Philip Morris International (PMI), one of the world’s biggest tobacco companies, drew up plans for a £1bn tobacco transition fund in the UK to be spent by local authorities and Public Health England on persuading smokers to give up cigarettes in favour of alternatives such as its “heat not burn” smokeless tobacco product, IQOS, leaked documents reveal.

The documents, obtained by the Guardian and Channel 4’s Dispatches programme, show PMI had discussions with a leading anti-tobacco MP about presenting a smoke-free bill proposing the fund to the House of Commons. If passed, the bill would have ended an advertising and marketing ban on IQOS and e-cigarettes.

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PMI wants to be seen as part of the solution to smoking, which kills half of all people who take it up, even though the company continues to make and market cigarettes around the world. Deborah Arnott, chief executive of Action on Smoking and Health (Ash), said this approach was “breathtakingly hypocritical”.

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PMI has declared it is committed to working for a “smoke-free future” in which products such as IQOS, which heats tobacco to deliver nicotine without the smoke and tar that cause diseases including cancer, replace cigarettes. When the Food and Drug Administration in the United States licensed IQOS there, it said the high nicotine hit it delivered could make it an attractive alternative to cigarettes for smokers, but there was a risk of creating addiction in non-smokers.

Ash has advocated a “polluter pays” fund for smoking cessation services, but not one that transitions people on to other addictive tobacco products. Arnott said PMI was seeking to buy respectability, access to government and a role in smoking policy that the industry at the moment is categorically denied.

“This is completely unacceptable,” said Arnott. “The tobacco industry is the most profitable consumer business on the planet, selling products which kill 7 million people a year globally and nearly 100,000 in the UK alone. The industry can afford to pay and it should be made to pay, not allowed a seat at the government policymaking table so it can ensure the fund is used to further the interests of its shareholders rather than public health.”

The MP who met PMI was Labour’s Kevin Barron, now retired, who has an exemplary record in combating smoking and is credited with getting the bill that banned smoking in public places through parliament. Barron said he believed e-cigarettes and other nicotine-delivery devices that were less harmful than cigarettes had an important part to play and he had no qualms in meeting companies that wanted to go in that direction.

The internal documents – an email and two briefing papers – are dated March and May 2018. An email from Mark MacGregor, PMI’s corporate affairs director and a former chief executive of the Conservative party, said an exploratory conversation with the MP had been extremely positive. “He understands the concept of the ‘deal’ that is on offer and is very attracted to the incentive that the fund could provide to change behaviours among smokers and the industry – though balanced by enabling industry to inform smokers,” it said.

Facebook Twitter Pinterest People try IQOS during a demonstration at a store in Tokyo, Japan. Photograph: Washington Post/Getty

That would have meant the removal of advertising restrictions. PMI proposed the setting up of a £1bn fund over 10 years from 2021 in exchange for the loosening of laws curbing advertising of e-cigarettes and heated tobacco products. The money was to come from all the major tobacco companies with products on the market in the UK.

The documents show that the bill, if passed, would have rewritten the rules on e-cigarettes after the UK’s exit from the EU. A European directive dictates the size and strength of nicotine liquids in e-cigarettes, which has, for instance, resulted in Juul devices popular with young people containing only 20mg of nicotine instead of 59mg in the USA, so that they are less addictive. That restriction would go, as would limits on packaging and advertising. The relevant parts of the Tobacco and Related Products Regulations 2016, which enshrined the EU rules in UK law, would be repealed, “enabling adult smokers to make informed decisions”, the document says.

PMI envisaged that IQOS would be redefined as a “considerably less harmful novel smokeless tobacco product” (CLHTP). Such products would have lighter regulation and would be promoted to people who cannot stop smoking and do not switch to e-cigarettes, says the document. “Publicly funded public health communications and anti-smoking campaigns, as well as professional health advice such as Nice guidance, must include advice on e-cigarettes and CLHTPs,” says PMI’s draft bill.

The money from the fund would mostly go to local authorities, which are responsible for smoking cessation programmes. Public Health England would get £15m “to facilitate switching” from cigarettes to IQOS, and would have to “report annually on its efforts and achievements in improving the scientific knowledge base and consumer understanding of non-combustible alternatives”.

Barron introduced a 10-minute-rule bill to the Commons on 30 October 2018 that proposed the tobacco transition fund. He had met PMI earlier in the year, has had disussions with other tobacco companies, and maintains it was the right thing to do. He said the issue was simple: smoking kills 50% of users and more than 200 people a day. Tobacco companies are now promoting and selling products that are up to 95% safer and satisfy people’s addiction. “Shouldn’t we be encouraging them to do that?” he asked.

He said companies must not be able to stipulate that their specific products must be used. “You cannot buy the market, although they have money,” he said. “But if they want to promote a safer, less harmful product for somebody who is addicted to nicotine, my view is we should help them to do that because it will lessen the deaths from combustible tobacco. So I did the 10-minute-rule bill. I spoke to ministers and said this was what it was about. I don’t think the discussions were completely hostile.”

The bill, competing with 149 others, was not adopted. Ash worries that in the post-Brexit world, the EU’s tight regulations over e-cigarettes and smokeless tobacco products could be lifted with the sort of consequences that occurred in the US when Juul took off among teens.

Arnott said: “Ash has worked with Kevin Barron for decades. He led the campaign in parliament to ban tobacco advertising and it’s thanks to his work that pubs are now smoke-free. If, as it looks like, PMI persuaded Kevin Barron of the need for government to partner with the industry, their ‘normalisation’ strategy is clearly working.

“Kevin may have left parliament, but PMI’s parliamentary and public relations campaign continues. Now the government has committed to considering the ‘polluter pays’ approach, PMI will be lobbying to ensure it’s structured to suit their commercial interests.”

Philip Morris said it supported the government’s commitment to make England smoke-free by 2030. “To realise this ambition, millions of current smokers need to be persuaded to quit altogether or switch to less harmful alternatives. Critical to this will be putting in place a regulatory framework that ensures smokers have the facts about alternatives and that tobacco companies are pushed to phase out cigarettes.

“We have made this point time and time again to MPs, civil servants, local councillors, journalists and the broader public. What this story really shows is that Philip Morris has been consistent in its efforts to make smoke-free 2030 a reality.”