The tax will target sugary drinks but will exclude pure fruit juices and milk-based drinks. Manufacturers of sugary beverages now have two years to amend recipes and reduce sugar, after which the tax will be imposed with two bands: one for drinks containing 5g of sugar per 100ml and another for those containing 8g of sugar per 100ml.
The Chancellor has announced that in England the money raised from the levy will be used to improve sports provision in schools. The drinks manufacturers will have the choice of whether to pass on their increased costs to the consumer by raising prices.
The British Dental Association (BDA) has welcomed the news; Mick Armstrong, chair of the BDA, said:
“Many were expecting half-measures from government on sugar, so today’s announcement looks like progress.
“Britain’s sugar addiction is costing the health service billions, and it’s only right the drinks companies should make a fair contribution. Health professionals are confronting a preventable epidemic, and parents, government and the food industry all need play their part.
“Sugar is cheap, addictive and nutrient free, and industry finally has a reason to start cutting the dose.”
When announcing the sugar levy, Mr Osborne said that he didn’t want to be in a position where he looked back on his time as chancellor and had to say to his children that he had ducked difficult decisions and failed to do anything. However, Stephen Fayle, a spokesperson for the BSPD, commented that more action is needed. He said
“We welcome the levy on soft drinks which are a major factor in the unacceptably high levels of dental decay in children. But we would like the levy to be the first step in an integrated campaign to eliminate childhood caries, including a national programme of prevention.
“Dental caries in children is largely preventable but as a society we are spending more than £30m per annum on extractions under general anaesthetic.”
Similar sentiments were announced by FGDP(UK). Mick Horton, dean of FGDP(UK) said:
“This is definitely a step in the right direction. Sugary drinks are now children’s biggest source of dietary sugar. In England, two in ten are obese by the time they leave primary school, and tooth extraction is the primary reason why children are admitted to hospital.
“Whilst investing in school sport is laudable, there is a need to educate the public as to the dangers of a high sugar diet and the potential risks to health of childhood obesity, diabetes and avoidable dental extractions.
“The Government could have used this levy to challenge the culture in which the average person drinks two litres of high sugar soft drinks every week, and we look forward to seeing further measures in the Childhood Obesity Strategy.”
Professor Nigel Hunt, Dean of the Faculty of Dental Surgery, Royal College of Surgeons, said:
“The Chancellor’s announcement today of a new sugar levy to be introduced on soft drinks is very welcome.
“Approximately 90 per cent of tooth decay is preventable; eating and drinking high levels of sugar is a significant cause. Tooth extractions continue to be the number one reason why five to nine year old children are admitted to hospital. A levy that could decrease the amount of sugar children are consuming is therefore a massive step in the right direction towards tackling poor dental health and obesity.
“We now urge the government to investigate how this sugar levy could be applied more widely than just soft drinks.”
Oral health charity, the British Dental Health Foundation, also welcomed the Government’s decision but now want to put pressure on the food and drinks industry to take real steps in helping to prevent tooth decay in the UK.
Henry Clover, deputy chief dental officer at Dentaid, commented:
“We’re pleased that the Government has listened to the scientific evidence and advice from various campaign groups, as well as the wishes of thousands of members of the general public, and taken appropriate action to implement a levy on the production of sugary soft drinks – a leading factor of obesity, type 2 diabetes and tooth decay.
“While this is no silver bullet, it is a very significant and welcome step in the right direction to changing consumer sugar habits in the UK, and in ultimately trying to tackle the associated oral health and overall health risks of a diet high in processed sugar.”
“There are a couple of fundamental outcomes we hope will happen as a result of the sugar tax, however, these have been assumed and are by no means guaranteed.
“Firstly, it is hoped that the manufacturers will take action over the next two years to adapt their recipes and reduce the overall sugar content of their drinks. Secondly, it is hoped that they will pass on any tax to the consumer to ultimately make products more expensive, so they are less likely to buy sugary drinks and make healthier lower sugar choices.
“However, there is a danger that not every manufacturer of sugary soft drinks will do this. There is a chance that they try to absorb the costs by finding cheaper ways to make their products by squeezing suppliers and sourcing cheaper ingredients. That’s why we’d like the Government to closely monitor consumer buying habits and consider introducing a tax directly on the consumer at the point of purchase, if the industry tax does not prove effective.”
Nigel Carter OBE, chief executive of the British Dental Health Foundation said:
“While welcoming what is obviously a positive step in addressing the current children’s dental health crisis and ‘obesity epidemic’ we are facing in the UK, we feel that the measures outlined do not go far enough and more pressure needs to be put on manufacturers.
“By implementing the levy on manufactures, and not the consumer, pressure is now on companies to change their products; we have to now make sure that they do just this and not continue with their current models and pass the cost onto the consumer through price raises.
“We are also happy to see the money raised by the levy go to towards school sports, but we feel some of these funds could have been used to educate the public about preventing oral health problems, which are some of the biggest health issues facing children in the UK.
“What we have seen today with the sugar levy announcement is a very clear and effective statement from the Government that they trying are tackling the nation’s growing health problems but there is still so much more for them to do.”
Fiona Sandom, president of the British Association of Dental Therapists said:
“The Chancellor’s introduction of a sugary drinks tax is a positive step forward – and highlights the need for health education, especially about children’s dental health – an issue which often gets overshadowed by the so-called childhood ‘obesity crisis’. Because more serious health problems can result from poor dental health, I would have preferred to see a significant proportion of the revenue put towards improving access to preventative dental health care, particularly in the more deprived areas of the UK.
“Moving forward, there now needs to be consistency and clarity in food labelling, as well as some robust measures taken to limit the strategies of drinks companies especially as tactical marketing ploys such as end-of aisle displays, price discounting and sponsorship were all cited as major influencers in the increased sales of carbonated drinks in last year’s Public Health England study.”
Of course, not everyone is pleased with the news. The director-general of The Food and Drink Federation, Ian Wright, said:
“We are extremely disappointed by today's announcement of a new tax on some of the UK's most successful and innovative companies. 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. The imposition of this tax will, sadly, result in less innovation and product reformulation, and for some manufacturers is certain to cost jobs. Nor will it make a difference to obesity."
Roger White, chief executive of Irn Bru maker A.G. Barr, commented:
"It is extremely disappointing that soft drinks have been singled out given it is the only food and drink category to have made any real progress in reducing sugar intake in recent years, down 13.6 per cent since 2012.
"We will await further details and ensure that we are fully involved in the consultation process to ensure our position, and progress to date, are well understood."
Christopher Snowdon, director of lifestyle economics at the Institute of Economic Affairs, said:
"Taxing soft drinks is an assault on the poor that has never been shown to reduce obesity anywhere in the world.
"It merely pushes up the cost of living and encourages people to buy budget brands from cheaper shops. This is exactly what happened when Denmark introduced its disastrous fat tax."
Kate Andrews, research fellow at the Adam Smith Institute, said:
"Despite sugar consumption falling over the last two decades, the Government still insists on involving itself in every nook and cranny of our day to day lives. It's not consumers, but the nanny state, that needs a set of rules to rein in its excessive behaviour… The government is meddling in decisions that are best left to parents and families."
According to Canadean analyst, Fiona Baillie, consumer attitudes towards soft drinks are currently undergoing significant changes, which make it difficult to predict how much impact the Government’s new tax will have on the market.
Fiona said: “The low calorie still drinks segment saw a growth of 6 per cent in 2014, a much stronger increase than the 2 per cent that the regular calorie segment experienced. This shows that consumers are already switching to sweetened drinks that will not face high taxation, as trends towards health and wellness endure.
“Furthermore, with pure fruit juices and milk based beverages exempt from the tax, the declining trend juices have seen due to sugar concerns may see a turnaround, with consumers migrating back to these drinks due to better pricing and a change in consumer perception about natural fructose.”
A number of other nations have already experienced similar sugar taxes, which may act as a guide to how the UK will fare. Mexico, for example, pushed through a sugar tax in 2014, with mixed results.