A UK government-led commission has called for the introduction of the world’s first tax on sugar and salt for food production, to break what it calls the “junk food cycle” and improve the nation’s eating habits. Annual grocery bills will rise by £160 a year if the UK government passes on the cost of its new policies on recycling and advertising of sugary and salty snacks, industry leaders have warned.
Families with fewer resources will be the most affected by this new tax as they will see the price of their shopping list increase by 11%, according to the food and drink federation. But it is not only families who will be affected by the implementation of this tax. “The suggestion that we should introduce further food taxes at this time is madness. It is an insult to the hardworking families of this country to be told what to do by those who can’t begin to imagine how tough the last year has been,” said Ian Wright, the chair of the industry body.
In a report, Eating into Household Budgets: the Government’s Recipe for Food Price Inflation, The Food and Drink Federation (FDF) put the cost of new government policies around public health and sustainability at £8bn.
But what are the consequences for hospitality?
Well, the FDF has today warned that consumers will inevitably face higher food and drink prices if manufacturers are forced to absorb the cost of what the government proposed to implement during the next few years. As it happened with a new sugar tax in 2018, businesses often add the cost of the sugar tax to the supply chain. The tax is meant to penalise the manufacturers responsible for drinks and food, but some of them will simply pass the cost on. As a result of this, many restaurants, pubs, cafes and hospitality in general will be forced to take the burden and cover costs themselves or transfer it to their customers.
However, as the FDF explains, food prices are the result of many factors including weather and climate conditions, trade restrictions, global supply and demand, energy prices, retailer market power, and government policies. In a globalised Britain, many of these factors are hard for the Government to directly control.
Ian Wright CBE, Chief Executive, FDF, said:
“We absolutely accept the need to address the pressing concerns around sustainability and obesity. Our members are doing so on an epic scale through active commitments to net zero and reformulation. The Government needs to understand the costs of the changes it is demanding and the impact it would have’’.