Your local high street has a black market problem, and the government is barely trying to stop it
Almost half of cigarettes consumed in the UK had no tax paid on them last year costing the taxpayer billions and driving high street crime, writes Philip Morris executive Peter Nixon
Britain is the second-largest illegal cigarette market in Europe by volume and the third-largest by proportion.
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One-third of the cigarettes smoked in this country last year were fake or smuggled, according to a recent report on illegal cigarettes that we commissioned from KPMG. The loss to the Treasury of fake and smuggled cigarettes alone was valued at £4.3 billion for 2025 – up by just over one-third on the prior year.
If you also account for duty-free – where evidence suggests the system is being abused – then more than 45% of the cigarettes consumed in the UK have no tax paid on them at all.
Even more worryingly, there’s no sign this crisis will improve soon. Now, the chief executive of the Chartered Trading Standards Institute, John Herriman, has admitted to the London Assembly that his staff – those tasked with cracking down on illegal tobacco on our hard-pressed high streets – simply don’t have the resources.
Trading Standards funding has been cut by 39% since 2010, nearly twice as much as other local services. Local authorities see it as an easy budget to slash. As Herriman said, the impact “won’t be seen immediately.” But it is now. He warned, “organised and serious crime [has a] foothold” on our high streets.
He’s not the only one sounding the alarm. Co-op bosses have also joined the fray, accusing those peddling illegal tobacco of “creating a shadow economy…shaping the face of high streets up and down the UK, creating an unsafe environment [and] impacting legitimate businesses.”
Both Herriman and Co-op are correct. At Philip Morris Limited, we run undercover mystery shopper tests week in, week out, and we know just how rampant illegal tobacco is. It’s on the high street of every town and city across the UK. Our teams have even found illicit products being sold just a stone’s throw from Windsor Castle and across Westminster.
We can stop this, but only if the government swallows its pride and recognises that its approach to illicit tobacco is not working. We need the same vision and fortitude shown in the anti-money laundering strategy, where the government has created 500 jobs through a new £500 million initiative.
To start with, we need to fund all enforcement agencies properly – from the high street to our borders. The £30m for the new High Street Organised Crime Unit, of which £6m reaches Trading Standards, won’t even fund two additional Trading Standards Officers per council. Recovering just a fraction of the duty currently being surrendered would mean enforcement that is not only self-funding but also revenue-generating, benefiting vital public services.
Then give enforcement authorities sufficient powers to issue heavy on-the-spot fines and make it easier to permanently close irresponsible retail premises down for good.
We also need retailer licensing to be introduced immediately. Parliament committed to looking at it in April, but there is still no delivery date. Selling alcohol has required a licence for hundreds of years, how is it right that anyone can start selling tobacco or nicotine products wherever and whenever they like?
The true cost goes beyond lost duty alone. It’s the law-abiding newsagent, whose business is dwindling as they haemorrhage income to nearby rogue traders. Meanwhile, those same irresponsible retailers are often illegally selling cigarettes or vapes to children.
We’re ready to work together with government, industry, retailers and communities, whenever the government decides it’s serious about solving this problem. We hope that time comes sooner rather than later, and the UK can stop relinquishing control of its high streets to organised crime.
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Peter Nixon is the Managing Director of UK & Ireland at Philip Morris Limited.
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