
When the tax is raised, the cost is passed on to consumers who have to pay more for tobacco products in the shops.
The price of cigarettes usually increases with inflation each year unless the Chancellor intervenes to freeze the rates.
The previous increase was revealed in March last year, when the price of a pack of cigs increased to an average of £16.
What is the Spring Statement?
By Ryan Sabey, Deputy Political Editor:
Rachel Reeves is delivering the Spring Statement - nearly fifty years after the first such "mini-Budget" was delivered.
The statement, which over the years has been delivered in both autumn and Spring, was started in 1976 at the end of the year.
The law changed in 1975 to ensure there were two economic forecasts every year as opposition MPs and the public could keep track of government plans.
Rachel Reeves has insisted there will only be one major fiscal event each year with a Budget planned for the autumn - so no tax hikes or reductions this year.
Her Labour predecessor Gordon Brown held the Budget in the the autumn and each autumn he would deliver a Pre-Budget Report giving an update on the state of the country’s finances.
Fast forward to 2010 and George Osborne, Chancellor until 2016, set up the Office for Budget Responsibility, to provide an independent forecast.
They were also there to dissect the state of the economy - producing five-year forecasts twice a year.
But the OBR weren’t asked for a forecast by short-lived Prime Minister Liz Truss in 2022 despite their mini-Budget containing an array of tax cuts causing a market meltdown.
The former Chancellor Jeremy Hunt introduced a one-off increase of £2 per 100 cigarettes or 50 grams of tobacco.
Previous to this, prices rose in November 2023 by 7.4% - or £1.08.
This took the price of an average pack of 20 cigarettes to £15.67 from £14.59.
Taxing tobacco is a big revenue maker for the Government.
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The OBR estimates tobacco duties will raise £8.7billion for the Government in the 2024/25 tax year.
What does this Spring Statement mean for Rachel Reeves?
By Ryan Sabey, Deputy Political Editor
Rachel Reeves is trying shift any blame away from herself and the Labour government as it grapples with the sluggish economy.
The Chancellor is telling MPs that the “world had changed” meaning she has to take drastic action when it comes to spending and welfare.
The trouble for Ms Reeves and Sir Keir Starmer is that they put growth as their “number one” mission and that, to put it mildly, is stalling.
The independent watchdog say growth forecasts has halved for this year and the financial headroom wiped out - hence the savings to be made elsewhere.
But for Ms Reeves all this puts her in a very tight spot insisting she will stick to her iron clad rules - with her looking to find up to £15 billion of savings.
The Tories and commentators are aiming their fire over how she hasn’t helped herself as growth has fallen.
They point out that she was the person who decided to go on a £40 billion tax raid at October’s Budget - with £25 billion of it falling on the shoulders of business.
The upcoming Donald Trump-led tariff war could easily throw the government off course again unless a limited trade deal can be struck.
Rachel Reeves will be pushing every leaver possible to get that over the line before it kicks in next week to give her some breathing space.
But we could be back at square one come the Autumn with the Budget to balance the books - with speculation there could be tax rises and Whitehall departments scratching around for more savings.
Read our live blog for all the latest updates on the Spring Statement.
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