The Government’s Tobacco and Vapes Bill, to be debated in the House of Lords this week, is designed to eliminate smoking by gradually raising the age limit to buy nicotine products. However Ministers added an amendment last month that would also create a licencing regime, so that only shops that pay a fee could sell cigarettes, vapes or any product containing nicotine Local councils will be allowed to charge for licences, and to refuse to grant them in certain areas, which could mean shops near schools or hospitals are banned from selling any nicotine product - slashing their takings.

There will be a consultation before a licensing regime is introduced. Conservative Shadow Home Office Minister Matt Vickers said: “This will be another tough hit for small business and retailers after Labour’s job tax kicked in this month. Whilst it is important we work towards a smoke free future for the next generation, we should do so without penalising and punishing small businesses that play an important role in local communities.”

An analysis by academics has already warned that the generational ban on smoking could force 7,700 businesses to close and cost 70,100 jobs over the next three decades.

Dr Maged Ali, a professor at the University of Essex, said in a report that this ban will “push many stores to the brink” because tobacco accounts for a fifth of retailers’ sales while shops are already struggling in the wake of cost of living pressures. At the same time, there is evidence that black market tobacco sales may be booming.

Official figures from HMRC show the number of cigarettes bought on the legal market fell by 45.5% between 2021 and 2024, but the number of smokers has fallen by just 0.5%. Think tank the Institute of Economic Affairs has argued that this suggests there has been rapid growth in tobacco sales on the black market following increases in tobacco taxes.

Retailers fear that a licencing regime will benefit the black market further, Association of Convenience Stores chief executive James Lowman said: “A licensing scheme has the potential to help tackle the illicit market and punish those who sell to children, but unless properly structured it could also prevent legitimate traders from operating based on the presence of other outlets in the area, or the specifics of where that store is located.

“This requires detailed consultation with local shops and other stakeholders, and none of this has taken place. We now need proper discussion of the detail as regulations are drafted, or we fear that this legislation will significantly impact investment, growth and service provision in our sector.”

He said: “When regulations aren’t properly enforced this is the worst of all worlds: cost go up for businesses but the problems the rules are designed to address carry on because illegal operators flout the law.” A Government spokesperson said: “We are rightly delivering the world-leading Tobacco and Vapes Bill to create the first smoke-free generation and end the cycle of addiction and disadvantage.

“It is also vital we support local retailers and get Britain’s high street thriving again, which is why we will fully consult with retailers and local councils ahead of introducing licensing regulations.
“We will continue to work with them to ensure the regulation changes are successfully implemented. We are protecting retailers and small businesses by providing 40% business rates relief next year as well as a new permanent lower business rate from 2026.”