E-cigarettes are 95% less harmful than conventional cigarettes and shouldn't be regulated in the same way, according to a report by MPs.
The government is missing an opportunity to "tackle a major cause of death in the UK" by failing to encourage smokers to switch to the alternative, the MPs warned,
Misconceptions about e-cigarettes include that they are a "gateway" to smoking and that they pose a significant risk through second-hand inhalation, both of which were found to be not true by parliament's science and technology committee.
Almost three million people in the UK use e-cigarettes, roughly 470,000 of whom are using them to help them quit, with tens of thousands doing so successfully each year.
This is being overlooked by the NHS, they said, which spends approximately £2.6bn a year on people who smoke conventional cigarettes.
The MPs are calling for the government to consider risk-based regulation to allow more freedom to advertise e-cigarettes as the relatively less harmful option for nicotine addicts.
The report follows a statement by Public Health England earlier this year in which the health officials called for more tolerance for e-cigarette users and for hospitals to provide patients with vaping lounges.
They also said that the government should provide financial incentives in the form of lower levels of taxation for smokers to swap from cigarettes to less harmful alternatives such as e-cigarettes.
In addition, the government should reconsider how e-cigarettes are used in public places and as a therapy by the NHS.
They also said the government should look again at regulations limiting e-juice refill strengths and tank sizes which were brought in by the EU.
Norman Lamb MP, the committee chair, said: "Smoking remains a national health crisis and the government should be considering innovative ways of reducing the smoking rate.
"E-cigarettes are less harmful than conventional cigarettes, but current policy and regulations do not sufficiently reflect this and businesses, transport providers and public places should stop viewing conventional and e-cigarettes as one and the same.
"There is no public health rationale for doing so," Mr Lamb stated.
"Concerns that e-cigarettes could be a gateway to conventional smoking, including for young non-smokers, have not materialised. If used correctly, e-cigarettes could be a key weapon in the NHS's stop smoking arsenal.
"E-cigarettes are a proven stop smoking tool and, while uncertainties undoubtedly remain about their long-term health impact, failing to explore the use of e-cigarettes could lead to the continued use of conventional cigarettes – which currently kill around 79,000 people in England every year.
"Medically licensed e-cigarettes would make it easier for doctors to discuss and recommend them as a stop smoking tool to aid those quitting smoking. The approval systems for prescribing these products must be urgently reviewed.
"The percentage of people smoking among those with mental health conditions remains stubbornly high, while it is declining in the general population. People with mental health conditions are almost 2.5 times more likely to smoke compared to the general population.
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"It is therefore extraordinary that one-third of mental health trusts ban the use of e-cigarettes completely, while three-quarters of NHS trusts are mistakenly concerned about 'second-hand' e-cigarette vapour. This is unacceptable.
"Those with mental ill health are being badly let down and NHS England appear to have failed to give this any priority. NHS England's default policy should be that e-cigarettes should be permitted in mental health units."