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What the Chancellor’s proposed sugar tax means for the NHS

Edmund Stubbs, 17 March 2016

The Chancellor’s budget announcement concerning the introduction of a sugar tax has, as expected, brought both elation and dismay to interested lobbying groups.

Most people are now familiar with the arguments from both for and against parties. Advocates claim the tax will reduce the consumption of sugar, save our children from obesity, and reduce the incidence of associated diseases such as diabetes and cardiovascular problems. Opponents claim that its introduction would represent a governmental ‘nanny-state’ intervention which will cause the loss of jobs, cost the poor far more than the rich in their food buying habits, and probably not prove effective in any case.

But what might the introduction of a sugar tax mean for health services? Could such a tax instead of being regarded as a ‘nanny-state’ intervention, be seen as a way of paying for the ill health that a diet high in sugar indisputably causes?

The health consequences of obesity are expensive for society to manage, and are especially costly to the health and social care sector. Obese people often suffer from unpleasant chronic conditions; ailments which entail substantial and recurring treatment costs. Expensive specialist equipment often has to be provided in the medical and social care sectors to assist such people with their mobility, and more staff are needed to assist even moderately overweight people in both hospital wards and care homes.

This week, the Public Accounts Committee has branded proposed savings targets for health services as ‘unrealistic’ and as potentially causing ‘long term damage’ to our hospitals. The government has ‘no convincing plan’, they claim, to fill a huge ‘black hole’ in the NHS’s funding.

Indeed, it is difficult to see how any planned programme of savings could ever be seen as being beneficial to the NHS. Plans would involve carving yet more flesh from its bones or increases in budget equivalent to only a very small percentage of overall spending costs. Such minimal savings seem unlikely to correct the treacherous path upon which NHS is currently treading

With this in mind, addressing public ill health with the proposed sugar tax seems smart; offering individuals a healthier and better quality of life while reducing the demand for healthcare in general. At the same time, consumers of sugary food and drink would in effect be subsidising the cost of their habit to society through the tax component in the price of each can or bottle.

The producers of sugary drinks may decide to absorb the cost of the proposed tax themselves, possibly by accepting lower profit margins, but are more likely to market lower-sugar alternatives more comprehensively or simply produce less high-sugar drinks. Consequently, consumers may see more healthy alternatives and less sugary drinks on the shelves when they go shopping. Producers may simply increase the price of their products to pass the cost of the tax on to the consumer. When all is said and done it is unlikely that on a hot summer’s day a moderate price increase of under 10p is going to dissuade a thirsty person from a familiar pleasure, but this might dissuade those drinking such drinks every day.

Nevertheless, the proposed sugar tax may eventually affect both child and adult buying patterns, thereby helping to combat obesity in the long term. At present, choosing the healthy option often proves more expensive than the sugary alternative. A price increase for the latter as the result of the proposed tax might be a subtle incentive for consumers of all ages to choose healthier products while encouraging producers to promote sugar-free consumables.

Edmund Stubbs is Healthcare Researcher at Civitas

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