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Hats off to the Government

Easter bunnies, bitter blows and the thirst for more of the same. David Burrows reflects on the story of the sugar tax so far.

In february all the talk was about the rabbit the prime minister might pull out of his negotiating hat in Brussels. That one never materialised (his new deal with the EU was widely panned). Thank goodness for the chancellor, then, who conjured up a pre-Easter bunny of a surprise with his sugar tax announcement in the March budget.

“I am not prepared to look back at my time here in this parliament, doing this job and say to my children’s generation: ‘I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.’”

George Osborne, UK chancellor

The move to introduce a levy, applied to drinks with more than five grams of sugar per 100 millilitres with a higher rate for more than eight grams, caught everyone by surprise. There were rumours but six months ago the Department of Health said:

“The government has no plans to introduce a tax on sugar-sweetened beverages. The government has committed to a tax lock to avoid raising the cost of living and to promote UK productivity and economic growth.”

The U-turn left many executives at the big beverage brands choking on their lunchtime Coke.

“For nearly a year we have waited for an holistic strategy to tackle obesity. What we’ve got today instead is a piece of political theatre.”

Ian Wright, Food & Drink Federation director general

The word “disappointed” came up in a number of the quotes flying around in the aftermath of the chancellor’s speech.

“We are extremely disappointed that the government is proposing to introduce a soft drinks tax from 2018.”

Britvic spokesperson

“Why us?” was the cry.

“We are the only category with an ambitious plan for the years ahead – in 2015 we agreed a calorie reduction goal of 20% by 2020.”

Gavin Partington, British Soft Drinks Association director general

After all, the voluntary initiatives are working.

“Despite the considerable voluntary initiatives and the significant progress that our industry and the company have made, a punitive levy on a specific single category has been brought out where, in stark contrast to other food and drink categories, we have been reducing sugar content and have a strong [commitment] to do so.”

Roger White, AG Barr chief executive

AG Barr’s shares dipped almost immediately, slipping more than 5% since the budget. The industry has warned that jobs will be lost.

“The imposition of this tax will, sadly, result in less innovation and product reformulation, and for some manufacturers is certain to cost jobs.”

Ian Wright, FDF

What’s more, it won’t curb obesity.

“If the aim is to reduce obesity, this levy flies in the face of evidence from around the world which shows taxes do very little, if anything, to reduce sugar and calorie intake or obesity levels but do add to people’s cost of living.”

Jon Woods, Coca-Cola Britain general manager

Campaigners, of course, claimed the opposite, raising a glass (of water, probably) to the unexpected news.

“This is a big moment in child health. It’s symbolic that a robust government can actually get control of big business when it’s having an ill effect on child health.”

Jamie Oliver, celebrity chef and campaigner

And while it may have been a “symbolic slap” to industry, it isn’t anti- business. Rather it should fuel innovation and reformulation.

“Because it is already possible to replace sugar with low-calorie sweeteners, producers are likely to respond by reformulating their existing products. And we think that this will be where we are likely to see the biggest health impacts.”

The Behavioural Insights Team

There is indeed scant evidence that jobs will be lost as a result. But will manufacturers spot an opportunity, pushing up the price of diet options? Some think so.

“Some manufacturers and/or retailers might respond to the tax by increasing the prices of diet drinks, dampening the extent of any consumer switching to these products.”

Institute for Fiscal Studies, Green Budget

But the government has already said this will be frowned upon. Indeed, the levy is on producers of sugar drinks rather than being a direct tax on consumers.

“The Treasury has also warned industry not to pass on levy costs to the purchaser and that it should do more to promote healthier products – even down to marketing water.”

Tam Fry, National Obesity Forum spokesman

Whether this will come to pass remains to be seen.

“Products with high sugar contents are more likely to be promoted and more of them are bought when on promotion. If we are to tackle the UK’s love affair with sugar we need to reduce the incentives for companies to produce and promote ever greater volumes.”

Anita Charlesworth, Health Foundation director of research and economics

There could, of course, be further restrictions on advertising laid down within the long-awaited (and much-delayed) childhood obesity strategy. Many agree that a sugar tax isn’t a silver bullet.

“The evidence broadly suggests that a structured approach, involving restrictions on price promotions and marketing, product reformulation, portion size reduction and price increase on unhealthy products, implemented in parallel is likely to have a more universal effect.”

Public Health England

This is just the start, campaigners hope. The soft drinks industry sees it very differently. Some are reportedly planning to take legal action.

“It’s fair to say we are more than just considering legal action. This has been rushed through without warning.”

Senior industry source (talking to the Sunday Times)

Similar challenges have been made in other European countries, while the European Court of Justice has blocked Scotland’s plan to introduce minimum pricing on alcohol. The chancellor’s response?

“Bring it on. We are going to introduce a sugar tax. It’s not a threat or a promise, it’s the way it’s going to be.”

If it’s discriminatory (fruit juices and milkshakes, for example, are exempt), then campaigners say slap the tax on all sugary drinks – including the sugar- laden hot drinks in cafes.

“We know that fruit juices are packed with sugar and lattes and so forth and all these supersize drinks on the high street can be disastrous.”

Tam Fry, National Obesity Forum spokesman

But why stop there? The drinks industry noted that…

“…sugar and calorie intake from all other major take-home food categories is increasing, which makes the targeting of soft drinks simply absurd.”

Gavin Partington, director general BSDA

The likes of the IFS also suggest that people, especially children, will simply go elsewhere for their sugar fix. This is unlikely, but a sugar tax on unhealthy foods is on “less firm footing” evidence-wise than one targeted at drinks alone, said the University of Oxford’s Adam Briggs. A tax on high-carbon foods, on the other hand…

“… could have meaningful effects on greenhouse gas emissions without harming health.”

If that happens, environment campaigners would throw their hats in the air – and I’d eat mine.