We spend c£10 billion a year on illicit drugs
This is the fifth in a series of posts based on perhaps the most important drug-related report of the current century, Dame Carol Black’s Review of Drugs . Today’s post looks at the section from that report dedicated to the size of the illicit drugs market within the UK.
The Review of Drugs found that in 2016/17, people in England and Wales spent approximately £9.4 billion on illicit drugs. To put this into some sort of perspective, this is more than the total expenditure in consumer sectors such as tea and coffee, pharmaceuticals and footwear. The revenue of the drugs industry is greater than the UK revenue of such large companies as Aldi (£8.7 billion in 2016/17), Boots (£6.9 billion in 2016/17) and EasyJet (£5.0 billion in 2016/17).
The report notes that government expenditure to address drug-related issues is dwarfed by total revenue from the drugs market. The total costs to society from drug use (including government spending) is considerably greater than the revenue generated by the sector. The European Monitoring Centre for Drugs and Drug Addiction estimated that the total EU drug market was worth around £26 billion in 2017. Based on this figure, it would seem that the drug market in England and Wales is equivalent to more than one third of the total EU drug market.
The graphic below put some of these huge figures into a comparative bar chart.
Spending habits by drug type
The Black Review also breaks down the amount of money spent on different substances. The patterns of spending by users of different substances obviously varies significantly. While cannabis and powder cocaine have a large number of users who purchase a small amount of drugs on average because their use is infrequent, the opposite is true for heroin and crack, where dependent users will consume these drugs of choice most days in order to avoid withdrawal.
Each individual heroin/crack user represents a significant source of revenue for the illegal drugs market. The annual spend of someone using both heroin and crack (approximately £19,000) is around 80% of the median wage in the UK.
Again, this information is very helpfully provided in graphical form :
Revenue and dependency
The report provides interesting detail on how most of the revenue generated in the drug market is derived from those who are dependent on their drug of choice.
- Opiates have the largest share of the drug market, but cannabis, powder cocaine and crack also drive significant revenue.
- Drug market revenue is almost entirely derived from those with intensive drug habits (defined as those who use three or more times per week) they account for 91% of total expenditure.
- For example, 89% of all powder cocaine users use less than three times per week, but this group only account for 13% of total powder cocaine revenue.
- Nearly all the revenue from opiates (97%) comes from those using more than three times a week.
- Consequently, attempting to reduce drug use among occasional users is unlikely to have a material impact on drug market revenues.
As you can see from the reproduce chart below, the Home Office estimates that 97% of the revenue generated by opiates comes from intensive users, with the parallel figure for Ecstasy being just 37%.
The key findings of Dame Carol’s analysis of revenue from the illicit drug market in England and Wales are:
- It is estimated that consumers in England and Wales spent £9.4 billion on drugs in 2016/17. The largest market is opiates (£3 .8 billion), followed by cannabis (£2.4 billion) and powder cocaine (£1.9 billion).
- Heroin users also have the highest average annual spend (£12,500) followed by users of crack cocaine (£6,300). Average annual spend is lower for drugs such as powder cocaine (£2,200) and cannabis (£1,000), as there are a large number of occasional users.
- Those who use drugs three or more times per week account for 91% of total expenditure on drugs. Thus, attempting to reduce drug use among occasional users is unlikely to have a material impact on drug market revenues.