A notable gap has arisen between governmental regulatory evaluations and the actual economic conditions of the UK’s food industry. Recent findings from Oxford Economics indicate a concealed economic impact worth millions due to the proposed modifications to the nutrient profiling model (NPM) by the Department of Health and Social Care (DHSC).
The report illustrates that the implementation costs associated with these regulatory changes could be up to 50 times higher for UK producers than what the official figures suggest, thus placing significant operational strain on these businesses and casting doubt on the expected real-world health advantages.
The NPM functions as a health rating system for food and beverages, determining which products face advertising restrictions. While the government’s Impact Assessment estimated the administrative burden at merely £53 per product, the insights from Oxford Economics project that “proposed changes to the NPM will cost food and drink manufacturers £2,812 per product.”
This considerable disparity underscores a miscalculation of the time necessary to navigate and apply these intricate new regulations across diverse product lines, as well as the extra costs tied to updating IT infrastructure to comply with the revised NPM standards.
The analysis reveals several unrealistic assumptions embedded in the official assessments. For example, the government believes that each manufacturer only needs 8.2 hours to comprehend the regulatory updates. This largely overlooks the fact that this “assumes that one production manager at a head office reads and reviews a 10,000-word document once and then shares this knowledge with technicians in just 90 minutes.” Additionally, surveyed food manufacturers anticipate losing “£10m each on average in sunk investment costs spent developing healthier products to support existing regulations,” as numerous items will be re-classified as ‘less healthy’ under the new proposals.
These challenges are compounded by a volatile macroeconomic landscape. The government presumes that none of the increased business costs will be transferred to consumers, even as the industry grapples with substantial regulatory pressures. With manufacturers having limited capacity to absorb additional costs, the Food and Drink Federation (FDF) forecasts that food inflation may rise to 9-10%.
Moreover, the financial implications of these proposals may limit consumer choices. Research indicates the government has severely underestimated the number of products affected, projecting a 40% rise in those restricted from promotion—nearly twice the government’s prediction of 22%.
Everyday essentials and healthier choices—including high-fiber breakfast cereals, fruit yogurts, lower-sugar cakes, and reduced-salt crisps—could be deemed non-compliant with the proposed NPM. As a result, surveyed manufacturers anticipate that over 10% of their products may be delisted, jeopardizing the accessibility of healthier options.
The report also points to a “significant lack of certainty around the policy’s real-world impact on calorie consumption.” The calorie reduction estimates for promotion restrictions from DHSC are based on a wide-ranging assumption that sales of ‘less healthy’ products could drop anywhere between 16% and 90%.
Kate Halliwell, chief scientific officer at the FDF, remarked: “This analysis shows DHSC has significantly underestimated both the cost and impact of its proposals on food manufacturers while relying on limited evidence to support its health claims.” She further stated: “At a time when food businesses are already under intense cost pressure, these proposals will add further strain on the sector and, perversely, risk removing from shop shelves many of the products that help consumers make healthier choices. We urge government to work with the industry on a more proportionate approach that protects consumer access to healthier options while promoting healthier diets.”
Alex Stewart, associate director at Oxford Economics, shared similar apprehensions: “Our analysis of the government’s impact assessment suggests costs to businesses are being significantly underestimated, while the health impacts are unclear. This reinforces the importance of post-implementation evaluation of existing policies and gathering further proof points, such as those from our analysis, to inform the final impact assessment.”
Instead of moving forward with the proposed overhaul, the FDF advocates for the government to reconsider its plans and to implement mandatory reporting of healthier food sales across the entire sector to transparently gauge progress.