Obesity Health Alliance. The Soft Drinks Industry Levy Policy Briefing

Transcription

1 Obesity Health Alliance The Soft Drinks Industry Levy Policy Briefing The Obesity Health Alliance (OHA) is a coalition of organisations committed to share expertise and support Government to tackle the issue of overweight and obesity in the UK. Obesity is a complex problem and there is no single silver bullet. A comprehensive range of population level policy interventions is required to tackle it. Policy Summary Excessive free sugar consumption is a driver behind the obesity epidemic in the UK. The OHA welcomes Government s proposals for a soft drinks industry levy to combat obesity. An effective soft drinks industry levy to reduce free sugar consumption is a vital part of a comprehensive strategy which tackles the price, promotion and formulation of food and drink within the obesogenic environment. In order to achieve an effective levy that promotes reformulation as well as reduces consumption of sugar sweetened drinks, the Government should consider: a) A workable definition of sugar based on health guidance; b) Making the tax bands more proportional to the sugar content; c) Reviewing which products are subject to the levy; and d) Funding a comprehensive, rigorous and independent evaluation of the levy. 1. Our view of the Soft Drinks Industry Levy We welcome the Government s levy to help children and adults cut down on their sugar from sugar sweetened beverages (SSBs). The soft drinks industry levy is a vital measure in the fight against overweight and obesity in the UK. The levy should result in a significant reduction in the consumption of sugar from SSBs, and our full support is subject to details being confirmed in the consultation and our concerns being addressed. Failure to do so may lead the OHA to change this position. 2. The Problem Obesity and health One in five children in England is overweight or obese before they start primary school, and by the time they leave, this increases to almost one in three. 1 Children are also eating too much sugar, salt and saturated fat. 2,3 We know that eating too much can lead to weight gain and obesity. This is putting our children s future health at risk of developing serious health conditions such as Type 2 diabetes, heart disease, cancer as well as other conditions. If current trends continue, we can expect millions of extra cases of disease. 4 In addition to this 6 in 10 adults in the UK are overweight or obese 5. If current trends continue, this is likely to increase to 7 in Obesity has been identified as the biggest threat to public health in the 21 st century. 7 Obesity is recognised as a complex interplay between diet, increasing physical inactivity and changing environments. But recent evidence from the World Health Organization (WHO) has

2 found that increases in the food energy supply alone are sufficient to explain the weight gain over recent decades, especially in high income countries. 8 Consumption of free sugars Caloric intake through free sugars remains staggeringly high. 9 Every age group in the UK exceeds the maximum recommended intake from free sugars of 5% and year olds consume three times more than is recommended by Government guidelines. 10 For this group, sugary drinks are their biggest source of free sugars, making up 30% of their total intake. Across all age groups, over 5.6 million litres of sugary drinks are consumed each year in the UK. 11 Households with children purchase around 50% more of their added sugars from carbonated and non carbonated soft drinks, compared to households without children (25% and 17% of total processed free sugar respectively). 12 Free sugars and health Excessive consumption of free sugar has become recognised as a leading source of extra calories and thus a cause of obesity. In particular, work by the Scientific Advisory Committee on Nutrition (SACN) and the WHO have led both to recommend that free sugar consumption should be reduced. Moreover, given the high rate of consumption and health consequences of consumption of SSBs, SACN has also recommended that consumption of these products should be minimised for both children and adults. Trials conducted in children and adolescents indicate that consumption of SSBs, as compared with non calorically sweetened beverages, results in greater weight gain and increases in body mass index. 13 There are also concerns that calories consumed through drinks have a weak impact on satiety (feeling full) and may be consumed in addition to, rather than instead of, calories from solid foods. 14 Tooth decay is now the number one reason for hospital admissions among young children aged It has been reported that half of eight year olds have visible signs of tooth decay and a third of children start school with visible signs of tooth decay. 16 The report by SACN found that greater consumption (i.e. the amount) of total sugars and sugars containing foods and beverages is associated with a greater risk of dental caries. 3. The Solution Mechanisms of a soft drinks industry levy The levy is a tax paid by the producers and importers of soft drinks containing added sugar. Currently the levy excludes pure fruit juices and milk based drinks. We believe that this levy can be an effective mechanism to promote reformulation and reduce consumption of SSBs, and an effective levy should include the recommendations below. The OHA welcomes the proposed soft drinks industry levy, subject to details being confirmed in the consultation and our concerns being addressed. a) A workable definition of sugar We believe that for the purposes of the levy a definition of sugar added to SSBs should be based on the definition of free sugars used by SACN and the World Health Organization. (A full definition is provided on page 6) However, we acknowledge and support the exemption of June

3 unsweetened fruit juice from the levy (despite its status as a free sugar) due to their contribution to a healthy diet inparticular for some sub groups of the population. This should be taken into account when adapting the SACN definition for use in the levy. b) The levy tax bands should be more proportional to the sugar content The expected current bands of the levy are 18p per litre cost for soft drinks with 5g of added sugar per 100ml and 24p per litre for those 8g of added sugar per 100ml. In their critique of the current tax bands, the Institute for Fiscal Studies note that drinks containing more sugar per 100ml will attract a relatively lower tax per gram of sugar. 17 Lessons can be learned here from discrepancies in alcohol taxation, which currently does not systematically tax stronger products more heavily than weaker ones. 18 The expected current bands of the levy should be revised to ensure the cost of the higher band is at least 1.6 times that of the lower (8g/5g = 1.6). As an example, we suggest the price of the upper band should increase from the expected 24p to a minimum of 29p per litre (1.6*18p) to ensure consistency. This can increase the efficacy of the tax by providing a clear signal and a larger incentive for reformulation. A more proportionate rate for the higher band may also reduce the risk of producers undershifting the tax i.e. not passing it on in full through the retail price. A low rate could be absorbed by producers or be passed onto all product lines made by the producers. The latter option would minimise the increase in retail prices for those subject to the levy and would also eliminate the positive effects of substitution away from unhealthy products subject to the levy to healthier products which are not subject to the levy. Review products that are subject to the levy a) Fruit juices We believe the following fruit juices as defined in The Fruit Juices and Fruit Nectars (England) Regulations 2013 should be exempt from the levy as currently proposed Fruit Juices are recognised as part of healthy diet through the Eatwell Plate and can contribute to a person s fruit and vegetable consumption. 19,20 To prevent the excessive intake of sugar from fruit juices, we support recommendations made by Public Health England that people should not consume more than 150ml from fruit juice per day. The impact of the levy on fruit juice consumption should be closely monitored. We also think that industry use of fruit juice and fruit nectars (as defined in the Fruit Juice and Fruit Nectar regulation 2013) as additions to SSBs should be monitored. b) Ready to drink milk based drinks and probiotic yoghurt drinks Whilst there are clear reasons to exclude pure milk from a soft drinks levy given its nutritional benefits, we believe that on balance ready to drink milk based drinks with free sugar should be subject to the levy. The benefits of dairy products could be obtained through substitute products such as yogurt and pure milk and other products which do not have free sugar. Moreover, unlike fruit juices as defined above, reformulation of milk based drinks to reduce levels of free sugar is likely to be technically easier than it is for fruit juices. Therefore we recommend that milk based drinks and yoghurt drinks where they include free sugar should be subject to the levy. The impact of the levy on milk and ready to drink milk based drinks and yoghurt drinks sales should be closely monitored. June

4 c) Dilutable cordials, squashes and syrups We believe that dilatuables such as cordials and squashes and similar concentrated forms of soft drinks with free sugar should be subject to the levy, according to their sugar content and volume after dilution, as currently proposed. It is important that consumption of concentrated and dilutable drinks is closely monitored to ensure that consumers do not compensate for the reduction in sugar by increasing the volume of the concentrate. A comprehensive, robust, independent evaluation of the levy We believe that public health policy should be built on robust evidence. While there is a wide range of evidence to justify the introduction of a levy, it is important that it is evaluated so that it can be refined and adjusted to continually deliver public health gains. We believe that Government should fund a rigorous evaluation of the soft drinks levy and that this should be conducted and published independently of Government. We believe that the following should be part of the remit of the evaluation: An examination of consumer retail data to examine changes in trends and sales of SSBs, products not covered by the levy including likely substitutes and complements, and changes in retail prices of the above products. An examination of consumption data trends for SSBs using existing dataset such as dietary surveys and additional relevant information like the Wales Public Health Outcomes Framework. An examination of the dietary consequences of the soft drinks industry levy including changes in consumption patterns for SSBs subject to the levy, products not subject to the levy including both likely substitutes and complements. Such a survey should be large enough to provide insight into patterns within sub groups by age, gender and socioeconomic status. A review of the soft drinks industry practices in response to the levy including action on reformulation as a result of the levy, product size changes, pricing strategies, and marketing and promotional activities. A review into consumer attitudes towards the levy and sugar consumption to understand consumer behaviour in response to the levy. Soft drinks industry levy and reformulation We welcome the Government s introduction of the soft drinks industry levy as a means to promote and incentivise reformulation. We believe that based on the evidence an effective levy could be an influential incentive to encourage reformulation. It is thought that specific food taxes could promote reformulation. 21 The proposed soft drinks industry levy in the UK is closer to a hybrid tax model successfully used in Hungary. A survey of manufacturers in Hungary found that following the introduction of the public health taxes 40% of the manufacturers changed their recipe, 30% of them completely removed the targeted ingredient, and 70% of them reduced the amount of the targeted ingredient. 22 Interviews with manufacturers supported this and demonstrated that in some cases the tax accelerated the process of reformulation. 23 The incentive of a tax for reformulation is also dependent on the ingredient. In the case of reducing sugar from SSBs, a tax is likely to encourage reformulation.a soft drink duty is both simple and practical as manufacturers do not need to replace free sugar with other nutrients June

5 other than water to maintain the volume and consistency of the product. Moreover, given the process of production of SSBs involves the addition of free sugar, reformulation to reduce free sugar is likely to be more straight forward compared to products where sugar is intrinsic like in fruit or honey. Soft drinks industry levy and consumption In addition to promoting reformulation, a soft drinks industry levy is also likely to have a positive health impact by reducing consumption of sugary drinks. This should be an important objective of the levy, as there is strong evidence that a tax on SSBs would reduce consumption of these products. Previous experience in both alcohol and tobacco have shown that this form of taxation is effective in reducing consumption and improving health. Therefore much of the expected health gains from a tax on SSBs is estimated to be the result of reduced calories due to reduced consumption of SSBs. Looking specifically at where taxes focused on SSBs, they have been consistent in reducing consumption of SSBs. France, Denmark, Finland and Hungary have all enacted a tax on SSBs, which the review found has resulted in a price rise of 3 10% and a decline in consumption of 4 10% in the four EU countries. 26 Real world evidence from Mexico also showed that purchases of sugary drinks fell by 12% at the end of the first year of a tax, with a 17% decline among households of low socioeconomic status. 27 In their review of the evidence on sugar reduction, Public Health England note 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. 28 Evidence suggests reducing the intake of SSBs can reduce individual rates of obesity. 29 Multiple modelling research studies demonstrate the efficacy of taxes in reducing consumption of sugary drinks, and in turn of reducing overweight prevalence. The efficacy of the tax is likely to relate to the price elasticity of demand for SSBs. Estimates of the price elasticity of demand for SSBs varies globally. However, while food as a product category may be relatively inelastic, evidence suggests that soft drinks are likely to be among the most elastic products within this category. 32 One potential reason for this is that unlike some other food products there are clear substitutes for SSBs such as water, diet drinks, tea and coffee. To maximise the impact of the soft drinks industry levy on reducing consumption for SSBs, we also need to consider the pass on rate. The evidence so far is that food related taxes are typically passed on and often producers over shift prices so that they exceed the price increase expected from the tax. 33 It is important that any new levy is closely monitored to ensure that tax is passed onto the retail price of the product. Moreover, it is important that manufacturers with large soft drink product ranges do not cross subsidise SSBs by increasing the prices of drinks not subject to the levy such as those with no added sugar. One additional benefit of an SSB levy is that it may increase public awareness of the health harms of consuming SSBs. However, this is unlikely to be sufficient alone to actually translate into behaviour change. In Finland, following the introduction a tax on SSBs, among those who reduced consumption the increase in price was a more significant factor than awareness of the negative health impact. 34 June

6 4. Public and expert support A soft drinks industry levy has been backed by public health organisationso s including individual members of this coalition, the t WHO, Public Health England, Food Standards Scotland, and the House of Commons Health Select Committee. 35,36,37,3 38 More than 155, 000 people supported a petition to introduce a sugary drinks tax. 39 Polling from March 2016 found that 69% of the public support a tax on sugary drinks. 40 Also in March, polling published in The Grocer found 56% of f Brits support the sugar levy respondents in this poll indicated a 50% price increase from current retail price was the most popular change, with support for this increase highest among year olds. 41 Definitions Free sugars: This comprises all monosaccharides and disaccharides added to foods by the manufacturer, cook or consumer, plus sugars naturally present in honey, syrups and unsweetened fruit juices. Under this definitionn lactose (the sugar in milk) when naturally present in milk and milk products and the sugars contained within the cellular structure of foods (particularly fruits and vegetables) are excluded. We acknowledge and support the t exemption of unsweetened fruitt juice from the levy (despite its status as a free sugar) due to their contribution to a healthy diet, particularly within some sub in groups of the population. Price elasticity (of demand): A measure of how much demand for a quantity of a good changes response to changes in prices or consumer incomes: specifically, the percentage change in demand for quantity with respect to a 1% change in a single price, holding all else the same. Contact For any enquiries relating to thiss briefing, please contactt Caroline Cerny: Caroline.Cerny@ukhealthforum.org.uk. June

7 References 1 Public Health England (2016) Child Obesity Statistics 2 Department of Health (2012) National Diet and Nutrition Survey: Headline Results from Years 1, 2 and 3 (combined) of the Rolling Programme 2008/ /11 3 Public Health England (2014) Sugar reduction: Responding to the challenge. to_the_challenge_26_june.pdf 4 ibid 5 Health and Social Care Information Centre (HSCIC). (2015). Health Survey for England, UK Health Forum and Cancer Research UK. (2016). Tipping the scales: Why preventing obesity makes economic sense. _cruk_full_report11.pdf 7 World Health Organization (2016) Global Strategy on Diet, Physical Activity and Health. 8 Vandevijvere, S. et al. (2015). Increased food energy supply as a major driver of the obesity epidemic: a global analysis. WHO Bulletin. 93: ibid 10 ibid 11 British Soft Drinks Association. (2014). Creating new choices: the 2014 UK soft drinks report Institute for Fiscal Studies. (2016). Using taxation to reduce sugar consumption Malik, V., et al. (2013). Sugar sweetened beverages and weight gain in children and adults: a systematic review and meta analysis. American Journal of Clinical Nutrition. 98(4): Chen, L., et al. (2009). Reduction in consumption of sugar sweetened beverages is associated with weight loss: the PREMIER trial. American Journal of Clinical Nutrition. 89(5): British Dental Association. (2016). Sugar and children s oral health HSCIC. (2015). Child Dental Health Survey Executive Summary.pdf 17 Institute for Fiscal Studies. (2016). The soft drinks levy Institute for Alcohol Studies. (2016). Taxation. knowledgecentre/price/factsheets/taxation.aspx 19 Legislation.gov.uk. The Fruit Juices and Fruit Nectars (England) Regulations Public Health England. (2016). The eatwell guide. eatwell guide 21 ECORYS. (2014). Food taxes and their impact on competitiveness in the agri food sector National Institute for Health Development Hungary. (2013). Supporting the monitoring the effect of the excise tax on selected food products in Hungary for combating non communicable diseases and promoting health and healthy lifestyles:s a technical report. 23 Ibid. 24 Jackson, R et al. (2010). Interventions on Control of Alcohol Price, Promotions and Availability for Prevention of Alcohol Use Disorders in Adults and Young People. Sheffield: ScHARR. University of Sheffield. 25 Chaloupka, F., et al. (2012). Tobacco taxes as a tobacco control strategy. Tobacco Control; 2012; 21(2): Cornelson, L., and Carriedo, A. (2015). Health related taxes on foods and beverages. Food Research Collaboration. content/uploads/2015/06/food and beverages taxes final amended.pdf 27 Colchero, M., et al. (2016). Beverage purchases from stores in Mexico under the excise tax on sugar sweetened beverages: observational study. BMJ. 2016; Ibid. 29 Escobar, M., Veerman, J., Tollman, S., Bertram, M., and Hofman, K. (2013). Evidence that a tax on sugar sweetened beverages reduces the obesity rate: a meta analysis. BMC Public Health. 13: Collins B, Capewell S, O Flaherty M, Timpson H, Razzaq A, Cheater S, et al. (2015) Modelling the Health Impact of an English Sugary Drinks Duty at National and Local Levels. PLoS ONE 10(6): e doi: /journal.pone Briggs, A., et al. (2013). Overall and income specific effect on prevalence of overweight and obesity of 20% sugar sweetened drink tax in UK: econometric and comparative risk assessment modelling study. BMJ. 347:f Wang, Y., et al. (2010). The Potential Impact of Sugar Sweetened Beverage Taxes in New York State. A Report to the NYC Department of Health & Mental Hygiene. June

8 33 ECORYS. (2014). Food taxes and their impact on competitiveness in the agri food sector World Health Organisation. (2015). Good Practise Brief. Public Health Product Tax in Hungary. topics/health systems/health systems response to ncds/publications/2015/publichealth product tax in hungary an example of successful intersectoral action using a fiscal tool to promote healthierfood choices and raise revenues for public health World Health Organisation. (2016). Report of the Commission on Ending Childhood Obesity Public Health England. (2015). Sugar reduction: from evidence into action. reduction from evidence into action 37 Food Standards Scotland. (2016). Food Standards Scotland agrees to radical measure to tackle Scotland s diet related health problems. standards scotland agrees radical measures tacklescotland%e2%80%99s diet related health problems 38 House of Commons Health Committee. Childhood obesity brave and bold action Petitions. Introduce a tax on sugary drinks in the UK to improve our children s health Ipsos Mori. (2016). Political monitor. mori political monitor march The Grocer. (2016). More than half of Brits support sugar tax but will it work. features/soft drinks report 2016/more than half of brits support sugar taxbut will it work/ article June