Soft drinks industry urges government to 'face the facts' and ditch Osborne's sugar tax

Businesses involved in almost every area of the soft drinks industry have launched a campaign calling on the government to ditch the "sugar tax" announced by former Chancellor George Osborne in March.

The tax, officially the soft drinks levy, is due to come into force in 2018. But along with other policies in development by David Cameron’s government, opponents of the policy hope it will be reconsidered by Theresa May and the new chancellor, Philip Hammond.

The campaign, "Face the facts, can the tax" aims to flag up what its supporters claim is the evidence that the tax will harm the economy, while failing to have any significant impact on levels of obesity.

Its supporters include the British Soft Drinks Association, which is funding the campaign, along with organisations representing retailers, wholesalers, the pubs and bars trade, vending machine operators and sugar producers.

The campaign follows the publication of The economic impact of the soft drinks levy, a report by advisory company Oxford Economics, which concluded that the tax would result in more than 4,000 job losses and reduce the industry’s GDP contribution by £132m.

The report also found that the levy itself would raise £420m in revenue, plus a further £84m in VAT paid on the levy – slightly lower than the £520m estimated by the Treasury.

In terms of the health impact of the levy, the campaign points out that according to the report, the tax will only cut energy intake by an average of five calories per person.

Bitter words

Gavin Partington, director general of the BSDA, said: "We know from the evidence around the world where they’ve tried a tax that it will not make a difference to obesity.

"What it will do, as this report shows, is damage thousands of businesses across the entire soft drinks supply chain, from farmers, to manufacturers, to convenience stores and the pub and restaurant trade. 

"At a time of economic uncertainty the Government needs to be supporting these businesses and working with industry to support actions that are already making a difference, such as reformulation, smaller packs, and more marketing of the many no sugar options now available."

But health campaigners reacted to the move with outrage. Graham MacGregor, chairman of campaign group Action on Sugar, called the campaign a "complete scandal and clearly cheap scaremongering from the soft drinks industry".

MacGregor continued: "The sugar drinks tax will switch people to lower sugar or artificially-sweetened drinks which are cheaper to produce than sugar-sweetened drinks, meaning that in reality soft drink companies will make more money.

"Sugar-sweetened drinks are the biggest contributor of sugar intake in the diets of children and teenagers and unless they are cut back there will be an increase in the levels of obesity, type 2 diabetes and tooth decay."

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