British American Tobacco (BATS.L) has attacked government plans to ban the display of cigarettes in shops, warning it could actually increase the appeal to some social groups.

The tobacco giant made the incredible claim after lashing out at the UK government for increasing tobacco duties by two per cent above inflation last month, which the company said would encourage illicit trade.

Speaking at today’s annual general meeting, Richard Burrows, chairman of BAT, said one in four cigarettes in Ireland is illicit or counterfeit and said the government was right to freeze cigarette duty as a result.

Burrows warned the UK government that there is a real prospect of a black market grabbing hold of the British smoking population.

He added, ‘The problem does not stop with tax. There is no convincing evidence that banning the display of tobacco in shops, requiring generic packaging or banning cigarette ingredients will cut smoking rates and help public health.

‘Forcing cigarettes under the counter, making packs easier to counterfeit or changing the taste of consumers’ favourite brands are likely to drive smokes to the unregulated market, possible forever.

‘I think governments have forgotten that the more tobacco that is driven underground, the more smoking may appeal to the curious.’

At the same meeting, shareholders voted in a final dividend of 81 pence per share, taking the total for the year to 114.2 pence per share – an increase of 15 per cent on the previous year.

The company has also reintroduced its share buy back programme, which had been suspended for two years.