Childhood obesity: Time for action Contents

7Fiscal measures

Expansion of the Soft Drinks Industry Levy

81.The Soft Drinks Industry Levy, which was announced by the Government in 2016 and came into force in 2018, is a welcome tool in tackling childhood obesity through a reduction in high consumption of this specific food group (Sugar-sweetened beverages (SSBs)). However, SSBs are not the only problematic foods in children’s diet, as they make-up only 13% of non-core food energy (foods high in fat and sugar that are surplus to requirements) eaten by British adolescents. In written evidence,Johnson et al from the University of Bristol argue that:

The remaining 87% of non-core food intake needs to be tackled as well, because a sole focus on a single food group (i.e. SSBs) will be insufficient to address the current obesity epidemic.90

82.Thijs van Rens, a public health economist and one of the Parliamentary Academic Fellows working with us on this inquiry, argued in written evidence, “If the UK wants to be a front-runner on this issue, plans for expanding the tax measures need to be put in place now.”91 More specifically, the Jamie Oliver Food Foundation, in written evidence, argued that the Government should reconsider their decision not to review their exclusion of fruit juices and milk-based drinks in the SDIL until 2020, a point our predecessor Committee also argued for in their 2017 report.92

83.The reaction to the SDIL was one of welcome rather than hostility. As PHE’s report of the first year of its reformulation programme shows, the levy has been a highly effective driver of reformulation. Such has been the effect of the SDIL that far less tax will be collected than anticipated as manufacturers have reduced sugar content to below the threshold levels.93

84.We echo our predecessor Committee in welcoming the introduction of the soft drinks industry levy and urging the Government to extend it to milk-based drinks.

85.The next Government’s next childhood obesity plan must set out further fiscal measures which are under consideration to cover food groups such as puddings and chocolate confectionary, which the PHE sugar reduction and wider reformulation programme review has shown are not making progress in sugar and calorie reduction. We recommend that these measures should be implemented if there is not substantially faster progress on reformulation for these groups in the coming year.

86.In 2017, the then Minister Nicola Blackwood explained to our predecessor Committee:

[…] we put in the plan that this is the beginning of a conversation; it is not the end of the steps we will take. We also put in the plan that, if we do not achieve the impact we want with the measures and steps, we will look to further levers. […] We have been perfectly clear that this is not the end of the story.94

87.The Government’s new childhood obesity plan must maintain the pressure on industry to reformulate through the promise of concrete further action if there is not faster progress on reformulation.

Use of the revenue from the levy

88.The Government’s childhood obesity plan says,

In England, the revenue from the levy will be invested in programmes to reduce obesity and encourage physical activity and balanced diets for school age children. This includes doubling the Primary PE and Sport Premium and putting a further £10 million a year into school healthy breakfast clubs to give more children a healthier start to their day.95

89.Further correspondence from the Minister for Public Health sets out the detail of the Government’s plans for the use of the levy:

90.In 2017, our predecessor Committee stated:

We commend the Government for responding positively to our recommendation that the proceeds of the soft drinks industry levy should be directed towards measures to improve children’s health. It is particularly welcome that some of the proceeds will be directed to breakfast clubs, whose greatest benefit is to children from lower income families. We intend to follow up how the income from the levy is distributed in order to help reduce the inequalities arising from childhood obesity.97

91.Despite this, in a discussion over the ‘healthy pupils capital funding’ in a Committee of Public Accounts hearing in October 2017, Jonathan Slater, Permanent Secretary, Department for Education stated:

This was a capital budget that had not yet been allocated. It was a new thing, to be funded from the sugar levy—do you remember that? The decision that Ministers took was that rather than allocating it in the future to individual capital programmes in support of healthy pupils, schools would appreciate it more if it was baked into their core schools budgets for them to spend on an ongoing basis as they wished. That was the change.98

92.We are extremely disappointed that the revenue being generated from the Soft Drinks Industry Levy has been diverted into core schools budgets. We reiterate our predecessor Committee’s argument that the proceeds of the soft drinks industry levy should be directed towards measures to improve children’s health, and specifically addressing health inequalities.


93.Taxation of food in the UK is not uniform. Food is VAT zero-rated, but there are some exceptions that attract standard-rate VAT of 17.5%, including food provided as catering, takeaway or in restaurants. Some countries have similar rules to the UK, applying sales tax to particular items. In France, sweets, chocolates, margarine and vegetable fat attract VAT of 20.6% whilst other foods attract VAT of only 5.5%. In Canada, sales tax applies to soft drinks, sweets and snack foods but other foods are free from sales tax. In oral evidence, Professor Jack Winkler of London Metropolitan University told us,

The next chapter in the childhood obesity plan should make clear an explicit objective not just to make the healthy choice the easier choice, but to make the healthy choice the cheaper choice …99

This was built on by Martin O’Connell of the IFS, who stated,

One point that has already been touched on by Jack is that the current system of VAT, as applied to food in the UK, is incoherent. A good starting point would be to sort it out. The fact that biscuits attract VAT and cakes do not, for example, has no real logical basis, either in terms of public health policy or simply on the principles of tax design. A very good starting point would be to focus energy on that.100

94.This point was summed up by Dan Parker of Living Loud in oral evidence, who argued:

What I find a little upsetting is the phrase that has been very popular in all of this—that we have to make the healthy choice the easy choice. That is not right. We have to make the healthy choice the cheapest choice because that is the only consideration for people who are on a very tight budget.101

95.We recommend that the Government undertake a consultation on the adjustment of VAT rates on food and drink after Brexit as a possible measure to tackle childhood obesity.

92 Health Committee, Childhood obesity: follow-up, Seventh Report of Session 2016–17, HC928 p.16

94 Health Committee, Childhood obesity: follow-up, Seventh Report of Session 2016–17, HC928 p.10

96 Health Committee, Childhood obesity: follow-up, Seventh Report of Session 2016–17, HC928 p.18

97 Health Committee, Childhood obesity: follow-up, Seventh Report of Session 2016–17, HC928 p.18

98 Public Accounts Committee, Oral evidence: Department for Education Annual, Report and Accounts 2016–17, HC 395, Q34, Jonathan Slater

99 Q73 Professor Winkler

100 Q90

101 Q132

Published: 30 May 2018