It used to be that the proliferation of charity shops was considered the canary in the coal mine for the UK High Street. These days, that honour goes to the humble vape shop. Though unlike Oxfam and the British Heart Foundation, they’re facing a Government crackdown.
Just days after getting his feet under the desk at Number Ten, new Prime Minister Andy Burnham has announced that he’s cutting business rates on pubs and clubs by 20% from next year, and he’ll fund it through higher rates for “anti-social businesses such as vape shops” alongside some pretty heroic targets on VAT for online marketplaces.
The “such as” reads to me like the Government either doesn’t know, or doesn’t want to say, what other businesses it thinks are antisocial – apparently it’s only vape shops that you’re allowed to bash in a Number Ten press release. It takes really imaginative maths to figure that an increase in business rates for vape shops (3,573 in 2023, almost certainly lower now) can pay for a 20% decrease in rates for nearly 32,000 pubs, clubs and live music venues, so there must be some. Or perhaps the Government is just name-checking vape shops to get some cheap publicity.
It seems to have worked. Interviewed on Times Radio, Chief Secretary to the Treasury Emma Reynolds casually referred to vape shops as “businesses that cause social harm” without explaining why, but wasn’t able to answer questions on how much money they’d raise from them or even how many there were. Readers can take the joke about figures being worked out “on the back of a fag packet” as read.
I’ve known John Dunne, the longtime head of the UK Vaping Industry Association, for ten years now, and he’s always cut a jovial figure. But something inside him seemed to snap this morning when he was interviewed on the same show.
“To say I’m angry would be an understatement,” he began, calling the rate rise part of “another raft of idiotic ideas from this government targeting an industry that is saving lives”.
That’s not usually how heads of trade associations speak to the media.
“The Government is doing everything in their power to crush this industry”, he went on, telling hosts Kate McCann and Stig Abell that many legitimate businesses were already shutting down.
It’s not difficult to understand why. Vape shops were already preparing for a huge tax liability in the form of the Vaping Products Duty, which hits in the autumn. Most legitimate vape shops are gearing up for a significant drop in sales, not because people will stop using nicotine, but because sales will simply move underground in vast numbers and the Government seems unable to do anything about it.
I took a longtime friend and collaborator – customs lawyer at EuroCentrum John Grayston – to the UKVIA Conference last week, and his conclusion as someone who’d never gone near this sector before was stark.
“The biggest threat to this industry is not government action but government inaction”, he posted on LinkedIn. “An increasing inability or incapacity to enforce trading standards rules in relation to ‘mini marts’, leading to the real prospect of an over-regulated official sector undermined by an unregulated contraband market facilitated by uncontrolled retail sales”.
He’s not wrong. I popped into a mini-mart in London the day before the conference and asked for a vape. The shopkeeper sold me something he got from under the counter which was clearly not compliant with the UK rules on tank size and nicotine content, didn’t have a health warning on the box, and tasted like kerosene.
The Vaping Products Duty was followed by the announcement that the Government intends to force all vapes to be sold in plain packaging and kept behind the counter, just as cigarettes are. If there are any vape shops that survive the duty imposition, not being able to display their products will lead them to close their doors immediately. What’s the point of having a vape shop if you can’t tell people walking by that you sell vapes?
The shop I bought my illegal vape from was a mobile phone shop that didn’t specialise in vapes, but they clearly knew that what they were selling was illegal. I suspect that they wouldn’t be considered a vape shop under whatever half-baked changes the government will dream up, and will be spared yet another tax rise.
Nor will supermarkets, which sell the largest share of vapes in the UK (not to mention cigarettes – you know, the things that kill you): doing that will feed into food prices and have an inflationary effect. Nor will the barber shops that have also started to sell vapes (often illegal vapes) on the side. Nor will the awful “American Candy” stores that seem to be popping up to sell vapes.
Despite selling only a fraction of the products available on the high street, specialist vape shops – the shops most exposed to enforcement and most likely to be inspected – will get hit by the rate hike. Their competitors – either enormous publicly traded supermarkets with huge profits or mini marts that sell illegal vapes on the side – will not. And that’s after getting hit by a duty, while their black-market competitors dodge it.
Any that survive both of those blows won’t be able to display their products, destroying any last footfall they might have dreamed of.
If I were a vape shop owner, I’d be calling force majeure on my lease today and getting out. Perhaps Oxfam can take over the site, and people can start complaining about charity shops again. By the way, charity shops are exempt from business rates.