BRITISH American Tobacco (BAT) took a swipe at the Government's smoking ban in pubs and clubs last night as it announced underlying profits rose nine per cent last year.

Chairman Jan du Plessis said the policy was based on an intolerant and paternalistic campaign to protect smokers from themselves, rather than meeting its stated objective of protecting the health of non-smokers.

BAT, which closed its Darlington factory in 2004 with the loss of 500 jobs, revealed operating profits of £2.6bn.

The company announced earlier this year it was closing its Southampton factory - its last remaining UK plant.

The underlying profit ignores the effect of last year's merger of BAT's US business with RJ Reynolds.

It said it had found another £80m of cost savings - increasing its annual savings target to £400m by next year.

The Government's smoking legislation, which comes into force next year in England and Wales, was amended to ban smoking in all pubs and clubs.

In Italy, a virtual ban on indoor public smoking since the start of last year, combined with a tax increase, had led to sales dropping six per cent.