Reeves plans milkshake tax

Telegraph

28-04-2025

Rachel Reeves is preparing to tax milkshakes in an attempt to reduce obesity levels.
The Chancellor has drawn up plans to impose a sugar tax on milk and yoghurt-based beverages for the first time, after concluding that they are damaging public health.
The levy will drive prices up by as much as 24p a litre, with officials expecting 93 per cent of drinks on the market to be affected unless they change their recipes.
This would force the makers of drinks such as Irn-Bru and Ribena to cut sugar content or face having to pay the tax.
Ms Reeves also intends to make an existing tax on fizzy drinks more onerous.
The Treasury, which disclosed the plans in a consultation published on Monday, insisted that the anti- obesity move was needed because its current levy had not reduced the nation's sugar intake, which is still twice the recommended levels.
However, experts accused Sir Keir Starmer of another breach of his election pledge not to raise taxes on working people.
'Sugar taxes have never worked'
Dr Christopher Snowdon, head of lifestyle economics at the Institute of Economic Affairs, said: 'The sugar tax has been such a dramatic failure that it should be repealed, not expanded.
'It has been costing consumers £300 million a year while childhood obesity rates have continued to rise.
'To claim it has been a success on the basis of a hypothetical reduction of one calorie a day is absurd. Sugar taxes have never worked anywhere. What happened to Starmer's promise to not raise taxes on working people?'
The sugar tax – officially the 'soft drinks industry levy (SDIL)' – is set at 18p per litre, or 24p for higher-sugar drinks.
It was introduced in 2018 and Ms Reeves announced in October that she planned to extend it. However, she did not give details.
At present, only fizzy drinks with more than 5g of sugar per 100ml qualify for the tax, but the document said the Government is proposing to reduce this to 4g: a more 'ambitious target'.
Milk-based beverages have also been excluded until now, because of fears that taxing them would reduce children's calcium intake, with teenage girls in particular not getting enough of the mineral.
However, a Treasury spokesman said these concerns had proven to be misguided. He said: 'Whilst young people still do not consume the recommended level of calcium, milk-based drinks are not a significant contributor to intakes.
Milk-based drinks only provide up to 3.5 per cent of calcium intakes for children aged 11 to 18 years, he said compared with 25 per cent from plain milk, and 38 per cent from cereal products such as fortified white bread.
Although the exemption will be removed, a 'lactose allowance' will be introduced to take into account the natural sugars in the milk component of these drinks.
In the document, James Murray, the Exchequer Secretary to the Treasury, said: 'We recognise that many products have been reformulated to just below the 5g sugar per 100ml threshold.
'Nearly a decade on, we believe it is time to set a more ambitious target. In addition, while there is no doubt about the nutritional benefits of plain milk, it remains an anomaly that sugary pre-packaged milkshakes and other milk-based drinks are exempt from the levy.
'This consultation outlines pragmatic steps to extend the SDIL's reach and amplify its impact.
'We propose measures that could save thousands more from becoming overweight or living with obesity, ensuring the levy remains fair, robust, and effective while minimising burdens on businesses.'
A spokesman said that the existing 5g boundary had forced many companies to reduce the amount of sugar, but by only a small amount below the boundary.
It has led to a clustering effect, where some 16 per cent of soft drinks now have between 4 and 5g per 100ml of sugar.
The Treasury said the level had been decided following a series of round tables with industry figures, health groups and academic experts.
Previous plans to introduce a third rate for drinks with the highest sugar content have been dropped.