Mr. Mike Ridgway:

I thank the committee for inviting me to address it today. I am a guest in the Oireachtas and appreciate the opportunity afforded to me to represent the views of the packaging industry in the debate about packaging regulation in the tobacco sector. I reside in the UK but I do have some Irish credentials. My grandfather came from County Clare and my grandmother came from Belfast, so I have an affinity for Ireland. I was employed in the UK packaging manufacturing industry for over 40 years and retired as the managing director of my company some three years ago. Since that time, I have been acting as a spokesman for seven major UK packaging companies which are all heavily involved in the design, development, innovation and manufacturing of packaging solutions for a wide range of consumer products, including tobacco products.

I fully appreciate there is not a sizeable packaging manufacturing industry operating in the tobacco sector in Ireland. We feel, however, we can contribute to the important debate taking place here, in the UK and in Brussels with the tobacco products directive. The companies that I represent have a serious concern that policy proposals introduced in this jurisdiction may well have detrimental knock-on effects on their sustainability, endangering the thousands of jobs they provide across other European countries.

As professionals working with packaging materials, we have first-hand experience and expertise of the complex role packaging plays within the fast-moving consumer goods sector, and how it protects the consumer and the legitimate industry from the dangers of counterfeiting.

The companies I represent have commercial interests with the tobacco industry. The industries have traded together for decades, producing and using a wide range of products including metal tins, rigid boxes and composite cans, plastic pouches and laminates, printed labels and folding cartons. With this in mind we have the interests of our employees, investments and innovative workplace skills to consider.

I will expand on the role of packaging. Tobacco packaging is a high-precision manufactured engineering component produced in large volume to exacting standards and subsequently used on high-speed packaging machines. To print and produce these highly complex products, capital equipment costing many millions of euro is needed, together with an experienced, well-trained and largely apprentice-trained workforce.

Essentially packaging acts as a barrier to trade in counterfeit and illicit goods. Sophisticated packaging is a defence against counterfeit products as it makes it extremely difficult and costly for criminals to copy. These fake products are typically sold on the black market. The illicit trade is a problem both in Ireland and the UK. Members will be familiar with the figures in Ireland, but I will explain the UK's problem. We lose some £8 million, €9.5 million, in tax revenue every day. How many hospitals and schools could be built with that money? Nearly £3 billion is lost to the British Treasury annually based on figures supplied by HMRC in London.

Packaging introduces variations, not only in colour, design and graphical content but also in enhanced features including embossing, de-bossing, hot-foil stamping, matt-gloss varnish combinations and vignettes. I could continue talking about the technical side for quite some time. In addition, special materials have been developed using techniques developed over periods of time including special raw materials, formulated low-retained solvent inks, tear tapes and tipping paper produced by world-class manufacturing companies. The construction of the cigarette carton has also gone through many changes which are not just graphical, but also of construction. Appendix 2 to my submission illustrates a product well known in the market and how its design has changed over five or six years from a rectangular standard carton, through to having little embellishments, such as blocking features, logo changes and shape changes. I ask members to compare that with the photographs underneath of what a standard plain pack would be. It would be much simpler to produce involving a different printing method, moving from gravure printing to lithographic printing and even digital printing. Such packs can be knocked out very simply and easily.

Once simplicity is introduced via a standardised design all complexity is eliminated. This will result in the printing process being opened up and the counterfeiter and copier can move with ease to print these standard packs.

We also need to consider the issue of tax stamps. It has been stated that tax stamps and other security systems help police address the problem of the illicit trade. I am not in a position to comment on the stated position of the law enforcement agencies in Ireland on this issue but in other jurisdictions with similar illegal tobacco problems, there is a belief that tax stamps have little impact. Criminals can also copy tax stamps. It is difficult for consumers and retailers to tell the difference between a genuine and fake product. The point is that tax stamps are irrelevant because somebody buying cigarettes in a back street or in a car-boot sale is only interested in the product. By the time the product is in the illicit distribution system a tax stamp, whether good or bad, is totally irrelevant.

Let us consider external experiences. Australia introduced plain packaging just over a year ago. According to the KPMG report, which was mentioned earlier, there has been an increase in the illicit trade. Significantly there has also been an increase in what are called the "illicit whites". I will explain that in greater detail later. Other retail surveys have shown the purchasing of cigarettes becoming a commodity item and a price-driven purchase. However, most significantly of all, the studies, including those by KPMG and the London School of Economics, all indicate that the level of smoking has remained consistent.

Let us also consider how branded packaging in the legitimate and controlled retail environment contributes to the delivery of tobacco-control objectives. It minimises the sale through illegitimate channels such as the black market. It significantly restricts the availability of product to young people. It supports duty-paid pricing levels. It minimises the market share of counterfeit products, such as "illicit whites". Appendix 1 shows what standardised plain packaging looks like. The one in the middle is called the "Spoonbill" a spoof product that appeared on the market in Australia with just a name - it did not mean anything. To the consumer it looks like a legitimate plain-pack product. However, it was made by counterfeiters, we believe in Vietnam and supplied into the Australian market. Sophisticated criminals will soon get their heads around that sort of thing.

We assist in the delivery of health regulation by having a legal product with packaging and ingredients regulations. Counterfeit and illicit brands have no control.

I will summarise the impact of plain packaging. It removes technical barriers. It provides huge economies of scale for counterfeit production. It facilitates deceiving consumers and undermines trust in genuine merchandise. It would lead to a collapse in product value due to commoditisation. There would be higher consumption due to cheaper commodity products and affordability. There would be greater availability to young people through the illicit trade. It would also potentially lead to increased harm from unregulated products.

I thank members for listening to me. I have been employed in the packaging industry for many years. I do not want to see sections of my industry damaged through the introduction of excessive regulation for which there is no evidence that it works. The UK packaging industry fully supports the regulation of tobacco products but believes there are far more effective alternatives to plain packaging such as education, information and cultural awareness.