Retailers claim government misled Lords over cost to shops of placing cigarettes out of sight.
The government has been accused of misleading parliament over the cost for retailers of implementing the controversial tobacco display ban.
Internal documents obtained under the Freedom of Information Act show that officials at the Department of Health (DoH) were warned by manufacturers that they had dramatically underestimated how much it would cost retailers to modify their shops to comply with the ban.
The display ban is part of the health bill, which is due to come before parliament in October. Under the proposals, cigarettes would still be available to buy but would be placed out of sight. Customers who wanted to purchase them would be given a list of products for sale.
The legislation will ban the display of cigarettes in supermarkets from 2011 and small shops from 2013.
Lord Darzi, the health minister, told the House of Lords this year that shops would pay as little as £120 each to install sliding screens in their premises. In a Lords debate in March, the government minister Baroness Thornton said that the cost "could be as little as £120".
The figure was also quoted in government briefing notes sent to peers in the Lords who oppose the display ban. The Conservative party and the Liberal Democrats are both likely to vote against it.
But according to the internal documents, which have been posted on the DoH website, the £120 figure was calculated in January this year after a quote had been obtained from a Canadian manufacturer, 4 Solutions Display. When Phil Beder, the company's vice-president, was made aware of the figure being quoted, he wrote to the DoH and to Ash – an anti-smoking pressure group, which had also quoted the figure in its literature – to ask that it be withdrawn.
In an email sent to Ash, dated 29 April this year, Beder said that the price quoted was based on a bulk order and did not include shipping or installation costs. He forwarded the correspondence to the DoH on 30 April, saying that he wanted to "clarify" the company's position.
Beder told Ash that he wanted "to make sure you are not making additional assumptions on costs to suit your internal needs. 4 Solutions cannot produce, deliver and install for the minimal dollars you are publishing. I trust your organisation will ensure the entire financial story is told to all."
Ash responded by telling 4 Solutions that it was confident its figures were correct.
The Canadian manufacturer also wrote to the National Federation of Retail Newsagents, which is opposed to the ban, confirming that the full cost would be far higher than the figure quoted by the DoH. When the federation emailed the DoH on 15 May to highlight the discrepancy, an official replied saying: "We are confident of the validity of the estimates that ministers have been quoting."
Small retailers have been lobbying against the display ban, arguing that independent shops cannot afford to refurbish their outlets at a time when many of them are already suffering a fall in sales as a result of the recession.
The Association of Convenience Stores, which represents more than 33,000 local shops, estimates that the new equipment required to remove tobacco from customers' view could cost the convenience industry as much as £252m.
It claims the minimum a single store could expect to pay is £1,850 but that this could rise to as much as £4,985. Small shops say that the ban will benefit larger retail chains and supermarkets, which can afford to implement the changes.
When asked about the allegations a spokeswoman at the DoH said that the government remained committed to introducing the ban.
The DoH said: "Point-of-sale displays have already been removed in a number of countries, including Canada, [where] removing point-of-sale display has coincided with a fall in smoking prevalence rates among 15 to 19-year-olds from 29% in 2002 to 19% in 2007."