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The Soft Drinks Industry Levy

Published Wednesday, April 12, 2017

This briefing provides an overview of the proposed Soft Drinks Industry Levy, and a background on sugar and health.

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Health impact of high sugar products

The consumption of too much high sugar food and drink can lead to weight gain which can increase the risk of medical conditions such as type 2 diabetes, heart disease and stroke. High sugar consumption can also increase the risk of tooth decay.  There has been particular concern around the impact of high sugar products on children, and the levels of obesity in this group.  Both the World Health Organisation[1] and the Scientific Advisory Committee on Nutrition[2] recommended a reduction in the daily intake of free sugars in 2015.[3]

In October 2015, Public Health England published its report, Sugar Reduction: The evidence for action which recommended interventions to reduce sugar consumption.[4]  The report stated that no single action would be effective in reducing sugar intake. It recommended a broad range of different measures, one of these was an introduction of a tax on high sugar products.  The report stated that “it is likely that price increases on specific high sugar products like sugar sweetened drinks, such as through fiscal measures like a tax or levy, if set high enough, would reduce purchasing at least in the short term.”

A new levy on soft drinks

In the 2016 Budget, the former Chancellor of the Exchequer, George Osborne announced the introduction of a levy on soft drinks. The levy would apply to manufacturers and importers of sugar added soft drinks and would be implemented in April 2018.  There would be exemptions for fruit juices and milk based drinks and for small producers. 

In the 2016 Budget it was announced that the proceeds of the levy would be used in England to increase spending on PE in schools, breakfast clubs and extending the school day. The devolved Administrations will receive money through the Barnett formula.  Recent changes have been made to this planned spending, with regards to funding to extend the school day.  In February 2017, the Department for Education announced that £415 million of funding from the soft drinks industry levy would be allocated to schools in 2018-19 to “pay for facilities to support physical education, after-school activities and healthy eating.” The announcement stated that the funding “built on” plans for schools to provide a longer school day.

The Government have emphasised that the intention is to encourage producers to reformulate their products to reduce sugar content, and therefore come under the threshold for the levy. A number of producers and retailers, including Lucozade Ribena Suntory and Tesco have already announced plans to reduce the total sugar content of their products.  The Chancellor of the Exchequer, Phillip Hammond has announced that because of reformulation action, a lower revenue is now forecast from the levy.  However, he confirmed that the Department for Education would still receive the full £1 billion of funding originally planned. 

Health organisations have welcomed the introduction of a levy on soft drinks but there has been some opposition from industry representatives. There has also been some commentary on the design of the levy, and uncertainty around the potential impacts on obesity.

The Finance (No 2) Bill 2017

The soft drinks industry levy is introduced by Clauses 71-107 of the Finance Bill 2017. This is tabled for its Second Reading debate on 18 April 2017.  Clause 107, on the commencement of the levy has been listed as one of the clauses for debate in a Committee of the Whole House.

 

 

 

[1]     World Health Organisation, WHO calls on countries to reduce sugars intake among adults and children, March 2015

[2]     Scientific Advisory Committee on Nutrition, Expert nutritionists recommend halving sugar in diet, July 2015

[3]     Free Sugars is a term used by the World Health Organisation to describe “all monosaccharides and disaccharides added to foods by the manufacturer, cook, or consumer, plus sugars naturally present in honey, syrups, and fruit juices.”

[4]     Public Health England, Sugar Reduction: The evidence for action, October 2015

Commons Briefing papers CBP-7876

Authors: Sarah Barber; Carl Baker; David Foster

Topics: Food, Health education and preventive medicine, Health finance, Health services, Taxation

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