Around three-quarters of the British public support government action to tackle obesity, and a majority want to see the government take bolder action to shape healthier food environments. Nesta’s blueprint for halving obesity, which rigorously evaluates over 30 obesity reduction policies, shows taxes can be an effective policy option to reduce obesity. Another high-impact option is Nesta’s proposal on health targets for supermarkets, part of the government’s healthy food standard.  

While a tax on sugary drinks has been in place in the UK since 2018, no tax on unhealthy food exists. The main proposal to date has been a tax on specific ingredients like salt and sugar, as proposed in the 2021 National Food Strategy (NFS). In addition to the NFS salt and sugar tax, three government-funded studies are currently underway, exploring tax options to encourage healthier diets. The primary advocacy coalition calling for a new tax on the food industry, Recipe for Change, is also evaluating a tax on less healthy food categories.  

However, none of these taxes use the NPM score to incentivise manufacturers to reformulate unhealthy foods. This project will model a novel tax design using the NPM aimed at reducing obesity rates, contributing to the evidence base on the potential cost and impact of different policies aimed at reducing obesity.

This project will model a novel food tax based on the NPM score. This will add to the existing evidence base exploring the impact of fiscal levers to improve diets. We have commissioned the health economics consultancy Oxford Economics to model the impact of the tax on salt and calories consumed, food prices, and tax revenue raised by the government. We will then translate these results into impacts on obesity and related cost savings to society.

Around two-thirds of people in the UK live with excess weight and obesity. Obesity costs UK society around £126 billion per year, including £12 billion to the NHS, and £31 billion in lost productivity. Small, consistent reductions in the excess calories we consume can set us on a path to halve obesity by 2030. 

If we can make the foods we eat and enjoy more healthy, then we can reduce the amount of excess calories we eat. The policy we are exploring would tax discretionary, non-staple foods that are already in scope of existing legislation such as restrictions on promotions and placement of unhealthy foods.  

A tax on manufacturers of unhealthy food products could directly incentivise greater reformulation, in turn leading to healthier foods purchased by consumers. A tax can also make healthier food relatively cheaper to unhealthy food, in turn encouraging consumers to change what they buy.

Nesta will design an NPM tax, with inputs from novel analysis, expert opinion, and literature review. This includes deciding which products are in scope of the tax, if the tax is linear or tiered, the tax rate, and other underlying assumptions of the impact model. 

We will commission Oxford Economics to model the nutritional and fiscal impact of an NPM tax. This impact model has two components: 

1. reformulation - to predict the size and proportion of reformulation for products in scope
2. consumer response - using price elasticities to predict how consumers change purchasing behaviour in reaction to price changes. 

We will use the outputs from the impact modelling to estimate reduction in obesity rates and broader societal benefits. We will provide considerations for policymakers on tax options.