George Osborne has announced a new levy on the soft drinks industry from April 2018 and that some money from banking fines will be invested in improvements for children’s hospitals.
Most of the £520m raised in the first year will be used to boost school sports activities, the chancellor said in his budget speech on Wednesday afternoon.
The levy will be targeted at producers and importers of soft drinks that contain added sugar, and aims to encourage firms to “reformulate by reducing the amount of added sugar in the drinks they sell, moving consumers towards lower sugar alternatives, and reducing portion sizes”.
Budget: fizzy drinks tax and money for children’s hospitals
“Obesity drives disease,” said Mr Osborne. “It increases the risk of cancer, diabetes and heart disease – and it costs our economy £27bn a year; that’s more than half the entire NHS paybill.”
He added: “We understand that tax affects behaviour. So let’s tax the things we want to reduce, not the things we want to encourage. The Office of Budget Responsibility estimate that this levy will raise £520m.”
NHS England welcomed the announcement, calling it a “major first step to what must be a comprehensive childhood obesity strategy”.
The move follows a report by Public Health England in October that recommended a tax of up to 20% on high sugar products.
“Let’s tax the things we want to reduce, not the things we want to encourage”
It is thought funds raised through the levy will decline as consumption of soft drinks in scope of the levy falls, partly as a result of producers changing their products and consumers making healthier choices.
Drinks that contain more than five grams of sugar per 100 millilitres will be subject to a main rate charge, with a higher rate for drinks with more than eight grams per 100ml.
A standard can of cola contains around 10.5 grams per 100ml, which equates to around seven teaspoons of sugar. This is more than the recommended daily intake for a child.
Simon Stevens, chief executive of NHS England, said: “This bold and welcome action will send a powerful signal and incentivise soft drinks companies to act on the health consequences of their products.
“It is a major first step to what must be a comprehensive childhood obesity strategy that will help us shed pounds off our waistlines, and save pounds on future NHS costs,” he added.
Janet Davies, chief executive and general secretary of the Royal College of Nursing, said: “Childhood obesity is affecting children’s health and restricting their lives so action is needed now.
“Nurses working in this field know that prevention is best as it can be very difficult to rectify the problem so the chancellor’s announcement of a sugar tax on drinks manufacturers is a good step towards prevention,” she added.
Royal College of Nursing appoints new leader
Meanwhile, the Mr Osborne said fines against the banking sector will be used to allocate money to equipment and development projects in acute children’s services at four trusts.
“I’m also using the LIBOR funds specifically to help with children’s’ hospital services,” he told the Commons.
He added: “Members across the House have asked for resources for children’s’ care in Manchester, Sheffield, Birmingham and Southampton and we provide those funds today.”
Budget documents accompanying the chancellor’s speech revealed that £1.1m will go to Central Manchester University Hospitals NHS Foundation Trust, to contribute to a dedicated helicopter landing pad.
The trust’s Manchester Royal Infirmary was confirmed as one of four “specialist” centres for emergency services in Greater Manchester in a recent consultation process.
Meanwhile, Sheffield Children’s Hospital Charity will get £700,000 for an intraoperative MRI scanner.
In addition, £2m will go towards a new £4.8m children’s emergency and trauma department at Southampton Children’s Hospital.