Lobby group calls for policy to be mothballed because of fragile consumer confidence and uncertainty caused by Brexit and sterling’s collapse in value

The UK food and drink industry is calling for the sugar tax to be mothballed as manufacturers face a shortage of workers, cost inflation and weak consumer confidence since the Brexit vote.

“The whole thing should be paused,” said Ian Wright, the director general of industry lobby group the Food and Drink Federation (FDF), whose members include the makers of Coca-Cola, Pepsi and Tango. “Confidence in the consumer goods market is very fragile and the government has promised not to impose any new burden on industry.”

The food and drink sector, which accounts for 16% of UK manufacturing by turnover, has been rocked by the Brexit vote as the collapse in the value of the pound increases the cost of imported ingredients and a question mark hangs over the status of its large migrant workforce. Of the 400,000 people employed in UK food and drink manufacturing, one in four are from other EU countries.

Wright said the industry needed “cast-iron assurances” from the government that its access to a “flexible workforce, with a wide range of skills and capabilities, as well as a strong work ethic” would continue. Due to the sector’s ageing workforce, it needs to recruit 130,000 new skilled workers by 2024.

“The government must develop a new migration policy that ensures manufacturers have continued access to the workers we need to address a looming skills gap ? and the drive for future innovation to support the UK’s competitive advantage,” Wright told FDF members at its conference last week.

The sugar tax was greeted with hostility by the industry and Wright argues that the levy, introduced by the chancellor in the budget, will be undermined by flawed analysis of its impact. “All the work that has been done is from the assumption that we are part of the EU,” he said. “At the very least, the consultation has to restart.”

There is also a risk that once the UK leaves the EU it could be flooded with imports that would undermine the tax’s efficacy, says Wright. “It will be very worthwhile to smuggle Coca-Cola into the UK because there will be a market for it,” he said. “We think this is a bad policy and will not have the impact it is intended to have.”

The FDF also wants the apprenticeships levy put on hold. “We have raised serious questions about both policies,” said Wright. “Both would add unwelcome additional burdens on hard-pressed industry at a moment of crisis.”

The two-tier sugar levy, which is due to take effect in April 2018, will force companies that produce or import soft drinks with significant added sugar to pay one rate for drinks containing at least 5g of sugar per 100ml and a higher rate for those with more than 8g per 100ml.

Jon Woods, the boss of Coca-Cola’s UK business, also reiterated his view that the sugar tax should be dropped, arguing it would force up prices and become a distraction. He said: “It’s bad for business at a time when we should be freeing our businesses from red tape and bureaucracy,” he said.

Coca-Cola argues getting Britons to drink lower or no-calorie drinks is the way forward. Last week it used singer Rita Ora to front the launch of a ￡10m advertising push for Coca-Cola Zero Sugar.

The links between sugar and sugary drinks in particular and Britain’s obesity crisis are well documented. They account for 29% of 11 to 18-year-olds’ daily sugar intake. Kawther Hashem, a nutritionist at the charity Action on Sugar, believes the tax will have an impact.

“These drinks are contributing a lot of sugar and calories to young people’s diets,” said Hashem. “We don’t know if manufacturers will be able to swallow the cost or will pass it on to consumers. Generally people are responsive to price ? that is why so much food is sold on promotion.”

Health campaigners are eagerly awaiting the publication of outgoing prime minister David Cameron’s delayed childhood obesity strategy. It was supposed to be published last year and is expected imminently. “We are concerned about the whole obesity strategy because there is so much uncertainty about all government policies at the moment,” added Hashem.

The soft drinks industry levy was confirmed in the Queen’s speech, with the formal consultation expected to start soon. “The soft drinks industry levy is a major step forward in our efforts to tackle childhood obesity; treating obesity and its consequences costs the taxpayer ￡5.1bn every year,” said a spokesman for the Treasury.

“The levy will be charged on soft drinks because they are the main source of added sugar in children’s and teenagers’ diets, many with no intrinsic nutritional value.”

https://www.theguardian.com/business/2016/jul/10/halt-sugar-tax-introduction-urges-food-drink-industry-